STOCKHOLDERS AGREEMENT
by and among
CORE-XXXX INTERNATIONAL, INC.
and
ALL OF THE HOLDERS OF ITS COMMON STOCK
Dated as of August 7, 1996
TABLE OF CONTENTS
Page
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Section 1. Certain Definitions. . . . . . . . . . . . . . . . . . . . .. . .2
Section 2. Restrictions on Transfer . . . . . . . . . . . . . . . . . .. . 12
2.1 Common Stock Subject To This Agreement. . . . . . . . . . . . . . . 12
2.2 General Restriction . . . . . . . . . . . . . . . . . . . . . . . . 13
2.3 Transfers of Restricted B Stock and Option Shares . . . . . . . . . 14
2.4 Tag-Along Right . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.5 Drag-Along Right. . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.6 Transfers Following Initial Public Offering . . . . . . . . . . . . 19
Section 3. Call Options . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.1 Call Options of the Company and the Principal Stockholder . . . . . 21
3.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.3 Termination of Call Options . . . . . . . . . . . . . . . . . . . . 26
Section 4. Registration Rights. . . . . . . . . . . . . . . . . . . . . . 26
Section 5. Changes in Common Stock; Option Plan . . . . . . . . . . . . . 26
5.1 Changes in Common Stock . . . . . . . . . . . . . . . . . . . . . . 26
5.2 Approval of Option Plan . . . . . . . . . . . . . . . . . . . . . . 27
Section 6. Transferees Subject to Agreement . . . . . . . . . . . . . . . 27
Section 7. Legends. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 8. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . 29
8.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.2 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.3 Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . 29
8.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.5 Entire Agreement; Headings; Gender. . . . . . . . . . . . . . . . . 30
8.6 Copy of Agreement with Company. . . . . . . . . . . . . . . . . . . 30
8.7 Specific Performance. . . . . . . . . . . . . . . . . . . . . . . . 30
8.8 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.9 Third Party Beneficiary . . . . . . . . . . . . . . . . . . . . . . 31
8.10 Certain Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . 32
Exhibit A Parties
Exhibit B Repurchase Percentages
Exhibit C Form of Registration Rights Agreement
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STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT (the "AGREEMENT"), dated as of August 7, 1996, by
and among CORE-XXXX INTERNATIONAL, INC., a Delaware corporation (the "COMPANY"),
JUPITER PARTNERS L.P., a Delaware limited partnership ("JUPITER"), and the other
parties listed on Exhibit A hereto under the caption "Management Stockholders"
(Jupiter and the Management Stockholders are collectively referred to herein as
the "STOCKHOLDERS," which term shall also include any Person who hereafter
becomes a party to this Agreement in accordance with the terms hereof).
Capitalized terms used herein and not otherwise defined shall have the meanings
specified in Section 1.
W I T N E S S E T H :
WHEREAS, the Stockholders are the holders of all of the issued and
outstanding shares of Common Stock of the Company;
WHEREAS, the Management Stockholders own both Restricted A Stock and
Restricted B Stock;
WHEREAS, concurrently with the execution of this Agreement, the Company
is entering into severance and non-competition agreements with each of the
Management Stockholders (each, a "SEVERANCE AGREEMENT");
WHEREAS, concurrently with the execution of this Agreement, pursuant to
that certain Stock Option Plan of the Company (the "OPTION PLAN"), the Company
is granting to certain of its employees options to purchase shares of Common
Stock at a
2
per share exercise price of $10 per share, subject to the terms and conditions
set forth in the Option Plan;
WHEREAS, as a result of a 155,000 for 1 stock split occurring on the
date hereof, the Company has 5,500,000 shares of Common Stock outstanding as of
the date hereof; and
WHEREAS, the parties hereto wish to provide for certain rights and
obligations of the Stockholders with respect to the transfer, purchase and other
rights affecting the Common Stock.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:
Section CERTAIN DEFINITIONS. For the purposes of this Agreement, the
following terms and phrases have the following meanings:
"AFFILIATE" means, (i) with respect to any natural Person, the spouse of
such Person, either parent of such Person or of such Person's spouse, any
descendant of any such parent, or any relative of such Person who has the same
home as such Person, and (ii) with respect to any other Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
such Person. For purposes of this definition, the term "CONTROL" (including,
with correlative meanings, the terms "CONTROLLING," "CONTROLLED BY" and "UNDER
COMMON CONTROL WITH"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
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"AFFILIATED TRANSFEREE," with respect to the Principal Stockholder,
means (i) any Affiliate of the Principal Stockholder, (ii) any employee or
partner of the Principal Stockholder or (iii) any employee or partner of any
Affiliate of the Principal Stockholder.
"BOARD" means the Board of Directors of the Company.
"BUSINESS DAY" shall mean any day except a Saturday, Sunday or other day
on which commercial banks in New York, New York, are authorized by law to close.
"CALL FOR BREACH" shall have the meaning specified in Section 3.1.4.
"CALL FOR CAUSE" shall have the meaning specified in Section 3.1.1.
"CALL FOR RESIGNATION" shall have the meaning specified in
Section 3.1.2.
"CALL OPTION" shall mean any right of the Company or the Principal
Stockholder to purchase Restricted B Stock from a Management Stockholder under
Section 3.
"CALL SHARES" shall mean any shares of Restricted B Stock with respect
to which the Company or the Principal Stockholder would have a purchase right if
a Management Stockholder ceased to be employed by the Company or any of its
subsidiaries for any of the reasons specified in Section 3.1.
"CALL WITHOUT CAUSE" shall have the meaning specified in Section 3.1.3.
"CAUSE," with respect to any Management Stockholder, shall mean (i) a
reasonable, good faith determination by the Board that the Management
Stockholder has, in any material respect, willfully failed to follow any of the
Company's written policies or any written directives of the Board (other than by
reason of a resignation for
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Good Reason) and, if such failure is susceptible of being cured as reasonably
determined by the Board in good faith, the failure of the Management Stockholder
to cure such failure within 10 days after receiving written notice (stating with
specificity the nature of such failure) from the Board; or (ii) any act of gross
negligence, willful misconduct, fraud or personal dishonesty by the Management
Stockholder involving the assets of the Company or any of its Affiliates
resulting in economic or reputational harm to the Company; or (iii) the
conviction of, or a plea of guilty or NOLO CONTENDERE by the Management
Stockholder to, a charge of any crime involving moral turpitude or a felony; or
(iv) the breach by the Management Stockholder in any material respect of any
contract or other agreement between the Company or any of its Affiliates and the
Management Stockholder and, if such breach is susceptible of being cured as
reasonably determined by the Board in good faith, the failure of the Management
Stockholder to cure such breach within 10 days after receiving written notice
(stating with specificity the nature of such failure) from the Board.
"CHANGE IN CONTROL" shall mean (i) such time as the Principal
Stockholder no longer is the beneficial owner of shares of any Common Stock or
(ii) the consummation of a sale of all or substantially all of the assets of the
Company and its subsidiaries (other than to the Principal Stockholder or any
Affiliate of the Company); PROVIDED, that a Change in Control shall only be
deemed to have occurred if immediately after the occurrence of the event
specified in clause (i) or clause (ii) the Company does not have any publicly-
traded securities.
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"COMMON STOCK" means the common stock, par value $.01 per share, of the
Company and any other shares of capital stock of the Company classified as
common stock hereafter authorized.
"COMPANY" means Core-Xxxx International, Inc., a Delaware corporation.
"CONTINGENT OBLIGATION" shall mean any direct or indirect liability,
contingent or otherwise, (i) with respect to any indebtedness, letter of credit
or other monetary obligation of another if the primary purpose or intent thereof
by the Person incurring such liability is to provide assurance to the obligee of
such obligation of another that such obligation of another will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holder of such obligation will be protected (in whole or in part)
against loss in respect thereof or (ii) under any letter of credit issued for
the account of that Person or for which that Person is otherwise liable for
reimbursement thereof.
"DISABILITY," with respect to a Management Stockholder, shall mean
incapacity of such Management Stockholder due to physical or mental illness, as
a result of which such Management Stockholder shall have been unable to perform
his duties for an aggregate period of six months during any 12-month period.
"DRAG-ALONG RIGHT" shall have the meaning specified in Section 2.5.
"EBIT" shall mean, as of the date of determination, the Company's
consolidated earnings before interest and taxes for the twelve full months
immediately preceding such date, determined in accordance with generally
accepted accounting
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principles as defined by the Company's accountants as in effect as of the date
hereof, except that inventory shall be determined on a "first-in, first-out"
basis.
"ENCUMBRANCE" means any mortgage, lien, security interest, pledge,
claim, option, right of first refusal or other like encumbrance with respect to
any share of Common Stock, and "ENCUMBER" shall have a correlative meaning.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FAIR MARKET VALUE" shall mean (A) after the Initial Public Offering,
(i) the average of the last reported bid price of the Common Stock for the 30
consecutive trading days immediately preceding the date on which any such
determination is to be made, as reported by NASDAQ or, if the Common Stock is
not listed on NASDAQ, by another reliable source or (ii) if the Common Stock is
listed on a securities exchange, the average of the last reported sales price of
the Common Stock for the 30 consecutive trading days immediately preceding the
date on which any such determination is to be made and (B) prior to the Initial
Public Offering, the fair market value per share of Common Stock as determined
in good faith by the Board.
"FULLY DILUTED SHARES" shall mean the total number of the Company's
outstanding shares of Common Stock on a fully diluted, fully converted basis
(assuming the exercise of all options and other securities convertible or
exchangeable into or exercisable for Common Stock).
"GOOD REASON," with respect to a Management Stockholder, means (i) a
reduction of such Management Stockholder's base salary payable during any fiscal
year by the Company and its Subsidiaries, (ii) the failure of the Company to pay
such
7
Management Stockholder his base salary or any of his benefits to which he is
entitled to be paid during any fiscal year, if such failure is not cured within
ten days thereof or (iii) a relocation of such Management Stockholder's
principal base of operation to any location other than a location within
50 miles of San Francisco during the term of such Management Stockholder's
employment with the Company.
"INITIAL PUBLIC OFFERING" means the first public offering of Common
Stock pursuant to an effective registration statement under the Securities Act
which results in the listing of such Common Stock on a national securities
exchange or the quotation of such Common Stock on NASDAQ.
"IN-THE-MONEY," with respect to options or other securities convertible
into Common Stock, shall mean any options or other such securities the Fair
Market Value of whose underlying shares of Common Stock exceeds the then
applicable exercise price.
"INVOLUNTARY TRANSFER," with respect to any shares of Common Stock,
means any Transfer, proceeding or action (other than a Transfer on the death of
a Management Stockholder) by or in which a Management Stockholder (or his
Permitted Transferee) shall be deprived or divested of any right, title or
interest in or to any of its shares of Common Stock, including, without
limitation, any seizure under levy of attachment or execution, any Transfer in
connection with bankruptcy (whether pursuant to the filing of a voluntary or an
involuntary petition under any applicable bankruptcy law) or other court
proceeding to a debtor-in-possession, trustee in bankruptcy or receiver or other
officer or agency, any Transfer to a state or to a public officer or agency
pursuant to any statute pertaining to escheat or abandoned property, any
8
Transfer pursuant to a divorce action or any Transfer upon or occasioned by the
legal incompetence of any Management Stockholder (or his Permitted Transferee)
or any Transfer to a legal representative of any Management Stockholder (or his
Permitted Transferee).
"MANAGEMENT STOCKHOLDERS" means the individuals listed on Exhibit A
under the caption "MANAGEMENT STOCKHOLDERS," any Stockholder who acquires Common
Stock from a Management Stockholder and who becomes a party to this Agreement,
and any other Stockholder (including any Person who acquires Option Shares) who
hereafter becomes a party to this Agreement and is denominated as a "Management
Stockholder."
"NET DEBT" shall mean (A) the sum of (a) all obligations of the Company
(i) for borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred and unpaid purchase price of any property,
service or business (other than trade accounts payable and accrued liabilities
incurred in the ordinary course of business and constituting current liabilities
in accordance with generally accepted accounting principles), (b) any liability
of the Company secured by any lien on property owned or acquired by the Company,
whether or not such liability shall have been assumed (but if such liability has
not been assumed by the Company, only to the extent that the value of the
asset(s) is subject to such lien), (c) all Contingent Obligations of the
Company, (d) all letters of credit and all obligations of the Company relating
thereto, and (e) all net obligations of the Company in respect of interest rate
swap agreements, currency swap agreements and other similar agreements designed
to hedge against fluctuations in interest rates or foreign exchange rates
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(collectively, "XXXXXX"), minus (B) the sum of (a) all cash and cash equivalents
of the Company, (b) all net receivables of the Company in respect of Xxxxxx and
(c) the aggregate exercise or conversion prices that would be payable to the
Company in connection with the exercise of any "in-the-money" options or "in-
the-money" convertible securities or other securities to acquire Common Stock,
regardless of whether such options or convertible or other securities are then
actually exercised or converted. In determining Net Debt as of any date, the
obligations described in clauses (A)(a)(i), (A)(a)(ii) and (A)(d) shall be the
ending balance or, to the extent such obligations arise under revolving credit
facilities, be the average of the ending balances of such obligations for the 12
months immediately preceding such date.
"NOTICE" shall have the meaning specified in Section 2.4.
"OPTION PLAN" shall have the meaning specified in the recitals to this
Agreement.
"OPTION SHARES" shall mean any shares of Common Stock issued or issuable
pursuant to the Option Plan.
"OPTION SHARE RESTRICTION PERIOD" shall mean any time prior to
February 7 , 2004.
"PERMITTED TRANSFEREE" means, with respect to a Stockholder who is a
natural person, (a) the spouse, parents, parents-in-law, siblings (by blood or
adoption) of such Stockholder or the lineal descendants (by blood or adoption)
of such Stockholder or such Stockholder's spouse, parents or siblings, (b) a
trust, the beneficiaries of which include only such Stockholder or spouse,
parents, or siblings (by blood or adoption) of such Stockholder or the lineal
descendants (by blood or adoption)
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of such Stockholder, spouse, parents or siblings, or a charitable trust that is
an Affiliate of such Stockholder, or (c) upon such Stockholder's death,
executors, administrators, testamentary trustees, legatees or beneficiaries of
such Stockholder.
"PERSON" shall mean an individual, firm, corporation, limited
liability company, partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind.
"POTENTIAL PARTICIPANT" shall have the meaning specified in Section
2.4.
"PRINCIPAL STOCKHOLDER" shall mean Jupiter and, where the context
refers to the ownership by the Principal Stockholder of Common Stock, shall also
mean its Affiliated Transferees who own Common Stock.
"PROSPECTIVE SELLER" shall have the meaning specified in Section 2.4.
"PROSPECTIVE TRANSFEREE" shall have the meaning specified in
Section 6.
"PUBLIC OFFERING" means a public offering of Common Stock pursuant to
an effective registration statement under the Securities Act.
"PUBLIC SALE" means a Transfer of Common Stock pursuant to a Public
Offering or under Rule 144 (or any successor rule) under the Securities Act.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the date hereof, in the form of Exhibit C.
"REPURCHASE PRICE" shall mean, with respect to a share of Common
Stock, (A) prior to the Initial Public Offering, an amount in cash equal to the
quotient obtained by dividing (i) Enterprise Value (defined below) minus Net
Debt by (ii) the number of Fully Diluted Shares and (B) after the Initial Public
Offering, an amount in
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cash equal to the Fair Market Value of such share. "ENTERPRISE VALUE" shall
mean EBIT times 6.1.
"RESTRICTED A STOCK," with respect to any Management Stockholder,
means those shares of Common Stock representing 40% of the aggregate shares of
Common Stock held by such Management Stockholder as of the date hereof and
bearing the legend specified in Section 7.2.
"RESTRICTED B STOCK," with respect to any Management Stockholder,
means all Common Stock (including, without limitation, any Option Shares) held
by such Management Stockholder from time to time, other than Restricted A Stock.
"RESTRICTED SHARES" means all shares of Common Stock other than
(i) shares that have been registered under a registration statement pursuant to
the Securities Act, (ii) shares with respect to which a sale has been made
pursuant to Rule 144 promulgated under the Securities Act (or any successor
rule) or (iii) shares with respect to which the holder thereof shall have
delivered to the Company an opinion of counsel, in form and substance reasonably
satisfactory to the Company, to the effect that the Transfer of such shares may
be effected without registration under the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SEVERANCE AGREEMENT" shall have the meaning specified in the recitals
to this Agreement.
"STOCKHOLDERS" shall have the meaning specified in the introductory
paragraph of this Agreement.
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"SUBSIDIARY," with respect to any Person, means any other Person of
which such Person owns or controls, directly or indirectly, more than 50% of the
outstanding voting shares or other voting interests or equity interests.
"SUBSTITUTE PURCHASE OFFER" shall have the meaning specified in
Section 2.4.
"TAG-ALONG COMMON STOCK" shall have the meaning specified in
Section 2.4.
"TAG-ALONG NOTICE" shall have the meaning specified in Section 2.4.
"TAG-ALONG RIGHT" shall have the meaning specified in Section 2.4.
"THRESHOLD AMOUNT" shall mean 825,000 shares of Common Stock, which is
20% of the shares of Common Stock held by the Principal Stockholder on the date
hereof.
"TRANSFER," with respect to any shares of Common Stock, means any
transfer, assignment, sale, gift, pledge, hypothecation or other disposition of
Common Stock or of all or part of the voting power (other than the granting of a
revocable proxy) associated with the Common Stock whatsoever, or any other
transfer of beneficial ownership of Common Stock, including, without limitation,
any Involuntary Transfer; and "TRANSFEREE" shall have a correlative meaning.
Section 2. RESTRICTIONS ON TRANSFER
2.1 COMMON STOCK SUBJECT TO THIS AGREEMENT. Unless otherwise
provided herein, all shares of Common Stock of the Company (including, without
limitation, any Option Shares) now owned or hereafter acquired by any of the
Stockholders or any Transferee thereof (including any Person who acquires Common
13
Stock by means of an Involuntary Transfer, but not including any Person who
acquires Common Stock pursuant to a Public Sale) shall be subject to the terms
of this Agreement.
2.2 GENERAL RESTRICTION.
2.2.1 GENERAL. Each Stockholder agrees that it will not,
directly or indirectly, make any Transfer of any Common Stock, except in
compliance with the Securities Act. Each Management Stockholder agrees that he
will not, directly or indirectly, make any Transfer of any Restricted B Stock
except in compliance with this Agreement. Each Management Stockholder further
agrees (i) that any direct or indirect Transfer of Restricted A Stock will be
made only in compliance with Section 6 (Transferees Subject to Agreement), to
the extent applicable, (ii) to be bound by the provisions of Section 2.5 (Drag-
Along Right) with respect to its Restricted A Stock, and (iii) that he shall not
Encumber his Restricted A Stock without the consent of the Board. The Principal
Stockholder agrees (i) that any direct or indirect Transfer of Common Stock held
by it will be made only in compliance with Section 6 (Transferees Subject to
Agreement), to the extent applicable, and (ii) to be bound by the provisions of
Section 2.4 (Tag-Along Right) with respect to its Common Stock. Any Transfer
effected, or purported or attempted to be effected, not in accordance with the
terms and conditions of this Agreement shall be void and of no effect. In
connection with any voided Transfer, the Company may hold and refuse to transfer
any Common Stock or certificate therefor tendered for transfer, in addition and
without prejudice to any and all other rights and remedies which may be
available.
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2.2.2 INVOLUNTARY TRANSFER. Any Person who acquires Common
Stock from a Management Stockholder by means of an Involuntary Transfer shall be
deemed to have become a party to this Agreement as a "Management Stockholder"
and shall be bound by the terms hereof; PROVIDED, that prior to the Company
transferring such Common Stock on its books and records to such Person and prior
to the exercise by such Person of any rights hereunder, such Person shall have
delivered an appropriate document, in form and substance reasonably satisfactory
to the Company, confirming that such Person takes such shares subject to the
terms and conditions of this Agreement, and such Person thereupon shall be
deemed to be a Permitted Transferee of such Management Stockholder.
2.3 TRANSFERS OF RESTRICTED B STOCK AND OPTION SHARES
2.3.1 Each Management Stockholder agrees that he will not,
directly or indirectly, Transfer any shares of Restricted B Stock except,
subject to compliance with Section 6 (Transferees Subject to Agreement),
(i) Transfers of Restricted B Stock pursuant to the procedures, and subject to
the limitations, set forth in Section 2.4 (Tag-Along Right), Section 2.5 (Drag-
Along Right), Section 2.6 (Transfers Following Initial Public Offering), or
(ii) Transfers of Restricted B Stock to the Company or the Principal Stockholder
pursuant to the provisions of Section 3 (Call Options) or otherwise, or
(iii) Transfers of Restricted B Stock to any Permitted Transferee of such
Management Stockholder, or (iv) Transfers consisting of pledges of Restricted B
Stock to the Company, or (v) Transfers of Restricted B Stock to any Person
pursuant to an Involuntary Transfer; PROVIDED that, in the case of this
clause (v), such Person shall have delivered an appropriate document, in form
and
15
substance reasonably satisfactory to the Company, confirming that such Person
takes such shares subject to the terms and conditions of this Agreement, and
such Person thereupon shall be deemed to be a Permitted Transferee of such
Management Stockholder. Each Management Stockholder further agrees that,
notwithstanding the foregoing, he will not, directly or indirectly, Transfer any
Option Shares during the Option Share Restriction Period other than pursuant to
Section 2.4 (Tag-Along Right), Section 2.5 (Drag-Along Right) or Section 2.6
(Transfers Following Initial Public Offering).
2.4 TAG-ALONG RIGHT. Other than in connection with the exercise of
the Drag-Along Right or a Call Option or pursuant to a Public Sale permitted
hereunder, in the event that any Stockholder (as used in this Section, a
"PROSPECTIVE SELLER") shall receive a bona fide offer to purchase shares of
Common Stock (a "PURCHASE OFFER") from any Person (including, without
limitation, any offer by a Management Stockholder, but not including (a) an
offer by a Permitted Transferee of such Prospective Seller or (b) an offer by
the Principal Stockholder), the Prospective Seller shall either decline such
Purchase Offer or, if the Prospective Seller determines to accept such Purchase
Offer, then, prior to accepting any Purchase Offer, arrange for the proposed
purchaser to make, in lieu of the Purchase Offer, a substitute bona fide offer
to purchase the same number of shares of Common Stock that were the subject of
the Purchase Offer, and upon the same terms as the Purchase Offer, from the
Stockholders owning Common Stock as a group in the relative proportions and
otherwise as described in the third succeeding sentence (the "SUBSTITUTE
PURCHASE OFFER"). Notwithstanding the foregoing, a Management Stockholder may
sell his
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Restricted A Stock at any time without complying with the provisions of this
Section 2.4. In the event a Substitute Purchase Offer is made, the Prospective
Seller shall give the other Stockholders written notice thereof (the "NOTICE")
specifying (i) the number of shares of Common Stock that is the subject of such
Substitute Purchase Offer, (ii) the terms (including the proposed date of
consummation thereof, which shall be not less than 30 days following the date of
the Notice) of such Substitute Purchase Offer, and (iii) the identity of the
proposed purchaser. Upon receipt of the Notice, each Stockholder (a "POTENTIAL
PARTICIPANT") shall have the right (the "TAG-ALONG RIGHT") to sell that number
of shares of Common Stock equal to (A) the product of (a) the total number of
shares of Common Stock proposed to be purchased and (b) a fraction, the
numerator of which shall be the number of shares of Tag-Along Common Stock (as
defined below) owned by such Potential Participant and the denominator of which
shall be the number of shares of Tag-Along Common Stock owned by all Potential
Participants (including the Prospective Seller) electing to participate in such
sale, minus (B) the total number of shares of Restricted A Stock held by such
Potential Participant as of the date hereof. For purposes of the foregoing,
"TAG-ALONG COMMON STOCK" shall mean all shares of Common Stock, including shares
issuable pursuant to Options which, at the time of the Notice, are capable of
being exercised in accordance with the terms of the Option Plan and are "in-the-
money." The Tag-Along Right may be exercised by a Potential Participant by
delivery, not later than 15 days after receipt of the Notice, of a written
notice (the "TAG-ALONG NOTICE") to the Prospective Seller, which shall state the
number of shares of Common Stock that such Potential Participant wishes to
include in such sale to the purchaser. Any Potential Participant who elects
17
not to participate in such sale may assign his rights with respect to such
participation to any other Potential Participant in any manner as such assigning
Potential Participant so elects, provided that the Tag-Along Notice is received
by the Prospective Seller on a timely basis and provides sufficient information
with respect to such assignment to enable the Prospective Seller to determine
the aggregate number of shares of Common Stock that all Potential Participants
wish to include in such sale. The Prospective Seller, together with any
electing Potential Participants, shall participate in any purchase made by the
purchaser specified in the Notice on the terms set forth therein (or on terms no
less favorable) and as provided in the Tag-Along Notice during the 90-day period
following the date of the Notice. Any purchases by such purchaser following
such 90-day period shall require a new Notice. To the extent a Potential
Participant does not participate in such sale and does not assign his rights
with respect thereto as provided above, the Prospective Seller may sell that
number of its shares of Common Stock (in addition to the shares of Common Stock
otherwise permitted to be sold by it hereunder) equal to the number of shares
with respect to which such Potential Participant had the opportunity to sell
hereunder and did not so assign his rights with respect thereto. All Transfers
made pursuant to this Section 2.4 shall be subject to the provisions of
Section 6 (Transferees Subject to Agreement). The provisions of this Section
2.4 shall terminate after the Initial Public Offering at such time as the
Principal Stockholder no longer owns Common Stock in excess of the Threshold
Amount.
2.5 DRAG-ALONG RIGHT. If the Principal Stockholder proposes to make
a bona fide sale of its shares of Common Stock to a third party un-Affiliated
with the
18
Principal Stockholder (which may include another Stockholder) in an amount equal
to at least 1% of the Fully Diluted Shares (which amount shall be calculated
based on the transaction in question or series of transactions related thereto),
the Principal Stockholder shall have the right (the "DRAG-ALONG RIGHT"),
exercisable upon 15 days' prior written notice, to require the other
Stockholders to sell a corresponding percentage (as the percentage being sold by
the Principal Stockholder) of the number of shares of Common Stock held by such
other Stockholder to such third party upon terms no less favorable than those
that apply to the Principal Stockholder with respect to such third party sale.
For purposes of calculating such corresponding percentage, there shall be
included in such calculation (i) Option Shares that are exercisable in
accordance with the Option Plan and are in-the-money, even if such sale is
during the Option Share Restriction Period, and (ii) Call Shares. Any shares of
Restricted A Stock held by a Management Stockholder shall be subject to the
Drag-Along Right prior to the inclusion of any Restricted B Stock held by such
Management Stockholder in such third party sale. Each Stockholder hereby agrees
to cooperate with the Principal Stockholder and to take any and all action
reasonably required in connection with the consummation of such third party
sale. Without limiting the foregoing, at the closing of any sale under this
Section 2.5, each Stockholder shall deliver certificates representing the shares
of Common Stock to be sold, duly endorsed for transfer and accompanied by all
requisite stock transfer taxes, and each Stockholder shall represent and warrant
that it is the beneficial owner of such shares free and clear of any
Encumbrances, with full authority and power to transfer such shares. All
Transfers made pursuant to this Section 2.5 shall be subject to the provisions
of Section 6 (Transferees Subject to
19
Agreement). The provisions of this Section 2.5 shall terminate after the
Initial Public Offering at such time as the Principal Stockholder no longer owns
Common Stock in excess of the Threshold Amount.
2.6 TRANSFERS FOLLOWING INITIAL PUBLIC OFFERING.
2.6.1 From and after the date of the Initial Public Offering,
and provided that at the time of the Transfer by a Management Stockholder
referred to below the Principal Stockholder owns Common Stock in excess of the
Threshold Amount, a Management Stockholder and his Permitted Transferees may
Transfer shares of Restricted B Stock held by them (other than, until the fifth
anniversary of the date hereof, any Call Shares) (x) pursuant to the exercise of
their rights under the Registration Rights Agreement, (y) pursuant to a sale
under Rule 144 of the Securities Act which is subject to the volume limitations
set forth in subparagraph (e)(1) of such Rule; PROVIDED, that a Management
Stockholder and his Permitted Transferees as a group may only Transfer their
Restricted B Stock under this clause (y) in an aggregate amount equal to (A) the
product of (i) the total number of shares of Public Sale Stock (as defined
below) held by such Management Stockholder as of the date hereof (or, if such
Management Stockholder and his Permitted Transferees as a group have acquired
additional Restricted B Stock after the date hereof in a manner that was not in
violation of this Agreement, such greater number) multiplied by (ii) a fraction,
the numerator of which shall be the aggregate number of shares of Common Stock
that have been Transferred by the Principal Stockholder prior to the date of the
proposed Transfer by such Management Stockholder, and the denominator of which
shall be the total number of shares of Common Stock held by the Principal
Stockholder as of the date hereof (or,
20
if the Principal Stockholder has acquired additional Common Stock after the date
hereof in a manner that was not in violation of this Agreement, such greater
number), minus (B) the total number of shares of Restricted A Stock held by such
Management Stockholder as of the date hereof, or (z) pursuant to an exemption
from the registration requirements of the Securities Act, but only (in the case
of this clause (z)) if at the time of such Transfer by such Management
Stockholder the Principal Stockholder is also Transferring Common Stock;
PROVIDED that a Management Stockholder and his Permitted Transferees as a group
may only Transfer their Restricted B Stock under this clause (z) in an aggregate
amount equal to (A) the product of (i) the total number of shares of Public Sale
Stock held by such Management Stockholder as of the date hereof (or, if such
Management Stockholder and his Permitted Transferees as a group have acquired
additional Restricted B Stock after the date hereof in a manner that was not in
violation of this Agreement, such greater number) multiplied by (ii) a fraction,
the numerator of which shall be the aggregate number of shares of Common Stock
then being Transferred by the Principal Stockholder, and the denominator of
which shall be the total number of shares of Common Stock held by the Principal
Stockholder as of the date hereof (or, if the Principal Stockholder has acquired
additional Common Stock after the date hereof in a manner that was not in
violation of this Agreement, such greater number), minus (B) the total number of
shares of Restricted A Stock held by such Management Stockholder as of the date
hereof. For purposes of the foregoing, "PUBLIC SALE STOCK" shall mean all
shares of Common Stock, including shares issuable
21
pursuant to Options which, at the time of such proposed Transfer, are capable of
being exercised in accordance with the terms of the Option Plan and are "in-the-
money," but until the fifth anniversary of the date hereof, shall not include
any Call Shares.
2.6.3 From and after the date of the Initial Public Offering,
and provided that at the time of the Transfer referred to below the Principal
Stockholder does not own Common Stock in excess of the Threshold Amount, a
Management Stockholder and his Permitted Transferees may Transfer shares of
Common Stock held by them (other than, until the fifth anniversary of the date
hereof, any Call Shares) pursuant to the exercise of their rights under the
Registration Rights Agreement or pursuant to an applicable exemption from the
registration requirements of the Securities Act.
2.6.3 Any shares of Common Stock Transferred pursuant to a
Public Sale shall no longer be subject to the provisions of this Agreement.
Section 3. CALL OPTIONS.
3.1 CALL OPTIONS OF THE COMPANY AND THE PRINCIPAL STOCKHOLDER.
3.1.1 TERMINATION FOR CAUSE. Subject to Section 3.3
(Termination of Call Options), if the employment by the Company of any
Management Stockholder shall be terminated by the Company or any of its
subsidiaries for Cause, then the Company and the Principal Stockholder shall
have the right, but not the obligation, to purchase (the "CALL FOR CAUSE")
from the applicable Management Stockholder and his Permitted Transferees, and
if the Company and/or the Principal Stockholder exercises such right, such
Management Stockholder and his Permitted Transferees shall have the
obligation to sell to the Company and/or the Principal
22
Stockholder, all (but not less than all) of the shares of Restricted B
Stock held by such Management Stockholder and his Permitted Transferees (it
being agreed that the number of shares subject to the Call for Cause shall be
the maximum number of shares of Restricted B Stock that may be held by such
Management Stockholder and his Permitted Transferees during the 180-day period
during which such Call for Cause may be exercised), at a price per share equal
to the lower of (i) $10 per share and (ii) the Repurchase Price (PROVIDED, that
if the termination for Cause occurs on or after the fifth anniversary of the
date hereof, the Call for Cause shall only apply to the Option Shares then held
by the applicable Management Stockholder and his Permitted Transferees). For
purposes of this Section 3.1.1, a termination for Cause shall be deemed to have
occurred with respect to a Management Stockholder if such Management Stockholder
resigns from his employment with the Company after committing any act which,
with notice or lapse of time or both, would constitute an event of Cause under
the definition of "Cause."
3.1.2 TERMINATION BY RESIGNATION. Subject to Section 3.3
(Termination of Call Options), if prior to the fifth anniversary of the date
hereof any Management Stockholder shall cease to be employed by the Company or
any of its subsidiaries as a result of his resignation (other than for Good
Reason and other than a resignation which occurs after committing any act which,
with notice or lapse of time or both, would constitute an event of Cause under
the definition of such term), then the Company and the Principal Stockholder
shall have the right, but not the obligation, to purchase (the "CALL FOR
RESIGNATION") from the applicable Management Stockholder and his Permitted
Transferees, and if the Company and/or the Principal Stockholder exer-
23
cises such right, such Management Stockholder and his Permitted Transferees
shall have the obligation to sell to the Company and/or the Principal
Stockholder, all (but not less than all) of that number of shares of
Restricted B Stock held by such Management Stockholder and his Permitted
Transferees (it being agreed that the number of shares referred to above shall
be the maximum number of shares of Restricted B Stock that may be held by such
Management Stockholder and his Permitted Transferees during the 180-day period
during which such Call for Resignation may be exercised) multiplied by the
percentage specified on Exhibit B opposite the relevant period in which such
resignation occurs, at a price per share equal to the lower of (i) $10 per share
and (ii) the Repurchase Price.
3.1.3 TERMINATION WITHOUT CAUSE. Subject to Section 3.3
(Termination of Call Options), if prior to the fifth anniversary of the date
hereof any Management Stockholder shall cease to be employed by the Company or
any of its subsidiaries for any reason whatsoever, except due to death,
Disability, termination for Cause (including resignation deemed to be a
termination for Cause under Section 3.1.1) or resignation (other than
resignation for Good Reason), the Company and the Principal Shareholder shall
have the right, but not the obligation, to purchase (the "CALL WITHOUT CAUSE")
from the applicable Management Stockholder and his Permitted Transferees, and if
the Company and/or the Principal Stockholder exercises such right, such
Management Stockholder and his Permitted Transferees shall have the obligation
to sell to the Company and/or the Principal Stockholder, all (but not less than
all) of that number of shares of Restricted B Stock held by such Management
Stockholder and his Permitted Transferees (it being agreed that the number of
shares referred to above shall
24
be the maximum number of shares of Restricted B Stock that may be held by such
Management Stockholder and his Permitted Transferees during the 180-day period
during which such Call Without Cause may be exercised) multiplied by the
percentage specified on Exhibit B opposite the relevant period in which such
cessation occurs, at a price per share equal to the Repurchase Price.
3.1.4 MANAGEMENT STOCKHOLDER BREACH OF SEVERANCE AGREEMENT.
Subject to Section 3.3 (Termination of Call Options), if any Management
Stockholder materially breaches any of Sections 3 (Non-Competition), 4
(Confidential Information), 5 (Employees of the Company) or 6 (Consultants of
the Company, Etc.) of his Severance Agreement and, if such breach is susceptible
of being cured as reasonably determined by the Board in good faith, such breach
is not cured within ten days after receiving written notice (stating with
specificity the nature of the breach of such failure) from the Board, then the
Company, among the other rights and remedies set forth in the Severance
Agreement, and the Principal Stockholder shall have the right, but not the
obligation, to purchase (the "CALL FOR BREACH") from the applicable Management
Stockholder and his Permitted Transferees, and if the Company and/or the
Principal Stockholder exercises such right, the Management Stockholder and his
Permitted Transferees shall have the obligation to sell to the Company and/or
the Principal Stockholder, all (but not less than all) of the shares of
Restricted B Common Stock held by such Management Stockholder and his Permitted
Transferees (it being agreed that the number of shares of Restricted B Stock
subject to the Call for Breach shall be the maximum number of shares of
Restricted B Stock held by such Management Stockholder and his Permitted
Transferees during the 180-day period
25
during which such Call for Breach may be exercised) at a price per share equal
to the lower of (i) $10 per share and (ii) the Repurchase Price.
3.1.5 PROCEDURE. The Company may exercise its rights pursuant
to this Section 3.1 by providing written notice to the relevant Management
Stockholder and the Principal Stockholder not later than 90 days after the
occurrence of the event which triggers the Company's rights under this
Section 3.1 (the "EVENT DATE"), provided, that the Company may exercise its
rights pursuant to this Section 3.1 for less than all of the shares subject to
such rights only with the prior written consent of the Principal Stockholder.
Any portion of such Call Option not exercised within such 90-day period shall
expire with respect to the Company and be void and of no further force and
effect. Provided that the Company (with the consent of the Principal
Stockholder) has not exercised its rights in full with respect to such relevant
Call Option under this Section 3.1, the Principal Stockholder shall exercise the
rights of the Company (with respect to that portion of the Call Option not
exercised by the Company) under this Section 3.1 on its own behalf by providing
written notice to the relevant Management Stockholder not later than 180 days
after the Event Date.
3.2 CLOSING. The closing of any purchase by the Company or the
Principal Stockholder under this Section 3 shall be held at the principal office
of the Company on the 30th day after the date on which a notice of exercise of a
Call Option is given hereunder or at such other time and place as the parties to
the transaction may agree upon. At the closing of any purchase under this
Section 3, the applicable Stockholder and his Permitted Transferees shall
deliver certificates representing the shares of Restricted B Stock to be sold,
duly endorsed for transfer and accompanied by
26
all requisite stock transfer taxes, and the Stockholder and his Permitted
Transferees shall represent and warrant that each is the beneficial owner of
such shares free and clear of any Encumbrances, with full authority and power to
transfer such shares. At such closing, the parties shall execute and/or deliver
such additional documents as are otherwise reasonably necessary or appropriate
to consummate the transfers.
3.3 TERMINATION OF CALL OPTIONS. Upon the occurrence of a Change in
Control, any theretofore unexercised Call Options shall terminate and be of no
further force or effect. Any shares of Common Stock Transferred in accordance
with the provisions of Section 2.4 (Tag-Along Right), Section 2.5 (Drag-Along
Right) or Section 2.6 (Transfers Following Initial Public Offering) (other than
to a Person who is a Management Stockholder on the date hereof or to any
Permitted Transferee of such Management Stockholder) shall no longer be subject
to the Call Options.
Section 4. REGISTRATION RIGHTS. The Company hereby grants to the
Principal Stockholder, the Management Stockholders and each of their Permitted
Transferees, registration rights with respect to the Common Stock on the terms
and subject to the conditions set forth in the Registration Rights Agreement.
Section 5. CHANGES IN COMMON STOCK; OPTION PLAN.
5.1 CHANGES IN COMMON STOCK. If there is any change in the Common
Stock by way of stock split, reverse stock split, stock dividend,
reclassification, merger, consolidation, reorganization, recapitalization or any
other means, then all appropriate adjustments to the provisions hereof shall be
made so that the rights and obligations of the parties hereto under this
Agreement shall continue, without enlargement or dilution, with respect to the
Common Stock as so changed.
27
5.2 APPROVAL OF OPTION PLAN. Each Stockholder (as of August 7, 1996)
hereby acknowledges receipt of a copy of the Option Plan, and hereby approves
the adoption of the Option Plan by the Company in all respects.
Section 6. TRANSFEREES SUBJECT TO AGREEMENT. Each Stockholder agrees
that it will not make any Transfer (including, without limitation, to a
Permitted Transferee but excluding a Transfer in a Public Sale) unless, prior to
the consummation of any such Transfer, the Person (other than any then current
Stockholder) to whom such Transfer will be made (a "PROSPECTIVE TRANSFEREE")
executes and delivers to the Company an agreement, in form and substance
reasonably satisfactory to the Company, whereby such Prospective Transferee
confirms that it shall be deemed to be a Stockholder for the purposes of, and
shall be subject to, this Agreement.
Section 7. LEGENDS.
7.1 Each certificate evidencing shares of Common Stock shall bear a
legend in substantially the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO REGISTRATION OF TRANSFER
OF SUCH SECURITIES WILL BE MADE ON THE BOOKS OF THE ISSUER UNLESS SUCH
TRANSFER IS MADE PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH
ACT. THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER, ALL AS SET FORTH IN A
28
STOCKHOLDERS AGREEMENT, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
EXECUTIVE OFFICES OF THE ISSUER."
7.2 Each certificate evidencing shares of Restricted A Stock shall
bear an additional legend in substantially the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE SHALL CONSTITUTE
"RESTRICTED A STOCK," AS DEFINED IN AND GOVERNED BY THE STOCKHOLDERS
AGREEMENT."
7.3 Each certificate evidencing shares of Restricted B Stock shall
bear an additional legend in substantially the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE SHALL CONSTITUTE
"RESTRICTED B STOCK," AS DEFINED IN AND GOVERNED BY THE STOCKHOLDERS
AGREEMENT, AND MAY BE SUBJECT TO CERTAIN REPURCHASE RIGHTS AS PROVIDED IN
SUCH AGREEMENT."
7.4 In the event that any shares of Common Stock shall cease to be
Restricted Shares, the Company shall, upon the written request of the holder
thereof, issue to such holder a new certificate evidencing such shares without
the first two sentences of the legend required by Section 7.1 In the event any
shares of Common Stock shall cease to be subject to the restrictions on transfer
and repurchase set forth in this Agreement, the Company shall, upon the written
request of the holder thereof, issue to such holder a new certificate evidencing
such shares without the third sentence of the legend required by Section 7.1 or
the legends required by Sections 7.2 and 7.3.
29
Section 8. MISCELLANEOUS.
8.1 AMENDMENT. This Agreement cannot be amended orally, but only by
an agreement in writing signed by the Company, the Principal Stockholder and the
holders of at least 50% of the shares of Common Stock held by all of the
Management Stockholders and their Permitted Transferees as a group, except that
the Company may amend Exhibit A of this Agreement to reflect changes made in
accordance with this Agreement.
8.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE.
8.3 EXECUTION IN COUNTERPARTS. This Agreement may be signed in one
or more counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
8.4 NOTICES. All communications provided for herein shall be in
writing and,
(i) if addressed to a Stockholder, shall be delivered or mailed or
telecopied to such Stockholder at its address specified on Exhibit A (or an
annex thereto, if such Stockholder shall have become a party hereto pursuant to
Section 6), or to such other address as such Stockholder shall have notified the
Company in writing, or
(ii) if addressed to the Company, shall be delivered or mailed or
telecopied to it at Core-Xxxx International, Inc., 000 Xxxxxx Xxxxx Xxxxxxxxx,
Xxxxx 000, Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxx X. Xxxxx,
30
Telecopy: 000-000-0000, with a copy to the Principal Stockholder, c/o Jupiter
Partners, L.P., 00 Xxxxxxxxxxx Xxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxx X. Xxxxxxx, Telecopy: (000) 000-0000, or to such other address
as the Company or the Principal Stockholder, as the case may be, shall have
notified all Stockholders in writing. Except as otherwise expressly provided
herein, any communication shall be deemed to have been given when delivered (if
delivered by hand or by reputable overnight courier service), in the case of
facsimile transmission, when telecopied with confirmation of transmission, or if
mailed, shall be deemed to have been given three days after having been so
mailed.
8.5 ENTIRE AGREEMENT; HEADINGS; GENDER. This Agreement (including
the Exhibits hereto) and the Agreements referred to herein embody the entire
agreement and understanding among the parties and supersede all prior agreements
and understandings relating to the subject matter hereof. The headings in and
date of this Agreement are for purposes of reference only and shall not limit or
otherwise affect the meaning hereof. The term "ITS" is used in this Agreement
for convenience only and shall be deemed to include, where applicable, "HER OR
HIS," and vice versa. Similarly, the pronoun "IT" when referring to a
Stockholder shall be deemed to include, where applicable, "HER OR SHE" or "HIM
OR HE," and vice versa.
8.6 COPY OF AGREEMENT WITH COMPANY. A counterpart of this Agreement
shall be filed with the Company at its principal office.
8.7 SPECIFIC PERFORMANCE. The parties recognize that the obligations
imposed on them in this Agreement are special, unique and of extraordinary
character, and that in the event of breach by any party, damages will be an
insufficient remedy;
31
consequently, it is agreed that the parties hereto may have specific performance
(in addition to damages) as a remedy for the enforcement hereof, without proving
damages. No party shall raise any argument as to the sufficiency of money
damages.
8.8 ASSIGNMENT. Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns; PROVIDED,
HOWEVER, that this Agreement may not be assigned by the Company or any of the
Management Stockholders without the prior written consent of the Company, the
Principal Stockholder and the holders of at least 50% of the shares of Common
Stock held by all of the Management Stockholders and their Permitted Transferees
as a group, except that (i) the Company may assign its rights herein to any
successor to all or substantially all of its assets (by merger or otherwise);
(ii) subject to Section 6 (Transferees Subject to Agreement), any Management
Stockholder may assign its rights under this Agreement to any Permitted
Transferee of its shares of Common Stock; and (iii) each Stockholder's rights
under the Registration Rights Agreement shall inure to the benefit of any holder
of Registrable Securities (as defined in the Registration Rights Agreement).
Any purported assignment made in violation of this Agreement shall be void and
of no force and effect.
8.9 THIRD PARTY BENEFICIARY. Nothing in this Agreement, express or
implied, is intended or shall confer upon anyone other than the parties hereto
(and their
32
respective permitted successors and assigns) any right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.
8.10 CERTAIN TAX MATTERS. The Company covenants and agrees that it
shall not claim a deduction for federal, state or local income tax purposes in
connection with the issuance of, the reduction of the Repurchase Percentage (as
set forth in Exhibit B) with respect to, or the disposition of, the shares of
Restricted A Stock and Restricted B Stock.
IN WITNESS WHEREOF, the parties hereto have hereunder signed
their names or have caused this Agreement to be duly executed by their officers
thereunder duly authorized as of the date first above written.
CORE-XXXX INTERNATIONAL, INC.
By:/s/Xxxx X. Xxxxx
-----------------------------
Authorized Officer
STOCKHOLDERS:
/s/Xxxxxx X. Xxxxx
-----------------------------
Xxxxxx X. Xxxxx
/s/Xxx Xxxxxxxx
-----------------------------
Xxx Xxxxxxxx
/s/Xxx X. Xxxxxx
-----------------------------
Xxx X. Xxxxxx
/s/Xxxxx X. Xxxxxx
-----------------------------
Xxxxx X. Xxxxxx
/s/Xxxx X. Xxxxx
-----------------------------
Xxxx X. Xxxxx
/s/J. Xxxxxxx Xxxxx
-----------------------------
J. Xxxxxxx Xxxxx
JUPITER PARTNERS, L.P.
By: Ganymede, L.P., its General Partner
By: Europa, L.P., its General Partner
By:/s/Illegible
-----------------------------
General Partner
EXHIBIT A
PARTIES
--------
NUMBER OF COMMON SHARES
I.STOCKHOLDERS: OWNED AS OF DATE HEREOF:
Name and Address
----------------
Jupiter Partners, L.P. 4,125,000
II. MANAGEMENT STOCKHOLDERS: Restricted Restricted
A Stock B Stock
--------- -----------
NAME
Xxxx X. Xxxxx 137,500 206,251
Xxxxxx X. Xxxxx 112,750 169,125
Xxx X. Xxxxxx 85,250 127,875
J. Xxxxxxx Xxxxx 85,250 127,875
Xxxxx X. Xxxxxx 66,000 98,999
Xxx Xxxxxxxx 63,250 94,875
------- -------
550,000 825,000
---------------------------
1,375,000
EXHIBIT B
REPURCHASE PERCENTAGES
Anniversary from
Date of Agreement Repurchase Percentage
----------------- ---------------------
On or before 1st Anniversary 100%
Between 1st and on or before 100%
2nd Anniversary
Between 2nd and on or before 100%
3rd Anniversary
Between 3rd and on or before 66 2/3%
4th Anniversary
Between 4th and on or before 33 1/3%
5th Anniversary
On or After 5th Anniversary 0%
EXHIBIT C
FORM OF REGISTRATION RIGHTS AGREEMENT
==============================================================================
REGISTRATION RIGHTS AGREEMENT
by and among
CORE-XXXX INTERNATIONAL, INC.
and
ALL OF THE HOLDERS OF ITS COMMON STOCK
Dated as of August 7, 1996
==============================================================================
TABLE OF CONTENTS
PAGE
----
1. Demand Registrations ............................................... 1
2. Piggy-back Registration ............................................ 6
3. Registration Procedures ............................................ 8
4. Preparation; Reasonable Investigation .............................. 14
5. Rule 144 ........................................................... 15
6. Hold-Back .......................................................... 16
7. Indemnification .................................................... 16
8. Participation in Underwritten Registration ......................... 18
9. Registration Rights to Others ...................................... 19
10. Definitions ........................................................ 19
REGISTRATION RIGHTS AGREEMENT, dated as of August 7 1996, by and among
CORE-XXXX INTERNATIONAL, INC., a Delaware corporation (the "COMPANY"), and
each of the other parties signatory hereto who own Common Stock of the
Company and are parties to that certain Stockholders Agreement, dated as of
the date hereof, among the Company and all of the holders of the Common Stock
of the Company (the "STOCKHOLDERS AGREEMENT"). Capitalized terms used herein
and not otherwise defined shall have the meanings given them in Section 10.
The parties hereto agree as follows:
1. DEMAND REGISTRATIONS.
(a) REQUEST. Jupiter shall have the right from time to time to
make up six written requests that the Company, subject to the provisions of
Sections 1(e) and (f), effect the registration under the 1933 Act of all or
any part of its Registrable Securities. Registrations requested pursuant to
this Section 1(a) are referred to herein as "DEMAND REGISTRATIONS." Each
request for a Demand Registration shall specify the number of Registrable
Securities requested to be registered. Within 10 days after receipt of any
such request, the Company shall give written notice of the Demand
Registration to all other holders of Registrable Securities (such holders,
together with Jupiter, are referred to in this Section 1 as the ""SELLING
HOLDERS") and shall, subject to Section 1(e), include in such registration
all Registrable Securities with respect to which the Company has received
written requests for inclusion therein within 15 days after the giving of the
Company's notice; PROVIDED, that the Company shall not be required to
include in such registration any Registrable Securities held by a Management
Stockholder or any of his Permitted
2
Transferees in excess of the Proportional Amount (as defined below). The term
"PROPORTIONAL AMOUNT," as of any date, shall mean an aggregate number of
shares of Common Stock equal to (A) the product of (i) the total number of
shares of Registrable Securities held by such Management Stockholder and his
Permitted Transferees as of the date hereof (or, if such Management
Stockholder and his Permitted Transferees as a group have acquired additional
Registrable Securities after the date hereof in a manner that was not in
violation of the Stockholders Agreement, such greater number) multiplied by
(ii) a fraction, the numerator of which shall be the aggregate number of
shares of Registrable Securities requested to be included in such
registration by Jupiter and the denominator of which shall be the total
number of shares of Registrable Securities held by Jupiter as of the date
hereof (or, if Jupiter has acquired additional Registrable Securities after
the date hereof in a manner that was not in violation of the Stockholders
Agreement, such greater number), minus (B) the total number of shares of
Restricted A Stock transferred by such Management Stockholder prior to the
date of such registration. For purposes of the foregoing definition, there
shall be included in the number of shares of Registrable Securities all
shares of Common Stock, including shares that, as of the date of
determination, are capable of being exercised in accordance with the terms of
the Option Plan and are "in-the-money," but, until the fifth anniversary of
the date hereof, shall not include any Call Shares.
(b) REGISTRATION STATEMENT FORM. Registrations under this Section
1 shall be on such appropriate registration form of the Commission as shall
be reasonably selected by the Company.
3
(c) EFFECTIVE REGISTRATION STATEMENT. A registration requested
pursuant to this Section 1 shall not be deemed to have been effected (i)
unless a registration statement with respect thereto has become effective and
remained effective in compliance with the provisions of the 1933 Act with
respect to the disposition of all Registrable Securities covered by such
registration statement until such time as all of such Registrable Securities
have been disposed of in accordance with the intended methods of disposition
by the Selling Holders set forth in such registration statement (unless the
failure to so dispose of such Registrable Securities shall be caused solely
by reason of a failure on the part of the Selling Holders); PROVIDED that
such period need not exceed 180 days, (ii) if after it has become effective,
such registration is interfered with by any stop order, injunction or other
order or requirement of the Commission or other governmental agency or court
for any reason not primarily attributable to the Selling Holders and has not
thereafter again become effective, or (iii) if the conditions to closing
specified in the underwriting agreement, if any, entered into in connection
with such registration are not satisfied or waived, other than primarily by
reason of a failure on the part of the Selling Holders.
(d) SELECTION OF UNDERWRITERS. If the Company or Jupiter desires
to engage an underwriter or underwriters with respect to an offering of the
Registrable Securities so to be registered, such underwriter shall be
selected by Jupiter and shall be reasonably acceptable to the Company.
(e) PRIORITY IN DEMAND REGISTRATION. If the managing underwriter
of any underwritten offering shall advise the Company (and the Company
4
shall so advise each Selling Holder of such advice) that, in its opinion, the
securities requested to be included in such registration exceeds the number
which can successfully be sold in such offering within a price range
acceptable to Jupiter, then the Company will include in such registration, to
the extent of the Registrable Securities which the Company is so advised can
be sold in such offering, FIRST, all securities proposed to be registered by
Jupiter and, SECOND, to the extent additional shares of Common Stock may be
included is such offering, all other shares proposed to be registered, pro
rata among the other Selling Holders of Registrable Securities participating
in such registration (relative to the number of Registrable Securities
originally requested to be registered by such Selling Holders) and the
Company (subject, in the case of any Management Stockholder or his Permitted
Transferees, to the Proportional Amount limitation); PROVIDED that if the
number of Registrable Securities that such managing underwriter advises can
be sold in such offering is less than 75% of all the Registrable Securities
the Jupiter had requested be included, Jupiter may withdraw its written
request made pursuant to Section 1(a) (Demand Registration) and such written
request will not be considered a request for registration for the purposes of
Section 1(a).
(f) LIMITATIONS ON DEMAND REGISTRATIONS. Notwithstanding anything
in this Section I to the contrary, (i) in no event will the Company be
required to effect more than six registrations pursuant to this Section I
upon the request of Jupiter and (ii) the Company shall not be required to
effect more than one Demand Registration in any six-month period or within 90
days after a previous offering of the Common Stock registered under the 1933
Act.
5
(g) COMPANY DELAY. Notwithstanding herein to the contrary, if
after Jupiter has given a written request under Section 1(a) (Demand
Registration), and prior to the effective date of the registration statement
filed in connection with such registration, the Board of Directors of the
Company shall determine in its good faith judgement that the filing of such
registration statement would be undesirable and would interfere with any
material financing, investment, acquisition or merger transaction then under
consideration or would reasonably in the judgement of the Board of Directors
of the Company adversely affect the interests of the Company and its
Stockholders, the Company may decide to delay the registration of such
Registrable Securities, and if the Board of Directors of the Company makes
such determination, the Company shall give written notice of such
determination to each Selling Holder. Such delay shall be for the period the
Company determines on the basis provided above in good faith is necessary or
desirable, but in no event greater than six months. The Company shall notify
Jupiter of the expiration of the period of delay. Following such delay, the
Company shall promptly cause the Registrable Securities to be registered
unless, within 15 days of receipt of notice from the Company, Jupiter
withdraws its written request made pursuant to Section 1 (Demand
Registration), in which case, such written request will not be considered a
request for registration for the purposes of Section 1 (Demand Registration)
or 2 (Piggy-back Registration).
(h) EXPENSES. The Company will pay all Registration Expenses
(excluding any underwriting discounts or commissions with respect to the
6
Registrable Securities) in connection with any registration requested
pursuant to this Section 1.
2. PIGGY-BACK REGISTRATION.
(a) RIGHT TO INCLUDE REGISTRABLE SECURITIES. If the Company
proposes to register any of its Common Stock under the 1933 Act by
registration on any form other than Forms S-4 or S-8 (or any successor rule)
for sale for its own account, it will each such time give prompt written
notice to all holders of Registrable Securities of its intention to do so and
of such holders' rights under this Section 2 prior to the proposed
registration. Upon the written request of any such holder (a "REQUESTING
HOLDER") made as promptly as practicable and in any event within 15 days
after the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such Requesting Holder),
the Company will file a registration statement with respect to, and use all
reasonable efforts to make effective at the earliest possible date, the
registration under the 1933 Act, subject to Section 2(b), of all Registrable
Securities which the Company has been so requested to register (PROVIDED that
the Company shall not be required to include in such registration any
Registrable Securities held by any Management Stockholder or his Permitted
Transferees in excess of the Proportional Amount) by the Requesting Holders
thereof (each, a "PIGGY-BACK REGISTRATION"); PROVIDED, HOWEVER, that if, at
any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement
filed in connection with such registration, the Company shall determine for
any reason not to register or to delay registration of such securities, the
Company may, at its election, give written notice
7
of such determination to each Requesting Holder of Registrable Securities and
(i) in the case of a determination not to register, shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration (but not from any obligation of the Company to pay the
Registration Expenses in connection therewith), without prejudice, however,
to the rights of any holder or holders of Registrable Securities entitled to
cause such registration to be effected as a registration under Section 1
(Demand Registration), and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any Registrable
Securities for the same period as the delay in registering such other
securities. No registration effected under this Section 2 shall receive the
Company of its obligation to effect any Demand Registration under Section 1.
(b) PRIORITY IN PIGGY-BACK REGISTRATION. If the managing
underwriter of any underwritten offering shall inform the Company that the
Registrable Securities requested to be included in such registration exceeds
the number which can successfully be sold in such offering within a price
range acceptable to the Company, and the Company has so advised the
Requesting Holders in writing, then the Company will include in such
registration, to the extent of the Registrable Securities and other shares of
Common Stock which the Company is so advised can be sold in such offering,
FIRST, all securities proposed to be registered by the Company for its own
account, SECOND, to the extent additional shares of Common Stock may be
registered in such offering, all of the Registrable Securities requested to
be registered by Jupiter, and THIRD, to the extent additional shares of
Common Stock may be registered in such offering, all other shares of
Registrable Securities proposed
8
to be registered, pro rata (subject, in the case of any Management
Stockholder or his Permitted Transferees, to the Proportional Amount
limitation). In connection with any registration as to which this Section
2(b) applies, the Requesting Holders shall have the right, upon written
notice to the Company within 10 days of receipt of notice from the Company,
to withdraw from such registration the Registrable Securities requested to be
registered by such Requesting Holders.
(c) EXPENSES. The Company will pay all Registration Expenses
(excluding any underwriting discounts or commissions with respect to the
Registrable Securities) in connection with any registration effected pursuant
to this Section 2.
3. REGISTRATION PROCEDURES. If and whenever the Company is required
to use its reasonable efforts to make effective the registration of any
Registrable Securities under the 1933 Act as provided in Sections 1 (Demand
Registration) and 2 (Piggy-back Registration), the Company will, as
expeditiously as possible.
(a) prepare and (within 90 days after the date a request for
registration is given to the Company but in any event as soon thereafter as
practicable) file with the Commission the requisite registration statement to
effect such registration and thereafter use all reasonable efforts to cause
such registration statement to become effective;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective and to
9
comply with the provisions of the 1933 Act and the rules and regulations of
the Commission thereunder with respect to the disposition of all Registrable
Securities covered by such registration statement, and furnish to each seller
of Registrable Securities, prior to the filing thereof draft copies of any
amendment or supplement to such registration statement or prospectus;
(c) furnish to each seller of Registrable Securities covered by
such registration statement, such number of conformed copies of such
registration statement and of each such amendment and supplement thereto (in
each case including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary
prospectus and any summary prospectus) and any other prospectus filed under
Rule 424 under the 1933 Act, and in each case, each amendment or supplement
thereto, in conformity with the requirements of the 1933 Act, such documents,
if any, incorporated by reference in such registration statement or
prospectus, and such other documents, as such seller may reasonably request;
(d) use all reasonable efforts (i) to register or qualify all
Registrable Securities and other securities covered by such registration
statement under such other securities or blue sky laws of such states of the
United States of America where an exemption is not available and as the
sellers of Registrable Securities covered by such registration statement
shall reasonably request, (ii) to keep such registration or qualification in
effect for so long as such registration statement remains in effect, and
(iii) to take any other action which may be reasonably necessary or advisable
to enable such sellers to consummate the disposition in such jurisdictions of
the securities to be sold by such sellers, except that the Company shall
10
not for any such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not but for the
requirements of this Section 3(d) be obligated to be so qualified or to
consent to general service of process in any such jurisdiction or to subject
itself to taxation in such jurisdiction;
(e) use all reasonable efforts to cause all Registrable Securities
covered by such registration statement to be registered with or approved by
such other federal or state governmental agencies or authorities as may be
necessary in the opinion of counsel to the Company or counsel to the seller
or sellers of Registrable Securities to enable the seller or sellers thereof
to consummate the disposition of such Registrable Securities;
(f) furnish at the effective date of such registration statement
to each seller of Registrable Securities and each such seller's underwriters,
if any, a signed counterpart of an opinion of counsel for the Company,
addressed to such seller and underwriters, if any, dated the effective date
of such registration statement and, if applicable, the date of the closing
under the underwriting agreement, covering substantially the same matters
with respect to such registration statement (and the prospectus included
therein) as are customarily covered in opinions of issuer's counsel delivered
to the underwriters in underwritten public offerings of securities and such
other legal matters as the underwriters may reasonably request;
(g) promptly notify each seller of Registrable Securities covered
by such registration statement at any time when a prospectus relating thereto
is required to be delivered under the 1933 Act, upon discovery that, or upon
the happening of any event as a result of which, the prospectus included in
such registra-
11
tion statement, as then in effect, includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, in the light of the
circumstances under which they were made, and promptly prepare and, at the
request of any such seller, furnish to it a reasonable number of copies of
drafts and final forms of a supplement to or an amendment of such prospectus
as may be necessary so that, as thereafter delivered to the purchasers of
such securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of
the circumstances under which they were made;
(h) otherwise use all reasonable efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least 12 months, but not more
than 18 months, beginning with the first full calendar month after the
effective date of such registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the 1933 Act and Rule 158
promulgated thereunder, and promptly furnish to each such seller of
Registrable Securities a copy of any amendment or supplement to such
registration statement or prospectus;
(i) provide and cause to be maintained a transfer agent and
registrar (which, in each case, may be the Company) for all Registrable
Securities covered by such registration statement from and after a date not
later than the effective date of such registration;
12
(j) use all reasonable efforts to list all Registrable Securities
covered by such registration statement on any national securities exchange on
which Registrable Securities of the same class covered by such registration
statement are then listed (or, if other shares of Registrable Securities are
so qualified, qualify them for inclusion in the National Association of
Securities Dealers Automated Quotations National Market System, as the case
may be);
(k) enter into such customary agreements (including an
underwriting agreement in customary form, including customary provisions
concerning indemnification of the underwriters by the Company) and take such
other actions as the sellers of Registrable Securities and the underwriters,
if any, reasonably request in order to expedite or facilitate the disposition
of such Registrable Securities;
(l) obtain a "cold comfort" letter or letters from the Company's
independent public accountants in customary form and covering matters of
the type customarily covered by "cold comfort" letters as the underwriters
may reasonably request;
(m) notify each seller of Registrable Securities and the managing
underwriter or agent, immediately, and confirm the notice in writing (i) when
the registration statement, or any post-effective amendment to the
registration statement, shall have become effective, or any supplement to the
prospectus or any amendment to the prospectus shall have been filed, (ii) of
the receipt of any comments from the Commission, (iii) of any request of the
Commission to amend the registration statement or amend or supplement the
prospectus or for additional information, and (iv) of the issuance by the
Commission of any stop order suspending the
13
effectiveness of the registration statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction, or
of the institution or threatening of any proceedings for any such purposes;
(n) use all reasonable efforts to obtain the withdrawal of any
order suspending the effectiveness of the registration statement at the
earliest possible time;
(o) cooperate with the sellers of Registrable Securities and the
managing underwriter or agent, if any, to facilitate the timely preparation
and delivery of certificates (not bearing any restrictive legends)
representing Registrable Securities to be sold, and enable such Registrable
Securities to be in such denominations and registered in such names as such
sellers or the managing underwriter or agent, if any, may reasonably request;
(p) cause its subsidiaries and affiliates to take all action
necessary or advisable to effect the registration of the Registrable
Securities contemplated hereby, including preparing and filing any required
financial information;
(q) make its officers and employees available to participate in
presentations to potential purchasers of Registrable Securities; and
(r) use all reasonable efforts to take all other steps necessary or
advisable to effect the registration of the Registrable Securities
contemplated hereby.
14
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish the Company such
information regarding such seller and the distribution of such securities as
the Company may from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any written notice from the
Company of the happening of any event of the kind described in Section 3(g)
(Company Delay), such holder will forthwith discontinue such holder's
disposition of Registrable Securities pursuant to the registration statement
relating to such Registrable Securities until such holder's receipt of the
copies of the supplemented or amended prospectus contemplated by Section
3(g) and, if so directed by the Company, will 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 relating to such Registrable
Securities current at the time of receipt of such notice.
4. PREPARATION; REASONABLE INVESTIGATION. In connection with the
preparation and filing of each registration statement under the 1933 Act
pursuant to this Agreement, the Company will give the holders of Registrable
Securities registered under such registration statement, the underwriters, if
any, and their respective counsel and accountants, the timely opportunity to
participate in the preparation of such registration statement, each
prospectus included therein or filed with the Commission, and each amendment
thereof or supplement thereto, and will give each of them such access to its
books and records and such opportunities to discuss the business of the
Company with its officers and the independent public
15
accountants who have certified its financial statements as shall be
reasonably necessary or advisable, in the opinion of such holders and such
underwriters' respective counsel, to conduct appropriate due diligence as
contemplated by the 1933 Act.
5. RULE 144. So long as the Common Stock shall be registered pursuant
to the requirements of Section 12 of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), the Company will file the reports required to
be filed by it under the Exchange Act and will take such further action as
Jupiter or the Management Stockholders, as the case may be, may reasonably
request, all to the extent required from time to time to enable Jupiter and
the Management Stockholders to sell Registrable Securities (to the extent
permitted by the Stockholders Agreement) without registration under the 1933
Act under the exemptions provided by Rule 144, as such rule may be amended
from time to time ("RULE 144"), or any similar rule or regulation hereafter
adopted by the Commission. Upon the request of Jupiter or such Management
Stockholder, as the case may be, a written statement as to whether it has
complied with such requirements and, if it has not so complied, stating that
it will promptly do so.
6. HOLD-BACK. Each of the Company and each Stockholder holding
Registrable Securities, whether or not included in a registration statement
hereunder, agrees not to effect any public sale or distribution of shares of
Common Stock during the period specified by the managing underwriter or
underwriters if the underwritten offer being made pursuant to such
registration statement (which period shall not
16
exceed seven days prior to and 180 days following the effective date of such
registration statement), except as part of such registration, if and to the
extent reasonably requested by such managing underwriter or underwriters.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify, to the fullest extent
permitted by law, each holder of Registrable Securities, its partners,
officers and directors, agents and each person who controls such holder
(within the meaning of the 0000 Xxx) against all losses, claims, damages,
liabilities and expenses resulting from any untrue or alleged untrue
statement of a material fact contained in any registration statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as the same are caused by or contained in any information
furnished in writing to the Company by such holder expressly for use therein
by such holder's failure to deliver a copy of the prospectus or any
amendments or supplements thereto after the Company has furnished such holder
with a sufficient number of copies of the same. In connection with an
underwritten offering, the Company shall indemnify such underwriters, their
officers and directors and each person who controls such underwriters (within
the meaning of the 0000 Xxx) to the same extent as provided above with
respect to the indemnification of the holders of Registrable Securities.
(b) In connection with any registration statement in which a holder
of Registrable Securities is participating, each such holder shall furnish to
the Company in writing such information and affidavits as the Company may
reasonably
17
requests for use in connection with any such registration statement or
prospectus and, to the extent premitted by law, shall indemnify the Company,
its directors, officers and agents and each person who controls the Company
(within the meaning of the 0000 Xxx) against any losses, claims, damages,
liabilities and expenses resulting from any untrue or alleged untrue
statement of material fact contained in the registration statement,
prospectus or preliminary prospectus or any amendment thereof of or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or omission is
contained in any information or affidavit so furnished in writing by such
holder; PROVIDED, that the obligation to indemnify shall be individual to
each holder and shall be limited to the net amount of proceeds received by
such holder from the sale of Registrable Securities pursuant to such
registration statement.
(c) Any person entitled to indemnification hereunder shall (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification (provided that the failure to give prompt
notice shall not impair any person's right to indemnification hereunder to
the extent such failure has not prejudiced the indemnifying party) and (ii)
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist with respect to
such claim, permit such indemnifying party to assume the defense of such
claim with counsel reasonably satisfactory to the indemnified party. If such
defense is assumed, the indemnifying party shall not be subject to any
liability for any settlement made by the indemnified party without its
consent (but
18
such consent shall not be unreasonably withheld). An indemnifying party who
is not entitled to, or elects not to, assume the defense of a claim shall not
be obligated to pay the fees and expenses of more than one counsel (and such
local counsel as may be necessary) for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist between
such indemnified party and any other of such indemnified parties with respect
to such claim.
(d) The indemnification provided for under this Agreement shall
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any partner, officer, director or
controlling person of such indemnified party and shall not survive the
transfer of securities. The Company also agrees to make such provisions, as
are reasonably requested by any indemnified party, for contribution to such
party on the event the Company's indemnification is unavailable for any
reason.
8. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. Notwithstanding the
provisions of Sections 1 (Demand Registration) and 2 (Piggy-Back
Registration), no person may participate in any registration hereunder which
is underwritten unless such person (i) agrees to sell such person's
securities on the basis provided in any underwriting arrangements approved by
the person or persons entitled to hereunder to approve such arrangements and
(ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required under the
terms of such underwriting arrangements; PROVIDED that no holder of
Registrable Securities included in any underwriting registration shall be
required to make any
19
representations or warranties to the Company or the underwriters other than
representations and warranties regarding such holder and such holder's
intended method of distribution.
9. 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 1933
Act, such rights shall not be in conflict with the rights provided to the
holders of Registrable Securities in this Agreement.
10. DEFINITIONS. As used in this Agreement, unless the context
otherwise requires, the following terms have the following respective
meanings:
"BOARD" shall mean the Board of Directors of the Company.
"CALL SHARES" shall have the meaning specified in the Stockholders
Agreement.
"COMMISSION" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the 1933 Act.
"COMMON STOCK" shall mean the authorized common stock of the Company,
par value $.01 per share.
"IN-THE-MONEY" shall have the meaning specified in the Stockholders
Agreement.
"JUPITER" shall mean the Principal Stockholder, as defined in the
Stockholders Agreement.
"MANAGEMENT STOCKHOLDERS" shall have the meaning specified in the
Stockholders Agreement.
20
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"PROPORTIONAL AMOUNT" shall have the meaning specified in Section 1(a).
"PERMITTED TRANSFEREES" shall have the meaning specified in the
Stockholders Agreement.
"PERSON" shall mean any individual, firm, corporation, limited
liability company, partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind.
"REGISTRABLE SECURITIES" shall mean any shares of Common Stock issued
or issuable to any of Jupiter, the Management Stockholders or any of their
transferees (but only if such transfer was made in compliance with the terms
of the Stockholders Agreement and such transferee became a party to the
Stockholders Agreement), but with respect to any particular share of Common
Stock, only until such time as such share (i) has been effectively registered
under the 1933 Act and disposed of in accordance with the registration
statement covering it, (ii) has been sold to the public pursuant to Rule 144
(or any similar provision then in effect) under the 1933 Act, or (iii) has
ceased to be outstanding; PROVIDED that any shares of Common Stock issued or
issuable to a Management Stockholder whose employment with the Company and/or
any of its subsidiaries has terminated shall only be deemed to be Registrable
Securities hereunder if such employment was terminated Without Cause.
21
"REGISTRATION EXPENSES" means all expenses incident to the Company's
performance of or compliance with Sections 1 (Demand Registration), 2
(Piggy-back Registration) or 3 (Registration Procedures), including, without
limitation, all registration and filing fees, all fees of the New York Stock
Exchange, Inc., other national securities exchanges or the National
Association of Securities Dealers, Inc., all fees and expenses of complying
with federal securities or blue sky laws, all word processing, duplicating
and printing expenses (including expenses of printing prospectuses and of
certificates for the Registrable Securities), messenger and delivery
expenses, the fees and disbursements of counsel for the Company and of its
independent public accountants, including the expenses of "cold comfort"
letters required by or incident to such performance and compliance, any fees
and disbursements of underwriters customarily paid by issuers or sellers of
securities (excluding any underwriting discounts or commissions with respect
to the Registrable Securities), any fees and expenses associated with any
road show, and the fees and expenses of one counsel to the Selling Holders or
the Requesting Holders, as applicable (selected by Selling Holders or the
Requesting Holders, as applicable, representing at least 50% of the
Registrable Securities covered by such registration).
"STOCKHOLDERS AGREEMENT" shall have the meaning specified in the
introductory paragraph hereto and shall mean the Stockholders Agreement as in
effect on the date hereof.
"WITHOUT CAUSE" with respect to a Management Stockholder, shall mean
the termination of such Management Stockholder's employment with the Company
or any of its subsidiaries for any reason (including due to death, Disability
22
or for Good Reason (as such terms are defined in the Stockholders
Agreement)), other than a termination for Cause (as defined in the
Stockholders Agreement).
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
CORE-XXXX INTERNATIONAL, INC.
By: __________________________________
Name:
Title:
JUPITER PARTNERS L.P.
By: GANYMEDE L.P., its
General Partner
By: EUROPA L.P., its
General Partner
By:_______________________________
Name:
Title: General Partner
MANAGEMENT STOCKHOLDERS:
______________________________________
Xxxxxx X. Xxxxx
______________________________________
Xxx Xxxxxxxx
______________________________________
Xxx X. Xxxxxx
______________________________________
Xxxxx X. Xxxxxx
______________________________________
Xxxx X. Xxxxx
______________________________________
J. Xxxxxxx Xxxxx
