Exhibit 99(a)
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ENVIROTEST SYSTEMS CORP.
AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
Dated as of April 10, 1992
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TABLE OF CONTENTS
Page
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Section 1. Transfers of Shares, Options or Warrants. . . . . . . . . . . 3
Section 2. Rights of First Offer . . . . . . . . . . . . . . . . . . . . 7
Section 3. Rights of Inclusion . . . . . . . . . . . . . . . . . . . . . 10
Section 4. Rights to Compel Sale . . . . . . . . . . . . . . . . . . . . 13
Section 5. Corporate Governance. . . . . . . . . . . . . . . . . . . . . 17
Section 6. Registration Rights . . . . . . . . . . . . . . . . . . . . . 25
Section 7. Transfers of Management shares. . . . . . . . . . . . . . . . 48
Section 8. Purchase Rights . . . . . . . . . . . . . . . . . . . . . . . 60
Section 9. Put Rights. . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 10. Financial Information . . . . . . . . . . . . . . . . . . . . 61
Section 11. Regulatory Matters. . . . . . . . . . . . . . . . . . . . . . 62
Section 12. Voting Shares . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 13. Share and Warrant Certificates. . . . . . . . . . . . . . . . 66
Section 14. Equitable Relief. . . . . . . . . . . . . . . . . . . . . . . 67
Section 15. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 16. Compliance with Securities Laws . . . . . . . . . . . . . . . 67
Section 17. Irrevocable Proxy . . . . . . . . . . . . . . . . . . . . . . 68
Section 18. Call of Senior Subordinated Notes . . . . . . . . . . . . . . 68
Section 19. Additional Share Issuance of New Investors. . . . . . . . . . 68
Section 20. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 69
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Schedule I - SCHEDULE OF STOCKHOLDERS
AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT, dated as of
April 10, 1992 (the "Agreement"), by and among ENVIROTEST SYSTEMS CORP., a
Delaware corporation (the "Company"), Georgetown Partners Limited
Partnership, a Maryland limited partnership ("Georgetown"), Gnitrow Ltd., a
company organized under the laws of the United Kingdom ("PITA"), Equico
Capital Corporation, a Delaware corporation ("ECC"), Amoco Venture Capital
Company, a Delaware corporation ("Amoco"), UNC Ventures II, L.P., a Delaware
limited partnership ("UNC II"), UNC Ventures, Inc., a Delaware corporation
("UNC Ventures" and, collectively with UNC II, "UNC"), MESBIC Ventures, Inc.,
a Texas corporation ("MESBIC"), Internationale Nederlanden (U.S.) Finance
Corporation ("NMB"), Skopbank, a Finnish banking corporation ("Skopbank"),
Apollo Investment Fund, L.P., a Delaware limited partnership ("Apollo"),
Chemical Equity Associates, a California limited partnership ("CVP"), and
each of the individuals listed on the Schedule of Securityholders attached
hereto as Schedule I (the "Management Stockholders"), Georgetown, PITA, ECC,
Amoco, UNC, MESBIC, NMB, Skopbank, Apollo, CVP, the New Investors and the
Management Stockholders are collectively referred to herein as the
"Stockholders" and individually as a "Stockholder." Amoco, UNC and MESBIC are
collectively referred to herein as the "Investor Group." Apollo and CVP are
collectively referred to herein as the "New Investors." Except as otherwise
provided herein, references to Georgetown, PITA, ECC, Amoco, UNC, MESBIC,
NMB, Skopbank, Apollo, CVP, the New Investors and the Management Stockholders
shall include any and all Permitted Transferees (as defined in Section l(h)
hereof) of such parties. References to the Stockholders shall include any
Permitted Transferees of the Stockholders.
WHEREAS, the Company is authorized to issue 30,000 shares of Class A Common
Stock, par value $.01 per share (the "Class A Common Stock"), of which an
aggregate of 1,581.34 shares are currently issued and outstanding, and 30,000
shares of Class B Common Stock, par value $.01 per share, of which an
aggregate of 7,818.02 shares are currently issued and outstanding (the "Class
B Common Stock" and collectively with the Class A Common Stock, the "Common
Stock"). (As used herein, the term "Shares" means (i) currently issued and
outstanding shares of Class A Common
Stock and Class B Common Stock, (ii) shares of Common Stock issued after the
date hereof upon conversion of currently outstanding shares of Common Stock
or upon the exercise of currently outstanding Options (as defined below) or
Warrants (as defined below), (iii) Additional Shares (as defined below) and
shares of Common Stock issued upon the exercise of Additional Warrants (as
defined below), and (iv) securities issued with respect to any additional
issuance upon, or exchange or reclassification of, Shares, or any other form
of recapitalization, consolidation, merger, share split, or share dividend
with respect to Shares);
WHEREAS, the Company has issued to NMB and Skopbank
warrants (the "Warrants") to purchase up to 1,720.32 shares of Class B Common
Stock, pursuant to the Warrant Agreement, dated as of April 10, 1992 (the
"Warrant Agreement"), among NMB, Skopbank and the Company;
WHEREAS, included among the Shares are the 2,599.14
shares of Class B Common Stock issued to the New Investors (all Shares held
by a New Investor, including any Shares that may hereafter be acquired are
referred to herein as its "New Investor Shares");
WHEREAS, the Company has issued to Georgetown and the
Management Stockholders options to purchase up to 1,286.75 shares of Common
Stock (the "Options");
WHEREAS, each Stockholder is the record and beneficial
owner of the number of Shares, Options or Warrants, appearing opposite his or
its name on Schedule I, free and clear of all options, liens, encumbrances or
charges of any kind (collectively, "Liens"), except as provided herein and in
the Warrant Agreement;
WHEREAS, certain of the parties hereto have entered into
that certain Stockholders' Agreement, dated as of December 21, 1990 (the
"Prior Stockholders' Agreement"), which they desire to amend and restate in
its entirety by this Agreement;
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NOW, THEREFORE, the parties hereto agree as follows:
1. Transfers of Shares, Options or Warrants.
(a) Each Stockholder agrees that, except in a transaction or transactions
specifically permitted or required by this Section 1 or Sections 4 or 7 of
this Agreement, he or it shall not, either directly or indirectly, transfer,
sell, assign, mortgage, hypothecate, pledge, create a security interest in or
lien upon, encumber, give, place in trust, or otherwise voluntarily or
involuntarily dispose of (collectively, "transfers) any of the Shares,
Options or Warrants held by such Stockholder, including Shares, Options or
Warrants that may hereafter be acquired by such Stockholder, unless such
Stockholder complies with the provisions of Sections 2, 3 and 16 and, in the
case of Management Stockholders, Section 7 hereof.
(b) Transfer of Shares, Options or Warrants to
Affiliates. Subject to Sections l(c), l(h) and 16, and, with respect to
Management Stockholders, Section 7, each Stockholder may, without the consent
of any of the other parties hereto and without complying with the provisions
of Sections 2 and 3 hereof, directly or indirectly, transfer Shares, Options
or Warrants to any Affiliate of such Stockholder, or, if such Stockholder is
an individual, pursuant to the laws of descent and distribution. In the event
of any such transfer, except as otherwise provided herein, a transferee or
subsequent transferee of a Stockholder shall be entitled to the rights and
privileges provided to such Stockholder herein and shall be bound and
obligated to the extent of such Stockholder by the provisions hereof.
As used herein, "Affiliate" shall mean (i) any
person directly or indirectly controlling, controlled by, or under common
control with, another person, (ii) a person owning or controlling 51% or more
of the outstanding voting securities of such other person, (iii) any officer,
director, partner or employee of such other person, (iv) with respect to each
of Georgetown, Apollo and CVP, any employee thereof, any partner thereof, any
partner of any partner thereof, or any person directly or indirectly
controlled by, or under common control with, any general partner thereof, and
(v) any parent, spouse or
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child (or any trust for the benefit of any parent, spouse or child) of any of
the foregoing.
(c) Restrictions on Georgetown Shares or Options.
Notwithstanding anything to the contrary contained in this Agreement,
Georgetown agrees that it shall not (i) directly or indirectly, transfer any
of the Shares or Options held by Georgetown if such disposition would
constitute a default or Event of Default under the Credit Agreement (as
defined therein) or constitute a Change of Control under the Indenture (as
defined therein) or (ii) transfer in any respect its Director Rights (as
hereinafter defined). Georgetown hereby agrees that Xxxxxxx X. Xxxxxxxxx is
and will remain in control of Georgetown.
(d) Certain Definitions. As used herein,
(i) "Credit Agreement" shall mean that certain
Credit Agreement, dated as of March 30, 1992, by and among Xxxxxxxx Test
Systems, Inc. ("HTS"), the guarantors named therein, the banks party thereto,
and NMB, as Agent, or any refinancing or restatement thereof,
(ii) "Indenture" shall mean that certain
Indenture, dated as of April 10, 1992, by and among HTS, the guarantors named
therein and the trustee named therein,
(iii) "Senior Subordinated Notes shall mean the
131/2% Senior Subordinated Notes due 2000 issued under the Indenture,
(iv) a Stockholder's "Director Rights" shall
mean the specific rights, if any, of such Stockholder to designate, nominate
or remove directors in accordance with Section 5 hereof,
(v) a Stockholder's "Representative Rights"
shall mean the specific rights, if any, of a Stockholder to appoint a
representative to attend meetings of the Company's Board of Directors in
accordance with Section 5 hereof, and
(vi) "person" shall mean any individual,
partnership, corporation, joint venture, association, jointstock company,
trust, unincorporated
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organization, union, business association, firm, government or agency or
political subdivision thereof, or other entity,
(vii) "control" with respect to any person,
shall mean the power to direct the management and policies of such person,
directly or indirectly, whether through the ownership of voting securities,
by contract or otherwise.
(e) Transfers by PITA. Subject to Sections l(h) and
16 and without complying with the provisions of Section 2 or 3 hereof, PITA
may at any time and from time to time transfer any or all of its Shares and,
at its option, in connection therewith, its Director Rights, to any person
(other than any person that directly competes with HTS). For the purposes
hereof, PITA or any transferee of PITA to whom PITA's Director Rights shall
have been assigned being herein referred to as the "PITA Investor. n
(f) Transfers by NMB, Skopbank, the Apollo Investor
and the CVP Investor. Subject to Sections l(h) and 16, and without complying
with the provisions of Section 2 or 3 hereof, (i) NMB and Skopbank may, at
any time and from time to time, transfer any or all of the Warrants, shares
of Class B Common Stock issuable upon the exercise of the Warrants, shares of
Class A Common Stock issuable upon conversion of such shares of Class B
Common Stock or shares of Class B Common Stock issuable upon conversion of
such Class A Common Stock (all such shares being referred to herein as
"Warrant Shares") to any person, (ii) each of the New Investors may at any
time and from time to time, transfer any or all of its New Investor Shares
and, at its option, in connection therewith, its Director Rights or
Representative Rights, as the case may be, to any person, provided that such
New Investor also transfers in connection therewith not less than 25% of the
aggregate principal amount of Senior Subordinated Notes then outstanding,
(iii) each of the New Investors may, at any time and from time to time,
transfer any or all of its New Investor Shares in one transaction or in
series of related transactions, provided that such New Investor also
transfers in connection therewith not less than $2,500,000 aggregate
principal amount of Senior Subordinated Notes; and (iv) if required by
applicable law or regulation, either of the New Investors may transfer any or
all of its New Investor Shares to any person or persons (with or
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without its Representative Rights but without its Director Rights), provided
that such New Investor shall have provided prior written notice of such
requirement to the Company. Apollo or any transferee of Apollo to whom
Apollo's Director Rights shall have been assigned being herein referred to as
the "Apollo Investor," and CVP or any transferee of CVP to whom CVP's
Representative Rights shall have been assigned being herein referred to as
the "CVP Investor."
(g) Other Transfers. Without limiting the provisions
of Sections l(c) and l(f) hereof, each of ECC, the Investor Group, the Apollo
Investor, and the CVP Investor may, subject to Sections l(h), 3 and 16,
transfer Shares or Options owned by it without complying with the rights of
first offer set forth in Section 2 hereof; provided, however, that in the
event that the ECC, the Investor Group, the Apollo Investor, or the CVP
Investor shall so transfer any Shares or Options pursuant to this Section
l(g), any Director Rights that it may have shall terminate and be of no
further force or effect and, thereafter, the holders (the "Majority
Independent Stockholders") of a majority of the Shares then held by
Stockholders other than Stockholders who continue to have Director Rights
(the "Independent Shares") shall have the Director Rights that formerly
belonged to the Stockholder or Stockholders whose Director Rights were
terminated by operation of this Section l(g).
(h) Condition to Permitted Transfers. As a condition
to any transfer permitted pursuant to this Section 1 (other than Section
l(i)), each transferee that is not a party hereto shall, prior to such
transfer, agree in writing to be bound by all of the provisions of this
Agreement applicable to the transferor and no such transferee shall be
permitted to make any transfer other than in accordance with the terms of
this Agreement. Any transferee of Shares, Options or Warrants pursuant to a
transaction permitted by this Section 1 shall be referred to as a "Permitted
Transferee." Except as otherwise provided herein, each Permitted Transferee
shall be entitled to the rights and privileges, including the right to
transfer Shares, Options or Warrants, and shall be bound and obligated to the
extent of the original transferor Stockholder under this Agreement.
(i) Transfer Restrictions. The provisions of
Sections 1, 2, 3 and 7 of this Agreement
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shall not apply to any transfer pursuant to a Public Offering of Registrable
Securities (as such terms are hereinafter defined) made pursuant to Section
6(b) or 6(c) hereof.
2. Rights of First Offer.
(a) Except as provided in Section 1 and, with
respect to Management Stockholders, Section 7 hereof, any Stockholder (a
"Selling Stockholder") who desires to transfer (x) any or all of its or his
Shares or Options or (y) any or all of its or his Shares or Options together
with any of the Company's 131/2% Subordinated Notes due 2000 (the "Junior
Subordinated Notes") (the securities to be transferred being referred to
herein as the "Sale Securities") to a third party purchaser or purchasers
shall first offer to sell such Sale Securities to the other Stockholders (the
"Offeree Stockholders") in their Proportionate Percentage (as defined in
Section 2(d) hereof), at a price determined in the sole discretion of such
Selling Stockholder (an "Offer"). Each such Offer shall be made by written
notice to the Company and the Offeree Stockholders. Upon receipt of such
notice, each Offeree Stockholder shall have 30 days (the "Offer Period") to
offer to purchase from the Selling Stockholder all, but not less than all, of
the Offeree Stockholder's Proportionate Percentage of the Sale Securities, at
the cash price determined by the Selling Stockholder and upon the terms and
conditions set forth in clauses (i) through (vi) of the definition of Firm
Offer below. If an Offeree Stockholder elects to accept an Offer, it or he
shall make a Firm Offer within the Offer Period by providing written notice
thereof to the Selling Stockholder, with copies thereof to the Company and
each of the other Offeree Stockholders. A Firm Offer shall be irrevocable for
a period of 30 days. As used herein, "Firm Offer" means a written all cash
offer for the purchase of the Sale Securities:
(i) Requiring no representations or
warranties from the Company or the Selling Stockholder
other than representations from such Selling Stockholder
that it or he has the corporate or individual authority
to sell such Sale Securities, is the sole owner of such
Sale Securities, and has good and valid title to such
Sale Securities, free and clear of any and all Liens,
and the sale of such Sale Securities, does
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not violate any agreement to which he or it is a party
or by which he or it is bound ("Customary Limited
Representations");
(ii) Containing no conditions other than a
financing condition (in which case the offer must be
accompanied by a non-refundable deposit equal to at
least 5% of the proposed purchase price and financing
commitments from financial institutions in the business
of providing acquisition financing that are subject only
to customary conditions);
(iii) Requiring no continuing obligations
on the part of the Selling Stockholder;
(iv) In the case of an Offer without the
financing condition, accompanied by demonstrated
capacity to finance the transaction;
(v) Providing for the purchase of the
Offeree's Proportionate Percentage of the Sale
Securities; and
(vi) Including an absolute release by the
Offeree Stockholder of the Selling Stockholder and its
Affiliates from any and all claims arising out of their
investment in, and activities relating to, the Company.
(b) If any Offer is not accepted by an Offeree
Stockholder, then a succeeding Offer or Offers for the sale of all Sale
Securities as to which there was no such acceptance shall thereafter be
deemed to have been made by the Selling Stockholder to those Offeree
Stockholders who accepted the preceding Offer, in their Proportionate
Percentage, at the same price and upon the same terms and conditions at which
they were offered to the initial Offeree Stockholders, until such time as all
Offers pursuant to Section 2(a) hereof and this Section 2(b) are accepted or
the time within which acceptance is required has expired and no Offer made
during such period is accepted. Each successive Offer hereunder shall be
deemed to have been made immediately upon the expiration of the period of the
prior Offers, and each Offeree Stockholder shall have a period of five
business days after the commencement of each Offer within which to
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accept the Offer, which acceptance must be for all and not part of the
Offeree Stockholder's Proportionate Percentage of the Sale Securities so
offered. If an Offeree elects to accept any Offer made pursuant to this
Section 2(b), it or he shall signify its or his acceptance within the
applicable 5 business day period by providing written notice thereof in the
form of a Firm Offer to the Selling Stockholder, with copies thereof to the
Company and each of the other Stockholders. The Company shall maintain
records of each successive Offer and the Sale Securities accepted for
purchase pursuant thereto, and shall apprise each Stockholder of the status
thereof upon request. No acceptance of any offer made by an Offeree
Stockholder pursuant to Section 2(a) hereof or this Section 2(b) shall be
effective unless Offers are accepted by one or more of the Offeree
Stockholders for all of the Sale Securities being offered.
Upon the receipt of Firm Offers for all of the
Sale Securities, the Selling Stockholder shall notify each Offeree
Stockholder who has made a Firm Offer (a "Committed Stockholder") of a
closing date selected by the Selling Stockholder (the "Closing Date"), which
shall be no earlier than 60 nor later than 75 days after the Selling
Stockholder made its initial written Offer. If one or more Committed
Stockholders shall fail or be unable to close on the purchase of their
portion of the Sale Securities on the Closing Date, such closing shall
nevertheless occur with the other Committed Stockholders. In addition to any
rights and remedies the Selling Stockholder may have against a defaulting
Committed Stockholder, (x) a defaulting Committed Stockholder will forfeit
any deposit given to the Selling Stockholder and (y) a defaulting Committed
Stockholder shall not be entitled to participate in the rights provided by
this Section 2 for a period of 12 months after such default.
(c) If all of the Sale Securities offered
pursuant to the provisions of this Section 2 are not accepted for purchase by
the Offeree Stockholders during the respective offering periods provided in
this Section 2 or are not purchased as provided in this Section 2, the
Selling Stockholder shall have the right to sell all (but not less than all)
of the Sale Securities to any purchaser or purchasers at a price, whether in
cash, securities or otherwise, having a value no less than 95% of the
offering price, and upon such other terms and conditions as the Selling
Stockholder may elect, free from the restrictions
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of this Section 2 (but subject to Section 3 hereof) in a bona fide
transaction or transactions during a period of 120-days after the date that
the last Offer expires under this Section 2. Any Securities not sold pursuant
to the immediately preceding sentence prior to the expiration of 120day
period referred to therein shall once again be subject to the rights of first
offer set forth in this Section 2.
(d) As used herein, the term "Proportionate
Percentage" shall mean, with respect to any Offeree Stockholder entitled to
receive a particular Offer, a percentage (expressed as a decimal fraction
rounded to the nearest onehundredth) obtained by dividing (x) the number of
Shares owned by such Stockholder (including the underlying Shares of any
Options or Warrants owned by such Stockholder) by (y) the aggregate number of
Shares owned by all Offeree Stockholders (including the underlying Shares of
any Options or Warrants owned by such Stockholders) entitled to receive such
offer.
3. Rights of Inclusion. Except as provided in Section 1
and, with respect to Management Stockholders, Section 7 hereof:
(a) No Stockholder or Stockholders shall, in
any one transaction or any series of related transactions (except a sale to
other Stockholders pursuant to Section 2(b) hereof), transfer to a third
party more than 10% of the Shares unless the terms and conditions of such
transfer include an offer to each of the other Stockholders to include, at
the option of each of the other Stockholders, in such transfer, a number of
Shares, Warrants or Options owned by the other Stockholders determined in
accordance with subsection 3(c) below. If any Stockholders (the "Offeree
Stockholders") receive a bona fide offer from a third party to purchase or
otherwise acquire a number of Shares or Options equal to at least 10% of the
Shares, which offer the Offeree Stockholders intend to accept, the Offeree
Stockholders shall then cause the third party's offer to be reduced to
writing (which writing shall include an offer to purchase or otherwise
acquire Shares, Warrants or Options from any of the other Stockholders
according to the terms and conditions of Sections 3(b) and 3(c) hereof) and
shall send written notice of the third party's offer (the "Notice") to each
of the other Stockholders. The Notice
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shall be accompanied by a true and correct copy of the third party's offer.
At any time within 15 days after receipt of the Notice, each of the other
Stockholders may accept the offer included in the Notice for up to such
number of Shares, Warrants or Options as is determined in accordance with the
provisions of Section 3(c) below by furnishing written notice of such
acceptance to the Offeree Stockholder and the third-party offeror. Any
Stockholder who accepts such offer may indicate in his written notice, if he
or it so elects, his or its desire to sell a number of Shares, Warrants or
Options in excess of his Proportionate Percentage share thereof, stating the
maximum number of Shares, Warrants or Options in excess of such Proportionate
Percentage which such Stockholder desires to sell (such Stockholder's "Excess
Amount"), which amount, together with such Proportionate Percentage, shall
not exceed the lesser of (i) the total number of Shares, Options and Warrants
owned by such Stockholder and (ii) the total number of Shares, Options and
Warrants offered to be purchased by third party purchaser.
(b) If within 15 days after the receipt of
the Notice any of the other Stockholders has not accepted the offer contained
in the Notice, such party shall be deemed to have waived any and all rights
with respect to the sale or other disposition of Shares, Warrants or Options
described in the Notice.
(c) The Shares, Warrants or Options to be
sold pursuant to this Section 3 shall be purchased by the third party
purchaser in the following order of priority: (i) first, from each
Stockholder (including the Stockholder initiating the sale of shares) who has
elected to participate in the sale pursuant to subsection 3(a), in accordance
with his respective Proportionate Percentage of the total number of Shares,
Warrants or Options to be acquired by the third party; (ii) second, to the
extent any Stockholder has declined to sell a number of Shares, Warrants or
Options proposed to be transferred equal to his Proportionate Percentage of
Shares, Warrants or Options to be acquired, then from the Offeree Stockholder
and the other Stockholders, in accordance with the Excess Amount indicated in
their respective notices or determined in accordance with the following
sentence (unless such amount exceeds the aggregate number of Shares, Warrants
or Options proposed to be sold to such third party, in which event the Excess
Amounts of such Stockholders shall be reduced according to their respective
Proportionate
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Percentage). For the purposes hereof, the Offeree Stockholder's Excess Amount
shall be deemed to be the lesser of (x) the difference between the number of
Shares then owned by the Offeree Stockholder and such Stockholder's
Proportionate Percentage of the total number of Shares, Options and Warrants
offered to be purchased by the third party, and (y) the total number of
Shares, Options and Warrants offered to be purchased by such Third Party
Purchaser less such Proportionate Percentage.
(d) The purchase from the Stockholders pursuant
to this Section 3 shall be on the same terms and conditions, including the
per share price and the date of transfer, as are received by the Offeree
Stockholder and stated in the Notice provided to the other Stockholders;
provided, however, that no other Stockholders shall be required to make any
representations or warranties in connection with such sale except Customary
Limited Representations.
(e) The Offeree Stockholder shall notify the
Company and the other Stockholders who have exercised their inclusion rights
pursuant to this Section 3 within five days of the end of the 15-day period
referred to in subsection 3(b), of the number of Shares, Warrants or Options
each Stockholder has been allocated to sell pursuant to subsection 3(c). Each
other Stockholder, within five days of receipt of such notice, shall deliver
to the Offeree Stockholder the certificate or certificates representing the
Shares, Warrants or Options, to be sold pursuant to such offer by such
Stockholder, together with a limited power-ofattorney authorizing the Offeree
Stockholder to sell or otherwise dispose of the Shares, Warrants or Options
to be sold pursuant to the terms of such third party's offer.
(f) Simultaneously with the consummation of
transfer of the Shares or Options of the Offeree Stockholder, the Offeree
Stockholder shall notify the Company and the other Stockholders who have
exercised their inclusion rights pursuant to Section 3 that the consummation
of such transaction has occurred and shall promptly, but in any event not
later than 3 business days thereafter, remit to such Stockholders the total
sales price of the Shares, Warrants or Options of such Stockholders sold
pursuant thereto, net of such Stockholder's pro rata share of all
out-of-pocket fees, expenses and costs incidental to such sale (collectively,
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"Sale Expenses") other than those payable to an Affiliate of any Offeree
Stockholder, and shall furnish such other evidence of the completion and time
of completion of such transfer and the terms thereof as may be reasonably
requested by such Stockholders.
(g) To the extent that no other Stockholders
have exercised their rights of inclusion pursuant to this Section 3, the
Offeree Stockholder shall have 90 days in which to transfer not more than the
number of Shares described in the Notice, on terms and conditions not more
favorable to the Offeree Stockholder than those set forth in the Notice.
4. Rights to Compel Sale.
(a) if Stockholders entitled to vote at least
54% of the then outstanding Voting Shares (as defined in Section 12 hereof)
propose to sell in any transaction or any series of related transactions all
of the Shares, Options and Warrants to a third party (other than to an
Affiliate of an Offeror Stockholder (as defined below)) in an arm's-length
transaction, such Offeror Stockholders may require all but not less than all
of the remaining Stockholders to sell all but not less than all the Shares,
Options and Warrants owned by them to such third party for the same per share
consideration (equitably adjusted to take into account the exercise price of
any Options or Warrants) and otherwise on the terms and conditions provided
in this Section 4; provided, however, that (A) Georgetown shall be one of
such Offeror Stockholders, (B) if the Sale Date (as defined below) is prior
to the second anniversary of the date hereof, the New Investors shall both be
Offeror Stockholders, and (C) if the Sale Date is on or after the second
anniversary of the date hereof, either (1) the New Investors shall both be
Offeror Stockholders or (2) the aggregate sale price (net of Sale Expenses)
would result in a cumulative annual rate of return (compounded semiannually)
to each of the New Investors from the date hereof through the Sale Date equal
to the following: (x) 35%, if such sale occurs after the second anniversary
of the date hereof but prior to the fifth anniversary of the date hereof, and
(y) 25%, if such sale occurs on or after the fifth anniversary of the date
hereof (it being understood that one or more of the other Stockholders may
agree to increase the net proceeds payable to the New Investors on such sale
by an amount
13
sufficient to satisfy the conditions set forth in clause (2) above).
If Stockholders entitled to vote at least 70%
of the then outstanding Voting Shares propose to sell in any transaction or
any series of related transactions all of the Shares, Options and Warrants to
a third party (other than to an Affiliate of an Offeror Stockholder) in an
arm's-length transaction, such Offeror Stockholders may require all but not
less than all of the remaining Stockholders to sell all but not less than all
the Shares, Options and Warrants owned by them to such third party for the
same consideration per share and otherwise on the terms and conditions
provided in this Section 4; provided, however, that (A) if the sale occurs on
or before the second anniversary of the date hereof and Xxxxxxx X. Xxxxxxxxx
is Chairman of the Company, Georgetown shall be one of such Offeror
Stockholders and (B) if such sale occurs prior to the fourth anniversary of
the date hereof, either (i) the New Investors shall both be Offeror
Stockholders or (ii) the aggregate sale price (net of Sale Expenses) would
result in a cumulative annual rate of return (compounded semiannually) to
each of the new Investors from the date hereof through the Sale Date equal to
the following: (x) 35%, if such sale occurs prior to the first anniversary of
the date hereof, (y) 30%, if such sale occurs on or after the first
anniversary of the date hereof but prior to the second anniversary of the
date hereof, and (z) 25%, if such sale occurs on or after the second
anniversary of the date hereof but prior to the fourth anniversary of the
date hereof (it being understood that one or more of the other Stockholders
may agree to increase the net proceeds payable to the New Investors on such
sale by an amount sufficient to satisfy the conditions set forth in clause
(2) above).
As used in this Section 4, the term "Offeror
Stockholders" means Stockholders with the requisite percentage of Voting
Shares who compel a sale pursuant to this Section 4(a).
(b) At the option of the Offeror Stockholders,
any sale of the Company permitted by Section 4(a) hereof may be structured as
a merger, consolidation or sale of all or substantially all of the
consolidated assets of the Company, and each Stockholder hereby agrees, to
the fullest extent permitted by applicable law, to vote all of the Shares it
is entitled
14
to vote in favor of such transaction. Notwithstanding any provision of this
Agreement to the contrary, the Company shall be prohibited from any merger,
consolidation or sale of all or substantially all of its assets if such
transaction would not be permitted under this Section 4 if structured as a
sale of Shares.
(c) For purpose of Section 4(a) hereof, the
return to a New Investor shall be equal to the greater of:
(i) the return that would be obtained by
an investor calculated solely on (A) New Money
Investments (as defined below) by such New Investor and
any of its Affiliates on or after the date hereof but on
or prior to the Sale Date, (B) all cash paid on or after
the date hereof but on or prior to the Sale Date by the
Company or a third party on the Sale Date to holders of
such New Money Investments, whether or not then owned by
such New Investor, including cash payments in respect of
principal of, or premium or interest on, New Money
Investments constituting Indebtedness ("New Money Debt")
and cash dividends and distributions with respect to New
Money Securities constituting equity ("New Money
Equity") (but excluding any funds relating thereto
escrowed pursuant to clause (e) below), and (C) New
Money Debt held by the holders of the New Money
Investments immediately following the Sale Date, valued
at the lesser of par and accreted value, provided that
such holders have agreed to receive such New Money Debt.
(ii) the return to such New Investor
calculated solely on (A) cash investments made on or
after the date hereof but on or prior to the Sale Date
by such New Investor or any of its Affiliates in the
Company or any of its subsidiaries ("New Money
Investments") (whether debt, equity or otherwise, and
including the cash exercise or conversion price of any
exchangeable or convertible securities), including the
purchase of Shares, and Senior Subordinated Notes on the
date hereof, (B) all cash actually received on or after
the date hereof but on or prior to the Sale Date by such
New Investor and its Affiliates with respect to
15
New Money Investments, including cash payments with
respect to principal of, or premium or interest on, New
Money Debt and cash dividends and distributions with
respect to New Money Equity (but excluding any funds
escrowed pursuant to clause (e) below), and (C) New
Money Debt held by such New Investor immediately
following the Sale Date, valued at the lesser of par and
accreted value; provided, that such New Investor has
agreed to receive such New Money Debt.
Upon the request of the Offeror Stockholders, which
request includes the terms of the proposed sale transaction, the Company or
the New Investors will calculate the cumulative annual rates of return in
accordance with clauses (i) or (ii) above, respectively, and promptly furnish
to each other and such Offeror Stockholders their calculations thereof in
reasonable detail.
(d) The Offeror Stockholders shall send written
notice of the exercise of their rights pursuant to this Section 4 to each of
the remaining Stockholders (the "Drag-Along Notice") setting forth the
consideration per share to be paid by a third party purchaser and the other
terms and conditions of the transaction. Within 10 days following the date of
the Drag-Along Notice, each of the remaining Stockholders shall either attend
the closing of the sale and deliver, or deliver to a representative of the
Offeror Stockholders designated in the notice, certificates representing the
Shares, Options and Warrants held by such Stockholder, duly endorsed,
together with all other documents required to be executed in connection with
such transactions. If a remaining Stockholder should fail to deliver such
certificates to the Offeror Stockholders, the Company shall cause the books
and records of the Company to show that such Shares, Options or Warrants are
bound by the provisions of this Section 4 and that such Shares, Options or
Warrants shall be transferred only to the third party purchaser upon
surrender for transfer by the holder thereof.
Simultaneously with the consummation of the sale of the
Shares, Options and Warrants of the Offeror Stockholders and the Shares,
Options and Warrants of the remaining Stockholders pursuant to this Section
4, the Offeror Stockholders shall promptly, but in any event not later than 3
business days thereof, remit to each of the
16
other Stockholders the total sales price of the Shares, Options or Warrants
of such Stockholder sold pursuant thereto, net of such Stockholder's pro rata
share of all out-of-pocket Sale Expenses other than those payable to an
Affiliate of any Offeror Stockholder, and shall furnish such other evidence
of the completion and time of completion of such sale or other disposition
and the terms thereof as may be reasonably requested by such Stockholders.
(e) The purchase from the Stockholders pursuant
to this Section 4 shall be on the same terms and conditions (including the
per share price (equitably adjusted to take into account the exercise price
of any Options or Warrants) and the date of transfer (the "Sale Date")) as
are to be received by the Offeror Stockholders, which terms and conditions
shall be stated in the Drag Along Notice (provided, however, that if any
securities are to be received by the Stockholders in connection with such
sale, each Stockholder will have the right to receive non-voting securities
on the terms provided in the Company's Certificate of Incorporation and
Section 11 hereof); and (ii) no other Stockholder shall be required to make
any representations or warranties in connection with such sale other than
Customary Limited Representations. The agreement of sale may set aside a
pro-rata portion of the proceeds payable with respect to the Shares, Options
and Warrants of the Company in escrow, upon terms satisfactory to the Offerer
Stockholders, as a source of indemnification to be provided to the
purchaser(s). Upon termination of such escrow, each Stockholder shall be
entitled to receive his or its pro-rata share of any funds remaining in
escrow, after the payment of all indemnity claims, the fees and expenses of
the escrow agent and the out-of-pocket expenses of any representative of the
Stockholders pursuant to the escrow agreement in connection with the
administration of the escrow and the settlement, compromise and/or defense of
any claims made against the escrow.
5. Corporate Governance.
(a) Number of Directors. Except as required by
law in any foreign jurisdiction or with the unanimous consent of all of the
directors of the Company, the Company and each of the Stockholders agree to
take such action, including the voting of the Class A Shares owned or
controlled by such Stockholder, as may be
17
necessary to cause the Company and each of its wholly-owned subsidiaries to
be managed by a Board of Directors consisting of nine members, in accordance
with the provisions of this Section 5. For purposes of this Section 5, except
as the context otherwise requires, references to directors or to the Board of
Directors shall include directors and the Board of Directors of the Company
and each of its wholly-owned subsidiaries.
(b) Initial Board of Directors. If the Board of
Directors on the date hereof shall not consist of Xxxxxxx X. Xxxxxxxxx,
Xxxxxx Xxxxxxx, Xxxxxx Xxxxxxxxx, Xxxxxxx X. Xxxxxxx, Xx., one person
nominated by Georgetown, one person nominated by the PITA Investor, one
person nominated by ECC, one person nominated by the holders of a majority of
the Shares held by the Investor Group (the "Investor Group Majority") and one
person nominated by the Apollo Investor, then immediately after the date
hereof, the Stockholders shall take such action and cause the then directors
to take such action as may be necessary so as to cause the Board of Directors
to consist of the foregoing nine members.
(c) Subsequent Nominations. Subject to Section
5(g) hereof, the Stockholders shall, at any time that directors are to be
elected, take such action as may be necessary to nominate or to cause the
Board of Directors to nominate and recommend, as the proposed members of the
Board of Directors, (i) five persons designated by Georgetown (each a
"Georgetown Director"); provided, however, that (A) if Xx. Xxxxxxx shall, for
any reason, cease serving as a director, Georgetown shall consult with the
PITA Investor, the New Investors and ECC prior to designating his successor
(and thereafter, prior to designating any further successors to the
directorship initially held by Xx. Xxxxxxx) and (B) if there is a Change of
Control (as defined in the Indenture) or Xxxxxxx X. Xxxxxxxxx shall cease to
control Georgetown (a "Change of Control Event"), the number of persons to be
designated by Georgetown pursuant to this clause (i) shall be reduced from
five to three (or, if a Phase II Event has occurred, from four to three);
(ii) one person designated by ECC (the "ECC Director"); (iii) one person
designated by the PITA Investor (the "PITA Director"); (iv) one person
designated by the Investor Group; and (v) one person designated by the Apollo
Investor; provided, however, if a Change of Control Event shall occur, the
number of persons to be designated by the Apollo Investor pursuant to this
18
clause (v) shall be increased from one to three (each director designated by
the Apollo Investor, an "Apollo Director"). Each of the Stockholders agrees
that (x) Amoco, UNC and MESBIC shall each have the right to appoint a single
representative to attend, at the Company's expense, but not to vote as a
director at, meetings of the Board of Directors (referred to herein as the
Investor Group's "Representative Rights") and (y) CVP shall have the right to
appoint a single representative to attend, at the Company's expense, but not
to vote as a director at, meetings of the Board of Directors (referred to
herein as CVP's "Representative Rights"), The Company shall provide prior
notice of all meetings of the Board of Directors to each such representative
and shall provide to such representative all information and documents
provided to directors in advance of any meeting of the Board of Directors.
(d) Removal. After the date hereof, Georgetown
shall be entitled at any time with or without cause to designate any
Georgetown Director for removal as a director; the PITA Investor shall be
entitled at any time with or without cause to designate any PITA Director for
removal as a director; ECC shall be entitled at any time with or without
cause to designate any ECC Director for removal as a director; the Investor
Group Majority shall be entitled at any time with or without cause to
designate any Investor Group Director for removal as director and the Apollo
Investor shall be entitled at any time with or without cause to designate any
Apollo Director for removal as director. The Company and Stockholders agree
to take such action, and to cause the remaining directors to take such
action, within five (5) days after any such designation, as is necessary to
remove a director designated for removal in accordance with the foregoing.
(e) Filling Vacancies. If at any time a vacancy
is created on the Board of Directors by reason of the death, removal or
resignation of any director, the Company and Stockholders agree to take such
action, and to cause the remaining directors to take such action, within
twenty days after such occurrence, to approve and elect a person to fill such
vacancy, which person shall be designated for election as a director by
Georgetown, if the person who has ceased to be a director was a Georgetown
Director (but if the person who has ceased to be a director is Xx. Xxxxxxx or
any successor to the
19
directorship initially held by Xx. Xxxxxxx, Georgetown shall consult with
ECC, the PITA Investor and the New Investors prior to filling such vacancy);
by ECC, if the person who has ceased to be a director was an ECC Director; by
the PITA Investor, if the person who has ceased to be a director was a PITA
Director; by the Investor Group Majority, if the person who has ceased to be
a director was an Investor Group Director; or by the Apollo Investor, if the
person who ceased to be a director was an Apollo Director.
(f) Covenant to Vote. Each Stockholder shall
vote (including, if applicable, pursuant to written consent) the shares of
Class A Common Stock owned or controlled by such Stockholder upon all matters
submitted to a vote of the stockholders of the Company in conformity with the
specific terms and provisions of this Agreement. Without limiting the
foregoing, each Stockholder shall vote the shares of Class A Common Stock
owned or controlled by him or it (i) at each annual or special meeting of
stockholders called for the purpose of voting on the election or removal of
directors and (ii) by consensual action of stockholders with respect to the
election or removal of directors, in favor of the election or removal of the
directors designated in accordance with this Section 5. The Company shall
vote, or cause to be voted, the capital stock of its subsidiaries in
conformity with the specific terms and provisions hereof.
(g) Covenant Defaults. In the event any of the
following events shall occur: (i) three Covenant Defaults (as hereinafter
defined) within a period of two years, (ii) any default in the payment of
principal or interest under the Credit Agreement or the Indenture that has
not been cured or waived within 15 days after the same is due and payable
(without consideration of any applicable grace period), (iii) the
acceleration of any amount due and payable under the terms and provisions of
the Credit Agreement or the Indenture, (iv) any material default under the
Credit Agreement or the Indenture that has not been cured or waived within 90
days after the notice thereof, or (v) a declaration under the Credit
Agreement or the Indenture of an Event of Default (in each case as defined
therein), and upon the election in writing of each of ECC (after consultation
with UNC, Amoco and MESBIC), the PITA Investor and the Apollo Investor (after
consultation with the CVP Investor) within 180 days after having received
notice of such defaults or such
20
acceleration, as the case may be (a "Phase II Event"), unless a Change of
Control Event has occurred, the Stockholders shall take such action, and
shall cause the directors to take such action, as may be necessary, to remove
one Georgetown Director (chosen by Georgetown) and to replace such director
with a director chosen by a majority of the remaining directors.
Each of the Stockholders agrees that following
a Phase II Event (x) CVP shall retain its Representative Rights and (y) in
addition to the continuing Director Rights hereunder of PITA and the Investor
Group, each of the PITA Investor, UNC, Amoco and MESBIC shall have the right
to appoint a single representative to attend at the Company's expense, but
not to vote as a director at, meetings of the Board of Directors (herein
referred to as its "Representative Rights"). The Company shall provide prior
notice of all meetings of the Board of Directors to each such representative
and shall provide to such representative all information and documents
provided to directors in advance of any meeting of the Board.
As used herein, "Covenant Default" shall mean
(A) a breach of a financial covenant under the Credit Agreement (it being
understood and agreed that the breach of more than one financial covenant at
any one time shall be deemed one Covenant Default for purposes hereof); or
(B) any other material breach of the Credit Agreement or the Indenture, in
each case whether or not such default or breach has been waived or the Credit
Agreement or the Indenture, as the case may be, has been amended to cure such
breach or default; provided, however, that a Covenant Default shall not
include any waiver under or amendment of the Credit Agreement or the
Indenture, as the case may be, intended generally (i) to cause the financial
covenants or other provisions thereof to reflect more accurately the business
of the Company (but not to change such covenants as a result of poor business
or financial performance), or (ii) to cure any default or breach that is not
material in nature; or (C) a breach of this Agreement willfully caused by
Georgetown that has a material and adverse effect on one or more
Stockholders.
(h) Supermajority Provisions.
(i) Prior to a Phase II Event, without the
approval of the Board of Directors, given by (x) unani-
21
mous written consent of the directors, (y) the affirmative vote at any
regular or special meeting of the Board of Directors of the Company of at
least 6 directors or (z) if for any reason fewer than 6 persons shall be
serving on the Board of Directors, the affirmative vote of all the directors
then in office, the Company shall not permit, and the Company shall not
permit any subsidiary to permit:
(A) the issuance of capital stock or
securities convertible or exchangeable into, or rights
to acquire, additional capital stock (collectively,
"Capital Stock"), other than pursuant to the Warrant
Agreement, the Warrants, Section 8 or 19 hereof, the
Options and the conversion of any Class A Shares or
Class B Shares into the other class of Common Stock;
(B) dividends on, distributions with
respect to, or repurchases or redemptions of, Capital
Stock, except (1) as provided in the Warrant Agreement,
as in effect on the date hereof, and (2) stock
repurchases from any employee of the Company upon the
termination of such employee's employment with the
Company, subject to the satisfaction of each of the
following conditions on the date of such purchase and
after giving effect thereto: (x) no default under the
Credit Agreement or the Indenture shall have occurred
and be continuing; (y) the aggregate amount paid in any
12-month period in connection with such purchases shall
not exceed $250,000; and (z) the aggregate amount paid
in connection with all such purchases shall not exceed
$750,000;
(C) the sale, lease or other disposition
of assets in a single transaction or related series of
transactions in excess of the greater of $2,500,000 or
18% of the consolidated stockholders' equity of the
Company and its subsidiaries;
(D) the purchase, lease or other
acquisition of assets in a single transaction or related
series of transactions in excess of the greater of
$2,500,000 or 18% of the consolidated stockholders'
equity of the Company and its subsidiaries;
22
(E) the amendment, alteration,
modification or repeal of the certificate of
incorporation or the by-laws of the Company or of any
subsidiary;
(F) the merger, consolidation or other
business combination, or sale of all or substantially
all of the assets of the Company or of any subsidiary;
(G) the incurrence of Indebtedness (as
defined in the Indenture) in excess of the greater of
$1,000,000 or 18% of the consolidated stockholders'
equity of the Company and its subsidiaries other than
(x) as contemplated by a capital expenditure budget
approved pursuant to clause (K) below and (y) letters of
credit or other financing of ordinary course of business
transactions;
(H) (i) changes in or amendments of the
Options or the Management Services Agreement between
Georgetown and the Company, dated as of April 10, 1992
(the "Management Agreement") or (ii) any transactions
between the Company or any of its subsidiaries and any
Affiliate of the Company other than (x) transactions
pursuant to the Management Agreement, (y) transactions
contemplated hereby, and (z) transactions with any
subsidiary of the Company;
(I) entering into any new line of business
other than the business engaged in by the Company or any
of its subsidiaries as at the date hereof or ceasing to
be engaged in any line of business engaged in by the
Company or any of its subsidiaries as at the date hereof;
(J) material amendments or modifications
of the Credit Agreement, the UT Leases (as such term is
defined in the Credit Agreement), the Warrant Agreement,
the Warrants, the Initial Options or the Additional
Option;
(K) the approval or amendment of the
Company's annual operating and capital budgets;
(L) investments in corporations,
partnerships, trusts or other entities that are not
23
subsidiaries of the Company other than Cash Equivalents
(as defined in the Indenture);
(M) any refinancing, substitution or
renewal of the Credit Agreement;
(N) if at any time Gross Profit (as
defined below) for the Trailing Four Quarter Period (as
defined in the Indenture) is less than or equal to the
product of (i) 70% and (ii) Fiscal 1992 Gross Profit,
the incurrence of selling, general and administrative
expenses during any quarter in excess of those provided
for in the operating budget approved pursuant to clause
(K) above. For purposes of this clause (N), "Gross
Profit" means, for any period, the difference of (i) the
amount which, in accordance with GAAP, is set forth
opposite the caption "Contract Revenue" on the Company's
consolidated income statement for such period and (ii)
the amount which, in accordance with GAAP, is set forth
opposite the caption "Cost of Revenues" on such
consolidated income statement for such period;
(O) appoint any committee of the Board
of Directors;
(P) change any accounting policy or
practice other than as mandated by generally accepted
accounting principles then in effect; and
(Q) after a Change of Control Event,
the appointment or election of a chief executive officer
of the Company.
(ii) Regardless of whether a Phase II
Event has occurred, without the prior written consent or the affirmative vote
at a meeting of Stockholders (whether or not called in accordance with the
Delaware General Corporation Law or applicable by-laws) entitled to vote at
least 71% of the Non-Management Voting Shares (as defined in Section 12
hereof), the Company shall not, and shall not permit any of its subsidiaries
to, (x) take any actions referred to in subparagraphs (A), (a), (C), (D),
(E), (F), (H), (I), (J), (L), (M) or (N) of Section 5(h)(i), (y) incur
indebtedness in excess of the greater of $2,500,000 or 18% of the
consolidated stockholders' equity of the Company and its subsidiaries (other
than as set forth in clauses (x) and (y) of subparagraph (G)
24
above), or (z) sell or otherwise dispose of, in a single transaction or
related series of transactions, more than 40% of the book value or fair
market value of the consolidated assets of the Company and its subsidiaries;
provided, however, that if a Change of Control Event shall have occurred,
action requiring approval pursuant to this Section 5(h)(ii) (other than with
respect to Sections 5(h)(i)(J) and (M), which shall continue to require the
affirmative vote of holders of at least 71% of the Non-Management Voting
Shares) shall require the affirmative vote of either of (1) holders of at
least 80% of the Non-Management Voting Shares or (2) holders of at least 96%
of the Non-Management Voting Shares other than Non-Management Voting Shares
then owned or controlled by Georgetown. For purposes of this Section
5(h)(ii), in the event any Stockholder entitled to vote on any matter
pursuant to this Section 5(h)(ii) shall abstain from such vote, all
Non-Management Voting Shares held by such Stockholder shall be deemed to have
been voted on such matter in the same manner as the majority of the
Non-Management Voting Shares voted on such matter.
6. Registration Rights.
(a) The following definitions shall apply with
respect to this Section 6:
(i) "Holders" shall mean any person (other
than the Company) who is or shall become a party to this
Agreement and any combination of them, and the term
"Holder" shall mean any such person.
(ii) "Public Offering" shall mean a bona
fide public offering, whether or not underwritten, of
equity securities or any securities convertible into or
exchangeable into equity securities of the Company
pursuant to an effective registration statement under
the Securities Act.
(iii) "Registrable Securities" shall mean
the Shares (it being understood and agreed that a Holder
of Warrants or Options shall be deemed to be the holder
of the Registrable Securities for which such Warrants or
Options are exercisable); provided, however, that any
such share shall cease to be a Registrable Security if
25
and when (x) a Registration Statement with respect to
the disposition of such share shall have become
effective under the Securities Act and such share shall
have been disposed of pursuant to such effective
registration statement or (y) such share shall have been
sold in a public transaction exempt from registration
pursuant to Rule 144 promulgated under the Securities
Act ("Rule 144"). The Company shall take such action as
is necessary to enable the Holder of any Warrants or
Options that are exercisable into Registrable Securities
to exercise such Warrants or Options simultaneously with
their sale pursuant to a Public Offering or, at the
request of such Holder, to cause such Warrants or
Options to be purchased by the underwriters in an
underwritten Public Offering as hereinafter provided.
(iv) "Registration Statement" shall mean
any registration statement of the Company that covers
any of the Registrable Securities pursuant to the
provisions of this Agreement, including the prospectus
included therein, any amendment or supplement thereof,
including posteffective amendments, all exhibits and all
material incorporated by reference or deemed to be
incorporated by reference in such Registration Statement.
(v) "Company Securities" shall mean any
equity securities or any securities convertible into or
exchangeable for equity securities proposed to be issued
and sold by the Company pursuant to a Registration
Statement.
(vi) "SEC" shall mean the United States
Securities and Exchange Commission.
(vii) "NASD" shall mean the National
Association of Securities Dealers, Inc.
(viii) The term "Warrant Registration
Event" shall mean the earlier to occur of (A) the date
on which the Company first becomes subject to the
reporting requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended (the
"Exchange Act") and
26
(B) the date on which the Company shall have failed to
purchase all of the Warrants and/or Warrant Shares set
forth in a Put Notice pursuant to, and in accordance
with, Section 9 of the Warrant Agreement; provided that
no Warrant Registration event described in clause (B)
above shall be deemed to have occurred prior to the
fourth anniversary of the date hereof.
(b) Demand Registrations.
(i) Upon the written request of one or
more Holders holding in the aggregate at least 50% of
the Registrable Securities (the "Initiating Holders")
requesting that the Company effect the registration of
such Initiating Holders' Registrable Securities under
the Securities Act of 1933, as amended (the "Securities
Act") (which request shall specify the Registrable
Securities so requested to be registered, the proposed
amounts thereof and the intended method of disposition),
the Company shall promptly give written notice of such
requested registration to all Holders and, as
expeditiously as reasonably possible, use its best
efforts to effect the registration under the Securities
Act of the Registrable Securities that the Company has
been so requested to register, for disposition in
accordance with the intended method of disposition
stated in such request. The Company shall not be
obligated to effect any registration pursuant to this
Section 6(b)(i) (A) before April 10, 1996, (B) during
the 90 day period commencing on the effective date of an
underwritten primary offering of the Company's equity
securities (or such longer period reasonably required by
the managing underwriter(s) of such offering), or (C)
after the Company has effected one such registration
pursuant to this Section 6(b)(i).
(ii) At any time after the occurrence of a
Warrant Registration Event, upon the request of one or
more Holders of a majority of the shares of Common Stock
subject to the Warrants and Warrant Shares that
constitute Registrable Securities requesting that the
Company effect the registration of such Holders'
Registrable Securities under the Securities Act
27
(which request shall specify the Registrable Securities
so requested to be registered, the proposed amounts
thereof and the intended method of disposition), the
Company shall as expeditiously as reasonably possible,
use its best efforts to effect the registration under
the Securities Act of the Registrable Securities that
the Company has been so requested to register for
disposition in accordance with the intended method of
disposition stated in such request (the "Bank Demand
Registration"). The Company shall not be obligated to
effect more than one registration pursuant to this
Section 6(b)(ii). Prior to any Holders requesting a Bank
Demand Registration, the Holders proposing to make such
request shall give at least 30 days notice thereof to
each of the other Holders of Warrants and the Warrant
Shares and such other Holders shall have the right to
participate in such request and, subject to Section
6(e), the Bank Demand Registration.
If either (A) a Bank Demand Registration
is not filed with the SEC on or prior to 90 days after
request pursuant to this clause (ii) (the "File Date")
or (B) the Company shall not have used its best efforts
to cause a Bank Demand Registration requested pursuant
to this clause (ii) to become effective and such Bank
Demand Registration has not become effective on or prior
to 120 days after such request (the "Effectiveness
Date") (the Filing Date, in the case of clause (A) above
or the Effective Date, in the case of clause (B) above,
being referred to herein as the "Event Dates), then the
Company agrees to pay, as liquidated damages, and not as
a penalty, to Holders requesting the Bank Demand
Registration (in proportion to the Registrable
Securities requested to be registered by such Holders)
the aggregate sum of $5,000 per week, provided, however,
that such liquidated damages will, in each case, cease
to accrue on and after the date (x) the Demand
Registration is filed, with respect to liquidated
damages for failure to file by the Filing Date, or (y)
the date Demand Registration is declared effective, with
respect to liquidated damages for failure to be declared
effective by the Effective Date; provided,
28
however, that no liquidated damages shall accrue during
the period referred to in 6(b)(v) below.
(iii) At any time after April 10, 1995,
upon the request of one or more Holders holding in the
aggregate at least 51% of the New Investor Shares that
constitute Registrable Securities requesting that the
Company effect the registration of such Holders'
Registrable Securities under the Securities Act (which
request shall specify the Registrable Securities so
requested to be registered, the proposed amounts thereof
and the intended method of disposition), the Company
shall as expeditiously as reasonably possible, use its
best efforts to effect the registration under the
Securities Act of the Registrable Securities that the
Company has been so requested to register, for
disposition in accordance with the intended method of
disposition stated in such request (a "New Investor
Demand Registration"). The Company shall not be
obligated to effect (A) more than one registration
pursuant to this Section 6(b)(iii) before April 10,
1996, or (B) more than a total of two registrations
pursuant to this Section 6(b)(iii).
(iv) A registration requested pursuant to
this Section 6(b) shall not be deemed to have been
effected (w) unless it has been declared effective by
the SEC, provided that a registration that does not
become effective after the Company has filed a
registration statement with respect thereto solely by
reason of the refusal to proceed of the Initiating
Holders shall be deemed to have been effected by the
Company at the request of such Initiating Holders unless
the Initiating Holders shall have elected to pay all
registration expenses referred to in Section 6(j)(ii)
hereof in connection with such registration, (x) if,
after becoming effective, such registration is
interfered with by any stop order, injunction or other
order or requirement of the SEC or other governmental
agency or court for any reason other than a
misrepresentation or an omission by the Initiating
Holders, (y) if the conditions to closing specified in
the purchase agreement or underwriting agreement, if
any, entered into in connection with such registration
29
are not satisfied other than by reason of some wrongful
act or omission, or act or omission in bad faith, by
such Initiating Holders or (z) unless in the case of the
Bank Demand Registration or a New Investor Demand
Registration, at least 100% of the Registrable
Securities requested to be included therein shall have
been registered.
(v) The Company may postpone, for up to
ninety (90) days, the filing or the effectiveness of a
registration statement for a registration requested
pursuant to this Section 6(b) if the Board of Directors
reasonably believes the requested registration would
have a material adverse effect on, or interfere in any
material respect with, any proposal or plan by the
Company to engage in any public financing or any
material pending corporate development or transaction,
including, without limitation, a material acquisition of
assets (other than in the ordinary course of business),
any tender offer or any merger, consolidation or other
similar transaction material to the Company and its
subsidiaries taken as a whole. In no event shall the
Company exercise its rights under this Section 6(b)(v)
more than once (A) during any six-month period or (B) in
respect of the same proposal, plan, development or
transaction.
(c) Piggyback Registration. If, at any time,
the Company proposes to file a registration statement in connection with a
Public Offering (other than (A) a registration statement on Form S-4 or S-8,
or any similar form which is a successor to said Forms, or (B) a registration
statement filed in connection with an exchange offer or an offering of
securities solely to the Company's existing stockholders) that may be used
for the registration of any of the Registrable Securities (a "Piggyback
Registration Statement"), then the Company shall give written notice of such
proposed filing at least 30 days before the anticipated filing date of such
Piggyback Registration Statement to all Holders, offering such Holders the
opportunity to include in such Piggyback Registration Statement such amount
of Registrable Securities as they may request. Each Holder desiring to have
Registrable Securities registered pursuant to this Section 6(c) shall advise
the Company in writing within 20 days after the date of receipt of the
Company's notice
30
(which request shall set forth the amount of Registrable Securities for which
registration is requested). Subject to Section 6(e), the Company shall
include in any such Piggyback Registration Statement all Registrable
Securities so requested to be included. No registration effected pursuant to
a request or requests referred to in this Section 6(c) shall be deemed to
have been effected pursuant to Section 6(b).
If the Company shall previously have received a
request for registration pursuant to Section 6(b) or pursuant to this Section
6(c), and if such previous registrations shall not have been withdrawn or
abandoned, the Company will not effect any registration of any Company
Securities under the Securities Act (other than a registration on Form S-4 or
Form S-8, or any similar form which is a successor to any of said Forms)
until a period of three months shall have elapsed from the effective date of
such previous registration, and the Company will so provide in any
registration rights agreements hereafter entered into with respect to any of
its securities.
The Company shall have the right to
discontinue, without liability to any Holder, any registration under this
Section 6(c) at any time prior to the effective date of such registration if
the registration of other securities giving rise to such registration under
this Section 6(c) is discontinued; but no such discontinuation shall preclude
an immediate or subsequent request for registration pursuant to Section 6(b).
(d) Certain Limitations on Registration Rights.
The Company, in its sole discretion, shall select the underwriter or
underwriters, including the managing or lead underwriter or underwriters, who
are to undertake any offering of securities with respect to which Holders
have registration rights pursuant to Section 6(c) hereof and shall have the
right to approve (such approval not to be unreasonably withheld) the
underwriter or underwriters, including the managing or lead underwriter or
underwriters, who are to undertake any offering of securities with respect to
which the Holders have registration rights pursuant to Section 6(b) hereof.
In the case of a registration under Section 6(b), if the Holders of a
majority of the Registrable Securities to be included therein have determined
to enter into an underwriting agreement in connection therewith, or, in the
case of a registration under Section 6(c), if the Board of Directors
31
of the Company or holders of securities initially requesting or demanding
such registration have determined to enter into an underwriting agreement in
connection therewith, all Registrable Securities to be included in any such
registration shall be subject to such underwriting agreement (providing it is
customary and reasonable) and no person may participate in any such
registration unless such person agrees to sell such person's Registrable
Securities on the basis provided in the underwriting arrangements approved by
such Holders, the Board of Directors of the Company or such holders, as the
case may be, and completes and/or executes all customary questionnaires,
indemnities, underwriting agreements and other reasonable documents that must
be executed under the terms of such underwriting arrangements; provided,
however that, if pursuant to their rights set forth in this Section 6, NMB or
Skopbank participate in any underwritten Public Offering hereunder, upon the
request of NMB and/or Skopbank, as the case may be, in order to permit it or
them to participate in such underwritten Public Offering notwithstanding any
legal or regulatory prohibition on its or their exercise of Warrants and/or
ownership of Shares, the underwriting agreement shall provide that, unless
prohibited by applicable law or regulation, the underwriter or underwriters
shall be required to purchase from NMB or Skopbank, as applicable, at the
closing of such Public Offering, Warrants representing the number of
Registrable Securities to be sold by NMB and/or Skopbank, as the case may be,
for a purchase price equal to the public offering price per share of such
Registrable Securities minus (A) the underwriters discount or commission
applicable to such Registrable Securities and (B) the exercise price of such
Warrants.
(e) Allocation of Securities Included in
Registration Statement. In the case of a registration pursuant to Section
6(b)(i), (ii) or (iii) that is underwritten, if the managing underwriter of
such offering shall advise the Company and the Holders electing (pursuant to
Section 6(b)) to include Registrable Securities in the Registration
Statement, in writing, that (A) the total amount of securities requested to
be included therein creates a substantial risk that the proceeds or price per
unit that will be derived from such registration will be reduced or (B) the
number of securities to be registered exceeds the amount of securities that
can be reasonably sold in such offering, the Company shall include in such
registration: (x) first, all Registrable Securities requested to be included
in such registration pursuant to
32
Section 6(b)(i), or with respect to registrations pursuant to Sections
6(b)(ii) or (iii) all Registrable Securities constituting Warrant Shares or
New Investor Shares (as applicable) requested to be included in such
registration pursuant to Section 6(b)(ii) or (iii), as the case may be
(unless such amount exceeds the amount which such underwriter advises can be
sold, in which case the Company shall include in such registration such
maximum amount allocated pro rata among the Holders of such Registrable
Securities based upon the percentage of Shares then owned such Holders), (y)
second, with respect to any registrations pursuant to Section 6(b)(ii) and
(iii), any other Registrable Securities requested to be included in such
registration pursuant to Section 6(c) hereof (unless such amount exceeds the
amount which such underwriter advises can be sold, in which case the Company
shall include in such registration such maximum amount allocated pro rata
among the Holders of such Registrable Securities) based upon the percentage
of Registrable Securities then owned by such Holders), and (z) third,
according to such priorities as the Company may agree with the holders of
other securities seeking to participate in any registration pursuant to
provisions of registration rights permitted by Section 6(i) hereof.
In the case of any other underwritten
registration pursuant to which Holders are entitled to include Registrable
Securities pursuant to Section 6(c), if the managing underwriter shall advise
the Company and the Holders electing (pursuant to Section 6(c) hereof) to
include Registrable Securities in the Piggyback Registration Statement, in
writing, that (A) the inclusion in any registration of some or all of the
Registrable Securities sought to be registered by the Holders requesting such
registration and the other securities sought to be registered creates a
substantial risk that the proceeds or price per unit that will be derived
from such registration will be reduced or (B) the number of securities to be
registered is too large a number to be reasonably sold, then (x) the number
of Company Securities sought to be registered shall first be included in such
registration and (y) the number of securities sought to be registered for
each Holder of Registrable Securities shall be reduced pro rata, based upon
the percentage of Registrable Securities then owned by such Holders.
(f) Limitations on Sale or Distribution of
Securities. If a registration under Section 6(b) or 6(c)
33
hereof shall be in connection with an underwritten public offering, each
Holder agrees not to effect any public sale or distribution, including any
sale pursuant to Rule 144 or Rule 144A under the Securities Act, of any
equity securities or of any security convertible into or exchangeable or
exercisable for any equity security of the Company (other than as part of
such underwritten public offering) within ten days before or 90 days after
the effective date of such Registration Statement.
(g) Adjustments Affecting Registrable
Securities. The Company will not effect or permit to occur any combination or
subdivision of shares that would adversely affect the ability of the Holder
of any Registrable Securities to include such Registrable Securities in any
registration contemplated by this Agreement or the marketability of such
Registrable Securities in any such registration.
(h) Rule 144. If the Company shall have filed a
registration statement pursuant to the requirements of Section 12 of the
Exchange Act or a registration statement pursuant to the requirements of the
Securities Act, the Company will timely file the reports required to be filed
by it under the Securities Act or the Exchange Act (including but not limited
to the reports under Sections 13 and 15(d) of the Exchange Act referred to in
Rule 144(c)(1)) and the rules and regulations adopted by the SEC thereunder
(or, if the Company is not required to file such reports, will, upon the
request of any Holder, make publicly available other information), and will
take such further action as any Holder may reasonably request, all to the
extent required from time to time to enable such Holder to sell his or its
Shares or Warrants, as the case may be, without registration under the
Securities Act within the limitation of the exemptions provided by (i) Rule
144 or Rule 144A under the Securities Act, as such Rules may be amended from
time to time, or (ii) any similar rules or regulations hereafter adopted by
the SEC. Upon the request of any Holder, the Company will deliver to such
Holder a written statement as to whether it has complied with such
requirements.
(i) Registration Rights to Others. If the
Company shall at any time after the date hereof provide to any holder of any
securities of the Company rights with respect to the registration of such
securities under the Securities Act, such rights shall not be in conflict
with
34
the rights provided in this Section 6 or more favorable to the grantee than
the rights provided in Section 6(b)(i).
(j) General Provisions. The following
provisions shall apply in connection with any Holder's Registrable Securities
proposed to be included in a Registration Statement under Section 6(b) or
6(c) hereof:
(i) Each Holder shall promptly provide the
Company with such information as it shall reasonably
request, in writing, and that is available to such
Holder in order to prepare the Registration Statement
and related prospectus, including (without limitation)
information regarding each such Holder's plan of
distribution.
(ii) All reasonable and necessary expenses
in connection with the preparation of such Registration
Statement and related prospectus and, except as set
forth below, the sale of securities contemplated
thereby, including, without limitation, (A) any and all
legal, accounting (including the expenses of any audit
and/or "comfort" letter) and filing fees (including
expenses associated with filings required to be made
with the NASD (including, if applicable, the fees and
expenses of any "qualified independent underwriter" and
its counsel, as may be required by the rules and
regulations of the NASD)), (B) blue sky fees and
expenses, (C) word processing, printing and duplicating
expenses and (D) all other fees and expenses customarily
paid by issuers or sellers of securities (but not
including fees and disbursements of financial experts
retained by any Holder and not underwriting discounts
and commissions attributable to the Registrable
Securities registered in the registration) shall be
borne by the Company; provided, however, that the
Company shall bear the expenses of only one counsel to
the Holders, which counsel shall be chosen by the
Holders of a majority of the Registrable Securities
requesting registration pursuant to Section 6(b) or, if
none, by the Holders of a majority of the Registrable
Securities included in such registration (as defined
below).
35
(iii) In connection with the Company's
registration obligations pursuant to Section 6(b) and
Section 6(c) hereof, the Company shall use its best
efforts to permit the sale of such Registrable
Securities in accordance with the intended method or
methods of distribution thereof, and pursuant thereto,
the Company shall as expeditiously as possible:
(A) prepare and file with the SEC, as soon
as practicable, but in no event later than 90 days after
any request in the case of a Registration pursuant to
Section 6(b), a Registration Statement or Registration
Statements relating to the applicable Registration on
any appropriate form under the Securities Act, which
form shall be available for the sale of the Registrable
Securities in accordance with the intended method or
methods of distribution thereof and shall include all
financial statements (including, if applicable,
financial statements of any subsidiary of the Company
that shall have guaranteed any indebtedness of the
Company) required by the SEC to be filed therewith,
cooperate and assist in any filings required to be made
with the NASD and use its best efforts to cause such
Registration Statement to become and remain effective;
provided that before filing a Registration Statement or
prospectus or any amendments or supplements thereto, the
Company shall furnish to the Holders of the Registrable
Securities covered by such Registration Statement and
the underwriters, if any, copies of all such documents
proposed to be filed, which documents shall be subject
to the reasonable review of such Holders and
underwriters and the Company shall not file any such
Registration Statement or prospectus or any amendments
or supplements thereto to which the Holders of a
majority of the shares covered by such Registration
Statement shall reasonably object, in writing, on a
timely basis;
(B) prepare and file with the SEC such
amendments and post-effective amendments to the
Registration Statement as may be necessary to keep the
Registration Statement effective for
36
twelve (12) months, or such shorter period terminating
when all Registrable Securities covered by such
Registration Statement have been sold; cause the
prospectus to be supplemented by any required prospectus
supplement, and as so supplemented to be filed pursuant
to Rule 424 under the Securities Act; and comply with
the provisions of the Securities Act with respect to the
disposition of all securities covered by such
Registration Statement during the applicable period in
accordance with the intended method or methods of
distribution by the sellers thereof set forth in such
Registration Statement or supplement to the prospectus
the Company shall not be deemed to have used its best
efforts to keep a Registration Statement effective
during the applicable period if it voluntarily takes any
action that would result in selling Holders of the
Registrable Securities covered thereby not being able to
sell such Registrable Securities during that period
unless such action is required under applicable law;
(C) notify the selling Holders of
Registrable Securities and the managing underwriters, if
any, promptly, and (if requested by any such person)
confirm such advice in writing, (1) when the prospectus
or any prospectus supplement or post-effective amendment
has been filed, and, with respect to the Registration
Statement or any post-effective amendment, when the same
has become effective, (2) of any request by the SEC for
amendments or supplements to the Registration Statement
or the prospectus or for additional information, (3) of
the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, (4) if
at any time the representations and warranties of the
Company contemplated by paragraph (N) below cease to be
true and correct, (5) of the receipt by the Company of
any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any
proceedings for such purpose, (6) of the happening of
any event that makes any statement made in the
Registration Statement, the
37
prospectus or any document 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 (7) of
the Company's reasonable determination that a
post-effective amendment to a Registration Statement
would otherwise be required;
(D) make every reasonable effort to obtain
the withdrawal of any order suspending the effectiveness
of the Registration Statement, or the lifting of any
suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for
sale in any jurisdiction, at the earliest possible
moment;
(E) if requested by the managing
underwriter or underwriters or a Holder of Registrable
Securities being sold in connection with an underwritten
offering, promptly incorporate in a prospectus
supplement or posteffective amendment such information
as the managing underwriters and the Holders of a
majority of the Registrable Securities being sold
reasonably agree should be included therein relating to
the plan of distribution with respect to such
Registrable Securities, including, without limitation,
information with respect to the amount of Registrable
Securities being sold to such underwriters, the purchase
price being paid thereof or by such underwriters and
with respect to any other terms of the underwritten (or
best efforts underwritten) offering of the Registrable
Securities to be sold in such offering; and make all
required filings of such prospectus supplement or
posteffective amendment as soon as notified of the
matters to be incorporated in such prospectus supplement
or post-effective amendment;
(F) furnish to each selling Holder of
Registrable Securities and each managing underwriter,
without charge, at least one signed copy of the
Registration Statement and any posteffective amendment
thereto, including
38
financial statements and schedules, all documents
incorporated therein by reference and all exhibits
(including those incorporated by reference);
(G) deliver to each selling Holder of
Registrable Securities and the underwriters, if any,
without charge, as many copies of the prospectus
(including each preliminary prospectus) and any
amendment or supplement thereto as such persons may
reasonably request; the Company consents to the use of
the prospectus or any amendment or supplement thereto by
each of the selling Holders of Registrable Securities
and the underwriters, if any, in connection with the
offering and sale of the Registrable Securities covered
by the prospectus or any amendment or supplement thereto;
(H) prior to any public offering of
Registrable Securities, register or qualify or cooperate
with the selling Holders of Registrable Securities, the
underwriters, if any, and their respective counsel in
connection with the registration or qualification of
such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions as any
seller or underwriter reasonably requests in writing and
keep each such registration or qualification (or
exemption therefrom) effective during the period such
Registration Statement is required to be kept effective
and do any and all other acts or things necessary or
advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by
the Registration Statement; provided, however, that the
Company shall not be required to qualify generally to do
business in any jurisdiction where it is not then so
qualified or to take any action that would subject it to
general service of process in any such jurisdiction
where it is not then so subject or subject the Company
to any tax in any such jurisdiction where it is not then
so subject;
(I) cooperate with the selling Holders of
Registrable Securities and the managing underwriters, if
any, to facilitate the
39
timely preparation and delivery of certificates
representing Registrable Securities to be sold, which
certificate shall not bear any restrictive legends and
shall be in a form eligible for deposit with the
Depository Trust Company; and enable such Registrable
Securities to be in such denominations and registered in
such names as the managing underwriters may request at
least two business days prior to any sale of Registrable
Securities to the underwriters;
(J) use its best efforts to cause the
Registrable Securities covered by the applicable
Registration Statement to be registered with or approved
by such other governmental agencies or authorities as
may be necessary to enable the seller or sellers thereof
or the underwriters, if any, to consummate the
disposition of such Registrable Securities;
(K) upon the occurrence of any event
contemplated by paragraph (C)(6) or (C)(7) above,
prepare a supplement or posteffective amendment to the
Registration Statement or the related prospectus or any
document incorporated therein by reference or file any
other required document so that, as thereafter delivered
to the purchasers of the Registrable Securities, the
prospectus will not contain an untrue statement of a
material fact or omit to state any material fact
necessary to make the statements therein not, misleading;
(L) cause all Registrable Securities
covered by the Registration Statement to be either
listed on each securities exchange or quoted on the
National Association of Securities Dealers, Inc.
Automated Quotation System on which similar securities
issued by the Company are then listed or quoted if
requested by the Holders of a majority of such
Registrable Securities or the managing underwriters, if
any;
(M) not later than the effective date of
the applicable Registration, provide a CUSIP number for
all Registrable Securities and provide the applicable
trustees or transfer agents with printed certificates
for the
40
Registrable Securities that are in a form eligible for
deposit with Depositary Trust Company;
(N) enter into such customary agreements
(including an underwriting agreement) and take all such
other actions in connection therewith in order to
expedite or facilitate the disposition of such
Registrable Securities and in such connection, whether
or not an underwriting agreement is entered into and
whether or not the registration is an underwritten
registration, (1) make such representations and
warranties to the Holders of such Registrable Securities
and to the underwriters, if any, in form, substance and
scope as are customarily made by issuers to underwriters
in similar underwritten offerings; (2) obtain opinions
of counsel to the Company and updates thereof, which
counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing
underwriters, if any, addressed to each Selling Holder
of Registrable Securities and each underwriter, if any,
covering the matters customarily covered in opinions
requested in underwritten offerings; (3) obtain "cold
comfort" letters and updates thereof from the Company's
independent certified public accountants addressed to
each Selling Holder of Registrable Securities and each
underwriter, if any, 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; (4) if an
underwriting agreement is entered into, the same shall
set forth in full the indemnification provisions and
procedures of Section 6(1) hereof with respect to all
parties to be indemnified pursuant to said Section; and
(5) the Company shall deliver such documents and
certificates as may be requested by the Holders of a
majority of the Registrable Securities being sold and
the managing underwriters, if any, to evidence
compliance with paragraph (K) above and with any
customary conditions contained in the underwriting
agreement or other agreement entered into by the
Company. The above shall be done at each closing under
such underwriting or similar
41
agreement or as and to the extent required thereunder;
(O) make available for inspection by a
representative of the Holders of a majority of the
Registrable Securities, any underwriter participating in
any disposition pursuant to such Registration, and any
attorney or accountant retained by the sellers of
Registrable Securities or such underwriter, all
financial and other records, pertinent corporate
documents and properties of the Company, and cause the
Company's officers, directors and employees to supply
all information reasonably requested by any such
representative, underwriter, attorney or accountant in
connection with such Registration; provided that any
records, information or documents that are designated by
the Company in writing as confidential shall be kept
confidential by such persons unless (i) disclosure of
such information is required by court or administrative
order or is necessary to respond to inquiries of
regulatory authorities, (ii) disclosure of such
information, based upon the advice of counsel to such
person and notice thereof to the Company, is required by
law, (iii) such information becomes generally available
to the public other than as a result of a disclosure or
failure to safeguard by such person or (iv) such
information becomes available to such person from a
source other than the Company or another person known by
such persons to be under a similar obligation of
confidentiality to the Company;
(P) otherwise comply with all applicable
rules and regulations of the SEC, and make generally
available to its security holders, earnings statements
satisfying the provisions of Section ll(a) of the
Securities Act, no later than forty-five (45) days after
the end of any 12-month period (or ninety (90) days, if
such period is a fiscal year) (1) commencing at the end
of any fiscal quarter in which Registrable Securities
are sold to underwriters in a firm or best efforts
underwritten offering, or (2) if not sold to
underwriters in such an offering, beginning with the
first month of the Company's
42
first fiscal quarter commencing after the effective date
of the Registration Statement, which statements shall
cover said 12-month periods; and
(Q) promptly prior to the filing of any
document that is to be incorporated by reference into
the Registration Statement or prospectus (after initial
filing of the Registration Statement), provide copies of
such document to counsel to the selling Holders of
Registrable Securities and to the managing underwriters,
if any; make the Company's representatives available for
discussion of such document and make such changes in
such document (other than any exhibits thereto) prior to
the filing thereof as counsel for such underwriters may
reasonably request.
(iv) Each Holder of Registrable Securities
agrees by acquisition of such Registrable Securities
that, upon receipt of any notice from the Company of the
happening of any event of the kind described in
paragraph (K) hereof, such Holder shall forthwith
discontinue disposition of Registrable Securities until
such Holder's receipt of the copies of the supplemented
or amended prospectus contemplated by paragraph (K)
hereof, or until it is advised in writing (the "Advice")
by the Company that the use of the prospectus may be
resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference
in the prospectus, and, if so directed by the Company,
such Holder shall deliver to the Company (at the
Company's expense) all copies, other than permanent file
copies then in such Holder's possession, of the
prospectus covering such Registrable Securities current
at the time of receipt of such notice. In the event the
Company shall give any such notice, the time periods
regarding the maintenance of the effectiveness of any
Registration Statement in Section 6(b) and 6(c) hereof
shall be extended by the number of days during the
period from and including the date of the giving of such
notice pursuant to Section 6(j)(iii)(C)(6) hereof to and
including the date when each seller of Registrable
Securities covered by such Registration Statement
43
shall have received the copies of the supplemented or
amended prospectus contemplated by paragraph (K) hereof
or the Advice.
(k) Indemnification.
(i) If any Registrable Securities are
registered or qualified for sale under the Securities Act pursuant to the
provisions of Section 6(b) or 6(c) hereof, the Company shall indemnify and
hold harmless each Holder thereby offering such Registrable Securities for
sale (a "Seller"), and each underwriter of such Registrable Securities, and
each other person, if any, who controls any such Seller or underwriter within
the meaning of the Securities Act, to the fullest extent lawful, from and
against any and all losses, claims, damages or liabilities (or actions in
respect thereof) joint or several, to which such Seller or underwriter or
controlling person may become subject under the Securities Act or the
applicable securities laws or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof), as incurred, arise
out of or are based upon (A) any untrue statement or alleged untrue statement
of any material fact contained in any Registration Statement under which such
Registrable Securities were registered or qualified under applicable
securities laws, any preliminary prospectus or final prospectus relating to
such Registrable Securities, or any amendment or supplement thereto, or (B)
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 (C) any violation by the Company or any of its employees or agents of any
rule or regulation under applicable securities laws or other laws applicable
to the Company, or (D) any action or inaction by the Company in connection
with any such registration or qualification of Registrable Securities as
contemplated hereby; and the Company shall reimburse each such Seller,
underwriter, and each such controlling person for all reasonable
out-of-pocket costs (including reasonable out-of-pocket costs of preparation
and reasonable attorneys' fees) and other expenses reasonably incurred by
such Seller or underwriter or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company shall not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
44
alleged omission in such Registration Statement, such preliminary prospectus,
such final prospectus or such amendment or supplement thereto (i) in reliance
upon and in conformity with written information relating to such Seller or
underwriter or controlling person furnished to the Company by any Seller or
underwriter or controlling person specifically and expressly for use in the
preparation thereof; or (ii) if such untrue statement or alleged untrue
statement, omission or alleged omission is completely corrected in an
amendment or supplement to the prospectus and the Seller, underwriter or
controlling person thereafter fails to deliver such prospectus as so amended
or supplemented prior to or concurrently with the sale of the Registrable
Securities to the person asserting such loss, claim, damage or liability
after the Company has furnished such holder with a sufficient number of
copies of the same.
(ii) If any Registrable Securities are
registered or qualified for sale under the Securities Act pursuant to the
provisions of Section 6(b) or 6(c) hereof, each Seller agrees severally, and
not jointly, to indemnify and hold harmless the Company, each other Seller,
each person who controls the Company or any other Seller within the meaning
of the Securities Act, and each officer and director of such controlling
persons from and against any losses, claims, damages or liabilities, joint or
several, to which the Company, such controlling person or any such officer or
director may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement of any material fact
contained in any Registration Statement under which such Registrable
Securities were registered or qualified under the Securities Act, any
preliminary prospectus or final prospectus relating to such Shares, or any
amendment or supplement thereto, or arise out of or are based upon the
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, which untrue
statement or omission was made therein in reliance upon and in conformity
with written information relating to such Seller furnished to the Company by
such Seller or controlling person specifically for use in connection with the
preparation thereof or arise out of or are based upon any violation by such
Seller of any rule or regulation under the Securities Act, and shall
reimburse the Company, such controlling person of the
45
Company and each such officer or director of such controlling person for any
legal or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action.
In no event shall the liability of a Seller of Registrable Securities
hereunder be greater in amount than the dollar amount of the net proceeds
received upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
(iii) Promptly after receipt by a person
entitled to indemnification under this Section 6(k) (an "indemnified party")
of notice of the commencement of any action, claim or proceeding as to which
indemnity may be sought hereunder, such indemnified party shall, if a claim
for indemnification hereunder in respect thereof is to be made against any
other party hereto (an "indemnifying party"), give written notice to such
indemnifying party of the commencement of such action, claim or proceeding,
but the omission so to notify the indemnifying party will not relieve it from
any liability that it may have to any indemnified party otherwise than
pursuant to the provisions of this Section 6(k) and shall also not relieve
the indemnifying party of its obligations under this Section 6(k) except to
the extent that the omission results in a failure of actual timely-notice to
the indemnifying party and such indemnifying party is damaged as a result of
the failure to give timely notice. In case any such action, claim or
proceeding is brought against an indemnified party, and such indemnified
party notifies an indemnifying party of the commencement thereof, the
indemnifying party shall be entitled (at its own expense) to participate in
and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense, with counsel reasonably
satisfactory to such indemnified party, of such action, claim or proceeding.
Any such indemnified party shall have the right to employ separate counsel in
any such action, claim or proceeding and to participate in the defense
thereof, but, if the indemnifying party has assumed the defense thereof, the
fees and expenses of such counsel shall be the expenses of such indemnified
party unless (a) the indemnifying party has agreed to pay such fees and
expenses; or (b) the indemnifying party shall have failed to promptly assume
the defense of such action, claim or proceeding and to employ counsel
reasonably satisfactory to the indemnified party; or (c) the named parties to
any such action, claim or proceeding (including any impleaded parties)
include both
46
such indemnified party and the indemnifying party or an Affiliate of the
indemnifying party, and such indemnified party shall have been advised by
counsel that there may be one or more legal defenses available to it which
are different from or additional to those available to the indemnifying party
or such 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 action,
claim or proceeding or separate but substantially similar or related actions,
claims or proceedings in the same jurisdiction, arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (together with appropriate local
counsel) at any time for all such indemnified parties, unless in the
reasonable judgment of any such indemnified party a conflict of interest may
exist between such indemnified party and any other of such indemnified
parties with respect to such action, claim or proceeding, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels). The indemnifying party shall not be liable
for any settlement of any such action, claim or proceeding effected without
its written consent, which consent shall not be unreasonably withheld. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending action, claim or
proceeding in respect of which any indemnified party is a party and is
entitled to indemnity hereunder, unless such settlement includes an
unconditional release of such indemnified party from all liability or claims
that are the subject matter thereof.
(iv) If for any reason the
indemnification provided for in this Section 6(k) is unavailable to an
indemnified party or insufficient to hold it harmless as contemplated by this
Section 6(k), then the indemnifying party shall contribute to the amount paid
or payable by the indemnified party as a result of such loss, claim, damage,
liability, cost or expense in such proportion as is appropriate to reflect
not only the relative benefits received by the indemnified party and the
indemnifying party, but also the relative
47
fault of the indemnified party and the indemnifying party, as well as any
other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission
of 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 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, claims, damages, liabilities, costs and
expenses shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
action, claim or proceeding.
The parties hereto agree that it would not
be just and equitable if contribution pursuant to this Section 6(K)(iv) 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 provision of this
Section 6(K)(iv), an indemnifying party that is a selling holder of
Registrable Securities shall not be required to contribute any amount in
excess of the dollar amount of the proceeds received by such Holder with
respect to the sale of any Registrable Securities. No person guilty of
fraudulent misrepresentation (within the meaning of Section ll(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
7. Transfers of Management Shares.
(a) Certain Definitions. The terms defined
below shall have the following meanings when used in this Section 7:
(i) "Acquisition" shall mean the purchase
of all the issued and outstanding shares of Xxxxxxxx
Test Systems, Inc. ("HTS") by Xxxxxxxx Acquisition Corp.
("Acquisition Corp."), a wholly owned subsidiary of the
Company, and the subsequent merger of Acquisition Corp.,
with and into HTS.
48
(ii) "Applicable Closing Date" shall mean
(A) with respect to Shares or Options acquired by a
Management Stockholder prior to the date hereof
(including Shares hereafter acquired upon the exercise
of such Options), the Initial Closing Date, and (B) with
respect to Shares or Options acquired by a Management
Stockholder after the date hereof, the Closing Date.
(iii) "Cause", when used in connection
with the termination of a Management Stockholder's
employment with Holdings, means the Management
Stockholder (A) shall have willfully failed to perform
any of his material obligations or shall have
demonstrated willful misconduct in the performance of
his duties to the Company or shall have willfully failed
to follow the instructions of the Board and shall have
failed to cure such failure within thirty (30) days
after receiving written notice thereof from the Board;
or (B) shall have consistently performed his duties to
the Company in a negligent fashion; or (C) shall have
committed any act of fraud, theft or dishonesty against
the Company; or (D) the Employee shall be convicted of
(or plead nolo contendere to) any felony, fraud or
embezzlement.
(iv) "Closing Date" means the date of this
Agreement.
(V) "Holdings" means the Company and all
other entities in which the Company from time to time
owns, directly or indirectly, 50% or more of the stock
or assets.
(vi) "Initial Closing Date" means December
21, 1990.
(b) Restrictions on Transfer. No Management
Stockholder shall effect a transfer of any Shares or Options prior to the
third anniversary of the Applicable Closing Date other than (i) pursuant to
Section 7(c) in connection with the Purchase Option (as hereinafter defined),
(ii) pursuant to Section 4, (iii) pursuant to Section 7(c) in connection with
a merger, consolidation, sale of assets, sale of stock or similar business
combination transaction approved by the Board of Directors and stockholders
of the Company, (iv) in connection with a
49
Public Offering in which the Management Stockholder is entitled to
participate pursuant to Section 6 hereof or (v) with the consent of the
Company (as evidenced by a resolution duly adopted by at least a majority of
the nonemployee members of the Company's Board of Directors). In exercising
the consent and approval provided for in clause (v), the Company may employ
its sole discretion in evaluating the nature of the proposed transferee and
the Company may impose such conditions on transfer as it deems appropriate in
its sole discretion, including but not limited to requirements that the
transferee be an employee of Holdings and that the transferee purchase the
Management Stockholder's Shares as a "Management Stockholder" subject to the
restrictions of this Section 7. In the event any transfer is authorized
pursuant to clause (v) to an employee of Holdings as a "Management
Stockholder," such employee shall execute an agreement, in form and substance
satisfactory to the Company, pursuant to which such employee shall agree to
be bound by such terms and conditions hereof, and such other provisions as
the Company may determine, and upon such execution such employee shall be
entitled to the benefit of such provisions hereof and such other provisions
as the Company determines and are set forth in such agreement. The foregoing
provisions of this Section shall not preclude a transfer of any Shares or
Options by a Management Stockholder by will or the laws of descent and
distribution on account of the death of such Management Stockholder;
provided, however, that the executors, administrators, heirs and transferees
of such Management Stockholder shall agree in writing to be subject to and
bound by all of the terms and conditions hereof, including without limitation
Section 7 hereof; and provided further, upon the death of any Management
Stockholder after the third anniversary of the Applicable Closing Date
hereof, such Stockholder's Shares or Options that are transferred by will or
the laws of descent and distribution shall no longer be subject to the
provisions of this Section 7. Any purported transfer in violation of this
Agreement shall be null and void and of no force and effect and the purported
transferees shall have no rights or privileges in or with respect to the
Company; Provided, however, following the third anniversary of the Applicable
Closing Date, the restrictions on transfer contained in this Section 7 shall
be of no further force and effect.
50
(c) Purchase Option.
(i) General Terms. In the event that prior to the
third anniversary of the Applicable Closing Date, any
Management Stockholder shall cease to be employed by
Holdings for any reason (including, without limitation,
death, disability, resignation or termination by the
Company with or without Cause), other than by reason of
a leave of absence approved by the Company, such
Management Stockholder (or his heirs, executors,
administrators, transferees, successors or assigns)
shall give prompt notice to the Company of such
termination of employment, and the Company, or if the
Company is prohibited by law or has insufficient funds
to effect such repurchase, each of the other
Stockholders, shall have the right and option at any
time within 60 days after the later of the effective
date of such termination of employment (the "Termination
Date") or the date on which the Company receives such
notice, to purchase from such Management Stockholder, or
his heirs, executors, administrators, transferees,
successors or assigns, as the case may be, (i) any or
all of the Shares or Options then owned by such
Management Stockholder at a purchase price equal to the
Option Purchase Price (as hereinafter defined) and/or
(ii) any or all of the outstanding principal amount of
the Subordinated Notes then owned by such Management
Stockholder at face value plus accrued interest. If,
pursuant to the immediately preceding sentence' the
Company is unable to purchase Shares or Options, the
Company shall give prompt notice to the other
Stockholders of the availability of such Shares or
Options for purchase in accordance with this Section
(c)(i). If, in accordance with the first sentence of
this Section (c)(1), the other Stockholders elect to
purchase more Shares or Options than the amount of
Shares or Options such Management Stockholder owns, the
Stockholders so electing shall purchase the Shares
and/or Options pro rata in accordance with the number of
Shares owned by such Stockholders. The Company may give
notice to the terminated Management Stockholder of its
intention to purchase such Shares or Options at any time
not later than 60 days after the later of the
Termination Date or the date on which the
51
Company receives such notice of such termination. (The
right of the Company or the other Stockholders, as
applicable, set forth in this Section 7(c) to purchase a
terminated Management Stockholder's Shares or Options is
hereinafter collectively referred to as the "Purchase
Option".) A Stockholder's agreement to assume such
obligation will relieve the Company of its obligations
under Section 7(c)(i)(C) with regard to the particular
Management Stockholder and such Management Stockholder
shall have no recourse against the Company under Section
7(c)(i)(C).
(A) Exercise of Purchase Option. The
Purchase Option shall be exercised by written notice to
such Management Stockholder (or his heirs, executors,
administrators, transferees, successors or assigns)
signed by an officer of the Company on behalf of the
Company or the Stockholders, as applicable, and shall
set forth the number of Shares or Options desired to be
purchased. Such notice shall set forth a time and place
of closing no earlier than 10 days and no later than 30
days after the date of notice is sent. At such closing,
the seller shall deliver certificates evidencing the
number of Shares or Options to be purchased by each
buyer, accompanied by stock powers duly endorsed in
blank or duly executed instruments of transfer with the
signature guaranteed by a member firm of the New York
Stock Exchange, Inc. or a commercial bank or trust
company organized under the laws of the United States or
any state thereof, and any other documents that are
necessary to transfer to the buyer good title to the
Shares or Options to be transferred, free and clear of
all pledges, security interests, liens, charges,
encumbrances, equities, claims and options of whatever
nature other than those imposed under this Agreement,
and concurrently with such delivery, buyer(s) shall
deliver to the seller the full amount of the Option
Purchase Price for such Shares or Options in cash by
certified or bank cashier's check.
B) Option Purchase Price. Subject to
Section 7(c)(i)(D) below, the "Option Purchase Price"
for (i) Shares to be purchased from a Management
Stockholder pursuant to the
52
Purchase Option (such number of Shares, the "Purchase
Number") shall equal the price calculated as set forth
in the table below opposite the applicable Termination
Date of such Management Stockholder and (ii) Options to
be purchased from a Management Stockholder shall be
equal to the Option Purchase Price applicable to the
underlying shares of Common Stock (in accordance with
(i) above) less the exercise price of such Options:
If the Shares Were Acquired by the
Management Stockholder Prior to the
Closing Date and the Terminate Option
Termination Date Occurs: Purchase Price
------------------------------------------- -------------------
On or prior to the second anniversary Adjusted Cost Price multiplied by
of the initial Closing Date 66-2/3% of the Purchase Number, plus
Adjusted Book Value Price multiplied
by 33-1/3% of the Purchase Number
After the second anniversary of the Adjusted Cost Price multiplied by
Initial Closing Date, and on or prior 33-1/3% of the Purchase Number, plus
to the third anniversary of the Adjusted Book Value Price multiplied
Initial Closing Date by 66-2/3% of the Purchase Number
If the Shares Were Acquired by the
Management Stakeholder on or after
the Closing Date and the Termination Option
Date Occurs: Purchase Price
------------------------------------------- -------------------
On or prior to the first anniversary Adjusted Cost Price multiplied by
of the closing Date 100% of the Purchase Number
After the first anniversary of the Adjusted Cost Price multiplied by
Closing Date, and on or prior to the 66-2/3% of the Purchase Number, plus
second anniversary of the Closing Adjusted Book Value Price multiplied
Date by 33-1/3% of the Purchase Number
53
After the second anniversary of the Adjusted Cost Price multiplied by
Initial Closing Date, and on or prior 33-1/3% of the Purchase Number, plus
to the third anniversary of the Adjusted Book Value Price multiplied
Initial Closing Date by 66-2/3% of the Purchase Number
As used herein, "Adjusted Cost Price" for
each Share means the lesser of (i) the original purchase
price per Share (adjusted for any stock dividend payable
upon, or subdivision or combination of, the Common
Stock) and (ii) the "Adjusted Book Value Price" for each
Share; "Adjusted Book Value Price" for each Share means
the consolidated net worth of the Company per common
share (adjusted to reflect the pro forma exercise in
full of any dilutive securities) reflected in the
Company's audited consolidated financial statements as
of the end of the fiscal year next preceding the
Termination Date; provided, however, that for purposes
of determining such price there shall be restored to the
net worth as reflected on such audited financial
statements (a) the effects of amortization of the excess
of cost over net assets of businesses acquired recorded
as intangible assets (but excluding goodwill) and
deferred charges resulting from purchase accounting
adjustments pursuant to Accounting Principles
Board Opinion Nos. 16 and 17 resulting from the
Acquisition (but only to the extent of the incremental
amount by which such intangible assets and deferred
charges exceed the intangible assets and deferred
charges that existed on the books of HTS immediately
prior to the Acquisition), (b) the depreciation charges
resulting from the revaluation of HTS' assets to current
fair market value in connection with the Acquisition
(but only to the extent of the incremental amount by
which such depreciation charges exceed the depreciation
charges that existed on the books of HTS immediately
prior to the Acquisition), and (c) the effects of
amortization of the excess of cost over net assets of
businesses acquired recorded as goodwill resulting from
purchase accounting adjustments pursuant to Accounting
Principles
54
Board Opinion Nos. 16 and 17 resulting from the
Acquisition; and provided, further, that at any time
after the Company has effected a Public Offering of its
Common Stock, then the "Adjusted Book Value Price n
shall equal the average of the last reported prices for
which Common Stock was sold prior to the close of
business on each of the last ten business days prior to
the Termination Date.
(C) Adjustments to Option Purchase Price.
If the Company or another Stockholder, as applicable,
exercises the Purchase Option with respect to any or all
of the Shares or Options of any Management Stockholder
whose employment with the Company was terminated by the
Company without Cause (the "Called Shares H), and if
within six months after the closing pursuant to such
exercise of the Purchase Option by the Company or such
other Stockholder
(1) the Company is merged into,
consolidated with or otherwise combined with or acquired
by another person or entity, or there is a liquidation
of the Company, or there is a Public Offering (a
"Subsequent Offering") of the Company's Common Stock
pursuant to an effective Registration Statement under
the Securities Act in which other Management
Stockholders participate as selling stockholders (other
than (1) a registration statement on Form S-8 or any
successor forms or any other registration statement
relating to a special offering to Holdings' employees or
(2) a registration statement relating to a Unit Offering
(as hereinafter defined)); and
(2) the per share consideration received
by the stockholders of the Company in such transaction,
or the per share net Proceeds received for the Company's
Common Stock in the Subsequent Offering, as the case may
be (in each case after being adjusted downward to
reflect what the per share consideration or per share
net offering proceeds, as the case may be, would have
been had the Shares of such terminated Management
Stockholder purchased by the Company or its designee
pursuant to the Purchase Option
55
been outstanding on the date of the closing of such
transaction or Subsequent Offering) exceed the Adjusted
Book Value Price used in calculating the Option Purchase
Price pursuant to the exercise of the Purchase Option,
then such Management Stockholder shall be entitled to receive from the Company
or the other Stockholder, as applicable, an amount per share equal to such
excess multiplied by the applicable Adjusted Book Value Price percentage within
30 days after the closing of any such transaction or Subsequent Offering;
provided, however, that in the case of a Subsequent Offering in which such
Management Stockholder would have been entitled to sell fewer than the number of
shares equal to the Purchase Number multiplied by the applicable Adjusted Book
Value Price percentage based upon the rights and restrictions in Section 6
hereof, the amount of any payment under this provision shall be proportionately
reduced to reflect the number of shares the Management Stockholder would have
been entitled to sell in the Subsequent Offering.
As used herein, a "Unit Offering" shall mean a Public Offering of a
combination of debt and equity securities of the Company in which (i) not more
than 10% of the gross proceeds received for the sale of such securities is
attributed to such equity securities, and (ii) after giving effect to such
offering, the Company does not have a class of equity securities required to be
registered under the Securities Exchange Act of 1934, as amended.
(D) Sale in Public Offering. Nothing
herein shall prevent any Management Stockholder from
selling Shares or Options in any Public Offering to
which the provisions of Section 6 are applicable;
provided, however, that (i) if less than all of such
Management Stockholder's Shares are sold in such
offering, for purposes of any subsequent calculation
hereunder of the Option Purchase Price, the Option
Purchase Price for Shares shall equal: (a) the Adjusted
Cost Price multiplied by the product of the applicable
Adjusted Cost Price percentage and the Adjusted Purchase
Number (as defined below), plus (b) the Adjusted Book
Value Price multiplied by the product of the applicable
Adjusted Book Value Price percentage
56
and the Adjusted Purchase Number, less (c) the product
of the Publicly-Sold Stock (as defined below) and the
Adjusted Book Value Price, where: (x) "Publicly-Sold
Stock" means the total number of shares of Stock
previously sold by the respective Management Stockholder
in a Public Offering, (y) "Adjusted Purchase Number"
means the sum of the Purchase Number and the
Publicly-Sold Stock, and (z) the Option Purchase Price
at all times shall equal or exceed the product of the
Adjusted Cost Price and the Purchase Number; and (ii)
this section shall continue to apply in accordance with
its terms to all Shares not sold in any such Public
Offering.
(E) In the event that the Company does not
agree to purchase any Shares or Options pursuant to this
Section 7(c) within the 60-day period set forth in
subsection (i), such Shares or Options shall then be
offered to the other Stockholders pursuant to the terms
and provisions of Section 2 hereof.
(ii) Company's First Refusal Right. In the
event that, prior to the third anniversary of the date
hereof, (x) a Management Stockholder is no longer
employed by Holdings; (y) the Company or another
Stockholder, as applicable, has declined to exercise the
Purchase Option with respect to any of such Management
Stockholder's Shares or Options; and (z) the Management
Stockholder thereafter proposes to sell any or all of
such Shares to a third party in a bona fide transaction,
the Management Stockholder may not transfer such Shares
without first offering to sell them to the Company and
the other Stockholders pursuant to this Section 7(b).
The Management Stockholder shall deliver a written notice (a "Sale
Notice") to the Company describing in reasonable detail the Shares or Options
being offered, the name of the offeree, the purchase price requested and all
other material terms of the proposed transfer. Upon receipt of the Sale
Notice, the Company, or if the Company is prohibited by law or has
insufficient funds to elect such purchase, the other Stockholders, shall have
the right and option to purchase all, but not less than all, of the
57
Shares or Options being offered at the price and on the terms of the proposed
transfer set forth in the Sale Notice; provided, however, that if the Company
is unable to purchase Shares or Options hereby, it shall give prompt notice
of such fact to the other Stockholders; and provided, further, if, in
accordance with this sentence, the other Stockholders elect to purchase more
Shares or Options than the amount of Shares or Options such Management
Stockholder owns, the Stockholders so electing shall purchase the Shares
and/or Options pro rata in accordance with the number of Shares owned by such
Stockholders. Within 30 days after receipt of the Sale Notice, the Company or
the other Stockholders, as applicable, shall notify such Management
Stockholder whether or not it wishes to purchase all the offered Shares or
Options .
If the Company or the other Stockholders, as applicable, elect to
purchase all the offered Shares or Options, the closing of the purchase and
sale of such Shares or Options shall be held at the place and on the date
established by the Company or the other Stockholders, as applicable, in its
notice to the Management Stockholder in response to the Sale Notice, which in
no event shall be less than 10 or more than 30 days from the date of such
notice. In the event that the Company or the other Stockholders, as
applicable, do not elect to purchase all the offered Shares or Options, the
Management Stockholder may, subject to the other provisions of this
Agreement, transfer the offered Shares or Options to the offeree specified in
the Sale Notice at a price no less than the price specified in the Sale
Notice and on other terms no more favorable to the transferee(s) thereof than
specified in the Sale Notice during the 180-day period immediately following
the last date on which the Company or the other Stockholders, as applicable,
could have elected to purchase the offered securities. Any such securities
not transferred within such 180-day period will be subject to the provisions
of this Section 7(c)(ii) upon subsequent transfer.
(d) Involuntary Transfers. In the event that the Shares
or Options owned by any Management Stockholder shall be subject to sale or
other transfer (the date of such sale or transfer shall hereinafter be
referred to as the "Transfer Date") prior to the third anniversary of the
Applicable Closing Date by reason of (i) bankruptcy or insolvency
proceedings, whether voluntary or involuntary, or
58
(ii) distraint, levy, execution or other involuntary transfer, then such
Management Stockholder shall give the Company written notice thereof promptly
upon the occurrence of such event stating the terms of such proposed
transfer, the identity of the proposed transferee, the price or other
consideration, if readily determinable, for which the Shares or Options are
proposed to be transferred, and the number of Shares or Options to be
transferred. After its receipt of such notice or, failing such receipt, after
the Company otherwise obtains actual knowledge of such a proposed transfer,
the Company, or if the Company is prohibited by law or has insufficient funds
to elect such purchase, the other Stockholders, shall have the right and
option to purchase all, but not less than all of such Shares or Options which
right shall be exercised by written notice given by the Company or other
Stockholders, as applicable, to such proposed transferor within 60 days
following the Company's receipt of such notice or, failing such receipt, the
Company's obtaining actual knowledge of such proposed transfer; provided,
however, that if the Company is unable to purchase Shares or Options hereby,
it shall give prompt notice of such fact to the other Stockholders; and
provided, further, if, in accordance with this sentence, the other
Stockholders elect to purchase more Shares or Options than the amount such
Management Stockholder owns, the Stockholders so electing shall purchase the
Shares or Options pro rata in accordance with the number of Shares owned by
such Stockholders. Any purchase pursuant to this Section 7(d) shall be at the
price and on the terms applicable to such proposed transfer. If the nature of
the event giving rise to such involuntary transfer is such that no readily
determinable consideration is to be paid for the transfer of the Shares or
Options, the price to be paid by the Company or the other Stockholders, as
applicable, shall be the Option Purchase Price that would have been
applicable hereunder had the Management incurred a Termination Date as of the
date of such proposed transfer for the Shares. The closing of the purchase
and sale of Shares or Options shall be held at the place and the date to be
established by the Company or the other Stockholders, as applicable, which in
no event shall be less than 10 or more than 30 days from the date on which
the Company or the other Stockholders, as applicable, give notice of its
election to purchase Shares or Options. At such closing, the Management
Stockholder shall deliver certificates evidencing the number of shares of
Stock to be purchased by the Company or the other Stockholders, as
applicable, accompanied by stock or bond powers, as the case may be, duly
endorsed in blank or duly
59
executed instruments of transfer, in either case with the signature
guaranteed by a member firm of the New York Stock Exchange, Inc. or a
commercial bank or trust company organized under the laws of the United
States or any state thereof, and any other documents that are necessary to
transfer to the Company or the other Stockholders, as applicable, good title
to such of the securities to be transferred, free and clear of all pledges,
security interests, liens, charges, encumbrances, equities, claims and
options of whatever nature other than those imposed under this Agreement, and
concurrently with such delivery, the Company or the other Stockholders, as
applicable, shall deliver to the Management Stockholder the full amount of
the purchase price for such securities in cash by certified or bank cashier's
check.
(e) Rights Granted Not to Affect Employment. Neither this
Agreement nor the rights granted to any Management Stockholder hereunder
shall confer, or be construed to confer, upon any Management Stockholder any
right to continue in the employment of the Company or any of its subsidiaries.
8. Purchase Rights.
If the Company proposes to issue or sell any shares of its Common
Stock or Common Stock Equivalents (as hereinafter defined), the Company
shall, not later than fifteen (15) business days prior to the consummation of
such transaction, notify in writing each Stockholder of such transaction.
Such notice shall describe the proposed sale or issuance, identify the
proposed purchaser, and contain an offer to each Stockholder to sell to such
Stockholder, at the same price and for the same consideration to be paid by
the proposed purchaser, such Stockholder's pro rata portion (which shall be
such Stockholder's percentage ownership of the Common Stock outstanding on a
fully diluted basis) of the Common Stock or Common Stock Equivalents to be
issued or sold. If any Stockholder to which an offer was required to be made
pursuant to the preceding sentence fails to accept such offer within fifteen
(15) business days after its receipt thereof, the Company may proceed for a
period of 90 days with such proposed issuance or sale of the securities
offered to such Stockholder, free of any right on the part of such
Stockholder under this Section 8 in respect thereof.
This Section 8 shall not apply to: (A) grants of employee stock
options or stock purchase rights; (B) sales
60
or issuances of Common Stock or Common Stock Equivalents pursuant to the
Warrant Agreement or upon exercise of employee stock options, employee stock
purchase rights, the Warrants, the Initial Option or the Additional Option or
any conversion of Class A Common Stock or Class B Common Stock into the other
class of Common Stock; (C) securities sold pursuant to a Public Offering; (D)
securities distributed ratably to all holders of Common Stock and Common
Stock Equivalents on a per share equivalent basis (which shall be such
Stockholders' percentage of the Common Stock outstanding on a fully diluted
basis) or (E) issuances pursuant to Section 19 hereof.
"Common Stock Equivalents" shall mean rights, warrants, options,
convertible securities, exchangeable securities, or other rights, exercisable
for or convertible or exchangeable into, directly or indirectly, common stock
of the Company and securities convertible or exchangeable into common stock
of the Company, whether at the time of issuance, upon the passage of time, or
upon the occurrence of some future event.
9. Put Rights. Without the prior written consent of the holders of
70% of the Voting Shares (which holders shall include (i) CVP so long as it
continues to own not less than 80% of the Shares owned by it on the date
hereof and (ii) Apollo so long as it continues to own not less than 80% of
the Shares owned by it on the date hereof), the holders of Warrants and
Warrant Shares shall not be entitled to require that the Company purchase,
and the Company shall not purchase any Warrants or Warrant Shares described
in a Put Notice delivered pursuant to Section 9 of the Warrant Agreement;
provided, however, that this Section shall not be construed to prevent
holders of Warrants or Warrant Shares from delivering a Put Notice (as
defined in Section 9 of the Warrant Agreement) or to prevent the occurrence
of a Warrant Registration Event or in any way limit the registration rights
hereunder of the holders of any Warrants or Warrant Shares following the
occurrence of a Warrant Registration Event.
10. Financial Information. The Company agrees to provide to each
Stockholder all financial information that is required to be delivered by the
Company pursuant to the Credit Agreement. Unless otherwise required by
applicable law, each Stockholder shall, at all times, keep confidential and
not divulge, furnish or make accessible to anyone (other than to its
attorneys, accountants and investment advisors,
61
on a confidential basis, and any prospective Permitted Transferee who is not
a direct competitor of the Company or any of its subsidiaries, as long as
such Transferee agrees to be subject to a confidentiality agreement
reasonably acceptable to the Company) such financial information to the
extent not already generally known to the public. In the event that the
Credit Agreement is terminated for any reason, the Company shall provide to
each Stockholder financial information similar to that required by the Credit
Agreement at the same times, to the extent practicable, as that required by
the Credit Agreement.
11. Regulatory Matters.
(a) Regulatory Compliance Cooperation.
(i) If a Stockholder determines that it has a
Regulatory Problem (as defined below), the Company agrees to take all such
actions as are reasonably requested by such Stockholder (x) to effectuate and
facilitate any transfer by such Stockholder of any Securities (as defined
below) of the Company then held by such Stockholder to any person designated
by such Stockholder, (y) to permit such Stockholder (or any Affiliate of such
Stockholder) to exchange all or any portion of the voting Securities then
held by such person on a share-for-share basis for shares of a class of
nonvoting Securities of the Company, which nonvoting Securities shall be
identical in all respects to such voting Securities, except that such new
Securities shall be nonvoting and shall be convertible into voting Securities
on such terms as are requested by such Purchaser in light of regulatory
considerations then prevailing, and (z) to continue and preserve the
respective allocation of the voting interests with respect to the Company
provided for in this Stockholders' Agreement and with respect to such
Stockholder's ownership of the Company's voting Securities. Such actions may
include, without limitation, (x) entering into such additional agreements as
are reasonably requested by such Stockholder to permit any Person(s)
designated by such Stockholder to exercise any voting power which is
relinquished by such Stockholder upon any exchange of voting Securities for
nonvoting Securities of the Company and (y) entering into such additional
agreements, adopting such amendments to the Certificate of Incorporation and
bylaws of the Company and taking such additional actions as are reasonably
requested by such Stockholder in order to effectuate the intent of the
foregoing. Each Stockholder
62
agrees to cooperate with the Company in complying with this Section ll(a),
including, without limitation, voting to approve amending the Company's
Certificate of Incorporation in a manner reasonably requested by the
Stockholder requesting such amendment.
(ii) If a purchaser has the right or opportunity to
acquire any of the Company's Securities from the Company, any Stockholder or
any other person (as the result of a preemptive offer, pro-rata offer or
otherwise), at such Stockholder's request the Company will offer to sell (or
if the Company is not the seller, to cooperate with the seller and such
Stockholder to permit such seller to sell) such non-voting Securities on the
same terms as would have existed had such Stockholder acquired the Securities
so offered and immediately requested their exchange for nonvoting Securities
pursuant to paragraph (i) above.
(iii) Before the Company redeems, purchases or
otherwise acquires, directly or indirectly, or converts or takes any action
with respect to the voting rights of, any Securities, the Company shall give
written notice of such pending action to each Stockholder. Upon the written
request of any Stockholder made within 10 days after its receipt of any such
notice stating that after giving effect to such action such Stockholder would
have a Voting Regulatory Problem, the Company shall defer taking such action
for such period (not to extend beyond 30 days after such Stockholder's
receipt of the Company's original notice) as such Stockholder requests to
permit it and its Affiliates to reduce the quantity of the Company's
Securities they own in order to avoid the Regulatory Problem. In addition,
the Company shall not be a party to any merger, consolidation,
recapitalization or other transaction pursuant to which any Stockholder would
be required to take any voting Securities, or any Securities convertible
into, or exchangeable or exercisable for, voting Securities, which might
reasonably be expected to cause such Purchaser to have a Voting Regulatory
Problem.
(iv) In the event that any subsidiary of the Company
ever offers to sell any of its Securities, then the Company will cause such
subsidiary to enter into agreements with each Stockholder substantially
similar to this Section 11.
63
(b) Covenant Not to Amend. The Company and each
Stockholder agree not to amend or waive the voting or other provisions of
this Agreement or the Company's certificate of incorporation if such
amendment or waiver would cause any Stockholder to have a Voting Regulatory
Problem, provided that any such Stockholder notifies the Company that it
would have a Voting Regulatory Problem promptly after it has notice of such
proposed amendment or waiver.
(c) Certain Definitions. As used in this Section 11:
"Regulatory Problem" means (i) any set of
facts or circumstances wherein it has been asserted by
any governmental regulatory agency (or a Stockholder
believes that there is a substantial risk of such
assertion) that such Stockholder is not entitled to
hold, or exercise any significant right with respect to,
the Securities or (ii) a Voting Regulatory Problem.
"Securities" means with respect to any
Person, such Person's capital stock or any options,
warrants or other securities that are directly or
indirectly convertible into, or exercisable or
exchangeable for, such Person's capital stock. Whenever
a reference herein to Securities is referring to any
derivative Securities, the rights of a Stockholder shall
apply to such derivative Securities and all underlying
Securities directly or indirectly issuable upon
conversion, exchange or exercise of such derivative
securities.
"Votinq Regulatory Problem" shall exist
when a Person and such Person's affiliates would own,
control or have power over a greater quantity of
Securities of any kind issued by the Company or any
other entity than are permitted under any requirement of
any governmental authority.
64
12. Voting Shares.
(a) Whenever this Agreement requires the consent of a
specified percentage of Voting Shares, each Stockholder shall be entitled to
one vote per Voting Share, provided that the holders of Non-Voting Shares
shall not have any right to vote such Shares and Apollo (or its express
assignee, but not necessarily its Permitted Transferees) shall be entitled to
a number of extra votes equal to the number of Non-Voting Shares.
To determine whether such specified percentage was
obtained, the number of votes cast shall be divided by the total number of
Voting Shares. (For example, if the number of votes cast equals 51 and the
number of Voting Shares equals 100, then the consent of 51% of the Voting
Shares shall be deemed to have been obtained.)
(b) As used in this Agreement, the following terms shall
have the meanings set forth below:
"Conversion Event" shall have the meaning set forth in the
Certificate of Incorporation of the Company.
"CVP Shares" on any date means all Shares outstanding on such date
that are held by CVP or its Affiliates; provided that such Shares shall cease
to be CVP Shares immediately upon their transfer pursuant to a Conversion
Event.
"CVP Voting Shares" on any date means the lesser of (a) the number
of Voting Shares outstanding on such date, multiplied by the Legally
Permitted Percentage and (b) the number of CVP Shares outstanding on such
date.
"Legally Permitted Percentage" means 4.99%, or such greater or
lesser percentage that CVP reasonably determines (and notifies the Company)
would result in the maximum number of CVP Voting Shares held by all holders
thereof to equal the maximum number of CVP Voting Shares that CVP and its
Affiliates may own, control or have the power to vote under any law,
regulation, rule or other requirement of any governmental authority at the
time applicable to CVP or its Affiliates.
"Non-Manaqement Voting Shares: means all Voting Shares other than
Voting Shares owned by Management Stockholders on the date hereof.
65
"Non-Votinq Shares" on any date means the total number of CVP
Shares outstanding on such date minus the total number of CVP Voting Shares
outstanding on such date.
"Voting Shares" on any date means, solely for purposes of this
Agreement, all Shares outstanding on such date held by a Stockholder and all
Shares issuable to any Stockholder upon the exercise of any Options; provided
that Voting Shares shall exclude any Shares issued or issuable upon exercise
of the Warrants.
13. Share and Warrant Certificates.
(a) Restrictive Endorsement. Each certificate
representing the Shares or Warrants now or hereafter held by a Stockholder
subject to this Agreement shall be stamped with a legend in substantially the
following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO AN AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT DATED AS OF APRIL
10, 1992, A COPY OF WHICH IS ON FILE AT THE OFFICES OF THE COMPANY AND WILL
BE FURNISHED TO ANY PROSPECTIVE PURCHASERS ON REQUEST. BY ACCEPTANCE OF THIS
CERTIFICATE, EACH HOLDER HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF THE
STOCKHOLDERS' AGREEMENT."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED
PURSUANT TO A CLAIM OF EXEMPTION FROM THE REGISTRATION OR QUALIFICATION
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS AND MAY NOT BE SOLD OR
TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION
PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE
EXEMPTIONS THEREFROM."
Each Stockholder agrees that he will deliver all certificates for Shares,
Options or Warrants owned by him to the Company for the purpose of affixing
such legend thereto.
(b) Replacement Certificates. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any certificate representing Shares, Options or Warrants issued
hereunder and of a bond or other indemnity reasonably satisfactory to the
Company and upon reimbursement to the Company of all reasonable expenses
incident thereto, and
66
upon surrender of such certificate, if mutilated, the Company will make and
deliver a new certificate of like tenor in lieu of such lost, stolen,
destroyed or mutilated certificate; provided, however, that a Stockholder
shall not be required to post any bond (but such Stockholder may be required
to enter into an indemnity agreement reasonably satisfactory to the Company)
if such Stockholder certifies that a Share, Option or Warrant has been lost,
destroyed or wrongfully taken and demands that the Company issue and, if
applicable, the transfer agent countersign a replacement certificate.
14. Equitable Relief. The parties hereto agree and declare that
legal remedies may be inadequate to enforce the provisions of this Agreement
and that equitable relief, including specific performance and injunctive
relief, may be used to enforce the provisions of this Agreement.
15. Arbitration. Any controversy arising under, out of, in
connection with, or relating to, this Agreement, and any amendment hereof, or
the breach hereof, shall be determined and settled by arbitration in New
York, New York, by a person or persons mutually agreed upon, or in the event
of a disagreement as to the selection of the arbitrator or arbitrators, in
accordance with the rules then obtaining of the American Arbitration
Association. Any award rendered therein shall specify the findings of fact of
the arbitrators and the reasons for such award, with the reference to and
reliance on relevant law. Any such award shall be final and binding on each
and all of the parties thereto and their personal representatives, and
judgment may be entered thereon in any court having jurisdiction thereof.
16. Compliance with Securities Laws. Each Stockholder hereby
acknowledges and agrees that the Shares, Options and Warrants have not been
registered under the Securities Act and, therefore, cannot be sold unless
subsequently registered under the Securities Act and any applicable state
securities laws or unless an exemption from such registration is available.
Notwithstanding anything to the contrary contained herein, the Company may
require, as a condition precedent to any transfer of Shares, Options or
Warrants permitted hereby, the delivery by the transferor of an opinion of
counsel, reasonably satisfactory to the Company, to the effect that such
transfer is permitted under the Securities Act and any applicable state
securities laws.
67
17. Irrevocable Proxy.
(a) Each Management Stockholder hereby appoints and
constitutes Xxxxxxx X. Xxxxxxxxx as his attorney-in-fact, with full power of
substitution and with full power and authority to:
(i) vote all Voting Shares owned by such Management
Stockholder, either in person or by proxy at any stockholders'
meeting, or by any written consent, in whatever manner such
attorney-in-fact, in his sole discretion, deems appropriate (and, in
any event, in any manner required by this Agreement); and
(ii) vote all such Voting Shares held by such
Management Stockholder to approve or disapprove of any action,
consent, amendment or waiver presented for consideration of the
Stockholders pursuant to this Agreement or otherwise.
Each Management Stockholder ratifies and approves all acts of any such
attorney-in-fact taken in good faith. No such attorney-in-fact shall be
liable for any acts or omissions nor for any error in judgment or mistake of
fact or law; provided, that each attorney-in-fact will be liable for any such
act, omission, error or mistake to the extent resulting from his own actions
taken in bad faith. This power, being coupled with an interest, is
irrevocable; provided, however, this power shall terminate and be of no
further force or effect following a Change of Control Event.
18. Call of Senior Subordinated Notes. Without the consent of the
Apollo Investor, the Company agrees not to redeem any of the Senior
Subordinated Notes pursuant to the Indenture prior to the third anniversary
of the date hereof.
19. Additional Share Issuance to New Investors. If, pursuant to
Section 4(e) of the Warrant Agreement, the Company shall issue additional
Warrants (the "Additional Warrants"), the Company shall, concurrently with
such issuance, at the option of any New Investor, sell, issue and deliver to
such New Investor, at a purchase price of $.01 per share, such additional
number of shares of Class B Common Stock (the "Additional Shares") necessary
to cause the number of New Investor Shares and Additional Shares
68
owned by such New Investor to equal (after giving effect to the issuance of
the Additional Warrants and the Additional Shares) the same percentage of the
then outstanding fullydiluted shares of Common Stock as the New Investor
Shares owned by such New Investor equal to the number of fully diluted shares
of Common Stock outstanding immediately prior to the issuances of the
Additional Warrants and the Additional Shares. The Company and NMB agree that
Section 4(e) of the Warrant Agreement shall, subject to the terms thereof, be
interpreted to provide NMB with an additional 3% of the fully-diluted shares
of Common Stock outstanding after giving effect to the issuance of the
Additional Warrants and the Additional Shares.
20. Miscellaneous.
(a) Notices. Any and all notices, designations, consents,
offers, acceptances, or any other communication provided for herein shall be
made by hand delivery, first-class mail (registered or certified, return
receipt requested), telex, telecopier, or overnight air courier guaranteeing
next day delivery: (i) in the case of the Company, to Envirotest Systems
Corp., c/o Georgetown Partners, 0000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxx,
XX, 00000 (Attention: Xxxxxxx Xxxxxxxxx) and (ii) in the case of any
Stockholder, to the address of the party appearing under his name on the
Schedule of Stockholders attached hereto (or to such other address as may be
designated by such party). Except as otherwise provided in this Agreement,
each such notice shall be deemed given at the time delivered by hand, if
personally delivered; five business days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next business day after timely delivery
to the courier, if sent by overnight air courier guaranteeing next day
delivery.
(b) Amendment. The provisions of this Agreement may be
amended by the approval of the holders of at least 90% of the Voting Shares.
Notwithstanding the foregoing, (i) the amendment or waiver of Section 11
shall also require the consent of CVP, ECC, NMB and Skopbank; (ii) the prior
written consent of NMB shall be required with respect to any amendment to any
Section of this Agreement (other than Section 5) to the extent that the
rights of NMB or Skopbank as a holder of Warrants or Warrant Shares would be
adversely affected; (iii) the provisions of Section 9 may be amended or
waived only by the approval of the holders
69
required to consent to action thereunder; and (iv) the amendment or waiver of
any provision hereof with respect to a matter that relates to the rights of a
particular Stockholder but not all Stockholders generally (including, without
limitation, the provisions relating to a Stockholder's Director Rights or
Representative Rights) shall not be amended without such Stockholder's
written consent. Notwithstanding the foregoing, no consent of any Stockholder
shall be required in connection with any amendment hereof to add any person
or entity as a Stockholder.
(c) Termination. Sections 1, 2, 3, 4, 5, 7, 8, 10, 15, 17
and 18 of this Agreement shall terminate on the earlier to occur of (i) ten
(10) years from the date hereof or (ii) the registration of any of the
Company's equity securities under the Securities Act (other than a
registration on Form S-4 or Form S-8, or any similar form which is a
successor to any of said Forms). Section 9 hereof shall terminate twelve (12)
years from the date hereof.
(d) Waiver. No failure or delay on the part of the
Stockholders or any of them in exercising any right, power or privilege
hereunder, and no course of dealing between the Company and the Stockholders
or any of them shall operate as a waiver thereof nor shall any single or
partial exercise of any right, power or privilege hereunder preclude the
simultaneous or later exercise of any other right, power or privilege. The
rights and remedies herein expressly provided are cumulative and not
exclusive of any rights and remedies which the Stockholders or any of them
would otherwise have. No notice to or demand on the Company in any case shall
entitle the Company to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the rights of the Stockholders
or any of them to take any other or further action in any circumstances
without notice or demand.
(e) Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute one and the same instrument.
(f) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
70
(g) Benefit and Binding Effect. This Agreement shall be
binding upon and shall inure to the benefit of the Company, its successors and
assigns, and each of the Stockholders, and their respective executors,
administrators and personal representatives and heirs and assigns. In the event
that any part of this Agreement shall be held to be invalid or unenforceable,
the remaining parts hereof shall nevertheless continue to be valid and
enforceable as though the invalid portions were not a part hereof.
(h) Entire Agreement. This Agreement (and, with respect to
the Warrants, the Warrant Agreements) contains the entire understanding of the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, discussions and understandings, including, without limitation,
the Prior Stockholders' Agreement.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as
of the day and year first above written.
ENVIROTEST SYSTEMS CORP.
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
GEORGETOWN PARTNERS LIMITED PARTNERSHIP
By: /s/ DHE Partners
------------------------------
By: ROCKSPRING MANAGEMENT
GENERAL PARTNER
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
General Partner
APOLLO INVESTMENT FUND, L.P.
By: APOLLO ADVISORY, L.P.
By: APOLLO CAPITAL MANAGEMENT, INC.
its General Partner
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Name: Xxxxx X. Xxxxxx
Title:
CHEMICAL EQUITY ASSOCIATES
By: CHEMICAL VENTURE PARTNERS,
its General Partner
/s/ Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxx
Title:
EQUICO CAPITAL CORPORATION
By: /s/ Xxxxxxxxx Xxxxxxxxxx
------------------------------
Name: Xxxxxxxxx Xxxxxxxxxx
Title: Vice President
AMOCO VENTURE CAPITAL COMPANY
By: /s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
General Partner
UNC VENTURES II, L.P.
By: /s/ Xxxxxx Xxxxxx XX
--------------------------
Name: Xxxxxx Xxxxxx XX
Title: General Partner
MESBIC VENTURES, INC.
By: [Illegible]
--------------------------
Name:
Title:
GMITROL LTD.
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Rep.
INTERNATIONAL NEDERLANDEN (U.S.)
FINANCE CORPORATION
By: Xxxxxx X. Xxxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxxx
Title:
SKOPBANK
By: [Illegible]
--------------------------
Name:
Title:
/s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Xxxxxx X. Xxxxxxxxx
/s/ Xxxxxxx Xxxxxx
------------------------------
Xxxxxxx Xxxxxx
Stockholder's Agreement
Signature Page /s/ Xxxxxx Boores
------------------------------
Xxxxxx Boores
/s/ Xxxx X. Xxxxxxxxxxx
------------------------------
Xxxx X. Xxxxxxxxxxx
/s/ Xxxxxxxx X. Xxx
------------------------------
Xxxxxxxx Xxx
/s/ Xxxxxx X. XxXxxxxxx
------------------------------
Xxxxxx X. XxXxxxxxx
/s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Xxxxxxx X. Xxxxxxxx
/s/ Xxxxxx Xxxxxx
------------------------------
Xxxxxx Xxxxxx
/s/ Xxxx X. Xxxxx
------------------------------
Xxxx Xxxxx
/s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Xxxxxx X. Xxxxxxxxx
------------------------------
Xxxxx X. XxXxxxxxxx
/s/ Xxxxx X. Xxxxxxxxxx
------------------------------
Xxxxx X. Xxxxxxxxxx
/s/ Xxxx X. Xxxxxxxx
------------------------------
Xxxx X. Xxxxxxxx
/s/ Xxxxxxxx X. Xxxxxx
------------------------------
Xxxxxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxxxxxx
------------------------------
Xxxxx X. Xxxxxxxxxx
/s/ Xxxxxx X. Xxxxxx
------------------------------
Xxxxxx X. Xxxxxx
------------------------------
Xxxxxxx X. Xxxxx
/s/ Xxxxxxxx X. Xxxx
------------------------------
Xxxxxxxx X. Xxxx
/s/ Xxxx X. Xxxxxxxxx
------------------------------
Xxxx X. Xxxxxxxxx
