Exhibit 99.3
AGREEMENT
THIS AGREEMENT (this "Agreement") is dated as of February 25, 2000, by
and between ePlus inc., formerly MLC Holdings, Inc., a Delaware corporation (the
"Company"), and TC Plus, LLC, formerly TC Leasing, LLC, a Delaware limited
liability company ("Xxxxxx"). Capitalized terms used herein but not defined
herein shall have the meanings assigned thereto in that certain Stock Purchase
Warrant, dated October 23, 1998, by the Company in favor of Xxxxxx (the
"Warrant").
The parties hereto agree as follows:
Section 1. Deferral of Put of Warrant. Notwithstanding the
Company'sdelivery to Xxxxxx on December 23, 1999 of the " Requirement Notice"
pursuant to Section 6A of the Warrant, the obligation of Xxxxxx and/or one or
more assignees of Xxxxxx pursuant to the terms of the Warrant, as applicable
(collectively, the "Holder") (the "Xxxxxx Exercise Obligation") to exercise the
purchase rights under the Warrant shall be deferred in accordance with the terms
of this Agreement. The Xxxxxx Exercise Obligation shall be deferred until the
earlier of: (a) the date that the full "cashless exercise" of the Warrant is
fully consummated, as provided in Section 2 below, and (b) the later of (i) the
date that is thirty days after the date that the Holder receives a certificate
signed by the chief executive officer of the Company certifying that the Company
does not reasonably anticipate that a public offering (the "Public Offering")
registered under the Securities Act of 1933, as amended, (including the rules
and regulations promulgated thereunder, the "Securities Act") of shares of
common stock, par value $.01 per share, of the Company ("Common Stock") will
occur within six months after the date of such certificate, and (ii) such time
as the Holder and its affiliates are not prohibited from so exercising (and from
selling any Common Stock) pursuant to that certain Lock-up Agreement, dated
February 25, 2000, by Xxxxxx in favor of X.X. Xxxxxx Securities Inc., First
Union Securities, Inc., Friedman, Billings, Xxxxxx & Co., Inc. and U.S. Bancorp
Xxxxx Xxxxxxx Inc. or any other agreement entered into with the consent of the
Company, which consent shall not be unreasonably withheld. In addition, the
Xxxxxx Exercise Obligation shall be further deferred to the extent necessary for
the Company and the Holder to make any filings in connection with the HSR Act
(and receive any other third party consents) required prior to or in connection
with the exercise of the Warrant; provided, however the Company and Xxxxxx each
agrees to use its reasonable best efforts to make its filings in connection with
the HSR Act within four business days of the date hereof. The Company shall be
relieved of any and all obligations precedent to requiring the Holder to
exercise the Warrant pursuant to the terms of the Warrant, including, without
limitation, delivering to the Holder the certificate of the chief executive
officer of the Company described in Section 6B of the Warrant.
Section 2. Consent to Cashless Exercise of Warrant. Notwithstanding
anything in the Warrant to the contrary, to the extent that the Warrant has not
previously been exercised, the parties agree that the Holder must exercise the
Warrant in full on the date the Company executes an underwriting agreement in
connection with a Public Offering. Notwithstanding anything in the Warrant to
1
the contrary, the Holder may exercise the Warrant, in its sole discretion, by
either (i) surrendering Common Stock to the Company having an aggregate price
(as determined by the closing sales price of Common Stock on NASDAQ on the
trading day on which the underwriting agreement in connection with the Public
Offering is executed) ("Market Price") equal to the aggregate Exercise Price (as
defined in Section 3 hereof) of the Common Stock issuable upon such exercise of
the Warrant (the "Warrant Stock"), or (ii) giving written notice to the Company
that the Holder is exercising the Warrant (or a portion thereof) and, in such
written notice, authorizing the Company to withhold from issuance a number of
shares of Warrant Stock issuable upon such exercise of the Warrant which when
multiplied by the Market Price of the Warrant Stock is equal to the aggregate
Exercise Price (and such withheld shares shall no longer be issuable under the
Warrant).
Section 3. Exercise Price in connection with a Cashless Exercise of
Warrant. Notwithstanding anything in the Warrant to the contrary, if and only if
the Holder is exercising the Warrant pursuant to Section 2 hereof, the parties
agree that the exercise price per share of Common Stock shall be $11.88 (108% of
$11.00) (subject to equitable adjustment from time to time to appropriately
account for any adjustments made pursuant to the terms of the Warrant of the
"Exercise Price" as defined in the Warrant.) In all other cases, the exercise
price per share of Common Stock under the Warrant shall remain $11.00 per share
of Common Stock (subject to adjustment from time to time pursuant to terms of
the Warrant).
Section 4. Amended and Restated Stockholders Agreement. Subject to Section
14 hereof, (a) Xxxxxx and the Company each agrees to execute the Amended and
Restated Stockholders Agreement in the form attached hereto as Exhibit A at the
time the underwriting agreement in connection with the Public Offering is
executed, and (b) the Company agrees to use its reasonable best efforts to cause
the holders of at least a majority of the then-outstanding Management Shares (as
defined in that certain Stockholders Agreement, dated as of October 23, 1998,
among the Company, Xxxxxx and the other stockholders parties thereto (the
"Stockholders Agreement")) to promptly execute same.
Section 5. Waiver of Breach of Stockholders Agreement. Subject to Section
14 hereof, Xxxxxx agrees to waive any and all breaches of the Stockholders
Agreement in connection with the allocation of shares of Common Stock to be sold
by Xxxxxx and the other stockholders of the Company in the Public Offering.
Section 6. Amendment to and Waiver of Rights under the Stock Purchase
Agreement. Subject to Section 14 hereof, Xxxxxx and the Company each agrees that
the rights, obligations and preferences set forth in sections 4B(ii), 4E, 4H, 4I
and 4J of that certain Common Stock Purchase Agreement, dated October 23, 1998,
by and between the Company and Xxxxxx (the "Stock Purchase Agreement") shall be
no longer be effective and that such party, on behalf of itself and its
successor and assigns, shall forever waive compliance with such sections of the
Stock Purchase Agreement.
Section 7. Successors and Assigns. This Agreement shall bind and inure to
the benefit of and be enforceable by the Company and Xxxxxx and their respective
permitted successors and assigns.
2
Section 8. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together shall constitute
one and the same Agreement.
Section 9. Headings; Interpretations. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a substantive
part of this Agreement. The use of the word "including" in this Agreement shall
be by way of example rather than by limitation.
Section 10. Governing Law. All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement and the
exhibits hereto shall be governed by, and construed in accordance with, the laws
of the State of Delaware, without giving effect to any choice of law or conflict
of law rules or provisions (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Delaware.
Section 11. Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, on the day following the date on which the same shall have
been sent to the recipient by reputable overnight courier service (charges
prepaid), when delivered via facsimile (with appropriate confirmation of
receipt), or on the third day following the date on which the same shall have
been mailed to the recipient by certified or registered mail, return receipt
requested and postage prepaid. Such notices, demands and other communications
shall be sent to Xxxxxx and to the Company at the addresses indicated below:
If to Xxxxxx:
c/x Xxxxxx Equity Investors III, L.P.
0000 Xxxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
FAX: 000-000-0000
Attention: Xxxxxx Xxxxxx
with a copy to:
Xxxxxxxx & Xxxxx
000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxxxxx, XX 00000-0000
FAX: 000-000-0000
Attention: Xxxxxxxx X. Xxxxxx, Esq.
If to the Company:
ePlus inc.
00000 Xxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000-0000
FAX: 000-000-0000
Attention: Xxxxxxx X. Xxxxxx
3
with a copy to:
Xxxxxx & Bird, LLP
000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx Xxxxxxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000
FAX: 000-000-0000
Attention: Xxxxx X. Xxxxxx, III, Esq.
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
Section 12. No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.
Section 13. Entire Agreement. This Agreement (including the exhibits
attached hereto) and the Warrant, the Stockholders Agreement and the Stock
Purchase Agreement (to the extent such agreements are not amended hereby) embody
the complete understanding between the parties hereto with respect to the
subject matter hereof and supersede and preempt any prior understandings,
agreements or representations by or among the parties, written or oral, which
may have related to the subject matter hereof in any way.
Section 14. Effectiveness of Sections 4, 5 and 6 hereof . Notwithstanding
anything in Section 4, 5 or 6 hereof to the contrary, Sections 4, 5 and 6 hereof
shall only be effective when and if
(a) the Holder is exercising the Warrant pursuant to a "cashless exercise"
as set forth in Section 2 hereof, and
(b) the executed underwriting agreement in connection with the Public
Offering provides that the underwriter(s) will purchase from Xxxxxx
(1) not less than the greater of (x) 320,000 shares of Common Stock,
(y) 80% of the shares of Common Stock to be sold by shareholders of
the Company (including Xxxxxx) in such Public Offering, and (z) 16% of
the shares of Common Stock to be sold by the Company and the
shareholders of the Company (including Xxxxxx) in such Public Offering
(in each of clauses (x), (y) and (z), before the exercise of any
over-allotment option granted to the underwriter(s)), and
(2) not less than 40% of the shares of Common Stock to be sold by
shareholders of the Company (including Xxxxxx) pursuant to any such
over-allotment option.
[END OF PAGE]
[SIGNATURE PAGE FOLLOWS]
4
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
EPLUS INC.
(FORMERLY MLC HOLDINGS, INC.)
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
TC PLUS, LLC
(FORMERLY TC LEASING, LLC)
By: XXXXXX EQUITY INVESTORS III, L.P.,
its managing member
By: TC EQUITY PARTNERS, L.L.C.,
its general partner
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Vice President
5
Exhibit A
AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
Dated as of February __, 2000
Among
EPLUS INC.
AND CERTAIN OF ITS STOCKHOLDERS
TABLE OF CONTENTS
Page
Section 1. Definitions.....................................................................................1
Section 2. Voting Arrangements.............................................................................5
(a) Election of Directors...........................................................................5
(b) Removal of Directors............................................................................5
(c) Vacancies.......................................................................................5
(d) Rights Unimpaired...............................................................................6
(e) Committees......................................................................................6
(f) Stock Purchase Warrant..........................................................................6
(g) Initial Xxxxxx Directors........................................................................6
(h) Fiduciary Duties Unchanged......................................................................6
(i) Election of Subsidiaries' Directors.............................................................6
Section 3. Legend..........................................................................................6
(a) 1933 Act Legend.................................................................................6
(b) Removal of Legends..............................................................................7
Section 4. Registration Rights.............................................................................7
(a) Shelf Registration..............................................................................7
(b) Demand Registration.............................................................................7
(c) Incidental Registration.........................................................................8
(d) Holdback Agreements.............................................................................9
(e) Registration and Maintenance Procedures.........................................................9
(f) Registration Expenses..........................................................................13
(g) Indemnification; Contribution..................................................................13
(h) Rule 144 Sales.................................................................................16
(i) Underwritten Registrations.....................................................................16
(j) No Inconsistent Agreements.....................................................................16
(k) S-3 Demands....................................................................................16
Section 5. Redemption.....................................................................................17
Section 6. Amendment and Waiver...........................................................................18
Section 7. Severability...................................................................................18
Section 8. Entire Agreement...............................................................................18
Section 9. Successors and Assigns.........................................................................18
Section 10. Counterparts...................................................................................19
Section 11. Remedies.......................................................................................19
Section 12. Notices........................................................................................19
Section 13. Governing Law..................................................................................20
Section 14. Descriptive Headings...........................................................................20
Section 15. Survival; Termination..........................................................................20
Section 16. Other Registration Rights......................................................................20
Schedules and Exhibits:
Schedule I -- Other Management Stockholders
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
-------------------------------------------
This AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this "Agreement") is
dated as of February __, 2000 among (i) EPLUS INC., formerly MLC Holdings, Inc.,
a Delaware corporation (the "Company"), (ii) TC Plus, LLC, formerly TC Leasing,
LLC, a Delaware limited liability company ("Xxxxxx") and (iii) Xxxxxxx X. Xxxxxx
("Xxxxxx"), Xxxxx X. Xxxxx and the other Persons listed on Schedule I hereto
(collectively, the "Management Stockholders" and collectively with Xxxxxx, the
"Stockholders").
The parties hereto amend and restated the initial stockholders agreement
dated as of October 23, 1998 in its entirety and hereby agree as follows:
Section 1. Definitions. Section 1. Definitions. For purposes of this
Agreement, the following terms have the indicated meanings:
"Affiliate" of a Person means any other Person controlling, controlled by
or under common control with such Person, whether by ownership of voting
securities, by contract or otherwise, and in the case of Xxxxxx shall include
Xxxxxx Equity Investors III, L.P. and any of its partners or Affiliates, and in
the case of a natural Person shall include any member of such Person's Family
Group.
"Agreement" is defined in the preface.
"Board" means the Company's Board of Directors.
"Common Shares" means shares of the Company's Common Stock.
"Common Stock" means, collectively, the Company's common stock, par value
$.01 per share, and any other class or series of authorized capital stock of the
Company which is not limited to a fixed sum or percentage of par or stated value
in respect to the rights of the holders thereof to participate in dividends or
in the distribution of assets upon any liquidation, dissolution or winding up of
the Company.
"Common Stock Purchase Agreement" means the Common Stock Purchase
Agreement, dated as of October 23, 1998, by and between the Company and Xxxxxx.
"Company" is defined in the preface.
"Co-Redemption Notice" is defined in Section 5.
"Demand Registration" is defined in Section 4(b)(i).
"Demand Right" is defined in Section 4(b)(i).
-1-
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Family Group" means such Person's spouse and lineal descendants (whether
natural or adopted) and any trust formed and maintained solely for the benefit
of such Person, such Person's spouse or such Person's lineal descendants.
"Incidental Registration" is defined in Section 4(c)(i).
"Incidental Registration Statement" is defined in Section 4(c)(i).
"Indemnified Company" is defined in Section 4(g)(ii).
"Indemnified Parties" is defined in Section 4(g)(ii).
"Indemnified Stockholder" is defined in Section 4(g)(i).
"Indemnifying Party" is defined in Section 4(g)(iii).
"Independent Directors" is defined in Section 2(a).
"Losses" is defined in Section 4(g)(i).
"Management Directors" is defined in Section 2(a).
"Management Shares" means Stockholder Shares held by the Management
Stockholders and their Affiliates.
"Management Stockholders" is defined in the preface.
"Market Value" means, with respect to any security on any date, (x) if such
security is quoted on NASDAQ or listed on a national securities exchange, the
average daily closing sales price of such security on NASDAQ or a national
securities exchange, as applicable, for the 20 trading days prior to such date,
and (y) if such security is not quoted on NASDAQ or listed on a national
securities exchange, the fair value per share determined jointly by the Company
and Xxxxxx, provided that if the Company and Xxxxxx are unable to reach an
agreement within a reasonable period of time, such fair value shall be
determined by a recognized investment banking firm jointly selected by the
Company and Xxxxxx, whose determination shall be final and binding upon the
Company and Xxxxxx (and the fees and expenses of such recognized investment
banking firm shall be paid by the Company).
"NASDAQ" means National Association of Securities Dealers Automated
Quotations National Market System.
"Norton" is defined in the preface.
-2-
"Options" means any options to purchase Common Stock granted by the
Company.
"Other Redeemers" is defined in Section 5.
"Ownership Percentage" means, with respect to any Stockholder, a percentage
equal to the product of (a) a fraction, the numerator of which is the sum of (i)
the number of Common Shares owned by such Stockholder, and (ii) the number of
Common Shares issuable upon the exercise of any Stock Purchase Warrant or Option
owned by such Stockholder, and the denominator of which is the sum of (x) the
number of shares of the Company's outstanding Common Shares, and (y) the number
of Common Shares issuable upon the exercise of all Stock Purchase Warrants or
Options owned by any of the Stockholders, multiplied by (b) 100.
"Person" means any individual, corporation, partnership, firm, joint
venture, association, limited liability company, joint-stock company, trust,
unincorporated organization, governmental or regulatory body or other legal
entity.
"Proceeding" is defined in Section 4(g)(iii).
"Public Offering" means a sale of Common Stock to the public in an offering
pursuant to an effective registration statement filed with the SEC pursuant to
the Securities Act, as then in effect, provided that a Public Offering shall not
include an offering made in connection with a business acquisition or
combination or an employee benefit plan.
"Public Sale" means a sale of Common Stock pursuant to a Public Offering or
a Rule 144 Sale.
"Redeemable Shares" is defined in Section 5.
"Redemption Notice" is defined in Section 5.
"Refused Securities" is defined in Section 5(d).
"Registrable Securities" means any Common Shares, except Common Shares
which have been Transferred in a Public Sale.
"Registration Notice" is defined in Section 4(b)(i).
"Registration Request" is defined in Section 4(b)(i).
"Registration Statement" means any registration statement of the Company
under which any of the Registrable Securities are included therein pursuant to
the provisions of this Agreement, including the prospectus, amendments and
supplements to such registration statement, including post-effective amendments,
all exhibits, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement. The Shelf shall be
deemed a Registration Statement.
-3-
"Requesting Holders" is defined in Section 4(b)(i).
"Rule 144 Sale" means a sale of Common Stock to the public through a
broker, dealer or market-maker pursuant to the provisions of Rule 144 adopted
under the Securities Act (or any successor rule or regulation).
"S-3 Demand Registration" is defined in Section 4(k)(i).
"S-3 Registration Notice" is defined in Section 4(k)(i).
"S-3 Registration Request" is defined in Section 4(k)(i).
"S-3 Requesting Holders" is defined in Section 4(k)(i).
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shelf" is defined in Section 4(a).
"Stockholders" is defined in the preface.
"Stock Option Plans" means the 1998 Long-Term Incentive Plan, the Employee
Share Purchase Plan and any other plan of the Company pursuant to which the
Company issues options, stock appreciation rights, restricted stock or other
stock based compensation to officers, employees, directors or consultants of the
Company or any of its Subsidiaries.
"Stock Purchase Warrant" means, collectively, the Stock Purchase Warrant,
dated as of October 23, 1998, by the Company in favor of Xxxxxx, and any
subsequent stock purchase warrant or stock purchase warrants in favor of Xxxxxx
or any of its Affiliates issued pursuant to or in connection with the Stock
Purchase Warrant, dated as of October 23, 1998, by the Company in favor of
Xxxxxx.
"Stockholder Shares" means (i) all shares of Common Stock now owned or in
the future acquired by the Stockholders, including all shares of Common Stock
acquired pursuant to the exercise of Options or the Stock Purchase Warrant, and
(ii) all shares of Common Stock or other securities issued or issuable directly
or indirectly with respect to the securities referred to in clause (i) by way of
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. Stockholder
Shares shall cease to be such when Transferred in a Public Sale or to the
Company.
"Subsidiary" means, with respect to any Person, any other Person of which
at least a majority of the outstanding shares or other equity interests having
ordinary voting power for the election of directors or comparable managers of
such Person are owned, directly or indirectly, by the first Person or one or
more Subsidiaries of such first Person.
-4-
"Xxxxxx" is defined in the preface.
"Xxxxxx Directors" is defined in Section 2(a).
"Xxxxxx Shares" means Stockholder Shares held by the Xxxxxx and its
permitted transferees. Xxxxxx Shares shall cease to be such when they cease to
be Stockholder Shares.
"Transfer" means, with respect to any Stockholder Shares, the gift, sale,
assignment, transfer, pledge, hypothecation or other disposition (whether for or
without consideration and whether voluntary, involuntary or by operation of law)
of such Stockholder Shares or any interest therein.
"Warrant Shares" means the Common Shares issued in connection with the
exercise of the Stock Purchase Warrant, so long as such Common Shares continue
to be Stockholder Shares.
Section 2. Voting Arrangements.
(a) Election of Directors. Each Stockholder agrees that such Person
will vote, or cause to be voted, all voting securities of the Company over
which such Person has the power to vote or direct the voting, and will take
all other necessary or desirable action within such Person's control, and
the Company will take all necessary and desirable actions within its
control, to cause the authorized number of directors for the Company to be
established at six directors, and to elect or cause to be elected to the
Board and cause to be continued in such offices as follows: (i) two
individuals designated by Xxxxxx (the "Xxxxxx Directors"), (ii) two
individuals designated by the Management Stockholders (the "Management
Directors") and (iii) two individuals who are not employees of the Company
or its Subsidiaries or Affiliates, designated by a nominating committee
comprised of one individual designated by the Management Stockholders and
one individual designated by Xxxxxx (the "Independent Directors"); provided
that for so long as the Board is divided into three classes, the "Class I"
directors shall consist of one Xxxxxx Director and one Independent
Director, the "Class II" directors shall consist of one Xxxxxx Director and
one Independent Director and the "Class III" directors shall consist of two
Management Directors.
(b) Removal of Directors. If at any time Xxxxxx shall notify the other
Stockholders of its desire to remove, with or without cause, any individual
designated by Xxxxxx pursuant to Section 2(a) or 2(i) from a directorship,
or if at any time the Management Stockholders shall notify the other
Stockholders of their desire to remove, with or without cause, any
individual designated by the Management Stockholders pursuant to Section
2(a) above from a directorship, all such Persons so notified will vote, or
cause to be voted, all voting securities of the Company or any Subsidiary
of the Company, as applicable, over which they have the power to vote or
direct the voting, and will take all other necessary or desirable action
within such Person's control, and the Company will take all necessary and
desirable actions within its control, to cause the removal of such
director.
(c) Vacancies. If at any time any director ceases to serve on the
board of directors of the Company or any Subsidiary of the Company (whether
due to resignation, removal or otherwise), then Xxxxxx or the Management
Stockholders, as applicable, shall be entitled to designate a successor
director to fill the vacancy created thereby on the terms and subject to
the conditions of Section 2(a) or 2(i), as applicable. Each Stockholder
agrees that he, she or it will vote, or cause to be voted, all voting
securities of the Company or any Subsidiary of the Company over which such
Person has the power to vote or direct the voting, and shall take all such
other actions promptly as shall be necessary or desirable to cause the
successor designated by Xxxxxx or the Management Stockholders, as
applicable, to be elected to fill such vacancy.
-5-
(d) Rights Unimpaired. Nothing in this Agreement shall be construed to
impair any rights that the stockholders of the Company or any Subsidiary of
the Company may have to remove any director for cause. No removal for cause
of an individual designated pursuant to this Section 2 shall affect the
right of Xxxxxx or the Management Stockholders, as applicable, to designate
a different individual pursuant to this Section 2 to fill the directorship
from which such individual was removed.
(e) Committees. The Compensation Committee of the Board shall at all
times grant all awards under the Stock Option Plans. The Compensation
Committee shall consist of four members, two of which shall be Independent
Directors and two of which shall be Xxxxxx Directors. All other committees
of the Board shall at all times consist of at least one Xxxxxx Director.
(f) Stock Purchase Warrant . Each Stockholder agrees that such Person
will vote, or cause to be voted, all voting securities of the Company over
which such Person has the power to vote or direct the voting, and will take
all other necessary or desirable action within such Person's control, and
the Company will take all necessary and desirable actions within its
control, so that Xxxxxx (or any Person designated by Xxxxxx) may exercise
its rights under the Stock Purchase Warrant pursuant to the terms thereof.
(g) Initial Xxxxxx Directors. Xxxxxx hereby designates Xxxx X.
Xxxxxxxxxx as the initial "Class II" Xxxxxx Director and Xx. Xxxx X. Xxxxx
as the initial "Class I" Xxxxxx Director.
(h) Fiduciary Duties Unchanged. Nothing in this Agreement shall be
construed to limit, change or eliminate any fiduciary duties a director of
the Company or any Subsidiary of the Company may have to the stockholders
of the Company or any Subsidiary of the Company under Delaware law.
(i) Election of Subsidiaries' Directors. The Company will take all
necessary and desirable actions within its control to elect or cause to be
elected to the respective boards of directors of each of the Company's
domestic Subsidiaries, and cause to be continued in such offices, at least
one Xxxxxx Director. Xxxxxx hereby designates Xxxx X. Xxxxxxxxxx as the
initial Xxxxxx Director for the purposes of this Section 2(i).
Section 3. Legend.
(a) 1933 Act Legend. The certificates representing Stockholder Shares shall
bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
AND APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION
THEREUNDER,
or a similar legend indicating that such Stockholder Shares may not be
Transferred in violation of the Securities Act. Unless the above legend or a
similar legend in already on the certificate representing such Stockholder
Shares, then each holder of Stockholder Shares shall provide the Company
promptly after the date hereof (and in no event later than 14 days after the
date hereof) with his or her certificates representing Stockholder Shares so
that such legend can be placed thereon.
(b) Removal of Legends. Whenever the restrictions described above cease to
be applicable to any Stockholder Shares, the holder thereof shall be entitled to
receive from the Company, without expense to the holder, a new certificate not
bearing a legend stating such restriction. The holders of Stockholder Shares
with a legend referencing that certain Stockholders Agreement, dated as of
October 23, 1998, among the Company and certain of its stockholders shall be
entitled to receive from the Company, without expense to the holder, a new
certificate not bearing such legend.
-6-
Section 4. Registration Rights.
(a) Shelf Registration. Xxxxxx shall have the right at any time to demand
that the Company include any and all Stockholder Shares owned by Xxxxxx or its
Affiliates in the Company's shelf registration statement in effect as of the
date hereof (the "Shelf").
(b) Demand Registration.
(i) So long as any Xxxxxx Shares are not included in the Shelf and/or the
Shelf is not then effective, Xxxxxx shall have the right (the "Demand Right") to
request registration under the Securities Act of all or any portion of the
Registrable Securities held by Xxxxxx and its Affiliates (in each case, referred
to herein as the "Requesting Holders") by delivering a written notice to the
Company, which notice identifies the Requesting Holders and specifies the number
of Registrable Securities to be included in such registration (the "Registration
Request"). The Company will give prompt written notice of such Registration
Request (the "Registration Notice") to all other Stockholders and will thereupon
use its reasonable best efforts to effect the registration (a "Demand
Registration") under the Securities Act on any form available to the Company of:
(x) the Registrable Securities requested to be registered by the
Requesting Holders; and
(y) all other Registrable Securities which the Company has received a
written request from another Stockholder to register within 30 days after
the Registration Notice is given.
The Company shall be obligated to effect three Demand Registrations.
(ii) A registration undertaken by the Company at the request of the
Requesting Holders will not count as a Demand Registration if, pursuant to the
applicable Demand Right, the Requesting Holders fail to register and sell at
least 50% of the Registrable Securities requested to be included in such
registration by the Requesting Holders.
(iii) If the sole or managing underwriter of a Demand Registration advises
the Company in writing that in its opinion the number of Registrable Securities
and other securities requested to be included exceeds the number of Registrable
Securities and other securities which can be sold in such offering without
adversely affecting the distribution of the securities being offered, the price
that will be paid in such offering or the marketability thereof, the Company
will include in such registration the greatest number of Registrable Securities
proposed to be registered by the Stockholders which in the opinion of such
underwriter can be sold in such offering without adversely affecting the
distribution of the securities being offered, the price that will be paid in
such offering or the marketability thereof, ratably among the Stockholders
proposing to register based on each such Stockholder's Ownership Percentage;
provided, however, that the Requesting Holders shall have the right to receive
priority over all other Stockholders in the third Demand Registration.
-7-
(c) Incidental Registration.
(i) At any time the Company proposes to register any Common Shares
under the Securities Act (other than pursuant to Section 4(b) or in
connection with a business acquisition or combination or an employee
benefit plan), whether in connection with a primary or secondary offering,
the Company will give written notice to each Stockholder at least thirty
(30) days prior to the initial filing of such Registration Statement with
the SEC of its intent to file such Registration Statement and of such
Stockholder's rights under this Section 4(c). Upon the written request of
any Stockholder made within twenty (20) days after any such notice is given
(which request shall specify the Registrable Securities intended to be
disposed of by such Stockholder), the Company will use its reasonable best
efforts to effect the registration (an "Incidental Registration") under the
Securities Act of all Registrable Securities which the Company has been so
requested to register by the holders thereof; provided, however, that if,
at any time after giving written notice of its intention to register any
securities and prior to the effective date of the Registration Statement
filed in connection with such Incidental Registration (each an "Incidental
Registration Statement"), the Company shall determine for any reason not to
register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination to each Stockholder
and, thereupon, (x) in the case of a determination not to register, the
Company shall be relieved of its obligation to register any Registrable
Securities under this Section 4(c) in connection with such registration
(but not from its obligation to pay the expenses incurred in connection
therewith), and (y) in the case of a determination to delay registration,
the Company shall be permitted to delay registering any Registrable
Securities under this Section 4(c) during the period that the registration
of such other securities is delayed.
(ii) If the sole or managing underwriter of a registration advises the
Company in writing that in its opinion the number of Registrable Securities
and other securities requested to be included exceeds the number of
Registrable Securities and other securities which can be sold in such
offering without adversely affecting the distribution of the securities
being offered, the price that will be paid in such offering or the
marketability thereof, the Company will include in such registration the
Registrable Securities and other securities of the Company in the following
order of priority:
(x) first, the greatest number of securities of the Company
proposed to be included in such registration by the Company for its
own account which in the opinion of such underwriter can be so sold;
and
(y) second, after all securities that the Company proposes to
register for its own account have been included, the greatest amount
of Registrable Securities requested to be registered by the
Stockholders of which in the opinion of such underwriter can be sold
in such offering without adversely affecting the distribution of the
securities being offered, the price that will be paid in such offering
or the marketability thereof, ratably among the Stockholders proposing
to register based on each such Stockholder's Ownership Percentage.
-8-
(d) Holdback Agreements.
(i) Each Stockholder agrees that if requested in connection with an
underwritten offering made pursuant to this Section 4 by the managing
underwriter or underwriters of such underwritten offering, such Stockholder will
not effect any Public Sale or distribution of any of the securities being
registered or any securities convertible or exchangeable or exercisable for such
securities (except as part of such underwritten offering), during the period
beginning 10 days prior to, and ending 180 days after, the closing date of each
underwritten offering made pursuant to such Registration Statement (or for such
shorter period as to which the managing underwriter or underwriters may agree).
(ii) The Company agrees not to effect any Public Sale or distribution of
its Common Stock, or any securities convertible into or exchangeable or
exercisable for such Common Stock, during the seven days prior to and during the
180-day period beginning on the effective date of any underwritten Demand
Registration (or for such shorter period as to which the managing underwriter or
underwriters may agree), except as part of such Demand Registration or in
connection with any employee benefit or similar plan, any dividend reinvestment
plan, or a business acquisition or combination.
(e)Registration and Maintenance Procedures. In connection with the
registration of any Registrable Securities and/or the maintenance of the Shelf
and/or any other Registration Statement, the Company shall, to the extent
applicable, at its own expense, as promptly as reasonably possible:
(i) Prepare and file with the SEC a
Registration Statement or Registration Statements on a form
available for the sale of the Registrable Securities by the
holders thereof in accordance with the intended method of
distribution thereof, and use its reasonable best efforts to
cause each such Registration Statement to become effective;
(ii) Prepare and file with the SEC such
amendments and post-effective amendments to each Registration
Statement as may be necessary to keep such Registration
Statement continuously effective for a period ending on the
earlier of (x) 90 days from the effective date and (y) such
time as all of such securities have been disposed of in
accordance with the intended method of disposition thereof;
and cause the related prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in
force) under the Securities Act; and comply with the
provisions of the Securities Act, the Exchange Act and the
rules and regulations of the SEC promulgated thereunder
applicable to it with respect to the disposition of all
securities covered by such Registration Statement as so
amended or in such prospectus as so supplemented;
-9-
(iii) Notify the selling Stockholders
promptly (but in any event within two business days), and
confirm such notice in writing, (A) when a prospectus or any
prospectus supplement or post-effective amendment has been
filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective,
(B) of the issuance by the SEC of any stop order suspending
the effectiveness of a Registration Statement or of any order
preventing or suspending the use of any preliminary
prospectus, (C) if at any time when a prospectus is required
by the Securities Act to be delivered in connection with sales
of Registrable Securities the Company becomes aware that the
representations and warranties of the Company contained in any
agreement (including any underwriting agreement) contemplated
by Section 4(e)(viii) cease to be true and correct in all
material respects, (D) of the receipt by the Company of any
notification with respect to the suspension of the
qualification or exemption from qualification of a
Registration Statement or any of the Registrable Securities
for offer or sale in any jurisdiction, (E) if the Company
becomes aware of the happening of any event that makes any
statement made in such Registration Statement or related
prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material
respect or that requires the making of any changes in such
Registration Statement, prospectus or documents so that, in
the case of such Registration Statement, it will not contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading, and that in the
case of the prospectus, it will not contain any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading;
(iv) Use its reasonable best efforts to
prevent the issuance of any order suspending the effectiveness
of a Registration Statement or of any order preventing or
suspending the use of a prospectus or suspending the
qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction, and, if
any such order is issued, to obtain the withdrawal of any such
order at the earliest possible moment;
(v) Deliver to each selling Stockholder and
the underwriters, if any, without charge, as many copies of
the prospectus or prospectuses (including each form of
prospectus) and each amendment or supplement thereto as such
Persons may reasonably request; and, the Company hereby
consents to the use of such prospectus and each amendment or
supplement thereto by each of the selling Stockholders and the
underwriters or agents, if any, in connection with the
offering and sale of the Registrable Securities covered by
such prospectus and any amendment or supplement thereto;
(vi) Prior to any public offering of
Registrable Securities, to use its reasonable best efforts to
register or qualify, and cooperate with the selling
Stockholders, the underwriters, if any, the sales agents and
their respective counsel in connection with the registration
or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and
sale under the securities or "blue sky" laws of such
jurisdictions within the United States as necessary;
-10-
(vii) Upon the occurrence of any event
contemplated by Section 4(e)(iii)(E), as promptly as
practicable prepare a supplement or post-effective amendment
to the Registration Statement or a supplement to the related
prospectus or any document incorporated or deemed to be
incorporated therein by reference, or file any other required
document so that, as thereafter delivered to the purchasers of
the Registrable Securities being sold thereunder, such
prospectus will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not
misleading;
(viii) Enter into an underwriting agreement
in form, scope and substance as is customary in underwritten
offerings and take all such other actions as are reasonably
requested by the managing or sole underwriter in order to
expedite or facilitate the registration or the disposition of
such Registrable Securities, and in such connection, (A) make
such representations and warranties to the underwriters, with
respect to the business of the Company and its Subsidiaries,
and the Registration Statement, prospectus and documents, if
any, incorporated or deemed to be incorporated by reference
therein, in each case, in form, substance and scope as are
customarily made by issuers to underwriters in underwritten
offerings, and confirm the same if and when requested; (B)
obtain opinions of counsel to the Company and updates thereof
(which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing
underwriters), addressed to the underwriters covering the
matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be
reasonably requested by underwriters; (C) obtain "cold
comfort" letters and updates thereof from the independent
certified public accountants of the Company (and, if
necessary, any other independent certified public accountants
of any Subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial
data are, or are required to be, included in the Registration
Statement), addressed to each of the underwriters, such
letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters in
connection with underwritten offerings; and (D) if an
underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures no less favorable to
the Stockholders than those set forth in Section 4(g) (or such
other provisions and procedures acceptable to holders of a
majority of the Registrable Securities covered by such
Registration Statement and the managing underwriters or
agents) with respect to all parties to be indemnified pursuant
to Section 4(g). The above shall be done at each closing under
such underwriting agreement, or as and to the extent required
thereunder;
(ix) Comply with all applicable rules and
regulations of the SEC and make generally available to its
Stockholders earnings statements satisfying the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act) no
-11-
later than 45 days after the end of any 12-month period (or 90
days after the end of any 12-month period if such period is a
fiscal year) (x) commencing at the end of any fiscal quarter
in which Registrable Securities are sold to underwriters in a
firm commitment or best efforts underwritten offering and (y)
if not sold to underwriters in such an offering, commencing on
the first day of the first fiscal quarter of the Company after
the effectiveness of a Registration Statement, which
statements shall cover said 12-month periods; and
(x) Use its reasonable best efforts to cause
all such Registrable Securities covered by such Registration
Statement to be designated as a NASDAQ "national market system
security" within the meaning of Rule 11Aa2-1 or listed on the
principal securities exchange on which Common Stock is then
listed (if any).
The Company may require each Stockholder as to which any registration is being
effected to furnish to the Company such information regarding such Stockholder
and the distribution of such Registrable Securities as the Company may, from
time to time, reasonably request in writing; provided that such information
shall be used only in connection with such registration. The Company may exclude
from such registration the Registrable Securities of any Stockholder who
unreasonably fails to furnish such information promptly after receiving such
request. Each Stockholder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section
4(e)(iii)(B), 4(e)(iii)(D) or 4(e)(iii)(E), such Stockholder will forthwith
discontinue disposition of such Registrable Securities covered by such
Registration Statement or prospectus until such Stockholder's receipt of the
copies of the supplemented or amended prospectus contemplated by Section 4(e),
or until such Stockholder is advised in writing by the Company that the use of
the applicable prospectus may be resumed, and has received copies of any
amendments or supplements thereto.
-12-
(f) Registration Expenses. All fees and expenses incident to the
performance of or compliance the Company with the provisions of Section 4 shall
be borne by the Company, whether or not any Registration Statement is filed or
becomes effective, including, without limitation, (i) all registration and
filing fees (including, without limitation, fees and expenses of compliance with
state securities or "blue sky" laws), (ii) reasonable messenger, telephone and
delivery expenses, (iii) fees and disbursements of counsel for the Company, (iv)
fees and disbursements of all independent certified public accountants referred
to in Section 4(e)(viii), (v) underwriters' fees and expenses (excluding
discounts, commissions, or fees of underwriters, selling brokers, dealer
managers or similar securities industry professionals relating to the
distribution of the Registrable Securities, which shall be paid by the selling
stockholders), (vi) Securities Act liability insurance, if the Company so
desires such insurance, (vii) internal expenses of the Company, (viii) the
expense of any annual audit, (ix) the fees and expenses incurred in connection
with the listing of the securities to be registered on any securities exchange,
and (x) the fees and expenses of any Person, including special experts, retained
by the Company. In connection with any Demand Registration or Incidental
Registration hereunder, the Company shall reimburse the holders of the
Registrable Securities being registered in such registration for the reasonable
fees and disbursements of not more than one counsel (together with appropriate
local counsel) chosen by Xxxxxx, if pursuant to a Demand Registration, or the
Company, in all other cases, and other reasonable out-of-pocket expenses of the
Stockholders incurred in connection with the registration of the Registrable
Securities.
(g) Indemnification; Contribution.
(i) The Company shall, without limitation as to time, indemnify and hold
harmless, to the full extent permitted by law, each Stockholder, the officers,
directors, members, agents and employees of each of them, each Person who
controls each such Person (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act), the officers, directors, agents and
employees of each such controlling person and any financial or investment
adviser (each, an "Indemnified Stockholder"), to the fullest extent lawful, from
and against any and all losses, claims, damages, liabilities, actions or
proceedings (whether commenced or threatened) reasonable costs (including,
without limitation, reasonable costs of preparation and reasonable attorneys'
fees) and reasonable expenses (including reasonable expenses of investigation)
(collectively, "Losses"), as incurred, arising out of or based upon any untrue
or alleged untrue statement of a material fact contained in any Registration
Statement, prospectus or form of prospectus or in any amendment or supplements
thereto or in any preliminary prospectus, or arising out of or based upon any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, except to the extent,
but only to the extent, that such untrue or alleged untrue statement is
contained in, or such omission or alleged omission is required to be contained
in, any information so furnished in writing by the Company to such Stockholder
expressly for use in such Registration Statement or prospectus and that such
statement or omission was reasonably relied upon by such Stockholder in
preparation of such Registration Statement, prospectus or form of prospectus;
provided, however, that the Company shall not be liable in any such case to the
extent that the Company has furnished in writing to such Stockholder within a
reasonable period of time prior to the filing of any such Registration Statement
or prospectus or amendment or supplement thereto information expressly for use
in such Registration Statement or prospectus or any amendment or supplement
thereto which corrected or made not misleading, information previously furnished
to such Stockholder, and such Stockholder failed to include such information
therein; provided, further, however, that the Company shall not be liable to any
Person who participates as an underwriter in the offering or sale of Registrable
Securities or any other Person, if any, who controls such underwriter(s) within
the meaning of the Securities Act to the extent that any such Losses arise out
of or are based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in any preliminary prospectus if (A) such Person failed
to send or deliver a copy of the prospectus with or prior to the delivery of
written confirmation of the sale by such Person to the Person asserting the
claim from which such Losses arise, (B) the prospectus would have corrected such
untrue statement or alleged untrue statement or such omission or alleged
omission, and (C) the Company has complied with its obligations under Section
4(e)(iii). Each indemnity and reimbursement of costs and expenses shall remain
in full force and effect regardless of any investigation made by or on behalf of
such Indemnified Stockholder.
-13-
(ii) In connection with any Registration Statement in which a Stockholder
is participating, such Stockholder, or an authorized officer of such
Stockholder, shall furnish to the Company in writing such information as the
Company reasonably requests for use in connection with any Registration
Statement or prospectus and agrees, severally and not jointly, to indemnify, to
the full extent permitted by law, the Company, its directors, officers, agents
and employees, each Person who controls the Company (within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling persons (each, an
"Indemnified Company", and together with the Indemnified Stockholders, the
"Indemnified Parties"), from and against all Losses, as incurred, arising out of
or based upon any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, prospectus or form of prospectus or in
any amendment or supplements thereto or in any preliminary prospectus, or
arising out of or based upon any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except to the extent, but only to the extent, that such untrue or
alleged untrue statement is contained in, or such omission or alleged omission
is required to be contained in, any information so furnished in writing by such
Stockholder to the Company expressly for use in such Registration Statement or
prospectus and that such statement or omission was reasonably relied upon by the
Company in preparation of such Registration Statement, prospectus or form of
prospectus; provided, however, that such Stockholder shall not be liable in any
such case to the extent that such Stockholder has furnished in writing to the
Company within a reasonable period of time prior to the filing of any such
Registration Statement or prospectus or amendment or supplement thereto
information expressly for use in such Registration Statement or prospectus or
any amendment or supplement thereto which corrected or made not misleading,
information previously furnished to the Company, and the Company failed to
include such information therein. In no event shall the liability of any selling
Stockholder hereunder be greater in amount than the after-tax dollar amount of
the proceeds (net of payment of all expenses) received by such Stockholder upon
the sale of the Registrable Securities giving rise to such indemnification
obligation. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Company.
-14-
(iii) Any Indemnified Party shall give prompt notice to the party or
parties from which such indemnity is sought (the "Indemnifying Parties") of the
commencement of any action, suit, proceeding or investigation or written threat
thereof (a "Proceeding") with respect to which such Indemnified Party seeks
indemnification or contribution pursuant hereto; provided, however, that the
failure to so notify the Indemnifying Parties shall not relieve the Indemnifying
Parties from any obligation or liability except to the extent that the
Indemnifying Parties have been prejudiced by such failure. The Indemnifying
Parties shall have the right, exercisable by giving written notice to an
Indemnified Party promptly after the receipt of written notice from such
Indemnified Party of such Proceeding, to assume, at the Indemnifying Parties'
expense, the defense of any such Proceeding, with counsel reasonably
satisfactory to such Indemnified Party; provided, however, that an Indemnified
Party or Indemnified Parties (if more than one such Indemnified Party is named
in any Proceeding) shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Indemnified
Parties unless: (x) the Indemnifying Parties agree to pay such fees and
expenses; (y) the Indemnifying Parties fail promptly to assume the defense of
such Proceeding or fail to employ counsel reasonably satisfactory to such
Indemnified Party or Indemnified Parties; or (z) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
or Indemnified Parties and the Indemnifying Parties, and there may be one or
more defenses available to such Indemnified Party or Indemnified Parties that
are different from or additional to those available to the Indemnifying Parties,
in which case, if such Indemnified Party or Indemnified Parties notifies the
Indemnifying Parties in writing that it elects to employ separate counsel at the
expense of the Indemnifying Parties, the Indemnifying Parties shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Parties, it being understood, however, that, unless there
exists a conflict among Indemnified Parties, the Indemnifying Parties shall not,
in connection with any one such Proceeding or separate but substantially similar
or related Proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (together with appropriate local counsel) at any
time for such Indemnified Party or Indemnified Parties. Whether or not such
defense is assumed by the Indemnifying Parties, such Indemnifying Parties or
Indemnified Party or Indemnified Parties will not be subject to any liability
for any settlement made without its or their consent (but such consent will not
be unreasonably withheld). The Indemnifying Parties shall not consent to entry
of any judgment or enter into any settlement which (A) provides for other than
monetary damages without the consent of the Indemnified Party or Indemnified
Parties (which consent shall not be unreasonably withheld or delayed) or (B)
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party or Indemnified Parties of a release, in form
and substance satisfactory to the Indemnified Party or Indemnified Parties, from
all liability in respect of such Proceeding for which such Indemnified Party
would be entitled to indemnification hereunder.
(iv) If the indemnification provided for in this Section 4(g) is
unavailable to an Indemnified Party or is insufficient to hold such Indemnified
Party harmless for any Losses in respect of which this Section 4(g) would
otherwise apply by its terms, then each applicable Indemnifying Party, in lieu
of indemnifying such Indemnified Party, shall have a joint and several
obligation to contribute to the amount paid or payable by such Indemnified Party
as a result of such Losses, in such proportion as is appropriate to reflect the
relative fault of and relative benefit to the Indemnifying Party, on the one
hand, and such Indemnified Party, on the other hand, in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party, on the one hand, and Indemnified Party, on the other hand, shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been taken by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent any such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include any
legal or other fees or expenses incurred by such party in connection with any
Proceeding, to the extent such party would have been indemnified for such
-15-
expenses if the indemnification provided for in Section 4(g)(i) or 4(g)(ii) was
available to such party. The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 4(g)(iv) were determined by
pro-rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in this Section 4(g)(iv).
Notwithstanding the provisions of this Section 4(g)(iv), an Indemnifying Party
that is a selling Stockholder shall not be required to contribute any amount in
excess of the amount by which the net after-tax proceeds received by such
Indemnifying Party exceeds the amount of any damages that such Indemnifying
Party has otherwise been required to pay by reasons of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(h) Rule 144 Sales. The Company shall file the reports required to be filed
by it under the Securities Act and the Exchange Act and the rules and
regulations promulgated thereunder, and will take such further action as any
Stockholder may reasonably request, all to the extent required from time to time
to enable such Stockholder to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided by
Rule 144. Upon the request of any Stockholder, the Company shall deliver to such
Stockholder a written statement as to whether it has complied with such
requirements.
(i) Underwritten Registrations. No Stockholder may participate in any
underwritten registration hereunder unless such Stockholder (x) agrees to sell
such Stockholder's Registrable Securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (y) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
(j) No Inconsistent Agreements. The Company has not and will not, enter
into any agreement with respect to the Company's securities that is inconsistent
with the rights granted to the Stockholders in this Section 4 or otherwise
conflicts with the provisions hereof.
(k) S-3 Demands.
(i) So long as (A) any Xxxxxx Shares are not included in the Shelf
and/or the Shelf is not then effective and (B) the Company is permitted
under Securities Act to register securities on Form S-3, Xxxxxx shall have
the right to request registration on Form S-3 of all or any portion of the
Registrable Securities held by Xxxxxx and its Affiliates (in each case,
referred to herein as the "S-3 Requesting Holders") by delivering a written
notice to the Company, which notice identifies the S-3 Requesting Holders
and specifies the number of Registrable Securities to be included in such
registration (the "S-3 Registration Request"). The Company will give prompt
written notice of such S-3 Registration Request (the "S-3 Registration
Notice") to all other Stockholders and will thereupon use its reasonable
best efforts to effect the registration (a "S-3 Demand Registration") on
Form S-3 of:
(x) the Registrable Securities requested to be registered by the
S-3 Requesting Holders; and
(y) all other Registrable Securities which the Company has
received a written request from another Stockholder to
register within 30 days after the S-3 Registration Notice is
given.
S-3 Demand Registrations shall constitute Demand Registrations.
(ii) If the sole or managing underwriter of a S-3 Demand Registration
advises the Company in writing that in its opinion the number of Registrable
Securities and other securities requested to be included exceeds the number of
Registrable Securities and other securities which can be sold in such offering
without adversely affecting the distribution of the securities being offered,
the price that will be paid in such offering or the marketability thereof, the
Company will include in such registration the greatest number of Registrable
Securities proposed to be registered by the Stockholders which in the opinion of
such underwriter can be sold in such offering without adversely affecting the
distribution of the securities being offered, the price that will be paid in
such offering or the marketability thereof, ratably among the Stockholders
proposing to register based on each such Stockholder's Ownership Percentage.
-16-
Section 5. Redemption. Prior to redeeming, purchasing or otherwise
acquiring (contingent or otherwise), directly or indirectly, or entering into
any agreement for the redemption, purchase or acquisition (contingent or
otherwise), directly or indirectly, of any Common Shares from any holder of
Management Shares, the Company shall give at least thirty (30) days prior
written notice to Xxxxxx, which notice (for purposes of this Section 5, the
"Redemption Notice") shall identify the type and amount of Common Shares to be
redeemed, describe the terms and conditions of such proposed redemption, and
identify each prospective transferor of the Common Shares to be redeemed (the
"Other Redeemers"). Xxxxxx or any of its Affiliates may, within fifteen (15)
days after the receipt of the Redemption Notice, give written notice (each, a
"Co-Redemption Notice") to the Company that such Person wishes to participate in
such proposed redemption upon the terms and conditions set forth in the
Redemption Notice, which Co-Redemption Notice shall specify the type and amount
of Common Shares such Person desires to redeem. If none of Xxxxxx and its
Affiliates give the Company a timely Co-Redemption Notice, then the Company may
redeem such Common Shares on the terms and conditions set forth in the
Redemption Notice of the Other Redeemers at any time within ninety days after
expiration of the fifteen-day period for giving Co-Redemption Notices with
respect to such redemption. Any such Common Shares not redeemed by the Company
during such ninety-day period will again be subject to the provisions of this
Section 9 upon a subsequent redemption. If Xxxxxx and/or its Affiliates give the
Company a timely Co-Redemption Notice, then the Company, at its option, shall
(a) redeem all Common Shares which Xxxxxx, its Affiliates and the Other
Redeemers desire to redeem, or (b) allocate the maximum number of each class of
Common Shares that the Company is willing to redeem (the "Redeemable Shares")
among Xxxxxx, its Affiliates and the Other Redeemers as follows:
(i) each Stockholder holding Xxxxxx Shares shall be
entitled to redeem a number of Common Shares (not to exceed, for any
such Stockholder, the number of shares of such Common Shares identified
in such Stockholder's Co-Redemption Notice) equal to the product of (A)
the number of Redeemable Shares of such class of Common Shares and (B)
such Stockholder's Ownership Percentage of such class of Common Shares;
and
(ii) the Other Redeemers shall be entitled to redeem
all Redeemable Shares remaining after taking into account clause (i)
above (with the allocation among the Other Redeemers as decided by the
Company in its sole discretion).
-17-
Section 6. Amendment and Waiver.Section Except as otherwise provided
herein, no amendment or waiver of any provision of this Agreement shall be
effective against the Company or Stockholders unless such amendment or waiver is
approved in writing by the Company, Xxxxxx and the holders of at least a
majority of the then-outstanding Management Shares. The failure of any party to
enforce any provision of this Agreement shall not be construed as a waiver of
such provision and shall not affect the right of such party thereafter to
enforce each provision of this Agreement in accordance with its terms.
Section 7. Severability. If any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision or any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
Section 8. Entire Agreement. Except as otherwise expressly set forth
herein, this document embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
Section 9. Successors and Assigns. Except as otherwise provided in this
Section 9, this Agreement shall bind and inure to the benefit of and be
enforceable by the Company and the Stockholders and their respective permitted
successors and assigns so long as such Stockholders and their respective
permitted successors and assigns hold Stockholder Shares. Any assignee of a
Stockholder shall be deemed a "Stockholder" and entitled to all benefits of a
"Stockholder" for all purposes hereunder, except that no assignee of a
Stockholder other than an Affiliate of such Stockholder (a) shall be bound be
the provisions of Section 2 hereof or (b) shall be entitled to the benefits or
suffer the burdens of Section 5 hereof, unless in each case the assignor and
assignee explicitly agree otherwise.
-18-
Section 10. Counterparts. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
Section 11. Remedies. The Company and the Stockholders shall be entitled to
enforce their rights under this Agreement specifically to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in their favor. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that the Company or any Stockholder may in its
sole discretion apply to any court of law or equity of competent jurisdiction
for specific performance and/or injunctive relief (without posting a bond or
other security) in order to enforce or prevent any violation of the provisions
of this Agreement.
Section 12. Notices. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, or sent via facsimile, or
mailed first class mail (postage prepaid) or sent by reputable overnight courier
service (charges prepaid) to such Person as follows:
if to the Company:
ePlus inc.
00000 Xxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000-0000
FAX: 000-000-0000
Attention: Xxxxxxx X. Xxxxxx
with a copy to:
Xxxxxx & Bird, LLP
000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx Xxxxxxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000
FAX: 000-000-0000
Attention: Xxxxx X. Xxxxxx, III, Esq.
if to Xxxxxx:
c/x Xxxxxx Equity Investors III, L.P.
0000 Xxxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
FAX: 000-000-0000
Attention: Xxxx X. Xxxxxxxxxx
with a copy to:
Xxxxxxxx & Xxxxx
000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxxxxx, XX 00000-0000
FAX: 000-000-0000
Attention: Xxxxxxxx X. Xxxxxx, Esq.
if to a Management Stockholder:
at the address set forth below such Management
Stockholder's signature on the signature page hereto
if to any Person who is deemed a Stockholder for any purpose
hereunder:
at the address set forth in the Company's records
or at such address or to the attention of such other Person as the
recipient party has specified by prior written notice to the sending party.
Notices will be deemed to have been given hereunder when delivered personally or
sent via facsimile (against receipt therefor), five business days after deposit
in the U.S. mail and one business day after deposit with a reputable overnight
courier service.
-19-
Section 13. Governing Law. The corporate law of Delaware shall govern all
issues concerning the relative rights of the Company and its stockholders. All
other questions concerning the construction, validity and interpretation of this
Agreement shall be governed by the internal law, and not the law of conflicts,
of Delaware.
Section 14. Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
Section 15. Survival; Termination. Common Shares acquired by the
Stockholders after the date hereof shall be Stockholder Shares and hence fully
subject to the provisions of this Agreement. Stockholder Shares shall cease to
be such when Transferred in a Public Sale or to the Company. All rights and
obligations of the Stockholders and the Company shall terminate upon Xxxxxx
Shares constituting less than 5% of the issued and outstanding Common Shares,
and all rights and obligations of the Stockholders and the Company shall remain
terminated even if Xxxxxx, its Affiliates and any holders of Xxxxxx Shares later
own in the aggregate 5% or more of the issued and outstanding Common Shares;
provided that the limited partners of Xxxxxx Equity Investors III, L.P. shall
not be treated as Affiliates of Xxxxxx or the holders of Xxxxxx Shares for the
purposes of this Section 15.
Section 16. Other Registration Rights. Each of the Management Stockholders
hereby agrees to waive any right to demand that the Company register any Common
Shares under the Securities Act or include any Common Shares in the Shelf or
other registration statement and any other registration right of any kind
granted by the Company to such Management Stockholder under any agreement other
this Agreement.
[END OF PAGE]
[SIGNATURE PAGES FOLLOW]
-20-
IN WITNESS WHEREOF, the parties, which constitute the Company,
Xxxxxx and the holders of a majority of the outstanding Management Shares, have
executed this Amended and Restated Stockholders Agreement as of the date first
above written.
THE COMPANY:
EPLUS INC. (formerly MLC Holdings, Inc.)
By:
Name: Xxxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
XXXXXX:
TC PLUS, LLC (formerly TC Leasing, LLC)
By: XXXXXX EQUITY INVESTORS III, L.P., its managing member
By: TC EQUITY PARTNERS, L.L.C., its general partner
By: _________________________________
Name:
Title:
HOLDERS OF A MAJORITY OF THE OUTSTANDING
MANAGEMENT SHARES:
XXXXXXX X. XXXXXX
Address: ___________________________
FAX: ___________________________
By:
Xxxxx X. Xxxxx
Address:
FAX:
JAP INVESTMENT GROUP, L.P.
By: J.A.P., Inc., its general partner
By:
Xxxxxxx X. Xxxxxx
Title:
By:
Xxxxx X. Xxxxxx
Address:
FAX:
By:
Xxxxxxx X. Xxxxxx, Xx.
Address:
FAX:
- 21 -
SCHEDULE I
OTHER MANAGEMENT STOCKHOLDERS
JAP Investment Group, L.P.
Xxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx, Xx.
