EXHIBIT 2.3
STOCKHOLDERS' AGREEMENT (this "Agreement"), dated September 10, 2000,
between Mikasa, Inc. (the "Company"), X.X. Xxxxxx Industries, S.A. (the
"Majority Stockholder") and the persons and trusts listed on Annex A hereto.
Each such person listed on Annex A hereto (together with the trust listed on
Annex A hereto with respect to such person) is sometimes referred to herein as a
"Management Stockholder" and together, the "Management Stockholders."
WHEREAS, the Company, the Majority Stockholder, the Management
Stockholders and Mountain Acquisition Corp., a Delaware corporation
("MergerCo"), have entered into an Agreement and Plan of Merger, dated the date
hereof (the "Merger Agreement"), providing for the merger of MergerCo with and
into the Company, with the Company as the surviving corporation (the "Merger");
WHEREAS, immediately following the consummation of the transactions
contemplated by the Merger Agreement, the Majority Stockholder and the
Management Stockholders will together own all of the shares of the outstanding
common stock, par value of $0.01 per share (the "Common Stock"), of the Company
(as the surviving corporation in the Merger); and
WHEREAS, the Company, the Majority Stockholder and each of the
Management Stockholders desire, for their mutual benefit and protection, to
enter into this Agreement to set forth their respective rights and obligations
with respect to the shares of Common Stock, whether issued or acquired in
connection with the Merger or issued or acquired thereafter, and any securities
that may be issued or distributed or be issuable in respect of any such shares
of Common Stock by way of stock dividend, stock split or other distribution,
merger, consolidation, exchange offer, recapitalization or reclassification or
similar transaction (the "Shares");
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following capitalized terms
shall have the meanings set forth below.
"Accounting Firm" has the meaning set forth in Section 3.14(i).
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with such Person.
For purposes of this Agreement, the term "control," (including, with correlative
meanings, the terms "controlling," "controlled by," and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting securities
or by contract or otherwise.
"Agreement" has the meaning set forth in the recitals hereto.
"Annual Dividend" has the meaning set forth in Section 3.14(iii).
"Beneficial Owner" has the meaning set forth in Rule 13d-3 promulgated
under the Exchange Act as in effect on the date hereof. The terms "Beneficial
Ownership" and "Beneficially Own" shall have correlative meanings.
"Board" has the meaning set forth in Section 8.1.
"Business Day" means any day that is not a Saturday, Sunday or legal
holiday in the City of New York.
"Call" has the meaning set forth in Section 3.1.
"Cause" means, with respect to the termination of employment of a Senior
Manager by the Company, (i) any willful violation by the Senior Manager of this
Agreement or his Employment Agreement, if any, that has a material adverse
effect on the Company or its Affiliates; (ii) any willful engaging by the Senior
Manager, in the Senior Manager's capacity as an employee of the Company, in
gross misconduct that has, or is intended to have, a material adverse effect on
the Company or its Affiliates; or (iii) any conviction of the Senior Manager of
a felony or other serious crime involving moral turpitude; provided, that any
act or failure to act of the Senior Manager shall not be considered "willful"
unless done or omitted to be done by the Senior Manager not in good faith and
without reasonable belief that the Senior Manager's action or omission was in
the best interest of the Company.
"Change in Management Date" means, with respect to a Put or Call exercised
pursuant to Section 3.7 or Section 3.8, any date prior to the end of Fiscal Year
2003 on which the employment of the second of two Senior Managers with the
Company is terminated for any reason.
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Common Stock" has the meaning set forth in the recitals hereto.
"Company" has the meaning set forth in the recitals hereto.
"Control Transaction" means a transaction resulting in: (i) the JGD Group
ceasing to Beneficially Own at least 50% of the Voting Power of the Voting
Securities of the Majority Stockholder or the Company then outstanding; (ii) the
Majority Stockholder ceasing to Beneficially Own 50% of the Voting Power of the
Voting Securities of the Company; (iii) the merger, consolidation or other
business combination of the Majority Stockholder or the Company with any other
Person other than, in the case of the Majority Stockholder, any member of the
JGD Group; (iv) the Majority Stockholder or the Company selling, leasing or
otherwise transferring 50% or more of its assets to any Person(s); or (v) the
liquidation, dissolution or winding-up of the Majority Stockholder or the
Company.
"Control Transaction Date" means, with respect to any Put exercised
pursuant to Section 3.12, any date prior to the end of Fiscal Year 2003 on which
a definitive agreement with respect to a Control Transaction is executed or
announced.
"Cumulative Net Income Per Share" means, with respect to any Fiscal Year,
the net after-tax income of the Company (excluding (i) the amortization of any
pushed-down goodwill resulting from the Merger, (ii) any ongoing financing or
interest charges (including any fees associated therewith) incurred as a result
of a change in the Company's pre-Merger capital structure resulting from the
Merger and any one time or extraordinary charges resulting from the Merger,
(iii) any one time or extraordinary charges resulting from any acquisition or
disposition of a business, Person or assets by the Company or any of its
subsidiaries or any merger, consolidation or other business combination
involving the Company after the Effective Time other than acquisition or
disposition of assets in the ordinary course of business consistent with past
practice, (iv) the impact of any change in the Company's accounting policies or
procedures and (v) any expense related to the Incentive Compensation Plan)
calculated on a cumulative basis with respect to such Fiscal Year and all the
Fiscal Years completed prior to such Fiscal Year, if any, beginning with Fiscal
Year 2001, divided by the number of Shares of Common Stock issued and
outstanding immediately following the Effective Time.
"Delivery Date" has the meaning set forth in Section 4.2.
"Disability" means the physical disability or mental incapacity of a Senior
Manager which entitles such Senior Manager to benefits under a long term
disability plan of the Company or which would entitle such Senior Manager to
benefits if he were a participant in such plan or which would otherwise qualify
such Senior Manager for social security disability insurance benefits.
"Dividend Gross Up" has the meaning set forth in Section 3.14(iii).
"Drag-Along Notice" has the meaning set forth in Section 4.1.
"Drag-Along Sale" has the meaning set forth in Section 4.1.
"Effective Time" has the meaning set forth in the Merger Agreement.
"Elected Shares" has the meaning set forth in Section 5.2.
"Employment Agreement" means, with respect to a Senior Manager, the
Employment Agreement, if any, between him and the Company, dated the date
hereof, and/or any subsequent employment agreement mutually agreed upon between
such Senior Manager and the Company.
"Equity Securities" of any Person, means any and all common stock,
preferred stock and any other class of capital stock of, and any partnership or
limited liability company interests in, such Person or any other similar
interests of any Person that is not a corporation, partnership or limited
liability company.
"Excess Pro Rata Portion" has the meaning set forth in Section 5.2.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Family Member" has the meaning set forth in Section 2.4.
"First Six Months Fiscal Year" has the meaning set forth in Section 3.9.
"Fiscal Year" means a fiscal year of the Company.
"General Put-Call Price" has the meaning set forth in Section 3.9.
"Good Reason" means (i) the assignment to the Senior Manager of any duties
or responsibilities which are materially inconsistent with the Senior Manager's
position (including status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by such Senior Manager's
Employment Agreement, if any, or as in effect at the time of expiration of such
Employment Agreement, if any, or any other action by the Company which results
in a material diminution in such position, authority, duties or
responsibilities; (ii) a significant reduction by the Company in the
compensation (including salary and bonuses) and/or benefits provided to the
Senior Manager under his Employment Agreement, if any, or as in effect at the
time of expiration of such Employment Agreement, if any; (iii) any material
breach or violation of any material provision of this Agreement or the Senior
Manager's Employment Agreement, if any, by the Company or the Majority
Stockholder which is not cured promptly after receipt by the Company or the
Majority Stockholder of written notice from the Senior Manager setting forth the
specific breach or violation; or (iv) the Company's requiring the Senior Manager
to be based at any office or location outside of northern New Jersey.
"Incentive Compensation Plan" means the Mikasa, Inc. Incentive Compensation
Plan, adopted as of the date hereof.
"Indemnified Party" shall have the meaning set forth in Section 6.7(ii).
"Indemnifying Party" shall have the meaning set forth in Section 6.7(ii).
"JGD Group" means X.X. Xxxxxx Industries, S.A., and its Affiliates.
"Losses" means claims, damages, liabilities, costs (including, without
limitation, costs of preparation, investigation and reasonable attorneys' fees
and disbursements in connection with any action) and expenses.
"Majority Stockholder" has the meaning set forth in the recitals hereto.
"Management Stockholder" has the meaning set forth in the recitals hereto.
"Merger" has the meaning set forth in the recitals hereto.
"MergerCo" has the meaning set forth in the recitals hereto.
"Merger Agreement" has the meaning set forth in the recitals hereto.
"Merger Consideration" has the meaning set forth in the Merger Agreement.
"Minimum Guaranteed Amount" means, with respect to a Share, the sum of (i)
(a) the Merger Consideration (as equitably adjusted to reflect changes in the
number of Shares resulting from transactions agreed to by the parties that take
place as of, or immediately prior to, the Effective Time) minus (b) the
aggregate amount of any dividends in respect of such Share the record date for
which is following the Effective Time and prior to the payment of the price for
the applicable Put or Call and (ii) the Dividend Gross Up, if any, in respect of
such Share.
"Nominee" has the meaning set forth in Section 8.2.
"Non-Elected Shares" has the meaning set forth in Section 5.2.
"Notice" has the meaning set forth in Section 3.14.
"Opinion" has the meaning set forth in Section 4.1.
"Other Holders" has the meaning set forth in Section 6.l(ii).
"Other Manager" means Xxxxxx X. Xxxxxxx.
"Period One" has the meaning set forth in Section 3.12.
"Period One Control Transaction Price" has the meaning set forth in Section
3.12.
"Period Two" has the meaning set forth in Section 3.12.
"Permitted Transferee" has the meaning set forth in Section 2.4.
"Person" means an individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or other agency or political subdivision thereof.
"Piggyback Registration" means a registration by the Company of Registrable
Shares under the Securities Act pursuant to Section 6.1.
"Pro Rata Portion" has the meaning set forth in Section 5.2.
"Public Offering Event" has the meaning set forth in Section 9.1.
"Put" has the meaning set forth in Section 3.1.
"Registrable Shares" means any Shares; provided, however, that any such
securities shall cease to be Registrable Shares to the extent (i) a registration
statement with respect to the offer and sale of such securities has been
declared effective under the Securities Act and such securities have been
disposed of in accordance with the plan of distribution set forth in such
registration statement, (ii) such securities have been distributed pursuant to
Rule 144 (or any similar provision then in force) under the Securities Act,
(iii) such securities shall have been otherwise transferred and new certificates
for them not bearing a legend restricting transfer under the Securities Act
shall have been delivered by the Company and they may be publicly resold without
registration or qualification of them under the Securities Act or any state
securities or blue sky law then in force, or (iv) such securities may be sold by
a Management Stockholder pursuant to Rule 144 under the Securities Act (or any
similar provision then in force) within any three-month period.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Second Six Months Fiscal Year" has the meaning set forth in Section 3.9.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Selling Holder" means, with respect to a registration statement under the
Securities Act in connection with a Piggyback Registration, a holder of Shares
whose Registrable Shares are included therein.
"Senior Manager" means Xxxxxx X. Xxxxx, Xxxxxxx X. Xxxxxxx or Xxxxxxx X.
Xxxxxxxxxx, as the case may be.
"Shares" has the meaning set forth in the recitals hereto.
"Tag-Along Allotment" has the meaning set forth in Section 5.2.
"Tag-Along Notice Date" has the meaning set forth in Section 5.3.
"Tag-Along Sale" has the meaning set forth in Section 5.1.
"Tag-Along Sale Date" has the meaning set forth in Section 5.3.
"Tag-Along Sale Notice" has the meaning set forth in Section 5.3.
"Target Cumulative Net Income Per Share" means, at the end of (i) Fiscal
Year 2001, US$26,000,000, (ii) Fiscal Year 2002, US$52,000,000 and (iii) Fiscal
Year 2003, US$78,000,000, in each case divided by the number of Shares issued
and outstanding immediately following the Effective Time; provided, that in each
case, such figures are subject to reasonable adjustment as mutually agreed by
the Majority Stockholder, the Company and the Management Stockholders if
necessary to preserve the economic benefits to the parties contemplated by this
Agreement in the event (a) any transaction or corporate event occurs which
affects the Company's capitalization or (b) any other transaction or corporate
event (other than the Merger), including without limitation any other
transactions with the Majority Stockholder or any of its Affiliates, outside of
the ordinary course of business occurs which could reasonably be expected to
have a substantial impact on the Company's Cumulative Net Income Per Share.
"Taxes" has the meaning set forth in Section 3.14(iii).
"Terminating Nominee" has the meaning set forth in Section 8.4.
"Termination Date" means the date upon which a Senior Manager's employment
with the Company is terminated for any reason.
"Transfer" means, with respect to any property, to directly or indirectly
sell, hypothecate, give, bequeath, transfer, assign, pledge or in any other way
whatsoever encumber or dispose of such property, whether for or without
consideration, and whether voluntarily or involuntarily or by operation of law.
"Transferee" has the meaning set forth in Section 2.1.
"2003 Put-Call Price" means, with respect to any Share, the sum of (i) the
Minimum Guaranteed Amount plus (ii) the product of 8.7 multiplied by a fraction
the numerator of which is (a) and the denominator of which is (b), where (a)
equals the excess, if any, of (A) Cumulative Net Income Per Share for Fiscal
Year 2003 over (B) Target Cumulative Net Income Per Share for Fiscal Year 2003
and (b) equals 3.
"Voting Power" means, with respect to any Voting Securities, the aggregate
number of votes attributable to such Voting Securities that could generally be
cast by the holders thereof for the election of directors or similar managing
persons at the time of determination (assuming such election were then being
held).
"Voting Securities" means, (i) with respect to the Company, the Equity
Securities of the Company entitled to vote generally for the election of
directors of the Company, (ii) with respect to the Majority Stockholder, the
Equity Securities of the Majority Stockholder entitled to vote generally for the
election of directors of the Majority Stockholder, and (iii) with respect to any
other Person, any securities of or interests in such Person entitled to vote
generally for the election of directors or any similar managing person of such
Person.
1.2 Construction and Interpretation.
(a) The words "hereof," "herein" and "hereunder" and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole
and not any particular provision of this Agreement.
(b) Where the context so indicates or requires, the masculine, feminine or
neuter gender, and the singular or plural number, shall be deemed to be or
include the other genders or number, as the case may be.
(c) Except as otherwise indicated, references herein to any "Article,"
"Section," "Annex" or "Schedule" mean an Article or Section of, or an Annex or
Schedule to, this Agreement, as the case may be. Except as otherwise indicated,
references herein to a "party" or the "parties" refers to a party or the
parties, as the case may be, to this Agreement.
(d) Unless otherwise expressly provided herein, in the computation of a
period of time from a specified date to a later specified date, the word "from"
means "from and including", the words "to" and "until" each mean "to but
excluding," and the word "within" means "from and excluding a specified date and
to and including a later specified date."
(e) All Annexes and Schedules attached to this Agreement or expressly
identified herein are incorporated herein by reference and made a part hereof.
ARTICLE II
STOCK TRANSFERS
2.1 General Restrictions on Transfer. The Management Stockholders agree
that they will not Transfer any Shares Beneficially Owned by them (or any
interest therein) to another Person (any such Person, a "Transferee"), other
than in accordance with all applicable provisions of this Agreement. The Company
shall not transfer on its books any Shares to any Person if the relevant
Transfer is not made in accordance with all applicable provisions of this
Agreement, and any purported Transfer in violation hereof shall be null and void
ab initio and of no effect.
2.2 Agreement to Be Bound. No Transfer of Shares by a Management
Stockholder to a Permitted Transferee shall be effective (and the Company shall
not transfer on its books any Shares) unless the certificates representing such
Shares issued to the Permitted Transferee shall bear the legend provided in
Section 2.3, if such a legend is required by Section 2.3. By accepting any
Transfer of Shares, any Permitted Transferee shall be deemed to have agreed to
be bound by the terms of this Agreement and to have accepted the rights and
obligations set forth hereunder as if it were the transferor of the relevant
Shares, and upon the request of the Company such Permitted Transferee shall
execute and deliver to the Company an instrument or instruments in form and
substance reasonably satisfactory to the Company and the Majority Stockholder
confirming that the Permitted Transferee agrees to be bound by the terms of this
Agreement and accepts the rights and obligations set forth hereunder as if it
were the transferor of the relevant Shares.
2.3 Legend. In addition to any other legend which may be required by
applicable law, each share certificate representing Shares which are
Beneficially Owned by the Management Stockholders shall have endorsed on its
face the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR THE SECURITIES LAWS OF ANY JURISDICTION. SUCH
SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
ASSIGNED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO (I) A REGISTRATION STATEMENT WITH RESPECT
TO SUCH SECURITIES THAT IS EFFECTIVE UNDER SUCH ACT, OR (II)
ANY EXEMPTION FROM REGISTRATION UNDER SUCH ACT.
IN ADDITION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE
MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED
OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER COMPLIES WITH
THE PROVISIONS OF A STOCKHOLDERS' AGREEMENT, DATED SEPTEMBER
10, 2000 (THE "STOCKHOLDERS' AGREEMENT"), A COPY OF WHICH IS
ON FILE AND MAY BE INSPECTED AT THE PRINCIPAL OFFICE OF THE
COMPANY. NO TRANSFER OF THE SECURITIES WILL BE MADE ON THE
BOOKS OF THE COMPANY UNLESS SUCH TRANSFER IS MADE IN
COMPLIANCE WITH THE TERMS OF SUCH STOCKHOLDERS' AGREEMENT. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO
OTHER RIGHTS AND OBLIGATIONS SET FORTH IN SUCH STOCKHOLDERS'
AGREEMENT.
To the extent the Company shall be satisfied, in its reasonable discretion, that
the circumstances or provisions requiring any of the above legends have ceased
to be effective, the Company will upon request reissue certificates without the
applicable legend or legends.
2.4 Permitted Transfers. Each Management Stockholder may only Transfer
Shares (i) on such Management Stockholder's death by bequest or inheritance to
such Management Stockholder's executors, administrators, testamentary trustees,
heirs, legatees or beneficiaries, (ii) to such Management Stockholder's spouse
or such Management Stockholder's lineal descendants (by blood or adoption)
(hereinafter, a "Family Member"), (iii) to a trust or custodianship the
beneficiaries of which may include only such Management Stockholder or Family
Members, (iv) to a trust or foundation which is tax-exempt pursuant to Section
501(c)(3) of the Internal Revenue Code of 1986, as amended, and which is
organized and operated exclusively for charitable purposes (each Person
designated in clauses (i) through (iv), a "Permitted Transferee"), (v) to the
Majority Stockholder and any of its Affiliates or (vi) as required by applicable
law. Each Management Stockholder may also Transfer Shares in accordance with
Article III, Article IV and Article V hereof.
ARTICLE III
PUT-CALL RIGHTS
3.1 Put-Call Terms. The Majority Stockholder shall have the right (but not
the obligation) to purchase the Shares Beneficially Owned by the Management
Stockholders (a "Call"), and the Management Stockholders shall have the right
(but not the obligation) to cause the Majority Stockholder to purchase such
Shares (a "Put"), at the times, upon the terms and subject to the conditions set
forth in this Article III.
3.2 2003 Put-Call. Notwithstanding any other provision of this Article III,
following the end of Fiscal Year 2003, the Majority Stockholder shall have the
right to Call all (but not less than all) of the Shares Beneficially Owned by
any one or more Management Stockholders and each Management Stockholder shall
have the right to Put all (but not less than all) of the Shares Beneficially
Owned by such Management Stockholder; provided, that the Notice in respect of
each such Call and Put must be given to the Majority Stockholder or Management
Stockholder, as applicable, during the sixty-day period following the completion
of the audit of the Company's financial statements for Fiscal Year 2003; and
provided, further, that each such Call and Put shall be exercised for a price
per Share equal to the 2003 Put-Call Price.
3.3 Death or Disability Termination. If, prior to the end of Fiscal Year
2003, a Senior Manager's employment with the Company shall be terminated as a
result of his death or Disability, (i) the Majority Stockholder shall have the
right to Call all (but not less than all) of the Shares Beneficially Owned by
such Senior Manager and (ii) such Senior Manager shall have the right to Put all
(but not less than all) of the Shares Beneficially Owned by such Senior Manager;
provided, that the Notice in respect of each such Call and Put must be given to
the Majority Stockholder or Senior Manager, as applicable, during the 180-day
period following the Termination Date; and provided, further, that each such
Call and Put shall be exercised for a price per Share equal to the General
Put-Call Price.
3.4 Without Cause Termination. If, prior to the end of Fiscal Year 2003, a
Senior Manager's employment with the Company shall be terminated by the Company
without Cause:
(i) such Senior Manager shall have the right to Put all (but not less than
all) of the Shares Beneficially Owned by such Senior Manager; provided, that the
Notice in respect of such Put must be given to the Majority Stockholder during
the sixty-day period following the Termination Date; and provided, further, that
the Put shall be exercised for a price per Share equal to the General Put-Call
Price; and
(ii) the Majority Stockholder shall have the right to Call all (but not
less than all) of the Shares Beneficially Owned by such Senior Manager;
provided, that the Call shall be exercised for a price per Share equal to the
General Put-Call Price; and provided, further, that the Notice in respect of
such Call must be given to such Senior Manager:
(a) during the sixty-day period following the completion of the audit of
the Company's financial statements for Fiscal Year 2001, if the Termination Date
occurs during Fiscal Year 2001; provided, however, that the Majority Stockholder
shall have no such right to Call such Shares if Cumulative Net Income Per Share
for Fiscal Year 2001 is at least 70% of Target Cumulative Net Income Per Share
for Fiscal Year 2001;
(b) during the sixty-day period following the Termination Date, if the
Termination Date occurs during the first six months of Fiscal Year 2002;
provided, however that the Majority Stockholder shall have no such right to Call
such Shares if Cumulative Net Income Per Share for Fiscal Year 2001 is at least
70% of Target Cumulative Net Income Per Share for Fiscal Year 2001;
(c) during the sixty-day period following the completion of the audit of
the Company's financial statements for Fiscal Year 2002, if the Termination Date
occurs during the second six months of Fiscal Year 2002; provided, however that
the Majority Stockholder shall have no such right to Call such Shares if
Cumulative Net Income Per Share for Fiscal Year 2002 is at least 75% of Target
Cumulative Net Income Per Share for Fiscal Year 2002;
(d) during the sixty-day period following the Termination Date, if the
Termination Date occurs during the first six months of Fiscal Year 2003;
provided, however, that the Majority Stockholder shall have no such right to
Call such Shares if Cumulative Net Income Per Share for Fiscal Year 2002 is at
least 75% of Target Cumulative Net Income Per Share for Fiscal Year 2002; and
(e) during the sixty-day period following the completion of the audit of
the Company's financial statements for Fiscal Year 2003, if the Termination Date
occurs during the second six months of Fiscal Year 2003; provided, however, that
the Majority Stockholder shall have no such right to Call such Shares if
Cumulative Net Income Per Share for Fiscal Year 2003 is at least 85% of Target
Cumulative Net Income Per Share for Fiscal Year 2003.
3.5 Good Reason Termination. If, prior to the end of Fiscal Year 2003, a
Senior Manager terminates his employment with the Company for Good Reason, such
Senior Manager shall have the right to Put all (but not less than all) of the
Shares Beneficially Owned by such Senior Manager; provided, that the Notice in
respect of such Put is given to the Majority Stockholder during the sixty-day
period following the Termination Date; and provided, further, that such Put
shall be exercised for a price per Share equal to the General Put-Call Price.
3.6 Without Good Reason Termination. If, prior to the end of Fiscal Year
2003, a Senior Manager terminates his employment with the Company without Good
Reason, the Majority Stockholder shall have the right to Call all (but not less
than all) of the Shares Beneficially Owned by such Senior Manager; provided,
that the Notice in respect of such Call must be given to the Senior Manager
during the sixty-day period following the Termination Date; and provided,
further, that such Call shall be exercised for a price per Share equal to the
General Put-Call Price.
3.7 Change in Senior Management Termination. If, prior to the end of Fiscal
Year 2003, any two Senior Managers cease to be employed by the Company for any
reason other than as a result of the termination of each such Senior Manager's
employment by the Company for Cause, each Other Manager shall have the right to
Put all (but not less than all) of the Shares Beneficially Owned by such Other
Manager; provided, that the Notice in respect of such Put must be given to the
Majority Stockholder during the sixty-day period following the Change in
Management Date; and provided, further, that such Put shall be exercised for a
price per Share equal to the General Put-Call Price.
3.8 Change in Senior Management For Cause. If, prior to the end of Fiscal
Year 2003, any two Senior Managers cease to be employed by the Company as a
result of the termination of each such Senior Manager's employment by the
Company for Cause, (i) the Majority Stockholder shall have the right to Call all
(but not less than all) of the Shares Beneficially Owned by each Other Manager
and (ii) each Other Manager shall have the right to Put all (but not less than
all) of the Shares Beneficially Owned by such Other Manager; provided, that the
Notice in respect of each such Call and Put must be given to the Majority
Stockholder or Other Manager, as applicable, during the sixty-day period
following the Change in Management Date; and provided, further, that each such
Call and Put shall be exercised for a price per Share equal to the General
Put-Call Price.
3.9 Calculation of the General Put-Call Price. The General Put-Call Price
of a Share in respect of a Put or Call exercised pursuant to Section 3.3,
Section 3.4, Section 3.5, Section 3.6, Section 3.7 or Section 3.8 with respect
to a Termination Date or Change in Management Date, as applicable, occurring
within the first six months of any Fiscal Year shall equal the sum of (i) the
Minimum Guaranteed Amount plus (ii) the product of 8.7 multiplied by a fraction,
the numerator of which is (a) and the denominator of which is (b), where (a)
equals the excess, if any, of (A) Cumulative Net Income Per Share for the last
completed Fiscal Year which began after Fiscal Year 2000 and ended prior to the
Termination Date or Change in Management Date, as applicable (the "First Six
Months Fiscal Year"), over (B) Target Cumulative Net Income Per Share for the
First Six Months Fiscal Year and (b) equals the number of completed Fiscal Years
taken into account in the calculation of Cumulative Net Income Per Share
pursuant to (A) above.
The General Put-Call Price of a Share in respect of a Put or Call exercised
pursuant to Section 3.3, Section 3.4, Section 3.5, Section 3.6, Section 3.7 or
Section 3.8 with respect to a Termination Date or Change in Management Date, as
applicable, occurring within the second six months of any Fiscal Year following
Fiscal Year 2000 shall equal the sum of (i) the Minimum Guaranteed Amount plus
(ii) the product of 8.7 multiplied by a fraction, the numerator of which is (a)
and the denominator of which is (b), where (a) equals the excess, if any, of (A)
Cumulative Net Income Per Share for the Fiscal Year in which the Termination
Date or Change in Management Date, as applicable, occurs (the "Second Six Months
Fiscal Year") over (B) Target Cumulative Net Income Per Share for the Second Six
Months Fiscal Year and (b) equals the number of completed Fiscal Years taken
into account in the calculation of Cumulative Net Income Per Share pursuant to
(A) above.
3.10 For Cause Termination. If, prior to the end of Fiscal Year 2003, a
Senior Manager's employment with the Company shall be terminated by the Company
for Cause, the Majority Stockholder shall have the right to Call all (but not
less than all) of the Shares Beneficially Owned by such Senior Manager;
provided, that the Notice in respect of such Call must be given to the Senior
Manager during the sixty-day period following the Termination Date; and
provided, further, that such Call shall be exercised for a price per Share equal
to the Minimum Guaranteed Amount.
3.11 Failure to Renew Employment Agreement. If a Senior Manager and the
Company fail to execute an agreement with respect to the employment by the
Company of such Senior Manager after December 31, 2002, such Senior Manager
shall have the right to Put all (but not less than all) of the Shares
Beneficially Owned by such Senior Manager; provided, that the Notice in respect
of such Put must be given to the Majority Stockholder during the sixty-day
period following the completion of the audit of the Company's financial
statements for Fiscal Year 2002; and provided, further, that such Put shall be
exercised for a price per Share equal to the sum of (i) the Minimum Guaranteed
Amount plus (ii) the product of 8.7 multiplied by a fraction, the numerator of
which is (a) and the denominator of which is (b), where (a) equals the excess,
if any, of (A) Cumulative Net Income Per Share for Fiscal Year 2002 over (B)
Target Cumulative Net Income Per Share for Fiscal Year 2002 and (b) equals 2.
3.12 Control Transaction. Subject to the provisions of Articles IV and V,
if, prior to the end of Fiscal Year 2003, a definitive agreement with respect to
a Control Transaction is executed or announced, each Management Stockholder
shall have the right to Put all (but not less than all) of the Shares
Beneficially Owned by such Management Stockholder; provided, that the Notice in
respect of such Put must be given to the Majority Stockholder either (x) during
the sixty-day period following the Control Transaction Date ("Period One") or
(y) during the sixty-day period following the completion of the Company's audit
for the Fiscal Year in which the Control Transaction Date occurs ("Period Two");
provided, however, that if the Notice is given to the Majority Stockholder on a
day that is within both Period One and Period Two, the Management Stockholder
shall determine the period in which the Notice was given; and provided, further,
that such Put shall be exercised for a price per Share equal to the Minimum
Guaranteed Amount plus:
(i) in the event Notice of such Put is given during Period One, the product
of 8.7 multiplied by a fraction, the numerator of which is (a) and the
denominator of which is (b), where (a) equals the excess, if any, of (A)
Cumulative Net Income Per Share for the last completed Fiscal Year which began
after Fiscal Year 2000 and ended prior to the Control Transaction Date over (B)
Target Cumulative Net Income Per Share for such Fiscal Year and (b) equals the
number of completed Fiscal Years taken into account in the calculation of
Cumulative Net Income Per Share pursuant to (A) above (the "Period One Control
Transaction Price"), or
(ii) in the event Notice of such Put is given during Period Two, the
product of 8.7 multiplied by a fraction, the numerator of which is (a) and the
denominator of which is (b), where (a) equals the excess, if any, of (A)
Cumulative Net Income Per Share for the Fiscal Year in which the Control
Transaction occurs over (B) Target Cumulative Net Income Per Share for such
Fiscal Year and (b) equals the number of completed Fiscal Years taken into
account in the calculation of Cumulative Net Income Per Share pursuant to (A)
above.
3.13 Purchase Right. Unless otherwise agreed in writing by the applicable
Management Stockholder, in the event that any Management Stockholder continues
to Beneficially Own Shares on the sixty-first day following the completion of
the audit of the Company's financial statements for Fiscal Year 2003 and no
Notice has been given pursuant to this Article III or Section 4.5 during the
immediately preceding sixty-day period with respect to such Management
Stockholder's Shares, all of such Management Stockholder's Shares shall be
automatically purchased by the Majority Stockholder within five Business Days
thereafter for a price per Share equal to the 2003 Put-Call Price and the
aggregate purchase price for such Management Stockholder's Shares shall be paid
to such Management Stockholder in a lump sum cash payment on such date of
purchase.
3.14 General. The parties agree that the following terms shall be
applicable to the exercise of a Put or Call pursuant to Section 3.2 through
Section 3.12 and Section 4.5 hereof and any purchase of Shares pursuant to
Section 3.13 hereof:
(i) The audit of the Company's financial statements for any Fiscal Year
shall be completed as soon as reasonably practicable and in no event later than
ninety days following the end of the relevant Fiscal Year and must be performed
by a nationally recognized accounting firm mutually agreed upon by the Senior
Managers, the Company and the Majority Stockholder (the "Accounting Firm");
provided, that if the Senior Managers, the Company and the Majority Stockholder
cannot agree upon an accounting firm, the Senior Managers, the Company and the
Majority Stockholder shall each appoint a nationally recognized accounting firm
which firms shall select a nationally recognized accounting firm which shall
then be the Accounting Firm.
(ii) A party exercising a Put or Call pursuant to this Article III or
Section 4.5 shall exercise such right by giving to the other party a written
notice (the "Notice") in accordance with the relevant provisions hereof
specifying such party's intent to Put or Call Shares Beneficially Owned by the
relevant Management Stockholder. The effective date on which a Put or Call is
exercised pursuant to such Notice shall be the tenth Business Day following the
later of (a) the date on which such Notice is given to the Majority Stockholder
or Management Stockholder, as applicable, and (b) the completion of the audit of
the Company's financial statements for the last Fiscal Year with respect to
which the exercise price for such Put or Call is calculated, if any; provided,
however, that the effective date of exercise of a Put exercised pursuant to
Section 4.5 must be prior to the Drag-Along Sale Date. Notwithstanding the prior
sentence, the effectiveness of, and the obligation of the Majority Stockholder
to honor, the exercise of a Put exercised pursuant to Section 3.12 shall be
subject to the consummation of the Control Transaction and the effective date of
such Put shall be the later of (x) the date determined pursuant to the
immediately preceding sentence and (y) the date of the consummation of the
Control Transaction; provided, however, that a Management Stockholder may
exercise any other Put right he may have pursuant to this Article III or Section
4.5 prior to the effectiveness of a Put exercised pursuant to Section 3.12
notwithstanding any Notice he may have given under Section 3.12. The aggregate
exercise price shall be paid to the relevant Management Stockholder in a lump
sum cash payment on the effective date of exercise of a Put or Call pursuant to
this Article III or Section 4.5.
(iii) (a) The term "Dividend Gross Up" means, with respect to a Share, the
amount equal to the sum of (A) the excess, if any, of (I) all U.S. federal,
state and local income taxes and/or any foreign taxes applicable because of the
residence or citizenship of the Management Stockholder ("Taxes") required to be
paid by the Management Stockholder with respect to any and all Annual Dividends
on such Share over (II) the Taxes the Management Stockholder would have been
required to pay if an amount equal to such Annual Dividends had been paid to the
Management Stockholder as part of the purchase price for such Share pursuant to
the applicable Put or Call and (B) an additional amount such that the net amount
retained by the Management Stockholder after the payment of all Taxes on the
amounts described in this Section 3.14(iii) is equal to the amount described in
clause (A) of this Section 3.14(iii).
(b) The Dividend Gross Up shall be determined by the Accounting Firm. The
tax rate to be used to determine the Dividend Gross Up shall be each Management
Stockholder's actual marginal tax rate for each applicable tax year.
(c) The term "Annual Dividend" means, with respect to a Share, the
aggregate dividends received by a Management Stockholder in any one Fiscal Year
on or after the Effective Time and prior to the payment of the price for the
applicable Put or Call in excess of $.20 per Share (as equitably adjusted to
reflect changes in the number of Shares resulting from transactions agreed to by
the parties that take place as of, or immediately prior to, the Effective Time).
(iv) The Management Stockholders, the Majority Stockholder and the Company
shall provide the Accounting Firm with all information reasonably required by
the Accounting Firm to make any determination required to be made by it under
this Agreement. Any assumptions not specified herein required to be used by the
Accounting Firm in determining the Dividend Gross Up shall be made by the
Accounting Firm in a reasonable manner that is intended to effectuate the
purposes of this Agreement. In making such determination, with respect to any
matter which is uncertain, the Accounting Firm shall adopt the position which it
believes more likely than not would be adopted by the Internal Revenue Service.
The Accounting Firm shall provide detailed supporting calculations with respect
to its determination to the Company, the Majority Stockholder and the relevant
Management Stockholder; provided, that the Accounting Firm shall not provide the
Company or the Majority Stockholder with the actual tax returns of the
Management Stockholder or any information concerning the Management Stockholder
that it is not reasonably necessary for the Company to fully understand the
basis for such determination. All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any determination by the Accounting Firm
hereunder shall be final, binding and conclusive upon the Company, the Majority
Stockholder and the Management Stockholder, absent manifest error.
(v) Any amounts payable pursuant to this Article III shall be subject to
such income or employment tax withholding as may be required under any provision
of U.S. federal, state or local tax law or any foreign tax law applicable
because of the residence or citizenship of the applicable Management
Stockholder, if any.
(vi) The Accounting Firm shall determine the exercise price with respect to
any Put or Call exercised pursuant to Section 3.2 through Section 3.12 and
Section 4.5 hereof and the purchase price with respect to any purchase of Shares
pursuant to Section 3.13 hereof.
ARTICLE IV
DRAG-ALONG RIGHTS
4.1 Drag-Along Rights. Subject to the provisions of Section 4.3 and Section
4.4, if the Majority Stockholder desires to sell more than 85% of the Shares
Beneficially Owned by it in good faith to an independent purchaser that is not
an Affiliate of the Majority Stockholder in an arms'-length negotiated
transaction, and said Transferee desires to acquire all or substantially all of
the issued and outstanding Shares upon the same terms and conditions as such
Transferee agreed to with the Majority Stockholder, each Management Stockholder
agrees to sell (a "Drag-Along Sale"), at the Majority Stockholder's request, a
proportion of the Shares Beneficially Owned by him to said Transferee (or to
vote all of such Shares in favor of any merger or other transaction which would
effect a sale of such Shares and waive all applicable dissenters or similar
rights) equal to the proportion of Shares Beneficially Owned by the Majority
Stockholder which are to be sold in the relevant transaction as specified in the
applicable Drag-Along Notice, at the same price, at the same time and on the
same terms and conditions as the Majority Stockholder shall have agreed to with
such Transferee with respect to the Majority Stockholder's Shares. In the event
a Drag-Along Sale is to be required, the Majority Stockholder shall give written
notice (the "Drag-Along Notice") of such sale to the Management Stockholders not
more than thirty or less than fifteen days prior to the proposed date of the
Drag-Along Sale (the "Drag-Along Sale Date") including (i) the proposed amount
of consideration to be received by the Beneficial Owners of Shares, (ii) the
name and address of the Transferee, (iii) the date of the proposed Transfer,
(iv) the number of Shares Beneficially Owned as of the close of business on the
day immediately prior to the date of delivery of the Drag-Along Notice by the
Management Stockholder to whom the notice is sent, (v) confirmation that the
Transferee has agreed to purchase the Management Stockholders' Shares in
accordance with the terms hereof, (vi) the Opinion and (vii) any other material
terms and conditions of the proposed Transfer.
4.2 Delivery of Certificates. On the date that is at least one Business Day
before the Drag-Along Sale Date (the "Delivery Date"), each Management
Stockholder shall deliver a certificate or certificates for all of his Shares to
be included in such Drag-Along Sale duly endorsed for Transfer, free and clear
of any lien, claim, encumbrance, charge or security interest of any kind to such
Transferee in the manner and at the address indicated in the Drag-Along Notice
against delivery of the purchase price for such Management Stockholder's Shares.
4.3 Consideration. The provisions of this Article IV shall only apply if
cash is one of the forms of consideration to be received in the Drag-Along Sale
and the Management Stockholder has the right, in his sole discretion, to receive
cash as the sole form of consideration he will receive for his Shares.
4.4 Cooperation. Each Management Stockholder participating in a Drag-Along
Sale shall make commercially reasonable efforts to cooperate in good faith with
the Majority Stockholder in connection with the consummation of a Drag-Along
Sale; provided, that a Management Stockholder shall not be required to (i) make
any representations or warranties other than standard representations concerning
ownership of his Shares or (ii) agree to indemnify any Person except with
respect to such Management Stockholder's own actions and disclosures; and
provided, further, that a Management Stockholder's total liability pursuant to
any such indemnity in connection with a Drag-Along Sale shall not exceed the net
proceeds received by such Management Stockholder in such Drag-Along Sale.
4.5 Put Right. Notwithstanding any other provision of this Article IV, in
the event the Majority Stockholder's sale to which the Drag-Along Sale relates
would constitute a Control Transaction, each Management Stockholder shall have
the right to Put all (but not less than all) of the Shares Beneficially Owned by
such Management Stockholder; provided, that the Notice in respect of such Put
must be given to the Majority Stockholder during the period beginning on the
date of the Management Stockholder's receipt of the Drag-Along Notice and ending
on the fifth Business Day immediately prior to the Delivery Date; and provided,
further, that the Put shall be exercised for a price per Share equal to the
Period One Control Transaction Price.
ARTICLE V
TAG-ALONG RIGHTS
5.1 Right to Participate in Sale. In the event that the Majority
Stockholder shall determine to sell Shares Beneficially Owned by it to a third
party or third parties excluding any member of the JGD Group, each Management
Stockholder shall have the right to sell in such transaction, on the same terms
and conditions as apply to the sale of the Majority Stockholder's Shares (a
"Tag-Along Sale"), a number of such Management Stockholder's Shares not to
exceed such Management Stockholder's Tag-Along Allotment.
5.2 Tag-Along Allotment. The maximum number of Shares that a Management
Stockholder shall be entitled to include in such Tag-Along Sale pursuant to
Section 5.1 (the "Tag-Along Allotment") shall be the sum of (i) the Pro Rata
Portion and (ii) the Excess Pro Rata Portion of his Shares. For purposes of this
Article V, "Pro Rata Portion" shall mean, with respect to Shares Beneficially
Owned by a Management Stockholder or Majority Stockholder, as the case may be, a
number equal to the product of (a) the total number of such Shares then
Beneficially Owned by the Management Stockholder or the Majority Stockholder, as
the case may be, and (b) a fraction, the numerator of which shall be the total
number of such Shares proposed to be acquired by the Transferee as set forth in
the Tag-Along Sale Notice and the denominator of which shall be the total number
of such Shares then issued and outstanding (including such Shares proposed to be
sold by the Majority Stockholder); provided, however, that any fraction of a
Share resulting from such calculation shall be disregarded for purposes of
determining the Pro Rata Portion. For purposes of this Article V, "Excess Pro
Rata Portion" shall mean, with respect to Shares Beneficially Owned by a
Management Stockholder or the Majority Stockholder, as the case may be, a number
equal to the product of (x) the number of Non-Elected Shares and (y) a fraction,
the numerator of which shall be such Management Stockholder's Pro Rata Portion
with respect to such Shares, and the denominator of which shall be the sum of
(1) the aggregate Pro Rata Portions with respect to the shares of Common Stock
of all of the Management Stockholders that have elected to exercise in full
their rights to sell their Pro Rata Portion of Shares, and (2) the Majority
Stockholder's Pro Rata Portion of Shares (the aggregate amount of such
denominator is hereinafter referred to as the "Elected Shares"). For purposes of
this Article V, "Non-Elected Shares" shall mean the excess, if any, of the total
number of Shares proposed to be acquired by a Transferee as set forth in the
Tag-Along Sale Notice, less the amount of Elected Shares. Notwithstanding the
foregoing, if the consummation of the sale by the Majority Stockholder to which
the Tag-Along Sale relates would result in the proportion of issued and
outstanding Shares Beneficially Owned by the Majority Stockholder equaling less
than 50% of the proportion of issued and outstanding Shares Beneficially Owned
by the Majority Stockholder immediately following the Effective Time (before
application of the provisions of this Section 5.2), each Management
Stockholder's Tag-Along Allotment with respect to such Tag-Along Sale shall be
deemed to be equal to 100% of the number of Shares Beneficially Owned by such
Management Stockholder as of the close of business on the day immediately prior
to the Tag-Along Notice Date.
5.3 Sale Notice. The Majority Stockholder shall provide each Management
Stockholder with written notice (the "Tag-Along Sale Notice") not more than
sixty days nor less than twenty days prior to the proposed date (the "Tag-Along
Sale Date") of the Tag-Along Sale. Each Tag-Along Sale Notice shall be
accompanied by a copy of any written agreement relating to the Tag-Along Sale
and shall set forth (i) the name and address of each proposed Transferee of
Shares in the Tag-Along Sale; (ii) the number of Shares proposed to be sold by
the Majority Stockholder; (iii) the proposed amount and form of consideration to
be paid for such Shares and the terms and conditions of payment offered by the
proposed Transferees; (iv) the aggregate number of Shares Beneficially Owned by
the Management Stockholder as of the close of business on the day immediately
prior to the date of delivery of the Tag-Along Sale Notice (the "Tag-Along Sale
Notice Date"); (v) the Management Stockholder's Tag-Along Allotment assuming
such Management Stockholder elected to include the maximum number of Shares
possible in the Tag-Along Sale; (vi) confirmation that the Transferee has been
informed of the rights provided for in this Article V and has agreed to purchase
Shares in accordance with the terms hereof; and (vii) the Tag-Along Sale Date.
5.4 Tag-Along Notice. (i) Any Management Stockholder wishing to participate
in the Tag-Along Sale shall provide written notice (the "Tag-Along Notice") to
the Majority Stockholder no more than fifteen days after delivery of the
Tag-Along Sale Notice. The Tag-Along Notice shall set forth the number of Shares
that such Management Stockholder elects to include in the Tag-Along Sale, which
shall not exceed such Management Stockholder's Tag-Along Allotment. The
Tag-Along Notice given by any Management Stockholder shall constitute such
Management Stockholder's binding agreement to sell the Shares specified in the
Tag-Along Notice on the terms and conditions applicable to the Tag-Along Sale;
provided, however, that in the event that there is any material change in the
terms and conditions of such Tag-Along Sale applicable to a Management
Stockholder after such Management Stockholder gives his Tag-Along Notice, then,
notwithstanding anything herein to the contrary, such Management Stockholder
shall have the right to withdraw from participation in the Tag-Along Sale with
respect to all of the Shares referred to in his Tag-Along Notice. If the
Transferee does not consummate the purchase of all of the Shares requested to be
included in the Tag-Along Sale by any Management Stockholder on the same terms
and conditions applicable to the Majority Stockholder, then the Majority
Stockholder shall not consummate the Tag-Along Sale of any of its Shares to such
Transferee, unless the Shares of all Management Stockholders and the Majority
Stockholder in the Tag-Along Sale are reduced or limited pro rata in proportion
to the respective number of Shares actually sold in any such Tag-Along Sale and
all other terms and conditions of the Tag-Along Sale are the same for each
Management Stockholder participating therein and the Majority Stockholder.
(ii) If a Tag-Along Notice from any Management Stockholder is not given to
the Majority Stockholder within the fifteen day period specified above, the
Majority Stockholder shall have the right to consummate the Tag-Along Sale
without the participation of such Management Stockholder, but only on terms and
conditions which are no more favorable in any material respect to the Majority
Stockholder than as stated in the Tag-Along Sale Notice and only if such
Tag-Along Sale occurs on a date within 120 days of the Tag-Along Sale Notice
Date.
5.5 Delivery of Certificates. On the Tag-Along Sale Date, each
participating Management Stockholder shall deliver a certificate or certificates
for the Shares to be sold by such Management Stockholder in connection with the
Tag-Along Sale, duly endorsed for transfer free and clear of any lien, claim,
encumbrance, charge or security interest of any kind to the Transferee in the
manner and at the address indicated in the Tag-Along Notice against delivery of
the purchase price for such participating Management Stockholder's Shares.
5.6 Not Applicable to Drag-Along Sales. The provisions of this Article V
shall not apply to any transaction in connection with which the Majority
Stockholder exercises its rights pursuant to Section 4.1.
5.7 Cooperation. Each Management Stockholder participating in a Tag-Along
Sale shall make commercially reasonable efforts to cooperate in good faith with
the Majority Stockholder in connection with the consummation of the Tag-Along
Sale, including, without limitation, by executing an agreement in respect of the
Tag-Along Sale containing customary representations, warranties, indemnities and
agreements.
5.8 Put Right. Notwithstanding any other provision of this Article V, in
the event the Majority Stockholder's sale to which the Tag-Along Sale relates
would constitute a Control Transaction, each Management Stockholder shall have
the right to exercise either his rights pursuant to this Article V, his rights
pursuant to Section 3.12 or his rights under both Article V and Section 3.12 (in
the latter case, with respect to the Shares not included in the Tag-Along Sale
pursuant to Article V), in his sole discretion.
ARTICLE VI
REGISTRATION RIGHTS
6.1 Piggyback Registration. (i) If the Company at any time proposes to
register any securities under the Securities Act, whether or not for sale for
its own account, on a form and in a manner which would permit registration of
Registrable Shares for a public offering under the Securities Act (other than a
registration statement on Form S-4 or Form S-8 or any successor form thereto),
the Company shall give written notice of the proposed registration to each
Management Stockholder at least fifteen days prior to the filing thereof, and
each Management Stockholder shall have the right to request that all or any part
of his Registrable Shares of the same class or series of the securities proposed
to be registered by the Company be included in such registration by giving
written notice to the Company within fifteen days after the delivery of such
notice by the Company. If the registration statement is to cover an underwritten
offering, such Registrable Shares shall be included in the underwriting on the
same terms and conditions as the securities otherwise being sold through the
underwriters.
(ii) Priority on Piggyback Registrations. If a Piggyback Registration
relates to an underwritten primary offering of securities and the underwriters
of such offering determine in their good faith judgment that the aggregate
number of securities which the Company, the Selling Holders and all other
eligible security holders of the Company (the "Other Holders") propose to
include in such offering exceeds the maximum number of securities that can
reasonably be expected to be sold within a price range acceptable to the
Company, the Company will include in such registration, first, the securities
which the Company proposes to sell and, second, the securities of such Selling
Holders and Other Holders on a pro-rata basis among all such Selling Holders and
Other Holders, taken together, based on the number of securities of the Company
requested to be included by all Selling Holders and Other Holders who have
requested that securities owned by them be so included (it being agreed and
understood, however, that such managing underwriters shall have the right to
eliminate entirely the participation in such offering by all Selling Holders and
Other Holders).
(iii) Underwriters. Shares proposed to be registered and sold for the
account of any Selling Holder pursuant to a Piggyback Registration shall be sold
to prospective underwriters selected or approved by the Company, on the terms
and subject to the conditions of one or more underwriting agreements negotiated
between the Company, the Selling Holders and Other Holders participating in such
registration, and such prospective underwriters. The Selling Holders shall be
permitted to withdraw all or a part of the securities held by such Selling
Holders which were to be included in such Piggyback Registration at any time
prior to the effective date of the registration.
(iv) Compliance. Notwithstanding any other provisions hereof, the Company
shall use its best efforts to ensure that (a) any registration statement filed
in connection with a Piggyback Registration, and any amendment thereto, and any
prospectus forming a part thereof, and any supplement thereto, complies in all
material respects with the Securities Act, (b) any registration statement filed
in connection with a Piggyback Registration, and any amendment thereto, does
not, when it becomes effective, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and (c) any prospectus forming part
of any registration statement filed in connection with a Piggyback Registration,
and any supplement to such prospectus, does not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading.
6.2 Registration Statement. In connection with any Piggyback Registration
pursuant to this Agreement, the Company will furnish each Selling Holder and
each underwriter, if any, with a copy of the registration statement and all
amendments thereto and will supply each such Selling Holder with copies of any
prospectus included therein (including a preliminary prospectus and all
amendments and supplements thereto), in each case including all exhibits, and
such other documents as may be reasonably requested, in such quantities as may
be reasonably necessary for the purposes of the proposed offer and sale covered
by such registration (the Company hereby consenting to the use in accordance
with all applicable law of each such registration statement or amendment or
post-effective amendment thereto, and each such prospectus or preliminary
prospectus or supplement thereto). In connection with any Piggyback
Registration, the Company will, at the request of the managing underwriter with
respect thereto or, if not an underwritten offering, at the request of the
Selling Holders, use its best efforts to register or qualify the Registrable
Shares covered by such Piggyback Registration for sale under the securities laws
of such states as is required to permit the offer and sale of such Registrable
Shares as contemplated by the applicable registration statement and to keep each
such registration or qualification effective during the period such registration
statement is required to be kept effective and to do such other acts or things
reasonably necessary to enable the disposition in such jurisdictions of the
securities covered by the applicable registration statement in accordance with
the securities laws of such jurisdictions. In connection with any offering of
Registrable Shares registered pursuant to this Agreement, the Company shall (i)
furnish each Selling Holder, at the Company's expense and at least three
Business Days prior to the sale of any Registrable Shares, with unlegended
certificates in a form eligible for deposit with The Depository Trust Company
representing ownership of the Registrable Shares which are sold pursuant to the
registration statement, in such denominations and registered in such names as
the managing underwriter, if any, or such Selling Holder shall reasonably
request, and (ii) instruct the transfer agent and registrar of the Shares to
release any stop transfer orders with respect to the Registrable Shares so sold.
6.3 Registration Procedures. In connection with the Company's obligations
to effect a Piggyback Registration pursuant to Section 6.1, the Company will as
expeditiously as is practicable:
(i) prepare and file with the Commission such amendments and post-effective
amendments to the registration statement with respect to such Shares and such
supplements to the prospectus used in connection therewith as may be necessary
to keep such registration statement effective and to comply with the provisions
of the Securities Act with respect to the offer and sale of all securities
covered by such registration statement, in accordance with the terms hereof;
(ii) cause all Registrable Shares covered by the registration statement to
be listed on each securities exchange on which identical securities issued by
the Company are then listed or are to be listed if requested by the Selling
Holders holding a majority in number of the Registrable Shares covered by such
registration statement or the managing underwriters, if any, and cooperate and
assist in any filings required to be made with any such securities exchange or
other regulatory body in connection therewith or otherwise;
(iii) notify each Selling Holder and the managing underwriter, if any,
promptly (and in any event within two Business Days): (a) when any registration
statement, prospectus or any supplement or amendment thereto has been filed, and
with respect to the registration statement or any post-effective amendment, when
the same has become effective; (b) of any request by the Commission or any other
federal or state governmental authority for any amendments or supplements to any
registration statement or prospectus or for additional information; (c) of the
issuance by the Commission of any stop order suspending the effectiveness of any
registration statement or the initiation of any proceedings for that purpose;
(d) if, at any time prior to the closing contemplated by an underwriting
agreement entered into in connection with such registration statement, that the
representations and warranties of the Company contained in such agreement cease
to be true and correct; (e) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Shares for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose; (f) of the happening of any event which makes any statement made in the
registration statement, the prospectus or any document incorporated or deemed to
be incorporated therein by reference untrue 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; and (g) of the Company's reasonable determination that a
post-effective amendment to any registration statement would be required;
(iv) use its best efforts to prevent the issuance of any order suspending
the effectiveness of the registration statement or of any order preventing or
suspending the use of a prospectus or suspending the qualification of any of the
Shares included therein for sale in any jurisdiction and, in the event of the
issuance of any stop order suspending the effectiveness of the registration
statement, or of any order suspending or preventing the use of any related
prospectus or suspending the qualification of any Shares included in such
registration statement for sale in any jurisdiction, use its best efforts to
promptly obtain the withdrawal of any such order;
(v) furnish to each Selling Holder and the managing underwriters, if any,
at the Company's expense, one signed copy of the registration statement and any
post-effective amendment thereto, including financial statements and schedules,
all documents incorporated therein by reference and all exhibits (including
those incorporated by reference);
(vi) as promptly as practicable, if required, based on the advice of the
Company's counsel, or, if necessary, upon the occurrence of any event
contemplated by Section 6.3(iii) hereof, prepare and file a supplement or
post-effective amendment to the registration statement, 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 Shares, the
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading;
(vii) provide and cause to be maintained a transfer agent and registrar for
all Registrable Shares covered by such registration statement from and after a
date not later than the effective date of such registration statement;
(viii) use its reasonable best efforts to provide a CUSIP number for the
Registrable Shares covered by such registration statement, not later than the
effective date of such registration statement;
(ix) use its reasonable best efforts to (a) obtain opinions of counsel to
the Company (which counsel and opinions shall be reasonably satisfactory to the
managing underwriters, if any, and the Selling Holders), and updates thereof
addressed to the managing underwriters, if any, and the Selling Holders,
covering the matters customarily covered in opinions provided in underwritten
offerings and such other matters as may be reasonably requested by the
underwriters, if any, or the Selling Holders; and (b) obtain "cold comfort"
letters and updates thereof (which letters and updates shall be reasonably
satisfactory to the managing underwriters, if any, and the Selling Holders) from
the Company's independent certified public accountants addressed to the Selling
Holders and managing underwriters, if any (and, if necessary, any other
independent certified public accountants of any subsidiary of the Company or of
any business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the registration
statement), such letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters by accountants in connection
with underwritten offerings and such other matters as the underwriters, if any,
or the Selling Holders shall reasonably request. The above shall be done at each
closing under such underwriting or similar agreement or as and to the extent
required thereunder or, if not an underwritten offering, as otherwise reasonably
requested by the Selling Holders;
(x) make available for inspection by a representative of the holders of a
majority of the Registrable Shares being sold and any attorneys or accountants
retained by such holders (and, to the extent reasonably requested, furnish
copies), in connection with the preparation of a registration statement pursuant
to this Agreement, all financial and other records and 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(s), attorney(s) or accountant(s) in connection with such
registration;
(xi) enter into such agreements reasonably requested by the Selling Holders
(including, as applicable, an underwriting agreement in form, scope and
substance as is customary in similar offerings and is reasonably satisfactory to
the Company) and take all such other customary and reasonable actions in
connection therewith (including such customary and reasonable actions as may be
requested by the managing underwriters, if any) in order to expedite or
facilitate the disposition of the Registrable Shares, and in such connection,
whether or not an underwriting agreement is entered into and whether or not the
registration is an underwritten registration:
(a) make such representations and warranties to the Selling Holders and the
underwriters, if any, with respect to the business of the Company and the
registration statement, prospectus and documents, if any, incorporated or deemed
to be incorporated by reference therein, in each case, in form, substance and
scope as are customarily made by issuers to underwriters in underwritten
offerings and confirm the same, if and when reasonably requested; and
(b) deliver such documents and certificates as may be reasonably requested
by the holders of a majority of the Registrable Shares being included in the
registration statement or the managing underwriters, if any, to evidence
compliance with clause (a) above and with any provisions contained in the
underwriting agreement or other similar agreement entered into by the Company.
The above shall be done at each closing under such underwriting or similar
agreement or, if not an underwritten offering, when otherwise reasonably
requested by the Selling Holders.
(xiii) if requested by the managing underwriter in an underwritten offering
of Registrable Shares, use reasonable efforts to cause each holder of ten
percent (10%) or more of the securities of the same class as the securities
included in such underwritten offering, or any securities convertible into or
exchangeable or exercisable for such securities, in each case purchased from the
Company at any time after the date of this Agreement (other than in a registered
public offering) to agree not to effect any public or private sale or
distribution or otherwise dispose (including sales pursuant to Rule 144
promulgated under the Securities Act) of any such securities during the ten days
prior to and the ninety days after such underwritten offering has been completed
(except as part of such underwritten registration, if otherwise permitted),
unless the underwriters managing such registration otherwise agree;
(xiv) if requested, furnish each Selling Holder with a copy (or a
reasonable number of copies, as requested) of the registration statement
(together with the exhibits thereto) and each amendment thereto prior to the
filing thereof with the Commission;
(xv) if requested by the managing underwriters, if any, or a Selling
Holder, promptly incorporate in a prospectus, supplement or post-effective
amendment such information as the managing underwriters, if any, or such Selling
Holder reasonably requests to be included therein relating to the sale of the
Registrable Shares, including, without limitation, information with respect to
the number of Registrable Shares being sold to underwriters, the purchase price
being paid therefor by such underwriters or such Selling Holders and with
respect to any other terms of the underwritten offering of the Registrable
Shares to be sold in such offering; and make all required filings of such
prospectus, supplement or post-effective amendment promptly following
notification of the matters to be incorporated in such supplement or
post-effective amendment;
(xvi) upon the occurrence of any event that would cause a registration
statement (a) to contain a material misstatement or omission or (b) to be not
effective and usable for the offer and sale of Registrable Shares, the Company
shall promptly file an amendment to such registration statement, in the case of
clause (a), correcting any such misstatement or omission and, in the case of
either clause (a) or (b), use its commercially reasonable efforts to cause such
amendment to be declared effective and such registration statement to become
usable as soon as reasonably practicable thereafter;
(xvii) otherwise use its reasonable best efforts to (a) comply with all
applicable rules and regulations of the Commission and to take all other steps
reasonably necessary to effect the registration of the Registrable Shares
covered by such registration statement as contemplated hereby, and (b) make
available to its security holders an earnings statement which satisfies the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or
any successor rule thereto) no later than forty-five days after the end of any
twelve-month period (or ninety days after the end of any twelve-month period if
such period is a fiscal year) (or in each case within such extended period of
time as may be permitted by the Commission for filing the applicable report with
the Commission) (A) commencing at the end of any fiscal quarter in which Shares
are sold to underwriters in a firm commitment or best efforts underwritten
offering and (B) if not sold to underwriters in such an offering, commencing on
the first day of the first fiscal quarter of the Company after the effective
date of a registration statement, which statements shall cover said twelve-month
periods; and
(xviii) in connection with any underwritten offering, cooperate with all
marketing efforts reasonably requested by the managing underwriter or managing
underwriters in connection with the sale of the Shares, including, without
limitation, participation in a reasonable number of road-show presentations and
other marketing activity by members of the Company's senior management and other
employees of the Company requested by such managing underwriter or managing
underwriters.
6.4 Holdback Agreements. The Company and each Management Stockholder
agrees, if requested (pursuant to a timely written notice) by the managing
underwriter or underwriters in an underwritten offering effected in connection
with a Piggyback Registration, not to effect any public sale or distribution of
any of the Company's Shares, including a sale pursuant to Rule 144, except as
part of such underwritten offering, during the period beginning ten days prior
to, and ending one hundred and eighty days after, the closing date of the
underwritten offering made pursuant to such registration statement. The
foregoing provisions shall not apply to the Company or any holder of Registrable
Shares if such Person is prevented by applicable law or regulation from entering
into any such agreement; provided, however, that any such Person shall undertake
not to effect any public sale or distribution of the class of securities covered
by such registration statement (except as part of such underwritten offering)
during such period unless it has provided sixty days' prior written notice of
such sale or distribution to the managing underwriter.
6.5 Registration Expenses. All expenses, disbursements and fees incurred by
the Company and the Selling Holders in connection with carrying out their
obligations under this Article VI, including, but not limited to, (i) the
reasonable and documented fees and expenses of one law firm (plus local counsel)
for the Selling Holders, (ii) all registration, filing fees and expenses
(including fees with respect to filings made with any securities exchange and
the fees and expenses of any "qualified independent underwriter" and its
counsel, as may be required by the rules and regulations of any securities
exchange), (iii) fees and expenses of compliance with state securities or blue
sky laws (including fees and disbursements of counsel for the underwriters or
Selling Holders in connection with blue sky qualifications of the Registrable
Shares and determinations of their eligibility for investment under the laws of
such jurisdiction as the managing underwriters or holders of a majority of the
Registrable Shares being sold may designate), (iv) printing expenses (including
printing certificates for the Registrable Shares to be sold and the registration
statements and prospectuses), messenger and delivery expenses, duplication, word
processing, and telephone expenses, (v) fees and disbursements of counsel for
the Company, (vi) fees and disbursements of all independent certified public
accountants of the Company incurred in connection with such registration
(including the expenses of any special audit and "cold comfort" letters incident
to such registration) and fees and disbursements of underwriters (excluding
discounts, commissions or fees of underwriters, selling brokers, dealer managers
or similar securities industry professionals relating to the distribution of the
Registrable Shares which shall be borne by the seller thereof) and other Persons
retained by the Company, (vii) internal expenses of the Company, including all
salaries and expenses of its officers and employees performing legal or
accounting duties, (viii) expenses of any annual audit or quarterly review,
including the fees and expenses of any Person, including special experts,
retained by the Company with regard to such annual audit or quarterly review,
(ix) the expense of any liability insurance, and (x) the expenses and fees for
listing the securities to be registered on each securities exchange on which
similar securities issued by the Company are then listed or to be listed will be
borne by the Company regardless of whether a registration statement becomes
effective.
6.6 Conditions to Selling Holders' Piggyback Registration Rights. It shall
be a condition of each Selling Holder's rights hereunder that:
(i) Cooperation. Such Selling Holder shall cooperate with the Company by
supplying information and executing documents relating to such Selling Holder or
the securities of the Company owned by such Selling Holder in connection with
the relevant registration that are reasonably requested by the Company;
(ii) Undertakings. Such Selling Holder shall enter into any undertakings
and take such other action relating to the conduct of the proposed offering
which the Company or the underwriters may reasonably request as being necessary
to insure compliance with federal and state securities laws and the rules or
other requirements of any securities exchange or which the Company or the
underwriters may reasonably request to otherwise effectuate the offering; and
(iii) Indemnification. Such Selling Holder shall execute and deliver an
agreement to indemnify to the fullest extent permitted by law and hold harmless
the Company, each of its directors, each of its officers who has signed the
registration statement, any underwriter (as defined in the Securities Act), and
each Person, if any, who controls the Company or such underwriter within the
meaning of the Securities Act, against such Losses to which the Company or any
such director, officer, underwriter or controlling person may become subject
under the Securities Act or otherwise, in such manner as is customary for
registrations of the type then proposed, but only with respect to written
information about or pertaining to such Selling Holder furnished by such Selling
Holder specifically for inclusion in a registration statement filed in
connection with a registration made under this Article VI.
6.7 Indemnification.
(i) Indemnification by the Company. In the case of any offering registered
under the Securities Act pursuant to this Agreement, the Company agrees to
indemnify to the fullest extent permitted by law and hold harmless each Selling
Holder against any and all Losses, to which they or any of them may become
subject under the Securities Act or any other statute or under common law or
otherwise, insofar as any such Losses shall arise out of, be caused by or shall
be based upon (a) any untrue statement or alleged untrue statement of a material
fact contained in a registration statement relating to the offer or sale of the
Registrable Shares covered thereby, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (b) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus (as amended
or supplemented if the Company shall have filed with the Commission any
amendment thereof or supplement thereto) or prospectus (as amended or
supplemented if the Company shall have filed with the Commission any amendment
thereof or supplement thereto, including the information deemed part of such
registration statement pursuant to Rule 430A promulgated under the Securities
Act), or the omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the indemnification agreement contained in this Section 6.7 shall not apply
to such Losses which shall arise from the sale of Registrable Shares to any
Person if such Losses shall arise out of, shall be caused by or shall be based
upon any such untrue statement or alleged untrue statement, or any such omission
or alleged omission, (x) if such statement or omission shall have been made in
reliance upon and in conformity with information furnished in writing to the
Company by and about such Selling Holder specifically for use in connection with
the preparation of the registration statement or any preliminary prospectus or
prospectus contained in the registration statement or any such amendment thereof
or supplement thereto; (y) if such untrue statement or omission was made in any
preliminary prospectus to the extent that (A) the prospectus corrected such
untrue statement or such omission and (B) the Selling Holder was legally
required to and failed to send or deliver a copy of the prospectus with or prior
to the delivery of written confirmation of the sale by such Selling Holder of
Registrable Shares to the Person asserting the claim from which such Losses
arise and the Company made the prospectus available to such Selling Holder in
accordance with the terms of the Agreement; or (z) if any such Losses arise out
of, are caused by or are based upon an untrue statement or omission in the
prospectus, to the extent that (A) such untrue statement or omission is
corrected in an amendment or supplement to the prospectus and (B) having
previously been furnished by or on behalf of the Company with copies of the
prospectus as so amended or supplemented, such Selling Holder was legally
required but failed to deliver such prospectus as so amended or supplemented,
prior to or concurrently with the sale of Shares to the Person asserting the
claim from which such Losses arise. This indemnity shall be in addition to any
other indemnification arrangements to which the Company may otherwise be a
party.
(ii) Conduct of Indemnification Proceedings. Any Person entitled to
indemnity under this Agreement (an "Indemnified Party") shall give prompt
written notice to the party from which such indemnity is sought (the
"Indemnifying Party") of any claim or of the commencement of any proceeding with
respect to which such Indemnified Party seeks indemnification or contribution
pursuant hereto; provided, however, that the failure so to notify the
Indemnifying Party shall not relieve the Indemnifying Party from any obligation
or liability except to the extent that the Indemnifying Party has been actually
and materially prejudiced by such failure. The Indemnifying Party shall have the
right exercisable by giving written notice to an Indemnified Party promptly
after the receipt of written notice from such Indemnified Party of such claim or
proceeding to assume, at the Indemnifying Party's expense, the defense of any
such claim or proceeding, with counsel reasonably satisfactory to such
Indemnified Party; provided, however, that under such circumstances an
Indemnified Party shall have the right to employ separate counsel in any such
claim or proceeding and to participate in the defense thereof; provided further,
however, that the fees and expenses of such separate counsel shall be at the
expense of such Indemnified Party unless: (a) the Indemnifying Party agrees to
pay such fees and expenses; or (b) the Indemnifying Party fails promptly to
assume the defense of such claim or proceeding or fails to employ counsel
reasonably satisfactory to such Indemnified Party; or (c) the Indemnified Party
shall have been advised by counsel that (A) there may be one or more material
defenses available to such Indemnified Party that are different from or
additional to those available to the Indemnifying Party or its Affiliates, or
(B) a conflict of interest likely exists if one counsel represents such
Indemnified Party and such Indemnifying Party or its Affiliate, in which case,
if such Indemnified Party notifies the Indemnifying Party in writing that it
elects to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof, it
being understood, however, that the Indemnifying Party shall not, in connection
with any one such claim or proceeding, or separate but substantially similar or
related claims or proceedings arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (together with appropriate local counsel which such counsel
shall be designated by the Indemnified Party and be reasonably acceptable to the
Indemnifying Party) at any time for such Indemnified Party, or for fees and
expenses that are not reasonable. Whether or not such defense is assumed by the
Indemnifying Party, such Indemnifying Party will not be subject to any liability
for any settlement made without its consent (which consent shall not be
unreasonably withheld). The Indemnifying Party shall not consent to entry of any
judgment or settle or compromise any pending or threatened claim, action or
proceeding, unless it contains as an unconditional term thereof the giving by
the claimant or plaintiff to the Indemnified Party of a release, in form and
substance satisfactory to such Indemnified Party, from all liability in respect
of such claim or litigation for which such Indemnified Party would be entitled
to indemnification hereunder.
(iii) Contribution. (a) If the indemnification provided for in this Section
6.7 is unavailable to an Indemnified Party in respect of any Losses or is
insufficient to hold such Indemnified Party harmless, then, except to the extent
that contribution is not permitted under Section 11(f) of the Securities Act,
each applicable Indemnifying Party shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party, on
the one hand, and such Indemnified Party, on the other hand, in connection with
the actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations appropriate under the circumstances. The
relative fault of such Indemnifying Party, on the one hand, and such Indemnified
Party, on the other hand, shall be determined by reference to, among other
things, whether any action in question, including any untrue statement of a
material fact or omission to state a material fact, has been taken or made by,
or relates to information supplied by, such Indemnifying Party or Indemnified
Party, and the parties' relative intent, knowledge, access to information
concerning the matter with respect to which the claim was asserted and
opportunity to correct or prevent such action, statement or omission. The amount
paid or payable by a party as a result of any Losses shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
(b) The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6.7 were determined by pro-rata allocation
or by any other method of allocation that does not take into account the
equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 6.7, no Indemnifying Party that
is a Selling Holder shall be required to contribute any amount in excess of the
amount by which the net proceeds received by such Selling Holder from the sale
of Shares exceeds the amount of any damages that such Selling Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11 (f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
(iv) Underwriting Agreement to Govern. At such time as an underwriting
agreement with respect to a particular underwriting is entered into, the terms
of any such underwriting agreement shall govern with respect to the matters set
forth therein to the extent inconsistent with this Section 6.7; provided,
however, that the indemnification provisions of such underwriting agreement as
they relate to Selling Holders are customary for registrations of the type then
proposed and provide for indemnification by such Selling Holders only with
respect to written information regarding such Selling Holder furnished by such
Selling Holders.
6.8 Rule 144. Following a Public Offering Event, the Company shall file the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the Commission thereunder and will take
such further action as any holder of Registrable Shares may reasonably request,
all to the extent required from time to time to enable such holder to sell
Shares without registration under the Securities Act within the limitation of
the exemptions provided by Rule 144. Upon the request of any Management
Stockholder, the Company will deliver to such Management Stockholder a written
statement as to whether it has complied with such requirements.
6.9 Termination of Registration Rights. The rights of a Management
Stockholder pursuant to this Article VI shall terminate with respect to Shares
held by such Management Stockholder to the extent such Shares may be sold by
such Management Stockholder pursuant to Rule 144 under the Securities Act (or
any similar provision then in force) within any three-month period.
ARTICLE VII
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
7.1 Representations and Warranties of the Company .
The Company represents and warrants to the Management Stockholders and the
Majority Stockholder as follows:
(i) Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(ii) Authority. The Company has full corporate power and authority to
execute, deliver and perform all of its obligations under Agreement and to
consummate the transactions contemplated hereby.
(iii) Binding Obligation. The execution, delivery and performance of this
Agreement by the Company and the consummation by it of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on its part, and, assuming the due execution by the party
seeking enforcement against the Company, this Agreement constitutes a binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except insofar as enforceability may be limited by bankruptcy,
insolvency, moratorium or other laws which may affect creditors rights and
remedies generally and by principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
(iv) No Conflict. The execution, delivery and performance of this Agreement
by the Company and the consummation by it of the transactions contemplated
hereby will not, with or without the giving of notice or the lapse of time, or
both, (a) violate any provision of law, statute, rule or regulation to which it
is subject, (b) violate any order, judgment or decree applicable to it, or (c)
conflict with, or result in a breach or default under, any term or condition of
its certificate or articles of incorporation or its bylaws or any material
agreement or other material instrument to which it is a party or by which it or
its property is bound.
7.2 Representations and Warranties of the Majority Stockholder. The
Majority Stockholder represents and warrants to each Management Stockholder and
to the Company as follows:
(i) Organization. It is a societe anonyme duly organized, validly existing
and in good standing under the laws of France.
(ii) Authority. It has full power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated hereby.
(iii) Binding Obligation. The execution, delivery and performance of this
Agreement by it and the consummation by it of the transactions contemplated
hereby have been duly and validly authorized by all necessary action on its
part, and, assuming the due execution by the party seeking enforcement against
it, this Agreement constitutes its binding obligation, enforceable against it in
accordance with its terms, except insofar as enforceability may be limited by
bankruptcy, insolvency, moratorium or other laws which may affect creditors'
rights and remedies generally and by principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
(iv) No Conflict. The execution, delivery and performance of this Agreement
by it and the consummation by it of the transactions contemplated hereby will
not, with or without the giving of notice or the lapse of time, or both, (a)
violate any provision of law, statute, rule or regulation to which it is
subject, (b) violate any order, judgment or decree applicable to it, or (c)
conflict with, or result in a breach or default under, any term or condition of
its certificate of incorporation, bylaws, trust or equivalent governing document
or any material agreement or other material instrument to which it is a party or
by which it or its property is bound.
(v) Ownership of VCA. The Majority Stockholder is the owner of 50% of the
issued and outstanding shares of capital stock of Verrerie Cristallerie
D'Arques.
7.3 Representations and Warranties of the Management Stockholders. Each of
the Management Stockholders represents and warrants to each other, to the
Company and to the Majority Stockholder as follows:
(i) Valid Trust. If a trust, the trust agreement creating such trust is a
legal, valid and binding trust agreement, and such trust is a valid trust under
the laws of the jurisdiction in which it was created.
(ii) Authority. If a trust, such trust has the requisite power and
authority to execute, deliver, and perform all of its obligations under, this
Agreement and to consummate the transactions contemplated hereby.
(iii) Binding Obligation. Assuming the due execution by the party seeking
enforcement against him, this Agreement constitutes his binding obligation,
enforceable against him in accordance with its terms, except insofar as
enforceability may be limited by bankruptcy, insolvency, moratorium or other
laws which may affect creditors' rights and remedies generally and by principles
of equity (regardless of whether enforceability is considered in a proceeding in
equity or at law).
(iv) No Conflict. The execution, delivery and performance of this Agreement
by him and the consummation by him of the transactions contemplated hereby will
not, with or without the giving of notice or the lapse of time, or both, (a)
violate any provision of law, statute, rule or regulation to which he is
subject, (b) violate any order, judgment or decree applicable to him, or (c)
conflict with, or result in a breach or default under, any term or condition of
any material agreement or other material instrument to which he is a party or by
which he or his property is bound.
7.4 Additional Representations and Warranties of the Management
Stockholders and the Majority Stockholder Each of the Management Stockholders
represents and warrants to the Majority Stockholder and to the Company, and the
Majority Stockholder represents and warrants to each of the Management
Stockholders and the Company that the Shares Beneficially Owned by him or it
were acquired for investment only and not with a view to any public distribution
thereof, and there is not any current plan or intention on such party's part to
offer to sell, exchange or otherwise dispose of the Shares Beneficially Owned by
him or it in violation of any of the requirements of the Securities Act.
7.5 Additional Agreements of the Company, the Majority Stockholder and the
Management Stockholders
(i) Each of the Majority Stockholder and the Company agree to give notice
in writing to each of the Other Managers of the termination of employment with
the Company of a Senior Manager for any reason no later than three Business Days
after the Termination Date.
(ii) Each of the Majority Stockholder and the Company agree to give notice
in writing to each of the Management Stockholders of the execution or
announcement of a definitive agreement with respect to a Control Transaction no
later than three Business Days after the Control Transaction Date.
(iii) The Majority Stockholder hereby agrees to guarantee absolutely and
unconditionally all of the obligations of the Company to the Management
Stockholders under Article III and Section 4.5 of this Agreement irrespective of
any circumstances whatsoever which might otherwise constitute a legal or
equitable discharge or defense of the liabilities of a surety or guarantor or
that otherwise limit recourse against the Majority Stockholder, other than
performance; provided, that the obligations of the Majority Stockholder under
this Section 7.5(iii) are independent of the obligations of the Company and a
separate action or actions may be brought and prosecuted against the Majority
Stockholder whether or not action is brought against the Company and whether or
not the Company is joined in any such action or actions.
(iv) Each of the Majority Stockholder, the Company and each Management
Stockholder agree that with respect to any Shares Beneficially Owned by a
Management Stockholder which are held in a trust, such Shares shall be treated
for all purposes under this Agreement as Shares held directly by such Management
Stockholder.
ARTICLE VIII
BOARD OF DIRECTORS
8.1. Board Composition. Commencing as of the Effective Time and so long as
any Senior Manager continues to Beneficially Own any Shares, the Senior Managers
who then Beneficially Own Shares shall have the right to nominate a number of
persons as candidates for election as members of the Board of Directors of the
Company (the "Board") equal to the number of Senior Managers who then
Beneficially Own Shares. The Majority Stockholder shall be entitled to nominate
any number of candidates for election in its sole discretion. As used herein,
the term "Nominees" refers to each person nominated to be elected to the Board.
The Majority Stockholder may cause the total number of members of the Board to
be increased at any time in its discretion, and the Management Stockholders
shall take all necessary actions reasonably requested by the Majority
Stockholder to effectuate the foregoing.
8.2. Board Action. Except as otherwise expressly provided herein or as
required by law, all actions to be taken by the Board will require the
affirmative vote of a majority of the members of the Board.
8.3. Election of Nominees. Each party hereto will use his or its best
efforts to cause the Nominees to be elected in any and all elections of
directors of the Company held during the period specified in Section 8.1 hereof.
Without limiting the generality of the foregoing, each of the Management
Stockholders and the Majority Stockholder will vote, grant a consent with
respect to, or cause to be voted for the election of the Nominees, in all
elections of directors of the Company held, or written consents in lieu thereof
given, during the period specified in Section 8.1 hereof, all securities
entitled to vote or consent in such election that such Person has the power to
vote or with respect to which such Person has the power to grant a consent (or
in respect of which such Person has the power to direct the vote or grant a
consent) in accordance with the terms of this Section 8.3.
8.4. Vacancies. Each Nominee will hold his or her office as a director of
the Company until the earlier of (i) the expiration of his or her term as
provided in the Company's certificate of incorporation, by-laws or applicable
law and (ii) his or her death, resignation, incapacity or removal from the Board
in accordance with Section 8.5. If any Nominee designated pursuant to Section
8.1 ceases to serve as a director of the Company for any reason during his or
her term (a "Terminating Nominee"), a Nominee for the vacancy resulting
therefrom may be designated by the party who originally designated the
Terminating Nominee.
8.5. Removal of Nominees. Only the Senior Managers may remove a Nominee
designated by the Senior Managers from the Board and only the Majority
Stockholder may remove a Nominee designated by the Majority Stockholder from the
Board. Any such Nominee may be removed by the Senior Managers or the Majority
Stockholder, as applicable, at any time, for any reason. If at any time the
Senior Managers or the Majority Stockholder, as applicable, shall desire to have
a Nominee removed from the Board pursuant to this Section 8.5, the Senior
Managers or the Majority Stockholder, as applicable, shall so notify the
Company, and each party hereto shall use its best efforts to take or cause to be
taken all such action as may be required to remove such Nominee from the Board.
8.6. Committees. Commencing as of the Effective Time and so long as any
Senior Manager continues to Beneficially Own any Shares, each committee of the
Board established by the Board shall have at least one director designated by
the Senior Managers, unless such committee is required by the Company's
certificate of incorporation, by-laws or applicable law to be composed entirely
of non-executive directors.
8.7. Compensation. The directors shall not receive any compensation for
their services, but shall be entitled to be reimbursed for reasonable
out-of-pocket expenses incurred in connection therewith.
ARTICLE IX
GENERAL
9.1 Public Offering. In the event the Company effects a bona fide offering
of Shares to the public (a "Public Offering Event"), (i) at the election of a
Management Stockholder, the provisions of Article II hereof shall cease to be
effective with respect to such Management Stockholder's Shares, (ii) the
purchase provisions of Section 3.13 shall cease to be effective with respect to
the Shares of the Management Stockholders, (iii) the right of the Majority
Stockholder to Call the Shares of any Management Stockholder pursuant to Article
III hereof shall cease to be effective and (iv) the right of each Management
Stockholder to Put his Shares to the Majority Stockholder pursuant to Article
III or Section 4.5 hereof shall cease to be effective at the time that more than
50% of the issued and outstanding Shares are held by members of the public
unrelated to the Majority Stockholder or any of its Affiliates or any of the
Management Stockholders. Upon any Transfer of Shares by a Management Stockholder
following any Public Offering Event, any remaining provisions of this Agreement
relating to such Shares shall cease to be effective.
9.2 Anti-Dilution Adjustments. In the event the Company changes the number
of Shares issued and outstanding as a result of a stock split, stock dividend,
recapitalization, subdivision, reclassification, combination, exchange of
shares, issuance of Shares for less than fair value or similar transaction with
respect to the issued and outstanding Shares, adjustments shall be made to the
provisions set forth herein so as to preserve, as nearly as practicable, the
economic benefits to the parties contemplated hereby.
9.3 Recapitalization, Exchanges, Etc., Affecting the Shares. The provisions
of this Agreement shall apply to the full extent set forth herein with respect
to (i) the Shares and (ii) any and all Common Stock or any common stock of any
successor or assign of the Company which may be issued in respect of, in
exchange for, or in substitution for any Shares, as a result of a
recapitalization, reclassification, merger, consolidation or other transaction.
9.4 Injunctive Relief. It is hereby agreed and acknowledged that it will be
impossible to measure in money the damages that would result from a failure by
any party to comply with any of the terms of this Agreement. Any party hereto
shall, therefore, be entitled to injunctive relief, including specific
performance, to enforce the terms of this Agreement, without the posting of any
bond. If an action should be brought in equity to enforce any of the provisions
of this Agreement, none of the parties hereto shall raise the defense that there
is an adequate remedy at law.
9.5 Notices. (i) Except as otherwise expressly provided herein, any and all
notices, demands or other communications required or permitted hereunder shall
be in writing and shall be made by hand delivery, or by first-class, registered
or certified mail with postage prepaid or by facsimile or telecopy, addressed to
the relevant party at the address set forth below:
(a) If to the Company, to:
Mikasa, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Chief Executive Officer
General Counsel
with a copy (which shall not constitute notice) to:
Xxxxxxxx & Xxxxx
Citigroup Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) If to the Majority Stockholder, to:
X.X. Xxxxxx Industries, S.A.
00 xxx Xxxxxx Xxxxxxx
00000 Xxxxxx, Xxxxxx
Telecopy: 33 3 21 95 4774
Attention: Xx. Xxxx Xxxxxxxx
with a copy (which shall not constitute notice) to:
Xxxxxxxx & Xxxxx
Citigroup Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(c) If to any of the Management Stockholders, to the address and/or
telephone number set forth below such Management Stockholder's name on the
signature pages hereto or to such other address as such Management Stockholder
shall have provided.
with a copy (which shall not constitute notice) to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Xxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(ii) Any party may change its address for notice by notice given to each
other party in accordance with the foregoing. No objection may be made to the
method of delivery of any notice actually and timely given.
9.6 Permitted Transferees Bound. All Shares Beneficially Owned by a
Permitted Transferee shall, for all purposes, be subject to the terms of this
Agreement, whether or not such Permitted Transferee has executed a consent to be
bound by this Agreement. Notwithstanding anything to the contrary contained
herein, any Person who purchases Shares from a Management Stockholder pursuant
to a Tag-Along Sale or Drag-Along Sale shall not be bound by this Agreement.
9.7 Effectiveness; Amendment; Waiver. Except as otherwise expressly set
forth herein, this Agreement may be amended, modified, supplemented or
terminated only by a written agreement of the Majority Stockholder, the Company
and such Management Stockholders as Beneficially Owned in the aggregate at least
80% of all Shares Beneficially Owned by all Management Stockholders at the time
of the execution of such written agreement; provided, however, that all parties
hereto agree that this Agreement and all other related agreements (including the
Merger Agreement) shall be amended to the extent required in order to provide
for the addition of Management Stockholders as parties to this Agreement and
such other relevant agreements in accordance with Annex A hereto. Other than
this Section 9.7, which shall be effective upon execution of this Agreement, the
other provisions of this Agreement shall become effective immediately following
the Effective Time and shall not be in full force or effect prior thereto.
9.8 Additional Documents; Further Assurances. Each party hereto agrees to
execute any and all further documents and writings and to perform such other
reasonable actions which may be or become necessary to effect the terms of this
Agreement.
9.9 No Third-Party Benefits. Nothing in this Agreement shall confer any
rights upon any Person other than the parties hereto and their respective
permitted successors and assigns.
9.10 Successors and Assigns. Except as otherwise expressly set forth
herein, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto, and their respective successors and permitted assigns;
provided, however, (i) neither this Agreement nor any rights or obligations
hereunder may be assigned by the Company or the Majority Stockholder, except
that the Majority Stockholder may assign its rights and obligations (except its
obligations under Section 7.5(iii)) hereunder (including the rights and
obligations to purchase Shares and pay the exercise price pursuant to any Put or
Call exercised hereunder or the purchase right pursuant to Section 3.13) to the
Company or any member of the JGD Group, provided, that any such assignment shall
not relieve the Majority Stockholder of its obligations hereunder, and (ii) no
rights or obligations of any Management Stockholder under this Agreement may be
transferred or assigned except that any Management Stockholder shall be
permitted to transfer its rights and obligations hereunder in connection with a
Transfer of Shares made to a Permitted Transferee in compliance with all of the
provisions of this Agreement.
9.11 Severability. In case any one or more of the provisions contained in
this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein; provided, however, that the parties hereto shall
use their reasonable best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
invalid, illegal or unenforceable term, provision, covenant or restriction.
9.12 Integration. This Agreement contains the entire understanding of the
parties with respect to the subject matter hereof. There are no restrictions,
agreements, promises, representations, warranties, covenants or undertakings
with respect to the subject matter hereof other than those expressly set forth
or referred to herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its subject matter.
9.13 Governing Law. THE RIGHTS AND LIABILITIES OF THE PARTIES SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED IN SUCH STATE.
9.14 Attorneys' Fees. If a Management Stockholder prevails in any
litigation or arbitration commenced (including any proceedings in a bankruptcy
court) between the parties hereto concerning any provision of this Agreement or
the rights and duties of any Person hereunder, in addition to such other relief
as may be granted, the Majority Stockholder shall reimburse the Management
Stockholder for his attorneys' fees and court costs incurred by reason of such
litigation or arbitration.
9.15 Headings. The headings and table of contents in this Agreement are
inserted only as a matter of convenience, and in no way define, limit, or extend
or interpret the scope of this Agreement or of any particular Section.
9.16 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.17 Consent to Jurisdiction. Each party hereto agrees that any proceeding
arising out of or relating to this Agreement or the breach or threatened breach
of this Agreement may be commenced and prosecuted in a court in the State of New
York. Each party hereto hereby irrevocably and unconditionally consents and
submits to the non-exclusive personal jurisdiction of any court in the State of
New York in respect of any such proceeding. Each party hereto consents to
service of process upon it with respect to any such proceeding by registered
mail, return receipt requested, and by any other means permitted by applicable
laws and rules. Each party hereto waives any objection that it may now or
hereafter have to the laying of venue of any such proceeding in any court in the
State of New York and any claim that it may now or hereafter have that any such
proceeding in any court in the State of New York has been brought in an
inconvenient forum.
9.18 No Inconsistent Agreements. No party will hereafter enter into any
agreements with respect to the Shares which are inconsistent with or violate or
limit in any material respects the rights granted to the other parties in this
Agreement.
9.19 Inclusion of Trusts. Reference to any Management Stockholder made
herein, including by use of the term "him" or the possessive "his" with respect
to such Management Stockholder, shall be deemed to include any trust referred to
on Annex A hereof with respect to such Management Stockholder. Unless otherwise
transferred in accordance with the terms hereof, a Management Stockholder shall
be deemed to Beneficially Own any Shares held by any trust referred to on Annex
A hereto with respect to such Management Stockholder.
* * * * * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
MIKASA, INC.
By: /s/ Xxx Xxxxx
----------------------------
Name: Xxx Xxxxx
Title: Secretary
X.X. XXXXXX INDUSTRIES, S.A.
By: /s/ A. Ibled
----------------------------
Name: A. Ibled
Title: President
MANAGEMENT STOCKHOLDERS
XXXXXXX X. XXXXXXX, on behalf of
himself, and
THE XXXXXXX XXXXXXX XXXXXXX
SEPARATE PROPERTY TRUST
/s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Address: x/x Xxx Xxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000-0000
XXXXXX X. XXXXX
/s/ Xxxxxx X. Xxxxx
-------------------------------
Address: x/x Xxx Xxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000-0000
XXXXXXX X. XXXXXXXXXX
/s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------------
Address: x/x Xxx Xxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000-0000
XXXXXX X. XXXXXXX, on behalf of
himself, and
THE XXXXXX X. XXXXXXX AND
XXXXXX X. XXXXXXX REVOCABLE
LIVING TRUST
/s/ Xxxxxx X. Xxxxxxx
-------------------------------
Address: x/x Xxx Xxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000-0000
ANNEX A
MANAGEMENT STOCKHOLDERS
Xxxxxxx X. Xxxxxxx, together with the
Xxxxxxx Xxxxxxx Xxxxxxx Separate Property
Trust
Xxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxx, together with the
Xxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxxx
Revocable Living Trust
Prior to September 24, 2000, a certain other holder of Common Stock may exchange
up to 318,000 shares of Common Stock for shares of New Preference Stock (as
defined in the Merger Agreement).
