EXHIBIT 10.6
DFG HOLDINGS, INC.
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
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THIS AGREEMENT is made as of August 8, 1996, among WPG Corporate
Development Associates IV, L.P., a Delaware limited partnership ("CDA
IV Domestic"), WPG Corporate Development Associates IV (Overseas),
L.P., a Cayman Islands exempt limited partnership ("CDA IV Overseas"),
the persons identified on Schedule I hereof (the "Individual Fund
Shareholders"), the GHB Charitable Trust #1 ("Trust"), ▇▇▇▇▇▇▇ ▇▇▇▇▇
("▇▇▇▇▇"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"), Pegasus Partners, L.P., a
Delaware limited liability company ("Pegasus I"), PAG Dollar Investors
LLC, a Delaware limited liability company, ("Pegasus II," and,
together with Pegasus I, "Pegasus"), those Persons identified on
Schedule II hereto (the "Warrant Holders"), General Electric Capital
Corporation, a New York corporation ("GE Capital") and DFG Holdings,
Inc., f/k/a Monetary Management Holdings, Inc., a Delaware corporation
(the "Company").
R E C I T A L S
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A. The Company is the successor by merger to MMH Transit Co., a
Delaware corporation ("Transit Co."). Pursuant to a Shareholders
Agreement, dated as of June 30, 1994 (the "Original Shareholders
Agreement"), Transit Co. and its stockholders as of that time imposed
certain restrictions on the transferability of Shares (as herein
defined) and created certain options and obligations to purchase
Shares. Transit Co. then merged into Monetary Management Holdings,
Inc., a Delaware Corporation ("MMH"), with MMH as the survivor in the
merger. By virtue of that merger, (i) the stockholders of Transit Co.
became stockholders of MMH, and (ii) the Shareholders Agreement
thereafter governed transfers of Shares of MMH. MMH subsequently
changed its name to "DFG Holdings, Inc."
B. Dollar Financial Group, Inc., a subsidiary of the Company,
has agreed to acquire Any-Kind Check Cashing Centers, Inc. and U.S.
Check Exchange Limited Partnership (collectively "Any-Kind") for a
consideration consisting of both cash and Shares.
C. In order to provide, among other things, capital for the
acquisition of Any-Kind, pursuant to a Stock Purchase Agreement, of
even date herewith, the Company has agreed to issue
to CDA IV Domestic, CDA IV Overseas, Trust, Pegasus I, Pegasus II and
GE Capital, and such Persons have agreed to purchase, Shares.
D. The Company and the other parties to this Agreement desire
to amend and restate the Original Shareholders Agreement to provide
for certain restrictions on the disposition of the Shares and certain
agreements with respect to, and in connection with, the Shares, all
upon the terms, conditions and provisions set forth herein.
A G R E E M E N T S
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NOW, THEREFORE, the Original Shareholders Agreement is amended
and restated in its entirety to read as follows:
ARTICLE I
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Definitions and Provisions of General Application
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1.1 Adoption of Recitals. The parties hereto adopt the
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foregoing Recitals and agree and affirm that construction of this
Agreement shall be guided thereby.
1.2 Definitions. For purposes hereof:
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"Act" shall mean the Securities Act of 1933, as amended;
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"Affiliate" shall mean any entity which, at the time of the
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applicable determination, an Investor controls, which controls an
Investor, or which is under common control with an Investor, but
does not include the Company or any of its subsidiaries. For the
purposes of the preceding sentence and the definition of Company
Affiliate, "control" means the power, direct or indirect, to
direct or cause the direction of the management and policies of
such entity through voting securities, contract or otherwise;
"Any-Kind" shall have the meaning set forth in the Recitals;
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"Appraiser" shall have the meaning set forth in Section
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3.5(c);
"Article II Closing" shall have the meaning set forth in
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Section 2.6;
"Article II Closing Date" shall have the meaning set forth
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in Section 2.6;
"Article III Closing" shall have the meaning set forth in
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Section 3.7;
"Article III Closing Date" shall have the meaning set forth
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in Section 3.7;
"Board of Directors" shall mean the board of directors of
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the Company;
"Board Fair Market Value" shall have the meaning set forth
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in Section 3.5(c);
"Cause" shall mean either of the following with respect to a
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Management Shareholder: (i) the Management Shareholder's wilful
refusal, after written notice by the Company, to cure within a
period of 30 days any continuing breach of an employment
agreement between the Company or any of its subsidiaries, on the
one hand, and the Management Shareholder, on the other hand; or
(ii) a final nonappealable adjudication in a criminal or civil
proceeding that the Management Shareholder has committed a fraud
or felony relating to or adversely affecting his employment by
the Company or any of its Subsidiaries;
"CDA IV Domestic" shall have the meaning set forth in the
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Preamble;
"CDA IV Overseas" shall have the meaning set forth in the
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Preamble;
"CDA Funds" shall mean, collectively, CDA IV Domestic and
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CDA IV Overseas;
"Commission" shall mean the Securities and Exchange
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Commission;
"Company" shall have the meaning set forth in the Preamble;
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"Company Affiliate" shall mean any entity which, at the time
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of the applicable determination, the Company controls, which
controls the Company or is under common control with the Company;
"Co-Sale Notice" shall have the meaning set forth in Section
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5.3(a);
"Credit Agreement" shall mean that certain Amended and
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Restated Credit Agreement of even date herewith by and among the
Dollar Financial Group, Inc., Bank of America National Trust and
Savings Association, as Admistrative Agent and the other
financial institutions listed therein;
"Cure" shall have the meaning set forth in Section 4.1;
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"Cure Period" shall have the meaning set forth in Section
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4.1(a);
"Delayed Purchase Notice" shall have the meaning set forth
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in Section 4.1(e);
"Demand" shall have the meaning set forth in Section 5.1(a);
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"Demand Registration" shall have the meaning set forth in
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Section 5.1(a);
"Desired Price" shall have the meaning set forth in Section
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2.4;
"Election Notice" shall have the meaning set forth in
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Section 5.3(b);
"Employment" with respect to a Management Shareholder shall
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mean the employment of such Management Shareholder on a full-time
basis with any of the Company or its Subsidiaries;
"Employment Date" with respect to a Management Shareholder
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shall mean the later of June 30, 1994 or the date of commencement
of such Management Shareholder's employment with the Company or
one of its Subsidiaries;
"Exempt Transferee" of an Investor shall mean (i) any
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Affiliate of such Investor, (ii) any partner, member or
stockholder of such Investor or of a partner, member, or
stockholder of such Investor, in each case to the extent that
such Transfer is made in accordance with the ownership interests
of such partner, member or stockholder in such Investor or in the
partner, member or stockholder of such Investor, (iii) solely in
the case of CDA Funds, any Individual Fund Shareholder, (as
herein defined) or any
other fund sponsored by ▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇, or (iv) any
liquidating trust for the benefit of the partners, members or
stockholders of such Investor or any such other fund;
"Exchange Act" shall mean the Securities Exchange Act of
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1934, as amended;
"Fair Market Value" shall have the meaning set forth in
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Section 3.5(a);
"Family" shall mean a spouse or descendant (lineal or
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adopted) or ancestor of an Individual Shareholder, or a spouse of
a descendant or ancestor of an Individual Shareholder, or a
trustee of a trust or custodian of a custodianship primarily for
the benefit of one or more of the foregoing and/or such
Individual Shareholder;
"▇▇▇▇▇▇▇▇" shall have the meaning set forth in the Preamble;
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"Group" shall have the meaning set forth in Section
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5.1(a)(i);
"Individual Shareholder" shall mean the Trust, a Management
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Shareholder or an Individual Fund Shareholder;
"Individual Fund Shareholder" shall mean any of the persons
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identified on Schedule I hereto;
"Insurance Proceeds" shall have the meaning set forth in
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Section 3.4(a);
"Investor" shall mean either of the CDA Funds, Pegasus or GE
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Capital, or any other Person to whom Shares are hereafter issued
or sold by the Company and who joins in and agrees to be bound by
this Agreement as an Investor, or any of them;
"Management Shareholders" or "Management Shareholder" shall
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mean ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ (who are the only Management Shareholders
as of the date hereof), or any person to whom Shares are
hereafter issued or sold by the Company and who joins in and
agrees to be bound by this Agreement as a Management Shareholder,
or any of them;
"Mandatory Repurchase Event" shall have the meaning set
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forth in Section 3.1(b);
"MMH" shall have the meaning set forth in Recital A;
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"M/S Fair Market Value" shall have the meaning set forth in
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Section 3.5(c);
"Negotiation Period" shall have the meaning set forth in
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Section 2.5(a);
"Offer" shall have the meaning set forth in Section 2.5(a);
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"Offer Notice" shall have the meaning set forth in Section
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2.5(a);
"Offeror" shall have the meaning set forth in Section
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2.5(a);
"Option" shall mean an option to purchase Shares which has
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been granted to a Management Shareholder;
"Pegasus" shall have the meaning set forth in the Preamble;
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"Pegasus I" shall have the meaning set forth in the
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Preamble;
"Pegasus II" shall have the meaning set forth in the
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Preamble;
"Permanent Disability" shall mean a disability due to
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injuries or sickness pursuant to which a Management Shareholder
is not able to perform the substantial and material duties of
his/her occupation and is receiving care by a physician or
psychologist which is appropriate for the condition causing the
disability, and which continues for a continuous period of at
least one hundred and eighty (180) days;
"Permitted Transferee" shall, except as provided herein,
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mean a person, other than an Individual Shareholder, to whom
Shares are Transferred pursuant to and in compliance with the
provisions of Section 2.2(a); it being understood that,
regardless to whom a Transfer of Shares is made pursuant to
Section 2.2(a), such Shares shall thereafter continue to be
subject to the terms, provisions and conditions of this
Agreement, unless otherwise decided by the Board of Directors of
the Company;
"Person" shall mean any individual, sole proprietorship,
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partnership, joint venture, unincorporated organization,
association, corporation, trust, institution, public benefit
corporation, entity or government;
"Prospectus" shall have the meaning set forth in Section
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5.3(b);
"Purchase Money Note" shall have the meaning set forth in
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Section 3.4;
"Purchase Price" shall have the meaning set forth in Section
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3.3;
"Purchaser" shall mean each Person, other than the Company,
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exercising a Repurchase Right pursuant to Section 3.2 or 4.1;
"Registrable Securities" shall mean Shares and any
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Securities to which Shares shall be converted by reason of any
recapitalization of the Company;
"Registration" shall have the meaning set forth in Section
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5.3;
"Registration Expenses" shall have the meaning set forth in
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Section 5.6(a);
"Registration Statement" shall have the meaning set forth in
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Section 5.3(a);
"Repurchase Right" shall mean a right to repurchase Shares
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following the Termination of Employment (as hereinafter defined)
of a Management Shareholder as set forth in Articles III and IV;
"SEC" shall mean the Securities and Exchange Commission;
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"Securities" shall mean securities of the Company,
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including, without limitation, Shares;
"Shareholder" shall mean each party to this Agreement
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(including, without limitation, a holder of Warrant Shares),
other than the Company or a Transferee (as herein defined), or
any of them;
"Shares" shall mean the shares of common stock, without par
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value, of the Company, inclusive of Warrant Shares and Shares
which are subject to or obtained pursuant to the exercise of
Options granted to a Management Shareholder;
"Subsidiaries" shall mean the subsidiaries of the Company
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from time to time;
"Termination of Employment" with respect to a Management
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Shareholder shall mean the termination of employment of such
Management Shareholder with the Company or any of its
Subsidiaries such that thereafter such Management Shareholder is
no longer employed by any of the Company or its Subsidiaries;
"Termination Option Notice" shall have the meaning set forth
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in Section 3.2(a);
"Third Party Offer" shall have the meaning set forth in
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Section 2.7;
"Transfer" shall mean any transfer, sale, assignment,
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pledge, encumbrance or other disposition of Shares, irrespective
of whether any of the foregoing are effected voluntarily or
involuntarily, by operation of law or otherwise, or whether inter
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vivos or upon death;
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"Transfer Notice" shall mean a notice of a proposed
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Transfer;
"Transferor" shall mean any Person who desires to Transfer
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Shares pursuant to Article II;
"Transferee" shall mean any person to whom the Transferor
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Transfers Shares that are not purchased or to be purchased
pursuant to the options exercised under Section 2.7;
"Transit Co" shall have the meaning set forth in Recital A;
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"Valuation Date" shall have the meaning set forth in Section
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3.3;
"Warrants" shall mean the warrants represented by those
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certain Warrant Certificates dated as of August [8], 1996 by the
Company in favor of the Warrant Holders;
"Warrant Shares" shall mean shares of common stock issued
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upon exercise of the Warrants; and
"▇▇▇▇▇" shall have the meaning set forth in the Preamble.
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1.3 Transferability of Certain Shares. Shares issued by the
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Company pursuant to a stock dividend, stock split, reclassification,
or like action, or pursuant to the exercise of a right granted by the
Company to all its shareholders to purchase Shares on a proportionate
basis, shall be Transferred only, and for all purposes be treated in
the same manner as, and be subject to the same options with respect
to, the Shares which were split or reclassified or with respect to
which a stock dividend was paid or like action taken, or rights to
purchase Shares on a proportionate basis were granted. In the event
of a merger of the Company where this Agreement does not terminate
pursuant to Section 7.5, shares and/or securities convertible into
shares, which are issued in exchange for Shares shall thereafter be
deemed to be Shares which are subject to the terms of this Agreement.
1.4 Duration of Articles II, III, IV, V and VI. Anything
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contained in this Agreement to the contrary notwithstanding
(including, without limitation, Section 2.3 hereof), the provisions of
Articles II, III, IV, V (except Sections 5.1 through 5.11) and VI of
this Agreement shall be in effect only until such time as (x) Shares
have been sold in public offerings registered with the SEC under the
Act with gross proceeds (before underwriting discounts) of not less
than $35,000,000, (y) such Shares are listed on a national securities
exchange or with NASDAQ, and (z) the number of registered or
beneficial holders of Shares exceeds 500.
1.5 Transfers of Shares. Each holder of Warrant Shares
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following the exercise of the Warrants, and any Person or entity to
whom Shares or Warrants are to be Transferred (except pursuant to an
effective registration statement filed by the Company with the SEC)
shall execute and deliver, as a condition to such exercise or
Transfer, whatever documents are deemed reasonably necessary by the
Company, in consultation with its counsel, to evidence such party's
joinder in, acceptance of, and agreement with, the obligations with
respect to Shares or Warrants contained in, this Agreement, and
thereupon shall become a party hereto. Subject to Section 5.16, with
respect to a Transfer, such documents shall contain, without
limitation, customary representations and warranties made by
prospective purchasers of
shares of stock or warrants from an issuer in a privately negotiated
transaction.
ARTICLE II
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Voluntary Transfers of Shares
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2.1 General Effect of Agreement. Unless a Transfer of Shares
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subject to this Agreement is made in accordance with the provisions of
this Agreement, it shall not be valid or have any force or effect.
2.2 Certain Permitted Transfers of Shares and Options. Anything
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contained in this Agreement to the contrary notwithstanding
(including, unless otherwise noted, the provisions of Section 2.3
hereof), but subject to Section 1.5:
(a) Subject to Section 2.3(d) of this Agreement, Shares may
be Transferred: (i) by an Individual Shareholder to any member of
his Family; (ii) from a member of the Family of an Individual
Shareholder to another member of the Family of that Individual
Shareholder or to that Individual Shareholder; (iii) subject to
the provisions of Section 3.1(a), to the personal representative
of an Individual Shareholder or Permitted Transferee who is
deceased or adjudicated incompetent; (iv) except as otherwise
provided in Section 3.1, by the personal representative of an
Individual Shareholder or Permitted Transferee who is deceased or
adjudicated incompetent to any member of said Individual
Shareholder's or Permitted Transferee's Family; or (v) upon
termination of a trust or custodianship which is a Permitted
Transferee, by the trustee of such trust or custodian of such
custodianship to the person or persons who, in accordance with
the provisions of said trust or custodianship, are entitled to
receive the Shares held in trust or custody. Any Shares
Transferred pursuant to this subparagraph (a) shall be subject
thereafter to the rights of the Company and the Shareholders
under this Agreement;
(b) Subject to Section 2.3(d) of this Agreement, Shares may
be Transferred by (i) any of the Investors to one or more Exempt
Transferees of such Investor and (ii) from such Exempt Transferee
to such Investor or to other Exempt Transferees of such Investor
(and upon any such Transfer pursuant to this Section 2.2(b)
(unless otherwise specifically set forth in this Agreement) the
Exempt Transferees to whom such Shares are Transferred shall have
the same rights and be subject to the same obligations as the
transferor under this Agreement);
(c) Subject to Section 2.3(d) of this Agreement, Shares may
be pledged to the Company by a Management Shareholder as security
for an indebtedness of such Management Shareholder to the
Company;
(d) Subject to Section 2.3(c), each of the CDA Funds (taken
as a unit) and Pegasus may transfer up to 2,080 Shares in the
aggregate, and GE Capital may transfer up to 1,456 Shares in the
aggregate (such 2,080 and 1,456 Shares, as the case may be,
subject to adjustment for stock dividends, stock splits,
reclassifications, or like actions) to one or more Transferees
who satisfy the requirements of Rule 501(a) of the SEC under the
Act; provided, that (x) each Transferee shall make appropriate
representations and permit appropriate legends necessary to
satisfy any applicable requirements concerning exemption from
registration under the Act and applicable state "blue-sky" laws,
(y) Transferor delivers a legal opinion pursuant to the
requirements of Section 2.3(d) hereof and (z) such Transferee
agrees to comply with this Section 2.2(d) with respect to further
Transfers of Shares; and
(e) Subject to Section 2.3(d), the Warrants or the Warrant
Shares may be Transferred by the holder of the Warrant (or any
portion thereof) or Warrant Shares to: (i) any holder of a Note
(as defined in the Credit Agreement) or (ii) to any Affiliate of
any Lender (as such are terms defined in the Credit Agreement).
2.3 Certain Prohibitions on Transfer. Anything contained in
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this Agreement to the contrary notwithstanding:
(a) No Shares may be Transferred by an Individual
Shareholder, other than pursuant to Section 2.2, Article III,
Section 4.1, or Sections 5.1, 5.2, the Co-Sale right under 5.12,
the co-sale right under 5.14(b) or 5.15, prior to June 30, 1999;
(b) No Shares may be pledged, hypothecated, assigned or
delivered in any manner as security for the indebtedness or
obligation of any person or entity, except that a Management
Shareholder may pledge Shares to the Company as security for an
indebtedness of such Management Shareholder to the Company;
(c) No Shares may be Transferred to a Transferee pursuant
to Article II if either the CDA Funds, on the one hand, or
Pegasus, on the other hand, notifies the Company and the
Transferor in writing that in their opinion, the ownership of
Shares by the Transferee would have an adverse impact on the
Company and such opinion is not unreasonable. An objection to a
proposed Transferee shall be deemed to be reasonable if the
proposed Transferee is a competitor of the Company;
(d) A Transferor may not Transfer Shares (except pursuant
to an effective registration statement under the 1933 Act)
without first delivering to the Company, if requested by the
Company, an opinion of counsel (reasonably acceptable in form and
substance to the Company) that neither registration nor
qualification under the 1933 Act and applicable state securities
laws is required in connection with such transfer.
2.4 Requirement of Service of a Transfer Notice. No Shares may
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be Transferred, except as may be required by or permitted pursuant to
the provisions of Section 2.2, Article III, Section 4.1, or Sections
5.1, 5.2, 5.12, 5.14(b) or 5.15, unless the Transferor first serves a
Transfer Notice upon the Company and each Shareholder, and the
provisions of this Article II are complied with. The Transfer Notice
shall contain the number of Shares that the Transferor desires to
Transfer. A Transfer Notice may not be served with respect to a
proposed Transfer which, if consummated, would be prohibited pursuant
to Section 2.3.
2.5 Offers Pursuant to Delivery of a Transfer Notice. Following
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the service of a Transfer Notice, the following shall occur:
(a) during the twenty (20) day period commencing on the
date of service of the Transfer Notice, each Shareholder shall
have the right to offer to purchase all, but not less than all,
of the Shares described in the Transfer Notice by delivering a
notice (the "Offer Notice") to the Transferor, setting forth such
Shareholder's offer to purchase such Shares and the price at
which such Shareholder offers to purchase such Shares. Each such
Shareholder submitting an Offer Notice is referred to herein as
an "Offeror", and each offer contained in an Offer Notice is
referred to herein as an "Offer". Each Offer Notice shall
provide that the Offer set forth therein is irrevocable for a
period of twenty (20) days from the date of expiration of the
twenty (20) day
period described in the first sentence of this paragraph (a) (the
"Negotiation Period");
(b) during the Negotiation Period, the Transferor shall
have the right to negotiate with any or all the Offerors, each of
whom shall have the right to increase (but not decrease) his
Offer during the Negotiation Period;
(c) within ten (10) days after the expiration of the
Negotiation Period, the Transferor may either (i) accept any
Offer, by written notice delivered to an Offeror, or (ii) reject
all Offers, by written notice delivered to all Offerors. If the
Transferor fails to deliver a written notice pursuant to the
preceding sentence within said ten day period, the Transferor
shall be deemed to have accepted the highest of such Offers.
(d) Any two or more of the Shareholders may submit a joint
Offer. If a joint Offer is submitted and is thereafter accepted
by the Transferor as provided herein, the Offerors submitting the
joint Offer shall purchase the Shares described in the Transfer
Notice in such proportions as the Shareholders submitting the
joint Offer shall agree. If two or more Shareholders submit
Offers at the same price for the Shares, the Transferor may (i)
accept any one of the Offers, or (ii) accept any two or more of
the Offers. If the Transferor shall accept two or more Offers at
the same price, each Offeror whose Offer has been accepted shall
purchase a number of the Shares described in the Transfer Notice
which bears the same ratio to the total number of Shares
described in the Transfer Notice as the number of Shares owned by
each such Offeror bears to the number of Shares owned by all such
Offerors. For the purposes of the preceding sentence, Shares
owned by a Permitted Transferee of an Offeror shall be deemed to
be owned by the last Offeror to own such Shares.
2.6 Effect of Acceptance of Offer. If one or more Offers is
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accepted by the Transferor as provided in Section 2.5, the Shares
described in the Transfer Notice shall be sold to the Offeror who
submitted such Offer(s) which the Transferor accepted, on the terms of
the Offer. Any purchase of Shares pursuant to the acceptance of an
Offer shall be consummated ("Article II Closing") at the Company's
principal office at 10:00 a.m., prevailing local time, on the date
("Article II Closing Date") which is the later of (x) 15 days after
the date on which an Offer is accepted (or deemed accepted) by the
Transferor or (y) the third business day following the earlier of the
expiration or early termination of the waiting period under ▇▇▇▇-
▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended or any
successor law ("HSR Act"), if notification of the Transfer of shares
would be required under the HSR Act. If said date is a Saturday,
Sunday or legal holiday, the Article II Closing shall take place at
the same time and place on, and the Article II Closing Date shall be,
the next succeeding business day. At the Article II Closing, the
Transferor shall deliver certificates representing the Shares being
purchased, duly endorsed, and the Shareholder or Shareholders
purchasing the Shares shall pay for the Shares purchased by wire-
transfer of immediately available funds.
2.7 Transfer if Offer not Accepted. If all Offers are rejected
------------------------------
by the Transferor, or no Offers are made by any of the Shareholders,
for a period extending until such date which is 120 days after date of
expiration of the Negotiation Period, the Transferor may solicit
written offers from any Person or Persons who are not Shareholders to
purchase all, but not less than all, of the Shares at the price which
is not less than 95% of the highest price offered in an Offer Notice,
payable in cash. Any offer submitted by any such Person within said
120 day period is referred to herein as a "Third Party Offer" and any
Person making a Third Party Offer is referred to herein as a
"Transferee". If the Transferor shall receive a Third Party Offer
within such period, the Transferor shall forthwith deliver copies of
the Third Party Offer to the Investors. The Investors (other than any
Transferor) shall each have ten (10) days from the date of delivery of
the Third Party Offer to exercise their right to object to the party
making the Third Party Offer, as provided in Section 2.3(c). If no
such objection is given within said ten (10) day period, subject to
Section 5.12, the Transferor may accept the Third Party Offer. If no
Third Party Offer meeting the requirements of this Section 2.7 is
received by the Transferor during said 120 day period, the Transferor
may not thereafter Transfer Shares pursuant to this Article II (other
than Section 2.2 thereof) without again complying with the provisions
of Sections 2.4 through 2.7.
2.8 Effect of Shares in Hands of the Transferee. Shares which
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are Transferred to a Transferee pursuant to Section 2.7 shall
thereafter continue to be subject to all restrictions on Transfer and
all other agreements, provisions, terms and conditions which are
contained in this Agreement, and, without limiting the generality of
the foregoing, the Transferee must comply with the provisions of this
Article II if he shall desire to Transfer any such Shares, as if the
Transferee was a Shareholder. However, such Transferee shall not
have any of the
rights which are given to Shareholders or (without limiting the
generality of the foregoing) the Investors pursuant to the provisions
of this Agreement.
ARTICLE III
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Certain Repurchase Obligations and Rights
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3.1 Mandatory Repurchase of Shares in Certain Events. Unless
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otherwise agreed by the Company and a Management Shareholder:
(a) upon the occurrence of a Mandatory Repurchase Event (as
defined below) with respect to a Management Shareholder, the
Company shall purchase, and the Management Shareholder (or his
personal representative, as the case may be) and each Permitted
Transferee owning Shares which such Management Shareholder was
the last Management Shareholder to own shall sell, all of the
Shares owned by such Management Shareholder and all such Shares
owned by such Permitted Transferee, all in the manner, for the
price and on the terms and conditions contained in Sections 3.3,
3.4, 3.5, 3.6, 3.7 and 3.8 of this Article III;
(b) a "Mandatory Repurchase Event" shall mean the
occurrence of either of the following events:
(i) the Termination of Employment of such Management
Shareholder by reason of death or Permanent Disability; or
(ii) the death of such Management Shareholder following
the Termination of Employment of such Management Shareholder
in the case where the Management Shareholder and his
Permitted Transferees did not sell all Shares owned by them
respectively pursuant to the other provisions of this
Section 3.1 or pursuant to Section 3.2 below.
3.2 Repurchase Rights in Certain Events. Upon the Termination
-----------------------------------
of Employment of a Management Shareholder in a manner which does not
constitute a Mandatory Repurchase Event:
(a) the Company shall have a Repurchase Right (exercisable
by service of written notice upon such Management Shareholder,
each Permitted Transferee owning Shares and/or Options which such
Management Shareholder was the last Management Shareholder to
own, the other Management
Shareholders and the Investors, within the 30-day period next
following the date of such Termination of Employment) to purchase
all or any portion of the Shares owned by such Management
Shareholder and each Permitted Transferee owning Shares which
such Management Shareholder was the last Management Shareholder
to own, all in the manner, for the price and on the terms and
conditions contained in Sections 3.3, 3.4, 3.5, 3.6, 3.7 and 3.8
of this Article III; and in the event that the Company does not
exercise the foregoing Repurchase Right with respect to all of
the Shares that may be purchased by reason of the operation of
this Section 3.2, then the Company shall notify each of the other
Management Shareholders, the CDA Funds, Pegasus and GE Capital of
(i) such Management Shareholder's Termination of Employment as
described in this Section 3.2 and (ii) the number of Shares owned
by such Management Shareholder and all Permitted Transferees
owning Shares which the Management Shareholder was the last
Management Shareholder to own as to which the Company did not
exercise its Repurchase Right (the "Termination Option Notice");
(b) following the delivery of the Termination Option
Notice, each of the other Management Shareholders and each of the
Investors (and/or any of their Exempt Transferees) shall have a
Repurchase Right (exercisable by service of written notice upon
such Management Shareholder, each Permitted Transferee owning
Shares which such Management Shareholder was the last Management
Shareholder to own, the other Management Shareholders, the
Investors and the Company, within the 20-day period next
following the date of delivery of the Termination Option Notice)
to purchase all or any portion of the Shares which were not
purchased by the Company pursuant to paragraph (a), all in the
manner, for the price and on the terms and conditions contained
in Sections 3.3, 3.4, 3.5, 3.6, 3.7 and 3.8 of this Article III.
(c) if the respective Repurchase Rights exercised by the
Company and the Purchasers call for the purchase, in the
aggregate, of more than the number of Shares subject to purchase,
or if pursuant to the applicable provisions of Section 4.1, more
than one Purchaser exercises a Repurchase Right, to purchase
Shares, and if the Repurchase Rights which are so exercised by
the Purchasers, or by the Purchasers and the Company, call for
the purchase, in the aggregate, of more than the number of Shares
which are subject to repurchase, then the Company shall purchase
the number of Shares for which it has exercised a Repurchase
Right, and the following shall apply with respect to the
Purchasers:
(i) the Purchasers may jointly purchase the Shares
which are purchasable by them, and divide them among
themselves in such proportions as they, in their sole
discretion, deem advisable;
(ii) if the Purchasers fail to so divide said Shares
within 10 days next following the expiration of the last
period in which Repurchase Rights may be exercised, the
Company shall purchase all Shares as to which it has
exercised a Repurchase Right, and each Purchaser shall
purchase from the Shares remaining after such purchase, a
number of Shares ("Proportionate Number") which bears the
same ratio to the number of Shares to be purchased by all
Purchasers as the number of Shares owned by such Purchaser
(and its Exempt Transferees) bears to the aggregate number
of Shares owned by all Purchasers (and their Exempt
Transferees) exercising Repurchase Rights, unless one or
more Purchasers serve notices purporting to exercise their
Repurchase Rights as to fewer than such Purchaser's
Proportionate Number of Shares;
(iii) if one or more Purchasers serve notices
purporting to exercise their respective Repurchase Rights as
to fewer than such Purchaser's Proportionate Number of
Shares, each such Purchaser shall purchase the number of
Shares specified in his notice of exercise of Repurchase
Rights and the other Purchasers shall purchase the remaining
Shares in ratios established by a like calculation to the
calculation set forth in subparagraph (ii) of this paragraph
(c), but excluding from all calculations therein both the
Shares owned, and the Shares purchased, by the Purchasers
who have exercised Repurchase Rights to purchase fewer than
their respective Proportionate Number of Shares; provided,
--------
however, that no Shareholder shall, by reason of the
-------
foregoing, be required to purchase more than the number of
Shares with respect to which it has exercised a Repurchase
Right.
For the purposes of this paragraph (c), Shares owned by a
Permitted Transferee of a Management Shareholder shall be deemed
to be owned by the last Management Shareholder to own those
Shares.
3.3 Purchase Price of Shares. The purchase price ("Purchase
------------------------
Price") of Shares to be purchased pursuant to Section 3.1 or 3.2 shall
be the Fair Market Value per Share (as defined in Section 3.5), as of
the last day of the month most recently ended prior to the date on
which the applicable event giving rise to the purchase of Shares
occurred (the "Valuation Date").
3.4 Manner of Payment. The Purchase Price shall be paid in the
-----------------
following manner:
(a) an amount equal to 33-1/3% of the Purchase Price shall
be paid on the Article III Closing Date; provided, however, that
-------- -------
if the Company or any Subsidiary shall have obtained insurance on
the life of a Management Shareholder whose Shares (or Shares
owned by his Permitted Transferees) are to be purchased pursuant
to Section 3.1 for the purpose of providing funds with which to
purchase such Shares, and in the event the proceeds of such
insurance ("Insurance Proceeds") exceed the portion of the
Purchase Price which is payable on the Article III Closing Date
in cash but for the operation of this proviso, and if the
Insurance Proceeds have been collected on the Article III Closing
Date, an amount equal to such Insurance Proceeds but not in
excess of the Purchase Price for the Shares purchased by the
Company shall be paid in cash toward the Purchase Price on the
Article III Closing Date (it being understood that if the
Insurance Proceeds are collected by the Company or any Subsidiary
after the Article III Closing Date, the Company shall make a
mandatory prepayment under the note(s) delivered by the Company
pursuant to this Section 3.4 of the amount by which the Insurance
Proceeds exceed the amount which was paid on the Article III
Closing Date, forthwith following collection thereof, with all
installments coming due under said note(s) to be reduced
ratably); and
(b) the balance of the Purchase Price shall be paid in two
equal annual installments on the first and second anniversaries,
respectively, of the Article III Closing Date. The principal
amount of the balance of the Purchase Price remaining from time
to time unpaid shall bear interest, payable on the same dates as
each installment of principal, at a rate per annum equal to the
lowest rate per annum which will not result in any portion of the
purchase price of the Shares being deemed to be unstated
interest or original issue discount under the provisions of the
Code. If pursuant to the previous sentence the interest rate,
but for the operation of this sentence, would be zero percent,
the interest rate shall be determined as if the sales price
was sufficiently high to require application of the unstated
interest or original issue discount provisions of the Code.
In the event a Management Shareholder is indebted to the Company under
a Promissory Note evidencing a portion of the subscription price or
option exercise price of his Shares (a "Purchase Money Note"), the
aggregate principal balance, and all accrued interest, outstanding
under said Purchase Money Note as of the Article III Closing Date
shall be offset (x) against the Purchase Price payable by the Company
and (y) ratably under the installment payments due and to become due
with respect thereto, except that all payments shall be applied first
to accrued interest owed under the Purchase Money Note and the
remainder to the principal thereof. The portion of the Purchase Price
which is not paid on the Article III Closing Date shall be evidenced
by a non-negotiable promissory installment note or notes made by the
Company and/or other Purchaser of the Shares pursuant to this Article
III or Article IV hereof, such note or notes to be in a commercially
reasonable form (including, without limitation, rights of acceleration
thereunder), providing for payment of the unpaid balance of the
Purchase Price and interest thereon, all as herein provided. Each
such promissory installment note shall provide that it may be prepaid
at any time or from time to time, in whole or in part, without
premium, penalty or notice. If there is more than one seller of such
Shares, a separate note shall be issued to each seller of such Shares.
Each note shall provide that a default under any other note made by
the maker thereof to a Management Shareholder or his Permitted
Transferees pursuant to this Article III shall be a default under all
notes made by the maker thereof to such Management Shareholder or his
Permitted Transferees pursuant to this Article III. Any notes which
are made by the Company, Management Shareholders or any of the
Investors shall be secured by a pledge of the Shares so purchased and
shall be with full recourse to the maker, provided, however, that
where the maker is a direct or indirect Exempt Transferee or a
Permitted Transferee of an Investor or a Management Shareholder (and
where such Shares had not been Transferred to an Exempt Transferee or
Permitted Transferee pursuant to a transaction where such Exempt
Transferee received substantially all of the assets then held by such
Investor), then, at the option of the Payee, the note shall be issued
with full recourse to the last Investor or Management Shareholder who
had owned such Shares. In the event any of the Shares are purchased
by any Purchasers, and in the event a Purchase Money Note shall be
outstanding as of the Article III Closing Date, the Management
Shareholder, on his own behalf and on behalf of his Permitted
Transferees, may direct that out of the Purchase Price otherwise
payable to such Management Shareholder and/or such
Permitted Transferees from such Purchasers, to the extent the Company
has not purchased Shares and offset the Purchase Money Note against
the Purchase Price, funds shall be paid directly to the Company in
payment of the accrued interest and the unpaid principal amount of
Purchase Money Note that would have been offset as provided above if
the Company had purchased all of the Shares being purchased by such
Purchasers.
3.5 Fair Market Value. Fair Market Value shall be determined as
-----------------
follows:
(a) for the purposes of this Article III, unless otherwise
provided by the terms of this Section 3.5, the "Fair Market
Value" of each of the Shares shall be determined on the basis of
the fair market value of the entire common equity of the Company
as of the Valuation Date, less an appropriate discount for lack
of liquidity and minority interest;
(b) during the 60 day period following the date on which a
Mandatory Repurchase Event occurs or a Repurchase Right is
exercised (as the case may be), the Management Shareholder with
respect to whom such event occurred or such right was exercised
(as the case may be), or his personal representative, on the one
hand, and the Board of Directors (following consultations with
the Purchasers, if Purchasers other than the Company are
exercising a Repurchase Right), on the other hand, shall attempt,
reasonably and in good faith, to agree upon the Fair Market
Value;
(c) in the event that the Management Shareholder (or his
personal representative, as the case may be) and the Board of
Directors are unable to so agree, then within ten business days
after the expiration of said 60 day period, the Board of
Directors and such Management Shareholder (or his personal
representative, as the case may be) shall mutually agree upon,
and retain, a nationally recognized independent appraiser of
closely held businesses (the "Appraiser"). The Management
Shareholder (or his personal representative, as the case may be),
on the one hand, and the Board of Directors, on the other hand,
shall each submit to the Appraiser such parties' respective
opinions as to the Fair Market Value, together with such
supporting data as such party deems relevant. The Appraiser
shall then conduct its own evaluation of such opinions and such
data, and shall conduct such independent procedures and
investigation as the Appraiser shall deem necessary in order to
form an opinion as to the Fair Market Value. However, the
Appraiser shall
be limited to selecting, as the Fair Market Value, either (x) the
opinion of the Management Shareholder (or his personal
representative, as the case may be), or (y) the opinion of the
Board of Directors. The Appraiser shall give written notice of
its determination to the Management Shareholder (or his personal
representative, as the case may be) and the Company. The Fair
Market Value as determined by the Board of Directors pursuant to
this Section 3.5 shall be the "Board Fair Market Value" and the
Fair Market Value as determined by the Management Shareholder (or
his personal representative) shall be the "M/S Fair Market
Value". If the Appraiser shall select the Board Fair Market
Value, the fees and costs of the Appraiser shall be paid by the
Management Shareholder (or his personal representative, as the
case may be). If the Appraiser shall select the M/S Fair Market
Value, the fees and costs of the Appraiser shall be paid by the
Company;
(d) notwithstanding the foregoing, in the event that within
twelve (12) months next following the Article III Closing Date,
(x) the Company shall issue or sell any equity securities (other
than non-participating, non-voting preferred stock not
convertible into common shares), or (y) an Investor shall sell
any Shares, at a price having a present value at the time of the
issuance or sale in excess of the Fair Market Value of each of
the Shares of a Management Shareholder which was sold pursuant to
this Article III (subject to adjustments for stock splits,
reverse stock splits, reclassifications, stock dividends and like
actions), then for the purposes of this Section 3.5 the Fair
Market Value shall be deemed to be the price per Share at which
such Shares were issued or sold (subject to adjustments for stock
splits, reverse stock splits, reclassifications, stock dividends
and like actions). In such event, the Company and/or the
Purchasers (as the case may be) shall make such adjustments to
the Purchase Price as shall be required in order that the total
amount payable to the Management Shareholder (or his personal
representative) and his Permitted Transferees equals what the
Purchase Price would have been if said deemed Fair Market Value
had been known as of the Article III Closing Date.
3.6 Priorities. In the event a Repurchase Right with respect to
----------
a Management Shareholder shall arise at any time after which such
Management Shareholder shall have delivered a Transfer Notice but
prior to the time any Offer or Third Party Offer shall have been
accepted with respect to such Transfer Notice, or in the event both
Repurchase Rights and obligations to purchase
shall arise under Sections 3.1 and/or 3.2 of Article III, the
following rules of priority shall be applied:
(a) as between the provisions of Article II and Sections
3.1 and 3.2 of this Article III, Sections 3.1 and 3.2 shall have
priority;
(b) as between Sections 3.1 and 3.2, Section 3.1 shall have
priority.
3.7 Article III Closing. Subject to the remainder of this
-------------------
Section 3.7, any purchase of Shares pursuant to this Article III shall
be consummated ("Article III Closing") at the Company's principal
office at 10:00 a.m., prevailing business time, on the date ("Article
III Closing Date") which is (x) the 90th day after the date of
occurrence of the event giving rise to the Repurchase Right or
obligation to purchase Shares pursuant to this Article III, unless an
appraisal demand is exercised, or (ii) in the event an appraisal
demand is exercised pursuant to Section 3.5, the 30th day after the
date on which the Company receives the written report of the Appraiser
pursuant to Section 3.5. The Company may, in its sole discretion upon
not less than three days prior notice to the respective Transferor(s),
accelerate the Article III Closing to any other date which is after
the date of occurrence of such event and, in the case where an
appraisal has been conducted pursuant to Section 3.5, after the
receipt by the Transferor and respective Transferee(s) of a written
report of the Appraiser pursuant to Section 3.5, in which event such
accelerated date, subject to the next following sentence, shall be the
Article III Closing Date. If said date is a Saturday, Sunday or legal
holiday, the Article III Closing shall occur at the same time and
place on, and the Article III Closing Date shall be, the next
succeeding business day. At the Article III Closing, each Person
selling Shares shall deliver certificates representing the Shares
being purchased, duly endorsed, and each shall furnish such other
evidence, including applicable inheritance and estate tax waivers and
releases, as may reasonably be necessary to effect the Transfers of
Shares. The Company and/or other Purchaser shall make the payments,
deliver the notes, and effect the pledges, which are set forth in
Section 3.4.
3.8 Failure to Deliver Shares. In the event the Company,
-------------------------
Management Shareholders or Investors exercise one or more options to
purchase Shares pursuant to this Article III, or the Company becomes
obligated to purchase Shares pursuant to this Article III, and in the
event a Management Shareholder or Permitted Transferee whose Shares
are to be purchased pursuant to this
Article III fails to deliver them on the Article III Closing Date, the
Company and/or such Shareholders purchasing Shares pursuant to this
Article III may elect to deposit the cash and promissory note
representing the Purchase Price with an escrow agent. In the event
the Company and/or such Shareholders do so, the Shares shall be deemed
for all purposes (including the right to vote and receive payment of
dividends) to have been transferred to the purchasers thereof, the
Company shall issue new certificates representing the Shares to the
purchasers thereof, and the certificates registered in the name of the
Shareholders obligated to sell them shall be deemed to have been
cancelled and to represent solely a right to receive payment of the
Purchase Price, without interest, from the escrow. If the proceeds of
sale have not been claimed by the Management Shareholder and each
Permitted Transferee whose Shares were purchased pursuant to this
Article III prior to the third anniversary of the Article III Closing
Date, the escrow deposits, and all interest earned thereon, shall be
returned to the respective depositors, and the Management Shareholder
and each Permitted Transferee whose Shares were purchased shall look
solely to the purchasers for payment of the purchase price. The
escrow agent shall not be liable for any action or inaction taken by
him in good faith.
ARTICLE IV
-----------
Restrictions on the Company's Ability to
Purchase and Pay for Shares
-----------------------------------------
4.1 Restriction on the Company's Right to Purchase.
----------------------------------------------
Notwithstanding anything to the contrary contained in this Agreement,
the Company shall not have the right to exercise any Repurchase Right
to purchase such number of Shares, and shall not be obligated to
purchase such number of Shares, if such purchase would result in a
violation of applicable law (including, without limitation, the
applicable corporate law of the Company's state of incorporation) or
of any contract to which the Company shall be a party (including,
without limitation, a violation of any covenants which may be
contained in any loan agreement or indenture in effect from time to
time), subject to the following:
(a) the Company shall, during the six month period (the
"Cure Period") following the date on which the Article III
Closing would have occurred but for the provisions of this
Section 4.1, use reasonable efforts and take such actions as may
be necessary (including, without limitation, remedying any
impairment of its capital or reconstituting its surplus) so that
the Company may purchase the Shares
without such purchase constituting a breach of contract or
violation of law, as the case may be (which shall not entail or
require the sale of additional securities). Any such actions, if
effective, are referred to herein as a "Cure". Within ten days
next following the end of the Cure Period, the Company shall
notify the Management Shareholder and all Permitted Transferees
whose Shares are subject to purchase under Article III, of
whether a Cure has been effected;
(b) if the Company shall not have effected a Cure within
the Cure Period that will enable it to purchase all Shares which
it could not purchase on the date on which the Article III
Closing would have occurred but for the operation of this Section
4.1, then, immediately after the expiration of the Cure Period,
the Company shall give notice of that fact to each of the
Management Shareholders and each of the Investors, and the
Management Shareholders and each of the Investors shall have
Repurchase Rights as to the remaining Shares to the same extent
as if they arose pursuant to Sections 3.2(b) and 3.2(c) (except
that the periods in which such rights may be exercised shall be
measured from the date of notice of expiration of the Cure
Period), for the price and on the terms and conditions with
respect to which such Shares were purchasable by the Company;
(c) if the respective Repurchase Rights exercised by the
Management Shareholders and the Investors pursuant to paragraph
(b) call for the purchase in the aggregate of more than the
number of Shares subject to purchase under the options described
in paragraph (b), then the provisions of Section 3.2(c) shall
apply;
(d) if the Repurchase Rights granted pursuant to paragraph
(b) are not exercised, or the respective Repurchase Rights
exercised by the Management Shareholders and the Investors
pursuant to paragraph (b) call for the purchase in the aggregate
of less than the number of Shares subject to purchase under
paragraph (b), and if those Repurchase Rights arose by reason of
the Company's inability, under paragraphs (a) and (b) of this
Section 4.1, to fulfill its obligation to purchase Shares arising
pursuant to Section 3.1, then from and after the date on which
said Repurchase Rights are no longer exercisable, the Shares
which the Company would have been obligated under Section 3.1 to
purchase, but for this Section 4.1, shall thereafter no longer be
subject to Section 3.1, but shall
remain subject to all remaining provisions of this Agreement, and
shall further be subject to paragraph (e);
(e) in the event Shares are not purchased pursuant to
Section 3.1 by reason of the application of the foregoing
provisions of this Section 4.1, and in the event the Company
shall thereafter become able to purchase the Shares without
violating applicable law or any agreement to which it is a party,
it shall give written notice of that fact to the personal
representative of the deceased Management Shareholder and his
Permitted Transferees (the "Delayed Purchase Notice"). In the
event the Company shall give a Delayed Purchase Notice, the
Management Shareholder or the personal representative of the
deceased Management Shareholder (or, if the Shares shall have
been distributed to the heirs or devisees of the deceased
Management Shareholder, such heirs or devisees) and such deceased
Management Shareholder's Permitted Transferees, shall each have
the option, exercisable not later than 90 days after the date of
delivery of the Delayed Purchase Notice, to sell to the Company
all (but not less than all) of the Shares owned by such
Management Shareholder, personal representative, heir, devisee or
Permitted Transferee (as the case may be), at the price and on
the terms contained in Sections 3.3, 3.4, 3.5, 3.6, 3.7 and 3.8
of Article III; provided, however, that for the purposes of the
-------- -------
foregoing (x) the Valuation Date shall be the last day of the
month next preceding the month in which the Delayed Purchase
Notice is delivered; and (y) the Management Shareholder or the
personal representative of the deceased Management Shareholder,
as the case may be, shall act on his own behalf and on behalf of
such heirs, devisees and Permitted Transferees for the purposes
of Section 3.5.
Each Shareholder purchasing Shares pursuant to the Repurchase Rights
set forth in paragraph (d) shall be obligated to pay only that portion
of the Purchase Price as is attributable to the Shares purchased by
him. In the event the Company, the Management Shareholders and/or the
Investors purchase Shares pursuant to this Article IV, the time of
closing of such purchase and the maturity dates of the installment
payments following the Article III Closing Date shall all be extended
in order to accommodate the additional periods of time contemplated by
this Section 4.1 in connection with the effecting of a Cure and/or the
exercise of the Repurchase Rights set forth in paragraph (b).
4.2 Restriction on the Company's Obligation to Make Payments.
--------------------------------------------------------
Notwithstanding any provision of this Agreement to the
contrary, the Company's obligations contained herein to make any
payment during a fiscal year on account of the Purchase Price of
Shares which it has previously purchased, or with respect to which it
is obligated to purchase or has a Repurchase Right pursuant to
Sections 3.1 or 3.2, respectively, of this Agreement, shall be
suspended to the extent the making of such payment, together with the
making of all other payments to be made during such fiscal year on
account of the Company's purchases of Shares pursuant to this
Agreement, would result in a violation of applicable law (including,
without limitation, the corporate law of the state of the Company's
incorporation), or the terms of any contract (including, without
limitation, any covenant contained in any loan agreement or indenture
to which the Company is a party). In the event applicable law or the
terms of any contract would be so violated:
(a) subject to the right provided in paragraph (b), if the
Article III Closing has occurred, the Company's obligation to
make such payments shall be tolled until such time as such law or
contract (as the case may be) would not be violated by the making
of such payment, in which event interest shall continue to accrue
under the notes which were delivered on the Article III Closing
Date; and
(b) if any portion of the Company's obligation to a former
Management Shareholder or former Permitted Transferee, as the
case may be, has been tolled pursuant to paragraph (a) for a
period in excess of one year from the date on which the
obligation was originally payable, said former Management
Shareholder or former Permitted Transferee, by written notice
delivered to the Company, may elect to rescind the sale of all
Shares the proceeds of sale of which are represented by unpaid
notes made by the Company which are owed to that former
Management Shareholder or former Permitted Transferee. Upon any
such rescission, the Shares which are reissued to that former
Management Shareholder or former Permitted Transferee shall be
subject to the provisions of this Agreement, as if they had never
been repurchased by the Company, and, if reissued, the former
Management Shareholder or former Permitted Transferee, shall
again be a Management Shareholder or Permitted Transferee (as the
case may be) for the purposes of this Agreement.
In the event payments are suspended pursuant to this Section 4.2, at
such time as the Company is able to resume making payments without
violation of such law or covenant, the Company shall first make
payment of arrearages on a proportional (to the amount
of the arrearages, and to the oldest arrearages first) basis, and
shall then make regularly scheduled payments. In the event that the
Company shall enter into a loan agreement pursuant to which loans
outstanding on a Article III Closing Date are refinanced, the Company
shall use its best efforts to obtain a restriction on payments in
respect of purchases of its Shares which is no less restrictive to the
Company than the restriction in effect on the Article III Closing
Date.
ARTICLE V
----------
Demand, Piggyback, Co-Sale and Preemptive Rights
-------------------------------------------------
5.1 Demand Registration Rights. Each of the three Groups (as
--------------------------
herein defined) shall have the following Demand Registration rights:
(a) at any time after 90 days after the first registration
of shares of common stock of the Company under the Act (other
than any registrations on Form S-8 or any form substituting
therefor), any Group may make a written request of the Company (a
"Demand") for registration with the Commission, under and in
accordance with the provisions of the Act and this Section 5.1,
of all or part of its Registrable Securities (a "Demand
Registration"), subject to the following:
(i) As used herein, each of (w) the CDA Funds, (x)
Pegasus, and (y) GE Capital shall be considered a "Group".
The Investors shall be entitled to the following number of
Demands: (x) each Group shall each be entitled to two
Demand Registrations (other than Demand Registrations on
Form S-3 promulgated by the Commission or any successor
form), and (y) at any time at which the Company is eligible
to register Registrable Securities on Form S-3 or any
successor form, each Group shall be entitled to an unlimited
number of Demand Registrations on Form S-3;
(ii) if:
(A) the Company has filed, or has taken
substantial steps toward filing, a registration
statement relating to any of the Company's securities,
and the managing underwriter of the offering to which
such registration relates or, if not an underwritten
offering, the Board of Directors, is of the opinion
that the filing of a
Registration Statement relating to a Demand
Registration would adversely affect the offering by the
Company of, or the market for, its securities; or
(B) the Board of Directors determines in the
exercise of its reasonable judgment that the Company's
ability to pursue a contemplated merger, acquisition,
significant sale of assets or other significant
business transaction (authorization for the negotiation
of which has been obtained from the Board of Directors)
would be adversely affected by the filing of a
Registration Statement with respect to a Demand
Registration;
the Company may defer such Demand Registration for a single
period not to exceed 120 days; and
(iii) if the Company shall elect to defer any Demand
Registration pursuant to the terms of subparagraph (ii), no
Demand shall be deemed to have been made for the purposes of
this Section 5.1 unless and until the Demand Registration
has become effective in accordance with paragraph (b) below;
All Demands made pursuant to this paragraph (a) shall specify the
aggregate number of Registrable Securities requested to be
registered, the intended methods of disposition thereof (if
known) and the anticipated price per Share (expressed as a
minimum price before expenses and commissions) at which the
Registrable Securities will be sold pursuant to the Demand
Registration;
(b) a Demand shall not be counted as such for the purposes
of paragraph (a) until the Registration Statement relating
thereto shall have been (i) filed with the Commission, (ii)
declared effective by the Commission and (iii) maintained
continuously effective for a period of at least 120 days or such
shorter period when all Registrable Securities included therein
have been sold in accordance with such Demand Registration. If a
Demand Registration shall have occurred, a subsequent Demand
shall not be made by any Group prior to 120 days after the
expiration of the period described in the preceding sentence;
(c) immediately upon receipt of a Demand, the Company shall
give written notice to all Shareholders and all holders of
Warrants (so long as such Warrants are
exercisable), stating that a member of a Group has made a Demand.
Each remaining Shareholder and all holders of Warrants (so long
as such Warrants are exercisable) upon written notice to the
Company delivered within 15 days next following the date on which
the Demand is made, may elect to include all or any portion of
its respective Registrable Securities in the Demand Registration.
If, however, in any Demand Registration the managing underwriter
or underwriters thereof (or in the case of a Demand Registration
not being underwritten, an independent underwriter, of nationally
recognized standing, selected by the holders of a majority of the
Registrable Securities being registered therein, whose fees and
expenses shall be borne by the Company), shall advise the Company
in writing that in its or their reasonable opinion the number of
securities proposed to be sold in such Demand Registration
exceeds the number that can be sold in such offering without
having a material adverse effect on the success of the offering
or the market for the Registrable Securities, the Company will
include in such Demand Registration only the number of
Registrable Securities which, in the reasonable opinion of such
underwriter or underwriters, can be sold without having a
material adverse effect on the success of the offering or the
market for the Registrable Securities, in the following order of
priority:
(i) first, the Registrable Securities requested to be
included in such Demand Registration by the holder of
Registrable Securities who have made such requests in
accordance with paragraphs (a) and (c) of this Section 5.1;
provided, however, that if in the opinion of such
-------- -------
underwriter(s), not all such Registrable Securities can be
so included without having a material adverse effect on the
success of the offering or the market for the Registrable
Securities, the number of Registrable Securities which in
the opinion of such underwriters can be included shall be
allocated pro rata among the holders of such Registrable
Securities on the basis of the respective numbers of
Registrable Securities requested to be included by each of
them;
(ii) second, Registrable Securities to be issued and
sold by the Company requested to be included in such Demand
Registration shall be included, but only to the extent that
in the opinion of such underwriter(s) they may be included
without having a material adverse
effect on the success of the offering or the market for the
Registrable Securities;
(d) if a Demand Registration is to be an underwritten
offering, the Group which made the Demand shall select a managing
underwriter or underwriters of recognized national standing to
administer the offering, who shall be approved by the Board of
Directors in accordance with Section 6.4(a).
5.2 Piggyback Registration Rights. The Shareholders and holders
-----------------------------
of Warrants (so long as such Warrants are exercisable) shall have the
following Piggyback Registration rights:
(a) whenever during the period commencing on the date
hereof and ending on the tenth anniversary of the date hereof the
Company proposes to register any equity securities under the Act
(other than any registrations on Form S-4 or S-8 or any form
substituting therefor), the Company will give written notice to
all holders of Registrable Securities and the Warrants (so long
as such Warrants are exercisable), at least 30 days prior to the
anticipated filing date, of its intention to effect such a
registration, which notice will specify the proposed offering
price (if known), the kind and number of securities proposed to
be registered, the distribution arrangements and such other
information that at the time would be appropriate to include in
such notice. Subject to paragraph (b) below, the Company shall
include in such registration all Registrable Securities with
respect to which written requests for inclusion therein have been
delivered by holder of Registrable Securities to the Company
within 15 business days after the date of delivery of the
Company's notice (a "Piggyback Registration"). Except as may
otherwise be provided in this Article V, Registrable Securities
with respect to which such requests for registration have been
received will be registered by the Company and offered for sale
to the public in a Piggyback Registration pursuant to this
Article V on the same terms and subject to the same conditions as
are applicable to any similar securities of the Company included
therein;
(b) If in any Piggyback Registration the managing
underwriter or underwriters thereof (or in the case of a
Piggyback Registration not being underwritten, an independent
underwriter, of nationally recognized standing, selected by the
Board of Directors in accordance with Section 6.4(a), whose fees
and expenses shall be borne by the Company), shall advise the
Company in writing that in
its or their reasonable opinion the number of Registrable
Securities proposed to be sold in such Piggyback Registration
exceeds the number that can be sold in such offering without
having a material adverse effect on the success of the offering
of securities to be sold by the Company in such Piggyback
Registration, the Company will include in such Piggyback
Registration (in addition to the equity securities the Company
proposes to sell) only the number of Registrable Securities owned
by the holder of Registrable Securities requesting such Piggyback
Registration, if any, which, in the opinion of such underwriter
or underwriters can be sold without having such a material
adverse effect. If some, but not all, of such Registrable
Securities can be so included, the number of Registrable
Securities which in the opinion of such underwriter or
underwriters can be included shall be (x) first the following
number of Registerable Securities shall be allocated to Trust:
the least of (A) the Registrable Securities requested to be
included in such Demand Registration by Trust (B) 1,250 Shares
less Shares of Trust previously registered and sold pursuant to
----
Sections 5.1 through 5.11 herein (in both cases, as such number
of Shares would be adjusted for stock dividends, stock splits,
reclassifications, or like actions) and (C) the number of
Registrable Securities which in the opinion of such underwriters
can be included in such Piggyback Registration, and (y) then, the
remaining number of Registerable Securities which may be so
included shall be allocated pro rata among the holders of
Registrable Securities requesting such Piggyback Registration on
the basis of the respective numbers of Registrable Securities
requested to be included by each of them (less, in the case of
Trust, any shares to be allocated to Trust pursuant to clause (x)
above);
(c) if any Piggyback Registration is an underwritten
offering, the Board of Directors, in accordance with Section
6.4(a), will select a managing underwriter or underwriters of
nationally recognized standing to administer the offering; and
(d) notwithstanding anything to the contrary contained in
this Section 5.2, the Company shall not be obligated to include
any Registrable Securities in any registration statement filed by
the Company if counsel to the Company who is reasonably
satisfactory to the holders of Registrable Securities who have
made a request pursuant to paragraph (a) of this Section 5.2
shall render an opinion to such holder of Registrable Securities
to the effect that (i)
registration is not required for the proposed transfer of such
Registrable Securities or (ii) a post-effective amendment to an
existing registration statement filed simultaneously with the
proposed transfer would be sufficient for such proposed transfer,
and the Company in fact files such a post-effective amendment.
5.3 Registration Procedures. With respect to any Demand
-----------------------
Registration or Piggyback Registration (generically, a
"Registration"), the Company will, subject to subparagraph 5.1(a)(iii)
and Section 5.5, as expeditiously as practicable:
(a) prepare and file with the Commission as soon as
practicable a registration statement or registration statements
(the "Registration Statement") relating to the applicable
Registration on any appropriate form under the Act which shall be
available for use in connection with the sale of the Registrable
Securities in accordance with the intended method or methods of
distribution thereof, and if required the Company shall undergo
and pay a special audit to effect such Registration. The Company
will use its best efforts to cause such Registration Statement to
become effective (including, without limitation, by means of a
shelf registration pursuant to Rule 415 under the Act if so
requested by a representative of the Group making a Demand). The
Company shall not be deemed to have breached such "best efforts"
undertaking if it shall take any action which is required under
applicable law, or shall take any action in good faith and for
valid business reasons, including without limitation the
acquisition or divestiture of assets;
(b) prepare and file with the Commission such amendments
and post-effective amendments to the Registration Statement as
may be necessary to keep each Registration Statement effective
for a period of not more than 120 days after the date of its
effectiveness, or such shorter period as will terminate when all
Registrable Securities covered by such Registration Statement
have been sold; cause each prospectus required in connection
therewith (a "Prospectus") to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the Act; and comply with the
provisions of the Act with respect to the disposition of all
securities covered by such Registration Statement during the
applicable period, in accordance with the intended method or
methods of distribution by the sellers thereof as set forth in
the Registration Statement or supplement to the Prospectus;
(c) promptly notify the selling holders of Registrable
Securities and the managing underwriters, if any (and, if
requested by any such Person, confirm such advice in writing),
of:
(i) the date on which the Prospectus or any Prospectus
supplement or post-effective amendment to the Registration
Statement has been filed, and, with respect to the
Registration Statement or any post-effective amendment, the
date on which the same has become effective;
(ii) any written request by the Commission for
amendments or supplements to the Registration Statement or
the Prospectus or for additional information;
(iii) the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement
or the initiation of any proceedings for that purpose;
(iv) the receipt by the Company of any written request
by any state securities authority for additional information
or written notification with respect to the suspension of
the qualification of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(v) the happening of any event which makes any
material statement made in the Registration Statement, the
Prospectus or any document incorporated therein by reference
untrue in any material respect or which requires the making
of any changes in the Registration Statement, the Prospectus
or any document incorporated therein by reference in order
to make the statements therein not misleading in the light
of the circumstances under which they were made;
(d) make every reasonable effort (taking into account the
interest of all selling holders of Registrable Securities, the
Company, and its officers and directors) to obtain the withdrawal
of any order suspending the effectiveness of the Registration
Statement at the earliest possible moment;
(e) if requested by the managing underwriter or
underwriters or a holder of Registrable Securities being
sold in connection with an underwritten offering, promptly
incorporate in a Prospectus supplement or post-effective
amendment to the Registration Statement such information as the
managing underwriters and the holders of a majority of the
Registrable Securities being sold agree should reasonably be
included therein relating to the plan of distribution with
respect to such Registrable Securities, including, without
limitation, in the case of an underwritten offering, information
with respect to (i) the number of Registrable Securities being
sold to such underwriters in a firm commitment underwriting and
the purchase price being paid therefor by such underwriters, and
(ii) any other terms of the underwriting; and make all required
filings of such Prospectus supplement or post-effective amendment
as soon as practicable upon being notified of the matters to be
incorporated in such Prospectus supplement or post-effective
amendment;
(f) furnish to each selling holder of Registrable
Securities and each managing underwriter (if any), without
charge, at least one signed copy of the Registration Statement
and any amendment thereto, including financial statements and
schedules, all documents incorporated therein by reference and,
to the extent reasonable, all exhibits (including those
incorporated by reference);
(g) deliver to each selling holder of Registrable
Securities and the underwriters, if any, without charge, as many
copies of the Prospectus (including each preliminary prospectus)
and any amendment or supplement thereto as such selling holder of
Registrable Securities and underwriters may reasonably request;
the Company consents to the use, in accordance with the Act, of
each Prospectus or any amendment or supplement thereto by each of
the selling holders of Registrable Securities and the
underwriters, if any, in connection with the offering and sale of
the Registrable Securities covered by such Prospectus or any
amendment or supplement thereto;
(h) in connection with any Registration of Registrable
Securities, use its best efforts to register or qualify or
cooperate with the selling holders of Registrable Securities, the
underwriters, if any, and their respective counsel in connection
with the registration or qualification of such Registrable
Securities for offer and sale under the securities or "blue sky"
laws of such jurisdictions as the holders of not less than 25% of
the Registrable Securities covered by the Registration Statement
or the managing
underwriter reasonably requests in writing and do any and all
other acts or things reasonably necessary or advisable to enable
the disposition in such jurisdictions of the Registrable
Securities covered by the Registration Statement; provided that
the Company will not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or
to take any action that would subject it to taxation in any such
jurisdiction or to submit to the general service of process in
any such jurisdiction;
(i) cooperate with the selling holders of Registrable
Securities and the managing underwriters, if any, to facilitate
the timely preparation and delivery of certificates representing
the Registrable Securities to be sold free from any restrictive
legends; and cause such Registrable Securities to be in such
denominations and registered in such names as the managing
underwriters may request at least two business days prior to any
sale of Registrable Securities to the underwriters;
(j) use reasonable efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be
registered with or approved by such governmental agencies or
authorities as may be necessary to enable the seller or sellers
thereof or the underwriters, if any, to consummate the
disposition of such Registrable Securities in the jurisdictions
contemplated by paragraph (h) of this Section 5.3;
(k) upon the occurrence of any event contemplated by
subparagraph (ii), (iv) or (v) of paragraph (c) of this Section
5.3, prepare any required supplement or post-effective amendment
to the Registration Statement or the related Prospectus or any
document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the
purchasers of the Registrable Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(l) not later than the effective date of the applicable
Registration Statement, provide a CUSIP number for all
Registrable Securities;
(m) enter into such agreements (including an underwriting
agreement) and take all such other actions in
connection therewith which are reasonably required in order to
expedite or facilitate the disposition of such Registrable
Securities, and, in such connection, whether or not an
underwriting agreement is entered into and whether or not the
Registration is an underwritten Registration:
(i) make such representations and warranties to the
holders of such Registrable Securities and the underwriters,
if any, and agree to such indemnification and contribution
provisions and procedures in such form, substance and scope
as are reasonably required and customarily made by issuers
to underwriters in primary underwritten offerings;
(ii) 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, if any, and the holders of a majority
of the Registrable Securities being sold) addressed to each
selling holder and the underwriters, if any, covering the
matters reasonably required and customarily covered in
opinions requested in underwritten offerings and such other
matters as may be reasonably requested by such underwriters
and holders;
(iii) obtain "cold comfort" letters and updates
thereof from the Company's independent certified public
accountants addressed to the selling holders of Registrable
Securities and the underwriters, if any, such letters to be
in customary form and covering matters of the type
customarily covered in "cold comfort" letters received by
underwriters in connection with primary underwritten
offerings;
(iv) deliver such documents and certificates as may
reasonably be requested by the holders of a majority of the
Registrable Securities being sold and the managing
underwriters, if any, to evidence compliance with
subparagraph (m) (i) above and with any customary conditions
contained in the underwriting agreement or other agreement
entered into by the Company. The above shall be done at
each closing under such underwriting or similar agreement as
and to the extent required thereunder;
(n) make available for inspection by a representative of
the holders of a majority of the Registrable Securities as to
which any Registration is being effected, any
underwriter participating in any disposition pursuant to such
Registration, and any attorney or accountant retained by the
sellers or underwriter, at reasonable times and upon reasonable
prior notice, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all
information reasonably requested by any such representative,
underwriter, attorney or accountant in connection with such
Registration Statement; provided, however, that any records,
information or documents that are designated by the Company in
writing as confidential shall be kept confidential by such
Persons unless disclosure of such records, information or
documents is required by court or administrative order of any
regulatory body having jurisdiction;
(o) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make
generally available to its security holders (which may be
accomplished through compliance with Rule 158 under the Act),
earning statements satisfying the provisions of Section 11(a) of
the Act, for the twelve month period:
(i) 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; or
(ii) if not sold to underwriters in such an offering,
commencing with the first month of the Company's first
fiscal quarter after the quarter in which the Registration
Statement became effective.
Said earning statements shall be furnished within 45 days after
the expiration of such 12-month period unless such 12-month
period constitutes a fiscal year, in which latter event said
statements shall be furnished within 90 days after the expiration
of such 12-month period;
(p) cause (i) all the Registrable Securities covered by
such registration to be listed on the principal securities
exchange on which similar securities issued by the Company are
then listed (if any), if the listing of such Registrable
Securities is then permitted under the rules of such exchange,
(ii) if no similar securities are then so listed or if the
listing of such Registrable Securities is then not permitted
under the rules of such exchange, to either cause all such
Registerable Securities to be listed
on the New York Stock Exchange ("NYSE"), if the listing of such
Registrable Securities is then permitted under the rules of the
NYSE, or (iii) if the listing of such Registrable Securities is
not permitted under the rules of the NYSE, secure designation of
each such Registrable Security as a National Association of
Securities Dealers, Inc. ("NASD") Automated Quotation System
("NASDAQ") "national market system security" within the meaning
of Rule 11Aa 2-1 under the Exchange Act or, failing that, secure
NASDAQ authorization for such shares and, without limiting the
generality of the foregoing, take all actions that may be
required by the Company as issuer of such Registerable Securities
in order to facilitate the managing underwriter's arranging for
the registration of at least two market makers as such with
respect to such shares with the NASD;
(q) provide and cause to be maintained a transfer agent and
registrar for all Registerable Securities covered by each
Registration Statement not later than the effective date thereof;
and
(r) prior to the filing of the Registration Statement, any
Prospectus or any other document that is to be incorporated by
reference into the Registration Statement or the Prospectus after
initial filing of the Registration Statement, provide copies of
each such document to counsel to the selling holders of
Registrable Securities and to the managing underwriters, if any;
make the Company's representatives available, at reasonable times
and upon reasonable prior notice, for discussion of such
document; and make such changes in such document prior to the
filing thereof as counsel for such selling holders or
underwriters may reasonably request.
The Company may require each seller of Registrable Securities as to
which any Registration is being effected to furnish to the Company in
writing or orally as the Company may request, such information
regarding such seller and the proposed distribution of such securities
as the Company may from time to time reasonably request in writing.
Each holder of Registrable Securities agrees that upon receipt of
notice from the Company of the happening of any event of the kind
described in subparagraph (c)(ii), (iii) (iv) or (v) of this Section
5.3, such holder of Registrable Securities will forthwith discontinue
disposition of Registrable Securities (but in the case of subparagraph
(c)(iv) of this Section 5.3, only in the applicable jurisdiction or
jurisdictions, as the case may be) pursuant to the Registration
Statement until such holder of Registrable Securities has
received copies of the supplemented or amended Prospectus as
contemplated by paragraph (k) of this Section 5.3, or until it has
been advised in writing (the "Advice") by the Company that the use of
the Prospectus may be resumed, and has received copies of any
additional or supplemental filings that are incorporated by reference
in the Prospectus. If so directed by the Company, such holder of
Registrable Securities will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies then in such
holder of Registrable Securities's possession), of the Prospectus
covering such Registrable Securities which is current at the time of
receipt of such notice. In the event the Company shall give any
notice of the happening of any event of the kind described in
subparagraph (c)(ii), (iii) or (v) of this Section 5.3, the 120-day
period referred to in paragraph (b) of this Section 5.3 shall be
extended by the number of days during the period from the date of the
giving of such notice to the date when each seller of Registrable
Securities covered by such Registration Statement shall have received
either the copies of the supplemented or amended Prospectus
contemplated by paragraph (k) of this Section 5.3 or the Advice (as
the case may be), both dates inclusive.
5.4 Restrictions on Public Sale. Each holder of Registrable
---------------------------
Securities whose Registrable Securities are included in a Registration
Statement agrees not to effect any public sale or distribution of the
securities of the Company, of the same or similar class or classes as
the securities included in such Registration Statement or any
securities convertible into or exchangeable or exercisable for such
securities, including a sale pursuant to Rule 144, during the 15-day
period prior to, and during the 90-day period beginning on, the
effective date of such Registration Statement (except as part of such
Registration), if and to the extent requested by the Company in the
case of a non-underwritten public offering, or if and to the extent
requested by the managing underwriter or underwriters, in the case of
an underwritten public offering.
5.5 Other Registrations. The Company agrees not to effect any
-------------------
public sale or distribution of any securities similar to the
Registrable Securities being registered, or any securities convertible
into or exchangeable or exercisable for such securities during the 15-
day period prior to, and during the 120-day period beginning on, the
effective date of any Registration Statement filed in connection with
a Demand made pursuant to Section 5.1(a).
5.6 Registration Expenses. Expenses incident to Registrations
---------------------
pursuant to this Article V shall be borne as follows:
(a) all expenses incident to the Company's performance of
or compliance with this Agreement ("Registration Expenses") and
the fees and expenses of one law firm and one accounting firm
retained by the holders of a majority of Registrable Securities
included in any registration (which selection shall be made in
consultation with the Selling Shareholders) will be borne by the
Company. Registration Expenses shall include, without
limitation, all registration and filing fees, the fees and
expenses of the counsel and accountants for the Company
(including the expenses of any "cold comfort" letters), all other
costs and expenses of the Company incident to the preparation,
printing and filing under the Act of the Registration Statement
(and all amendments and supplements thereto) and furnishing
copies thereof and of the Prospectus included therein, the costs
and expenses incurred by the Company in connection with the
qualification of the Registrable Securities under the state
securities or "blue sky" laws of various jurisdictions, the costs
and expenses associated with filings required to be made with the
National Association of Securities Dealers, Inc., the costs and
expenses of listing the Registrable Securities for trading on a
national securities exchange or authorizing them for trading on
the NASDAQ National Market System, and all other costs and
expenses incurred by the Company in connection with any
Registration hereunder. Notwithstanding the preceding sentence,
Registration Expenses shall not include the costs and expenses of
any holder of Registrable Securities for underwriters'
commissions and discounts, brokerage fees and transfer taxes with
respect to the holder of Registrable Securities to be Transferred
pursuant to the Registration, or the fees and expenses of any
other counsel, accountants or other representatives retained by
any holder of Registrable Securities (other than the law firm and
accounting firm specifically discussed in this Section 5.6(a),
all of which shall be paid by the respective holder of
Registrable Securities who are selling Registrable Securities
pursuant to the Registration;
(b) if the holders of Registrable Securities possessing, in
the aggregate, a majority of the Registrable Securities covered
by a Registration Statement which has been filed (or which the
Company notifies such holders it is prepared to file within five
days) pursuant to Section 5.1(a), but has not yet become
effective, shall request the
Company to withdraw (or to cease the preparation of) such
Registration Statement, the Company shall use its best efforts to
withdraw (or cease the preparation of) such Registration
Statement; provided, however, that if prior to the date which is
180 days after the date on which the Registration Statement was
withdrawn or the preparation thereof was ceased, the holders of
90% of the Registrable Securities covered by such Registration
Statement may thereafter request the Company to refile (or to
recommence the preparation of) such Registration Statement, if
permitted under the Act, the Company shall use its best efforts
to do so, and such Registration Statement shall not constitute a
second Demand pursuant to Section 5.1; provided further, that as
a condition to any such request, such holders of the Registrable
Securities shall agree in writing to reimburse the Company for
all Registration Expenses over and above those which the Company,
by proceeding, would have incurred had such initial Registration
Statement not been withdrawn (or the preparation thereof ceased).
Except as provided above, in any offering initiated as a Demand
Registration pursuant to Section 5.1(a), the Company shall pay
all Registration Expenses in connection therewith, whether or not
the Registration Statement relating thereto becomes effective.
5.7 Indemnity and Contribution. The parties shall be entitled
--------------------------
to indemnity and contribution in connection with Registrations, as
follows:
(a) the Company agrees to indemnify each holder of
Registrable Securities, its officers, directors and agents and
each Person who (within the meaning of the Act) controls such
holder of Registrable Securities, and hold them harmless against,
all losses, claims, damages, liabilities and expenses (which,
subject to the limitations herein contained, shall include
reasonable attorneys' fees) resulting from (i) any untrue or
alleged untrue statement of a material fact contained in any
Registration Statement, Prospectus or preliminary Prospectus or
based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading (except insofar as the same are
caused by any such untrue statement or alleged untrue statement
or omission or alleged omission being based upon or contained in
any information relating to such holder of Registrable Securities
furnished in writing to the Company by such holder of Registrable
Securities or his, her
or its representatives expressly for use therein or by such
holder of Registrable Securities' or such holder of Registrable
Securities' agent's failure to deliver a copy of the Registration
Statement or Prospectus or any amendments or supplements thereto
after the Company has furnished such holder of Registrable
Securities with a sufficient number of copies of the same), or
(ii) the Company's failure to perform its obligations under this
Section 5.7. The Company will also indemnify underwriters,
selling brokers, dealer managers and similar securities industry
professionals participating in the distribution, their officers
and directors and each Person who (within the meaning of the Act)
controls such Persons, to the same extent as provided above with
respect to the indemnification of the holders of Registrable
Securities. Notwithstanding the foregoing, the Company shall not
be obligated to indemnify any holder of Registrable Securities
(including the indemnified parties related to such holders) with
respect to any losses, claims, damages, liabilities or expenses
to the extent the same result from the breach by such holder of
the agreements set forth in the last paragraph of Section 5.3;
(b) in connection with any Registration in which any holder
of Registrable Securities is participating, each such holder of
Registrable Securities will furnish to the Company in writing
such information with respect to such holder of Registrable
Securities as the Company reasonably requests for use in
connection with any Registration Statement or Prospectus, and
such holder of Registrable Securities shall indemnify the
Company, its directors and officers, each underwriter and each
Person who (within the meaning of the Act) controls the Company
or any such underwriter, and hold them harmless, against any
losses, claims, damages, liabilities and expenses (which, subject
to the limitations herein contained, shall include reasonable
attorneys' fees) resulting from (i) a breach by such holder of
Registrable Securities of the provisions of the last paragraph of
Section 5.3, (ii) any untrue statement of a material fact or any
omission to state a material fact required to be stated therein
or necessary to make the statements in the Registration Statement
or Prospectus or preliminary Prospectus or any amendment or
supplement thereto, in light of the circumstances under which
they were made, not misleading, to the extent (but only to the
extent) that such untrue statement or omission is contained in
any information relating to such holder of Registrable Securities
so furnished in writing by such holder of Registrable Securities
or his, her or its representative specifically
for inclusion therein, or (iii) such holder of Registrable
Securities' failure to perform his obligations under this Section
5.7; provided, however, that the liability of each holder of
Registrable Securities under this Section 5.7(b) shall be limited
to the amount of net proceeds received by such holder in the
offering giving rise to such liability. The Company shall be
entitled to receive customary indemnities from underwriters,
selling brokers, dealer managers and similar securities industry
professionals participating in the distribution, with respect to
information with respect to such Persons so furnished in writing
by such Persons or their representatives specifically for
inclusion in any Prospectus or Registration Statement;
(c) any Person entitled to indemnification hereunder will:
(i) give prompt written notice to the indemnifying
party after the receipt by the indemnified party of a
written notice of the commencement of any action, suit,
proceeding or investigation or any threat thereof made in
writing for which such indemnified party will claim rights
of indemnification or contribution pursuant to this Section
5.7; provided, however, that the failure of any indemnified
party to give notice as provided herein shall not relieve
the indemnifying party of its obligations under paragraphs
(a) and (b) next above, except to the extent that the
indemnifying party is actually prejudiced by such failure to
give notice; and
(ii) unless in such indemnified party's reasonable
judgment a conflict of interest may exist between such
indemnified and indemnifying parties with respect to such
claim, permit such indemnifying party to unconditionally
(but subject to the exceptions herein contained) assume the
defense of such claim with counsel reasonably satisfactory
to the indemnified party.
If the defense is so assumed by the indemnifying party, the
indemnifying party shall lose its right to defend and settle the
claim if it fails to proceed diligently and in good faith with
the defense of the claim. If the defense of the claim is not so
assumed by the indemnifying party, or if the indemnifying party
shall lose its right to defend and settle the third party claim
as provided in the previous sentence,
the indemnified party shall have the right to defend and settle
the claim provided that the indemnified party gives the
indemnifying party not less than 10 days prior written notice of
any proposed settlement. If the defense is assumed by the
indemnifying party and is not lost as provided above, subject to
the provisions of the following sentence, the indemnifying party
shall have the right to defend and settle the claim.
Notwithstanding the preceding sentence, (A) in connection with
any settlement negotiated by a party pursuant to this Section
5.7(c) (a "Settling Party"), the other party (the "Other Party")
shall not be required by a Settling Party (x) to enter into any
settlement that does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such Other Party and
the Company of a release from all liability in respect of such
claim or litigation, (y) to enter into any settlement that
attributes by its terms liability to the Other Party and the
Company, or (z) to consent to the entry of any judgment that does
not include as a term thereof a full dismissal of the litigation
or proceeding with prejudice and (B) the Company shall be
required to consent to the terms of any such settlement (which
consent shall not be unreasonably withheld). An indemnifying
party who is not entitled to, or elects not to, assume the
defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel in any one jurisdiction for all
parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified
party a conflict of interest may exist between such indemnified
party and any other of such indemnified parties with respect to
such claim, in which event the indemnifying party shall be
obligated to pay the fees and expenses of such additional counsel
or counsels;
(d) if for any reason the rights of indemnification
provided for in paragraphs (a) and (b) of this Section 5.7 are
unavailable to an indemnified party as contemplated by such
paragraphs (a) and (b), then the indemnifying party in lieu of
indemnification shall contribute to the amount paid or payable by
the indemnified party (which, subject to the limitation provided
in paragraph (c) next above, shall include legal fees and
expenses paid) as a result of such loss, claim, damage, liability
or expense (i) in such proportion as is appropriate to reflect
the relative fault of the indemnified party and the indemnifying
party as well as other equitable considerations, or (ii) if the
allocation provided by clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the
relative benefits received by the indemnified party and the
indemnifying party, but also the relative fault of the
indemnified party and the indemnifying party, as well as any
other relevant equitable considerations;
(e) the Company and the holder of Registrable Securities
agree that it would not be just and equitable if contribution
pursuant to paragraph (d) next above were determined by pro rata
allocation or other method of allocation which does not take
account of equitable considerations. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f)
of the Act) shall be entitled to contribution from any Person not
guilty of such misrepresentation. The obligations of the holders
of Registrable Securities to contribute pursuant to paragraph
5.7(d) are several and not joint;
(f) if indemnification is available under this Section 5.7,
the indemnifying parties shall indemnify each indemnified party
to the full extent provided in paragraphs (a) and (b) hereof
without regard to (x) the relative fault of, and the relative
benefit received by, the indemnifying party or indemnified party
or (y) any other equitable considerations.
5.8 Rule 144. Once the first registration statement filed by
--------
the Company under the Act (other than any registration statement on
Form S-4 or S-8 or any form substituting therefor) has become
effective, the Company will file the reports required to be filed by
it pursuant to the Act and the Exchange Act, and the rules and
regulations adopted by the Commission thereunder, and will take such
further actions as any holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such
holder of Registrable Securities to effect sales of Registrable
Securities without registration under the Act within the limitations
of the exemption provided by Rule 144, if applicable to the sale of
Registrable Securities, or any similar rule or regulation hereafter
adopted by the Commission. At any reasonable time and upon request of
a holder of Registrable Securities, the Company will deliver to that
holder of Registrable Securities a written statement as to whether it
has complied with such informational requirements. Notwithstanding
the foregoing, upon thirty (30) days prior written notice to all
holders of Registrable Securities, the Company may deregister any
class of its equity securities under Section 12 of the Exchange Act or
suspend its duty to file reports with respect to any class of its
securities pursuant to Section 15(d) of the Exchange Act if it is then
permitted to do
so pursuant to the provisions of the Exchange Act and the rules and
regulations thereunder.
5.9 Participation in Underwritten Registrations. No holder of
-------------------------------------------
Registrable Securities may participate in any underwritten
Registration hereunder unless such holder of Registrable Securities
has:
(a) agreed to sell its Registrable Securities on the basis
provided in any underwriting arrangements approved by the Persons
entitled hereunder to select the underwriter pursuant to Sections
5.1 and 5.2 above; and
(b) accurately completed in a timely manner and executed
all questionnaires, powers of attorney, underwriting agreements
and other documents customarily required under the terms of such
underwriting arrangements.
5.10 Other Registration Rights. Except as granted herein to the
-------------------------
holder of Registrable Securities, the Company will not grant any
Person (including the holders of Registrable Securities) any demand or
piggyback registration rights with respect to the shares of common
stock of the Company (or securities convertible into or exchangeable
for, or options to purchase, shares of common stock of the Company),
other than piggyback registration rights that are not inconsistent
with the terms of this Article V. Any right to prior or pro rata
inclusion in a Registration Statement with the Registrable Securities
entitled to the benefits of this Article V shall be deemed to be
inconsistent with the terms of this Article V. Except as provided in
Section 5.1(c), the Company shall not grant to any Person the right to
piggyback on a Demand Registration.
5.11 Amendments and Waivers. The provisions of Sections 5.1-5.11
----------------------
of this Article V, including the provisions of this sentence, may not
be amended, modified or supplemented, and waivers of or consents to
departures from the provisions hereof may not be given, unless such
amendment, modification, supplement, waiver or consent shall have been
approved by not less than 2/3 of the members of the Board of Directors
and the Shareholders and holders of Warrants in accordance with
Section 7.5. Notwithstanding the foregoing:
(a) an amendment, modification, supplement, waiver or
consent to departure from the provisions hereof with respect to a
matter that relates exclusively to the rights of holders of
Registrable Securities whose Registrable Securities are being
sold pursuant to a Registration
Statement, that relates to the Registrable Securities being so
sold, and that does not directly or indirectly affect the rights
of the other holders of Registrable Securities or Registrable
Securities not being so sold, may be given by the holders of a
majority of the Registrable Securities being sold by such holder
of Registrable Securities; and
(b) no amendment, modification, supplement, waiver or
consent to the departure from its terms with respect to Section
5.7 shall be effective with respect to any Registration against
any holder of Registrable Securities who participated in such
Registration and is entitled to its protection unless consented
to in writing by such holder.
5.12 Co-Sale Right. No Investor (including, without limitation,
-------------
any of its Exempt Transferees) may accept one or more Third Party
Offers solicited by or for it pursuant to Section 2.7 involving a
Transfer (alone or with other Investors and/or Exempt Transferees), in
a single transaction or a series of transactions, of a number of
Shares in excess of 33-1/3% of the aggregate number of Shares owned by
such Investor as of the date hereof (subject to adjustment for stock
dividends, stock splits, reclassifications, or like actions and
including, for purposes of this calculation, all Shares previously
Transferred or to be Transferred by such Investor (and its Exempt
Transferees) pursuant to Sections 2.2(d) or 2.7 of this Agreement)
unless each Shareholder and each of the holders of Warrants (so long
as such Warrants are exercisable) has been offered an equal
opportunity to participate in such transaction or transactions, on the
terms set forth in this Section 5.12. In order to effectuate the
foregoing:
(a) the Investor proposing to make such a Transfer or
Transfers shall deliver a written notice ("Co-Sale Notice") to
the Company, prior to making any Transfer of Shares. The Co-Sale
Notice shall state such Investor's bona fide intention to
Transfer Shares, the number of Shares to be Transferred, the
expected closing date of the transaction, the identity of the
potential transferee, the consideration per Share to be
Transferred, confirmation that the Transferee has been informed
of the provisions of this Section 5.12 and has agreed to purchase
the Shares proposed to be sold in accordance with the terms
hereof and, if applicable, a description of all Transfers in
which such Investor and its Exempt Transferees have participated
or in which it and/or its Exempt Transferees have agreed to
participate within the prior six months. In the event that the
restrictions upon Transfer contained in this Section
5.12 are applicable to the Transfer with respect to which such
Co-Sale Notice has been delivered, the Company shall promptly
deliver a copy of such Co-Sale Notice to each Shareholder and the
holders of Warrants;
(b) each Shareholder and (so long as such Warrants are then
exercisable) the holder of any Warrant may elect to participate
in the proposed Transfer by delivering written notice (the
"Election Notice") to the Company and the Investor who served the
Co-Sale Notice within 15 days next following the date of service
of the Co-Sale Notice, setting forth the number of Shares
(including, without limitation, Warrant Shares) which such
Shareholder has elected to sell to the Transferee. Each
Shareholder and holders of Warrants (so long as such warrant is
exercisable) shall have the right to sell up to a number of
Shares which bears the same ratio to the number of Shares owned
by such Shareholder (or Warrant Shares that would be owned by
such holder of the Warrant upon the exercise in full of the
Warrant) as the number of Shares to be sold by the Investors who
served the Co-Sale Notice to the Transferee in the transaction or
transactions bears to the aggregate number of Shares then owned
by such Investors. The number of Shares which such Investors
would otherwise sell to the Transferee shall be reduced by the
aggregate number of Shares as to which the Shareholders and
holders of Warrants have delivered Election Notices;
(c) each Shareholder delivering an Election Notice shall
deliver to the Transferee at a closing to be held at the
executive office of the Company (or as the parties agree), one or
more certificates, properly endorsed for Transfer, which
represent the number of Shares which such Shareholder shall have
elected to Transfer, and may Transfer, pursuant to this Section
5.12. Such certificates shall be Transferred by each such
Shareholder to the Transferee upon consummation of the Shares
being Transferred by the Shareholders who served the Co-Sale
Notice, on the terms set forth in the Co-Sale Notice, and such
Shareholders shall be entitled to receive the proceeds of the
Transfer in respect of such certificates. At such time, each
holder of Warrants delivering an Election Notice shall deliver to
the Transferee (i) one or more certificates for Warrant Shares,
properly endorsed for Transfer, which represent the number of
Shares which such holder of Warrants shall have elected to
Transfer, and may Transfer, pursuant to this Section 5.12; or
(ii) an unconditional agreement to exercise the Warrant and
deliver such sufficient number of Warrant Shares
simultaneously with the consummation of the Shares being
Transferred by the Shareholder who served the Co-Sale Notice
against delivery to such holder of payment therefore provided
that any holder of Warrants shall not be required to exercise
Warrants except simultaneously with such Transfer and only to the
extent that Warrant Shares are included in such Transfer;
(d) as a condition to the effective exercise of an Election
Notice, a Shareholder or holder of Warrants delivering an
Election Notice shall join in and agree to be bound by all
provisions of the documents pursuant to which the Transferee is
to acquire Shares, including without limitation, the making of
representations, warranties and indemnities.
The foregoing provisions of this Section 5.12 shall not apply in the
case where an Investor is making a Transfer of Shares to such
Investors' Exempt Transferees.
5.13 Preemptive Rights. Subject to the provisions of Section
-----------------
5.14, each Shareholder and each holder of Warrants (so long as the
Warrant is then exercisable) shall have the preemptive right to
subscribe for any class of Securities now or hereafter authorized
which the Company proposes to issue or sell, such right to be
exercisable, with respect to such Shareholder and holder of Warrants
for an aggregate amount of such class of Securities up to the product
of (x) the amount of such class of Securities to be issued and (y) a
fraction, the numerator of which shall equal the number of Shares (on
a fully diluted basis after assuming the exercise or conversion of all
outstanding Options (to the extent such Options have vested in
accordance with its terms), warrants and convertible securities) then
held by such Shareholder and holder of Warrants (whether now held or
hereafter acquired), and the denominator of which shall equal the
aggregate number of Shares then outstanding (on a fully diluted basis
after assuming the exercise or conversion of all outstanding Options
(to the extent such Options have vested in accordance with its terms),
warrants and convertible securities) provided, however, that the
-----------------
foregoing provisions of this sentence shall not apply to (i) the
issuance of Shares pursuant to the exercise of Options, warrants
including, without limitation, the Warrants or conversion rights, or
(ii) the issuance of Shares as consideration in connection with the
acquisition of any business.
5.14 Certain Provisions with respect to GE Capital. In addition
---------------------------------------------
to its other rights and obligations under this
Agreement, GE Capital shall have the following additional rights and
obligations:
(a) Rights to Equity Securities:
---------------------------
(i) Issuance Notice. In the event the Company shall
intend to raise capital through the issuance of equity Securities
not involving any public offering registered under the Act, the
Company shall give written notice to G.E. Capital (an "Issuance
Notice"). The Issuance Notice shall describe the type of equity
Securities that the Company intends to issue and the aggregate
amount to be raised by such offering. During the thirty (30) day
period commencing on the date of service of the Issuance Notice,
GE Capital shall have the right to offer to purchase the GE
Amount (as defined in Section 5.14(a)(v)) (but not less than the
GE Amount) of the securities described in the Issuance Notice by
delivering a notice (the "GE Capital Notice") to the Company
setting forth GE Capital's offer (the "GE Capital Offer") to
purchase such Securities, which shall include the price per
Security at which GE Capital offers to purchase such Securities
and the aggregate total price of the Securities that GE shall
purchase. Each GE Capital Notice shall provide that the GE
Capital Offer set forth therein is irrevocable for a period of
thirty (30) days from the date upon which such GE Capital Notice
is delivered to the Company.
(ii) Actions Following Service of the GE Capital
Notice. During the ten (10) day period following service of
the GE Capital Notice, GE Capital and the Company shall negotiate
in good faith with respect to the GE Capital Offer. Within five
(5) days after such ten (10) day period has concluded, the
Company may either (i) accept the GE Capital Offer or (ii) reject
such offer by written notice to GE Capital. If the Company fails
to deliver a written notice pursuant to the preceding sentence
within said five (5) day period, the Company shall be deemed to
have rejected the GE Capital Offer.
(iii) Acceptance of the GE Capital Offer. If the
Company accepts the GE Capital Offer, The GE Amount of such
Securities (or such amount as the parties agree) shall be issued
to GE Capital pursuant to the terms of such offer, and Section
5.13 shall not apply to the issuance of such Securities. Any
purchase of Securities in connection with a GE Capital Offer
shall be consummated at the Company's principal office at 10:00
a.m., prevailing local time, as
soon as practicable, but in no event later than the later of (i)
the date which is 40 days after the date on which such GE Capital
Offer was accepted (or deemed accepted) by the Company or (ii)
the third business day following the earlier of the expiration or
early termination of the waiting period under the HSR Act, if
notification of the purchase of Securities would be required
under the HSR Act, or at such other place and time as the Company
and GE Capital shall agree. At such closing, the Company shall
deliver to GE Capital certificates representing the Securities
being purchased, duly endorsed, and GE Capital shall pay for such
Securities by wire transfer of immediately available funds.
(iv) Rejection of the GE Capital Offer. If (A) the
GE Capital Offer is rejected by the Company, (B) no GE Capital
offer is made by GE Capital, or (C) the GE Capital Offer,
although accepted by the Company, does not cover all of the
equity Securities described in the Issuance Notice, then, for a
period of 180 days after (x) the rejection of such offer in the
case of clause (A) above, (y) the termination of the 30 day
period after delivery by the Company of the Issuance Notice in
the case of clause (B) above, or (z) the acceptance by the
Company of such offer in the case of clause (C) above, the
Company may, subject to Section 5.13, issue to any Person the
number and type of equity Securities described in the Issuance
Notice but not being issued to GE Capital pursuant to this
Section 5.14(a)(iv). Such issuance shall be at price per unit of
such Security which is not less than 95% of the price per unit of
such Security set forth in the GE Capital Notice (or at any price
should no GE Capital Offer be made), and the price therefor shall
be payable to the Company in cash.
(v) Limitations. Notwithstanding the provisions of
this Section 5.14(a), (x) the foregoing right granted to GE
Capital shall apply only to the first $3,000,000 of equity
Securities which the Company shall desire to issue after the date
hereof (which shall exclude Securities issuable pursuant to the
exercise or conversion of Securities of the Company issued on or
before the date hereof (including, without limitation, the
Options or Warrants)), and (y) the Company shall have no
obligations under this Section 5.14(a) if the Company is
proposing to issue Shares at a price per Share which is less than
$1,600 (as such price shall be adjusted to take into account the
effect of stock splits, stock dividends, reclassifications and
other changes to the equity capital of the Company) (a "Section
5.14(a)(v)(y) Issuance"). In the event the Company
shall be offering or issue less than $3,000,000 of equity
Securities in connection with such capital raise, GE Capital
shall have the rights described above in connection with any
subsequent issuance of equity Securities in a manner not
involving a public offering registered under the Act, on the
terms and subject to the limitations set forth in the preceding
portions of this Section 5.14(a), but only in an amount equal to
the amount by which $3,000,000 exceeds the aggregate issuance
price of the equity Securities issued during the prior capital
raise(s) by the Company (other than Section 5.14(a)(v)(y)
Issuances). Once the Company shall have raised a total of
$3,000,000 through the issuance of equity Securities after the
date hereof, whether through issuances to GE Capital or otherwise
(but other than through Section 5.14(a)(v)(y) Issuances), GE
Capital shall no longer have any rights under this Section
5.14(a). For purposes of this Section 5.14(a) the "GE Amount"
shall equal the lesser of (A) the aggregate amount to be raised
by the offering of Securities set forth in the Issuance Notice;
and (B) $3,000,000 less amounts raised by the Company in
issuances of equity securities described in this Section
5.14(a)(v) (to GE Capital or otherwise, but other than through
Section 5.14(a)(v)(y) Issuances).
(b) Significant Transactions. In the event the Company or
------------------------
the Investors (other than GE Capital) shall propose to engage in
a Significant Transaction (as herein defined), the Company or
such Investors shall provide GE Capital written notice of such
intention, describing the Significant Transaction. GE Capital
shall have twenty (20) business days to perform due diligence and
to provide the Company or such Investors (as the case may be)
with the highest price it is willing to pay for a comparable
Significant Transaction. GE Capital may make a proposal with
respect to a comparable Significant Transaction within such
twenty (20) day period. Following the receipt of such proposal
(if any), the Company shall have ten (10) business days in which
to accept or reject GE Capital's proposal. During such ten (10)
business day period, the Company and the other Investors shall
negotiate with GE Capital in good faith with respect to such
proposal, provided, however, that the Company or the Investors
shall in no circumstances be required to negotiate for any period
longer than 10 business days. In the event that the Company or
said Investors (as the case may be) accepts GE Capital's offer,
the Company (or said Investors, as the case may be) shall work in
good faith to close such transaction as quickly as possible. In
the event the Company or said Investors (as the case may be)
rejects GE Capital's offer (or should GE Capital make no proposal
in the above described twenty (20) day period), the Company or
said Investors shall be free to engage in the proposed
Significant Transaction. For the purposes of this paragraph (b),
a Significant Transaction shall mean a transaction where: (i)
the Company shall consolidate or merge with any other corporation
or entity not a Subsidiary or other Company Affiliate pursuant to
a transaction in which the Shareholders of the Company
immediately prior to such merger or consolidation shall own less
than 50% of the outstanding voting Securities of the surviving
corporation, (ii) there occurs a transfer or lease all or
substantially all of the Company's and its Subsidiaries' assets
to any Person other than the Company, a Subsidiary or other
Company Affiliate, or (iii) any Person not a Subsidiary or other
Company Affiliate shall purchase or otherwise acquire directly or
indirectly the beneficial ownership of Shares and immediately
following such purchase or acquisition such Person and its
affiliates shall directly or indirectly own in the aggregate 50%
or more of the Shares then outstanding.
5.15 Pull-Along Right. In the event the CDA Funds (and its
----------------
Exempt Transferees) and either (i) Pegasus (and its Exempt
Transferees) or (ii) GE Capital (and its Exempt Transferees) (or all
of them) (such Investors and their respective Exempt Transferees, the
"Pull-Along Investors") desire to Transfer all or substantially all of
the Shares owned by the Pull-Along Investors to a purchaser or related
group of purchasers in a single or related series of transactions who
are not any of the Pull-Along Investors for a consideration consisting
of cash and/or publicly traded securities, the Pull-Along Investors
shall have the right to require all the Shareholders and holder(s) of
Warrants to Transfer to such purchaser or related group of purchasers
the same proportion of the Shares owned by such Shareholders (or, in
the case of Warrants, such number of Warrant Shares such holder would
own had the Warrant been fully exercised) as the proportion of the
Shares owned by the Pull-Along Investors (including each of their
Exempt Transferees) which are being Transferred in such transaction or
related series of transactions, at the same price and on the same
terms and conditions as those which apply with respect to the Shares
which the Pull-Along Investors intend to Transfer; provided, that the
holders of Warrants shall not be required to exercise Warrants except
simultaneously with such Transfer.
5.16 Special Provisions Applicable to Warrants and Warrant
-----------------------------------------------------
Shares. Notwithstanding anything to the contrary contained in
------
Sections 5.12, 5.15, or 6.5, no provision of such Sections shall
------------- ---- ---
require a holder of Warrants to make any representations (other than
representations as to title, due authorization and enforceability
relating solely to such holder) or provide any indemnification to the
purchaser(s) under such Sections (other than with respect to the above
matters) in any agreement requested or required to be executed by such
holder in connection with any Transfer under such Sections and no
right of such holder to participate in any Transfer under such
Sections shall be conditioned upon the making of such representations
or the provision of such indemnification other than those set forth in
this Section 5.16. If the consideration proposed to be paid in any
such Transfer consists of capital stock or other equity interests, and
receipt by a holder of a Warrant of all or any portion of such stock
or other equity interests would result in a violation of applicable
law, the Investors or the Pull-Along Investors, as the case may be,
shall provide that the purchaser, the Investors, Pull-Along Investors,
or the Company as applicable, shall, simultaneously with the
consummation of the Transfer, purchase for cash, at fair market value,
the capital stock or other equity interest to which the applicable
holder of a Warrant would be entitled absent this provision.
5.17 Payment. At the closing of any Transfer pursuant to Section
------- -------
5.12 or 5.15, the consideration with respect to the Shares, Warrants
---- ----
and Warrant Shares of any holder sold pursuant thereto shall be paid
directly to each holder pursuant to written instructions of such
holder. The Investors or Pull-Along Investors shall furnish such
other evidence of the completion and time of completion of such
Transfer and the terms thereof as shall be reasonably requested by
each Shareholder or holder of a Warrant or Warrant Shares.
ARTICLE VI
-----------
Certain Corporate Governance Matters
-------------------------------------
6.1 Grant of Proxy. Each Individual Fund Shareholder shall, and
--------------
does hereby, irrevocably appoint CDA IV Domestic, his or her true and
lawful proxy, with full power of substitution, to vote all Shares (now
or hereafter) acquired by him on all matters requiring a vote of
Shareholders of the Company, hereby ratifying all actions which said
proxy may take in respect thereof. Said proxies shall be coupled with
an interest and be irrevocable, notwithstanding any Transfer,
including, without limitation, to a Permitted Transferee pursuant to
Section 2.2(a) hereof, of the Individual Fund Shareholder's Shares.
The foregoing proxy shall remain in effect with respect to, and be
binding upon, all transferees of such Shares, including, without
limitation, a
Permitted Transferee of Individual Fund Shareholders pursuant to
Section 2.2(a) hereof.
6.2 Board of Directors.
------------------
(a) Subject to Section 6.6 hereof, from and after the date
hereof and until the provisions of this Article VI cease to be
effective, each Shareholder (other than a holder of Warrant
Shares with respect to such Warrant Shares) shall vote all of
such Shareholder's Shares and take all other necessary or
desirable actions within such Shareholder's control (whether in
such Shareholder's capacity as a stockholder, director, member of
a Board of Directors committee, officer of the Company or
otherwise, including, without limitation, attendance at meetings
in person, by telephone or by proxy for purposes of obtaining a
quorum, execution of written consents in lieu of meetings and
amendments of the Company's Bylaws and Certificate of
Incorporation), and the Company shall take all necessary and
desirable actions within its control (including, without
limitation, calling special Board of Directors and stockholder
meetings for purposes of amendments of the Company's Bylaws and
Articles of Incorporation), so that:
(i) the authorized number of members of the Board of
Directors shall be six;
(ii) the Shareholders shall elect two nominees selected
by the CDA Funds, one nominee designated by Pegasus I, one
nominee designated by GE Capital and two nominees designated
by the Management Shareholders (who shall be ▇▇▇▇▇ (so long
as ▇▇▇▇▇ shall remain as an employee of the Company or any
of the Subsidiaries) and ▇▇▇▇▇▇▇▇ (so long as ▇▇▇▇▇▇▇▇
remains an employee of the Company or any of the
Subsidiaries). At such time as either ▇▇▇▇▇ or ▇▇▇▇▇▇▇▇
ceases to be an employee of the Company or any Subsidiary,
the director formerly designated by such Management
Shareholder shall be appointed by the joint decision of CDA
IV Funds, GE Capital and Pegasus I;
(iii) the Shareholder having the right to designate a
member of the Board of Directors shall have the sole right
to remove that Person from the Board of Directors, for or
without cause, and to designate a replacement director;
(iv) in the event that any director designated by a
Shareholder pursuant hereto ceases to serve as a member of
the Board of Directors during his term of office, such
Shareholder shall have the right to designate a replacement
member of the Board of Directors to fill the resulting
vacancy;
(b) The Company shall pay the reasonable out-of-pocket
expenses incurred by each director in connection with attending
the meetings of the Board of Directors or discharging any of his
duties as a director of the Company, and the Company shall
indemnify each director to the fullest extent allowed by law in
respect of any liability, demands, claims, actions, causes of
action, assessments, losses, penalties, costs, damages or
expenses, including reasonable attorneys' fees, suffered as a
result of activities undertaken in his capacity as director;
(c) The right of an Investor to designate members of the
Board of Directors shall cease at such time that such Shareholder
owns less than 25% of the Shares owned by such Shareholder at the
date hereof. For the purposes of the preceding sentence, Shares
owned by an Exempt Transferee of an Investor shall be deemed to
be owned by the Investor which originally subscribed for them.
6.3 Board of Directors Attendance Rights. For as long as
------------------------------------
Pegasus owns at least 25% of the Shares owned by it on the date
hereof, Pegasus II shall have the right to designate one (1)
representative to attend, at Pegasus II's sole cost and expense, each
meeting of the Board of Directors, such notice to be provided at such
time as notice is given to members of the Board of Directors. At any
time during which any of the CDA Funds, Pegasus or GE Capital (each a
"Group") are not entitled to designate a member of the Board of
Directors and as long as such Group owns any Shares, such group shall
have the right to designate one (1) representative to attend, at such
Group's sole cost and expense, each meeting of the Board of Directors,
such notice to be provided at such time as notice is given to members
of the Board of Directors. The right granted to Pegasus II and the
Groups pursuant to this Section 6.3 shall include the right to
participate in such meetings, but does not include the right to vote
directly or through its representatives at any meeting of the Board of
Directors, and shall not limit the ability of the Board of Directors
to take action without a meeting to the extent permitted under the
Delaware General Corporation Law.
6.4 Certain Supermajority Requirements. Neither the Company nor
----------------------------------
any of its Subsidiaries shall take any of the following actions,
unless such actions shall have been approved:
(a) by (x) both members of the Board of Directors selected
by the CDA Funds and (y) the member of the Board of Directors
selected by Pegasus I, in the following instances:
(i) the payment of a dividend or other distribution
with respect to the Company's capital stock (including any
exercise of Repurchase Rights hereunder), other than by
reason of a Mandatory Repurchase Event;
(ii) the incurrence of indebtedness in an amount which
would result in the aggregate indebtedness of the Company
and its Subsidiaries for borrowed money exceeding
$120,000,000;
(iii) the creation of a lien or security interest in
any assets of the Company or any of its Subsidiaries other
than in the ordinary course of business;
(iv) the settlement of any claim or litigation
involving a settlement amount in excess of $1,000,000;
(v) [intentionally deleted];
(vi) [intentionally deleted];
(vii) acquisition of a business (whether by means of a
purchase of assets or shares, a merger or any other business
combination) involving a purchase price (including
indebtedness assumed or to which the business is subject) is
in excess of $5,000,000;
(viii) adoption of any employee benefit plan or any
stock option plan;
(ix) any issuance of capital stock, options, warrants
(other than the Warrant) and convertible securities (other
than pursuant to the exercise of the Warrant and of
previously authorized options, warrants and convertible
securities);
(x) any amendment to the certificate of incorporation
of the Company;
(xi) the filing of a petition for the Company or any
of its Subsidiaries under any chapter of the Bankruptcy
Code;
(xii) any material change in accounting policies or
methods;
(xiii) any replacement of the Company's independent
certified public accountants;
(xiv) the incurrence of capital expenditures in
excess of $500,000 over the amount budgeted for capital
expenditures in the applicable fiscal year in the budget
described in Section 6.4(b)(ii);
(xv) any transactions between (A) the Company or any
of its Subsidiaries, and (B) any Shareholder or any of its
Affiliates, other than employee compensation in the ordinary
course of business ; and
(xvi) any change in the number of the Board of
Directors.
(b) by members of the Board of Directors selected by at
least two of the following three Shareholder groups consisting of
(A) the Management Shareholders, as a group, (B) the CDA Funds,
as a group, and (C) Pegasus I in the following instances:
(i) the employment or termination of any employee of
the Company, Subsidiary or Company Affiliates whose title is
that of Vice President or higher;
(ii) the adoption of an annual budget for the Company
and the Subsidiaries;
(iii) the adoption of an expansion plan; or
(iv) the hiring of a financial advisor.
(c) Subject to Section 6.4(a), by members of the Board of
Directors selected by the CDA Funds and either (x) GE Capital or
(y) Pegasus I:
(i) a decision to propose to engage in a Significant
Transaction;
(ii) a transaction effecting a Significant
Transaction; provided, however, that if the Significant
Transaction involves GE Capital (or any Affiliate of GE
Capital) acquiring the Company pursuant to Section 5.14(b)
herein, the following shall also be required (x) if the
director selected by Pegasus I had not approved the decision
to propose to engage in such Significant Transaction as set
forth in Section 6.4(c)(i), the approval of the director
selected by Pegasus I shall also be required to consummate
the Significant Transaction; and (y) otherwise, the
affirmative consent of Shareholders (other than GE Capital
and its Exempt Transferees) holding a majority of the
outstanding Shares of the Company (excluding for purposes of
such calculation Shares held by GE Capital and its Exempt
Transferees) shall be required to consummate the Significant
Transaction; provided, further, however, that if the
Significant Transaction involves consideration other than
cash or publicly traded securities, the approval of the
director selected by Pegasus I and the director selected by
GE Capital shall also be required to consummate the
Significant Transaction.
6.5 Sale of the Company. Notwithstanding the provisions of
-------------------
Section 6.4, if after the third anniversary of the date of this
Agreement, either the members of the Board of Directors selected by
the CDA Funds, Pegasus, or GE Capital, desire that the Company make an
initial public offering of its Securities, and if the other such
Investors, are unwilling to approve such offering, the Investors shall
take such actions (subject to Section 5.14(b) herein) as are
reasonably necessary to effect a sale of the Company and its
Subsidiaries as a going concern, whether by means of a sale of Shares,
a merger, or a sale of assets. Such actions shall include, without
limitation, engagement of a financial advisor or investment banker who
shall be selected jointly by the Investors. All Shareholders and
holders of Warrants shall cooperate with the Investor who shall be
requiring the sale of the Company, including executing such documents
as may reasonably required therewith (which may contain
representations, warranties, covenants and indemnities which are
customarily given in connection with sales of businesses of the type
and size of the Company and the Subsidiaries).
6.6 Proviso. Notwithstanding any implication to the contrary,
-------
with respect to the Warrant Shares, the holders of the Warrants or
Warrant Shares shall not be required to vote such
Warrant Shares on any of the matters set forth in this Article VI.
ARTICLE VII
------------
Miscellaneous Provisions
-------------------------
7.1 Legend on Certificates. All certificates evidencing Shares
----------------------
which are subject to this Agreement shall bear the following legend:
"The sale, transfer and encumbrance of the shares
represented by this certificate are subject to that certain
DFG Holdings, Inc. Amended and Restated Shareholders
Agreement among the corporation and its shareholders, dated
as of August 8, 1996 (the "Agreement"). A copy of the
Agreement is on file in the office of the Secretary of the
corporation. No sale or other transfer of the shares
represented by this certificate may be effected except
pursuant to the terms of the Agreement. The Shares
represented by this certificate are subject to a voting
agreement contained in the Agreement."
Upon termination of this Agreement, certificates for Shares may be
surrendered to the Company in exchange for new certificates without
the foregoing legend. The Shareholders who previously were parties to
the Original Shareholders Agreement shall surrender their certificates
representing Shares for deletion of the legend required pursuant to
Section 7.1 of the Original Shareholders Agreement and addition of the
foregoing legend.
7.2 Financial Statements and Inspection Rights. The Company
------------------------------------------
shall promptly furnish or cause to be furnished to the Investors and
Management Shareholders (a) annual audited income statements, balance
sheets and related financial information and quarterly unaudited
consolidated income statements and balance sheets of the Company and
its Subsidiaries, (b) copies of all material notices and documents
supplied by the Company to its lenders and (c) such other information
as any Investor may reasonably request. Each Investor and Management
Shareholders or its representative shall have the right, at any time
during normal business hours, at its own expense and on reasonable
advance notice to the Company, to examine and make copies of or
extracts from the books of account and other records of the Company,
and to inspect the assets, properties, and operations of the Company
and to discuss matters with respect to the Company with employees and
lenders of the Company.
7.3 Confidentiality. Each Shareholder (other than the holders
---------------
of Warrant Shares who are Lenders pursuant to the Credit Agreement,
who shall be governed by the Credit Agreement) agrees not to divulge
or communicate to any other Person or use or exploit for any purpose
whatsoever any confidential information which it may acquire during
the continuance of this Agreement in relation to the business of the
Company and its Subsidiaries, except (i) with the prior written
consent of the other parties hereto, or (ii) as may be required by
law, applicable accounting or securities regulations or order of a
court of competent jurisdiction. For purposes of this Section, the
foregoing confidentiality requirement shall not apply to any
information which:
(a) is available to the general public at the time of use
or disclosure;
(b) becomes available to the general public (other than as
a result of unauthorized disclosure or use); or
(c) is provided to the disclosing party by a third party
who is lawfully in possession of such information and has a
lawful right to disclose or use it.
Each Shareholder shall cause its respective Affiliates, counsel,
accountants, consultants, employees, agents and representatives not to
disclose to any Person or use or exploit for any purpose whatsoever
any such information which it itself is prohibited from disclosing
pursuant to this Section 7.3.
7.4 Remedies. Each of the parties to this Agreement shall be
--------
entitled to enforce its rights under this Agreement specifically, to
recover damages and costs caused by any breach of any provisions of
this Agreement and to exercise all other rights existing in its favor.
In the event of a dispute hereunder, the prevailing party's reasonable
attorney's fees and costs shall be promptly reimbursed by the opposing
party or parties in such dispute. 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 any party may in
its sole discretion apply to any court of law or equity of competent
jurisdiction (without posting any bond or deposit) for specific
performance and/or other injunctive relief in order to enforce or
prevent any violations of the provisions of this Agreement.
7.5 Termination and Amendment of the Agreement. This Agreement
------------------------------------------
shall be terminated:
(a) with the approval of the Board of Directors and the
written consent of each of (i) Management Shareholders owning not
less than 90% of the aggregate number of issued and outstanding
Shares owned by all Management Shareholders as such and (ii) all
of the Investors; or
(b) upon the sale by the Company of substantially all of
its assets or a merger of the Company as a result of which the
Shareholders' aggregate collective percentage of ownership,
direct or indirect, of the surviving entity is less than 50% of
their percentage of ownership of the Company.
This Agreement may be amended by the Company with the written consent
of each of (i) Management Shareholders owning not less than 90% of the
aggregate number of issued and outstanding Shares owned by all
Management Shareholders as such and (ii) all of the Investors, but no
such amendment shall adversely affect the method of valuation of any
Management Shareholder's Shares for the purposes of Article III
without his consent or shall materially adversely affect the holders
of Warrants or Warrant Shares as a group without such holders consent.
For purposes of this Section 7.5, Shares owned by a Permitted
Transferee of a Management Shareholder shall be deemed to be owned by
the last Management Shareholder to own those Shares.
7.6 Termination of Status as Management Shareholder or Non-
------------------------------------------------------
Management Shareholder. Except to the extent that this Agreement
----------------------
shall provide that certain rights of an Investor granted herein shall
terminate if the number of Shares owned by such Investor and/or its
Exempt Transferees shall be reduced below a specified percentage of
the Shares owned by such Investor as of the date hereof, from and
after the date that a Management Shareholder or Investor (and/or its
Permitted Transferees and/or its Exempt Transferees), as the case may
be, ceases to own any Shares, he shall no longer be deemed to be a
Management Shareholder or Investor for purposes of this Agreement and
all rights he may have hereunder (including, without limitation, the
right to exercise any option herein granted) shall terminate. For the
purposes of this Section 7.6, Shares owned by a Permitted Transferee
or an Exempt Transferee shall be deemed to be owned by the last
Management Shareholder, or Investor, as the case may be, to own those
Shares.
7.7 Notices. All notices required hereunder shall be in writing
-------
and shall be deemed served when delivered personally to the person for
whom intended or two days after deposit in the United States Mail,
certified mail, return receipt requested or
refused, addressed to the Persons for whom intended at the following
respective addresses:
The Company:
DFG Holdings, Inc.
c/o Dollar Financial Group, Inc.
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Any Purchaser, Shareholder or holders of Warrants,
at the last known address of said Purchaser, Shareholder or
holder of Warrants, as the case may be, as disclosed by the
books and records of the Company,
and/or to such other persons and/or at such other addresses as may be
designated by written notice served in accordance with the provisions
hereof.
7.8 Miscellaneous. The use of the singular or plural or
-------------
masculine or neuter gender shall not be given an exclusionary meaning
and, where applicable, shall be intended to include the appropriate
number or gender, as the case may be.
7.9 Counterparts. This Agreement may be executed in
------------
counterparts, each of which shall be deemed to be an original and all
of which, when taken together, shall constitute one instrument.
7.10 Descriptive Headings. Title headings are for reference
--------------------
purposes only and shall have no interpretive effect.
7.11 Entire Agreement. This Agreement constitutes the entire
----------------
agreement between the parties with respect to the subject matter
hereof. Each exhibit and schedule is incorporated herein by reference
and constitutes a part of this Agreement. Any amendments to this
Agreement must be made in writing and duly executed by each of the
parties entitled to adopt said amendment as provided in Section 7.5 or
by an authorized representative or agent of each such party.
7.12 Binding Effect. This Agreement shall be binding upon and
--------------
inure to the benefit of the parties hereto, their heirs,
representatives, successors and permitted assigns.
7.13 Applicable Law. This Agreement shall be governed as to
--------------
validity, construction and in all other respects by the laws of the
State of Delaware applicable to contracts made in that State.
7.14 Severability. The invalidity of any provision of this
------------
Agreement or portion of a provision shall not affect the validity of
any other provision of this Agreement or the remaining portion of the
applicable provision.
7.15 Not an Employment Agreement. Nothing contained herein shall
---------------------------
be deemed or construed as an agreement of employment between any
Management Shareholder and the Company or any of its Subsidiaries.
7.16 Arbitration. Any claims, controversies, demands, disputes
-----------
or differences between or among the parties hereto arising out of, or
by virtue of, or in connection with, or otherwise relating to this
Agreement shall be submitted to and settled by arbitration conducted
in Philadelphia, Pennsylvania before one or three arbitrators, each of
whom shall be knowledgeable in the field of corporate law. Such
arbitration shall otherwise be conducted in accordance with the rules
then applying of the American Arbitration Association. The parties
hereto agree to share equally the responsibility for all fees of the
arbitrators. Judgment upon any award granted by such an arbitrator
may be enforced in any court having jurisdiction thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
DFG HOLDINGS, INC., a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
President
WPG CORPORATE DEVELOPMENT ASSOCIATES
IV, L.P.
By: WPG Private Equity Partners, L.P.,
General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
-----------------------------------------
Managing General Partner
WPG CORPORATE DEVELOPMENT ASSOCIATES IV
(OVERSEAS), L.P.
By: WPG CDA IV (Overseas), Ltd., General
Partner
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
------------------------------------------
Director
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
---------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇, as Trustee under
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
---------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
PEGASUS PARTNERS, L.P.
By:(Signature Illegible)
------------------------------------------
PAG DOLLAR INVESTORS LLC
By:(Signature Illegible)
-------------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
GHB CHARITABLE TRUST #1
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Trustee
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Trustee
BANK OF AMERICA ILLINOIS
By: /s/ L. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, III
------------------------------------
By: L. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, III
Its: Managing Director
BHF-BANK AKTIENGESELLSCHAFT
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Its: Vice President
▇▇▇▇▇▇ BROTHERS COMMERCIAL PAPER, INC.
By: /s/ ▇▇▇▇▇▇ ▇ ▇▇▇
------------------------------------
By: ▇▇▇▇▇▇ ▇. ▇▇▇
Its: Authorized Signitory
THE FIRST NATIONAL BANK OF MARYLAND
By: (Signature Illegible)
------------------------------------
By:
Its:
PILGRIM AMERICA PRIME RATE TRUST
By: /s/ ▇▇▇▇▇▇ Tiffen
------------------------------------
By: ▇▇▇▇▇▇ Tiffen
Its: Sr. Vice President
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
SCHEDULE I
INDIVIDUAL FUND SHAREHOLDERS
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇, as Trustee under ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
SCHEDULE II
WARRANT HOLDERS
Bank of America Illinois
BHF-Bank Aktiengsellschaft
The First National Bank of Maryland
Pilgrim America Prime Rate Trust
▇▇▇▇▇▇ Commercial Paper Inc.
NYFS06...:\47\41847\0008\1710\EXHD156W.060
