XXXXXX'X, INC.
STOCKHOLDERS AGREEMENT
Dated as of August 15, 2001,
As amended on February 8, 2002,
April 3, 2002 and October 3, 2003
XXXXXX'X, INC.
STOCKHOLDERS AGREEMENT
TABLE OF CONTENTS
Page
ARTICLE I..........................................................................................................3
DEFINITIONS.......................................................................................................3
1.1. Certain Matters of Construction.........................................................................3
1.2. Definitions.............................................................................................4
ARTICLE II........................................................................................................12
COVENANTS AND CONDITIONS..........................................................................................12
2.1. Restrictions on Transfers; Involuntary Transfers.......................................................12
2.2. Call by the Company of Management Stockholders' Equity Interests.......................................14
2.3. Take Along.............................................................................................16
2.4. Come Along.............................................................................................18
2.5. Corporate Governance...................................................................................20
2.6. Rights of Participation................................................................................21
2.7. Confidentiality........................................................................................23
ARTICLE III.......................................................................................................23
REGISTRATION RIGHTS...............................................................................................23
3.1. General................................................................................................23
3.2. Demand Registration Initiated by the Berkshire Stockholders............................................23
3.3. Piggyback Registration; Reduction in Registration......................................................24
3.4. Obligations of the Company.............................................................................25
3.5. Furnish Information....................................................................................27
3.6. Expenses of Registration...............................................................................27
3.7. Underwriting Requirements..............................................................................27
3.8. Indemnification........................................................................................28
3.9. Registration on Form S-3...............................................................................30
3.10. Reports Under Securities Exchange Act of 1934..........................................................30
3.11. No Inconsistent Agreements.............................................................................31
3.12. Stock Split............................................................................................31
3.13. Timing and Other Limitations...........................................................................31
3.14. Lock-up................................................................................................31
ARTICLE IV........................................................................................................32
MISCELLANEOUS.....................................................................................................32
4.1. Appointment of the Management Proxy....................................................................32
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4.2. Remedies...............................................................................................32
4.3. Entire Agreement; Amendment; Waiver....................................................................32
4.4. Severability...........................................................................................33
4.5. Notices................................................................................................33
4.6. Binding Effect; Assignment.............................................................................34
4.7. Governing Law..........................................................................................34
4.8. Termination............................................................................................34
4.9. Recapitalizations, Exchanges, Etc......................................................................35
4.10. Action Necessary to Effectuate the Agreement...........................................................35
4.11. Purchase for Investment; Legend on Certificate.........................................................35
4.12. Effectiveness of Transfers.............................................................................36
4.13. Other Stockholders.....................................................................................36
4.14. No Waiver..............................................................................................36
4.15. Costs and Expenses.....................................................................................36
4.16. Counterpart............................................................................................36
4.17. Headings...............................................................................................36
4.18. Third Party Beneficiaries..............................................................................36
4.19. Consent to Jurisdiction................................................................................37
4.20. WAIVER OF JURY TRIAL...................................................................................37
ii
STOCKHOLDERS AGREEMENT
This
Stockholders Agreement (this "Agreement") is entered into as of
the 15th day of August, 2001 by and among (i) Xxxxxx'x, Inc., a Delaware
corporation and successor to Xxxxxx Holdings, Inc., a
Massachusetts corporation
(together with its successors and permitted assigns, the "Company") and (ii) the
Stockholders (as defined below) party hereto and has been amended on each of
February 8, 2002, April 3, 2002 and October 3, 2003.
WHEREAS, upon consummation of the transactions contemplated by that
certain Stock Purchase Agreement dated as of July 12, 2001, as heretofore
amended (the "Stock Purchase Agreement") by and among the Company, the selling
stockholders of the Company and CH Acquisition LLC, a Delaware limited liability
company, the Berkshire Stockholders (as defined below), the Management
Stockholders (as defined below) and the Other Stockholders (as defined below) as
of the date of such consummation will own the number of shares of Common Stock
(as defined below) and options to purchase shares of Common Stock, each as set
forth in the books and records of the Company;
WHEREAS, each of the parties to this Agreement desires that this
Agreement supersedes the Stock Acquisition Agreements (as defined below), the
Stock Option Agreements (as defined below) and the Existing Stock Purchase
Agreements (as defined below), and by execution of this Agreement, such Stock
Acquisition Agreements, Stock Option Agreements (to the extent not restated as
of the date hereof) and Existing Stock Purchase Agreements shall terminate
effective as of the date of this Agreement; and
WHEREAS, each of the Stockholders desires to enter into this Agreement
for the purpose of regulating certain relationships of the Stockholders with
regard to the Company and certain restrictions on the Common Stock and other
equity securities owned by the Stockholders.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
ARTICLE I.
DEFINITIONS
1.1. CERTAIN MATTERS OF CONSTRUCTION. In addition to the definitions
referred to or set forth below in this Section 1:
(a) The words "hereof," "herein," "hereunder" and words of
similar import shall refer to this Agreement as a whole and not to
any particular Section or provision of this Agreement, and reference
to a particular Section of this Agreement shall include all
subsections thereof;
(b) References to Sections and Articles refer to Sections
and Articles of this Agreement;
(c) Definitions shall be equally applicable to both nouns
and verbs and the singular and plural forms of the terms defined; and
(d) The masculine, feminine and neuter genders shall each
include the other.
1.2. DEFINITIONS. For the purposes of this Agreement, the following
terms shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended, or any
successor act.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor act.
"Adverse Claim" shall have the meaning set forth in Section 8.102 of
the applicable Uniform Commercial Code.
"Affiliate" shall mean, with respect to any specified Person, any
other Person which, directly or indirectly, through one or more intermediaries
controls, or is controlled by, or is under common control with, such specified
Person (for the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise.
"Agreement" shall have the meaning set forth in the first paragraph
of this Agreement.
"Associate" (i) when used to indicate a relationship with any Person
shall mean, (a) any corporation or organization of which such Person is an
officer or partner or is, directly or indirectly, the beneficial owner of ten
percent (10%) or more of any class of equity securities, (b) any trust or other
estate in which such Person has a substantial beneficial interest or as to which
such Person serves as a trustee or in a similar fiduciary capacity, and (c) any
relative of such Person who has the same home as such Person, is a parent,
sibling, spouse, in-law, child or grandchild of such Person, or the spouse of
any of them, or (ii) when used to indicate a relationship with the Company,
shall also mean a director or officer of the Company or any Subsidiary. Neither
the Company nor any of its Subsidiaries shall be deemed an Associate of any
Stockholder.
"Berkshire Representatives" shall have the meaning as set forth in
Section 2.5(a).
"Berkshire Stockholders" shall mean (i) those Persons listed as the
Berkshire Stockholders on the signature pages hereof, and (ii) their Permitted
Transferees (other than the Company), as evidenced by an executed counterpart to
this Agreement or a joinder to this Agreement, in either case, indicating that
such Permitted Transferee will be a Berkshire Stockholder.
"Board" or "Board of Directors" shall mean the Board of Directors of
the Company as the same shall be constituted from time to time.
"Board Determination Procedures" shall mean the procedures by which
the Board calculates the Board Participation Determination. Such procedures
shall include, but not be limited to, a good faith estimate by the Board of any
acceleration of vesting of any Time Options and/or Performance Options upon
consummation of the proposed Transfer, the Applicable Percentage (as defined in
the Performance Options), the IRR (as defined in the Performance Options),
Adjusted EBITA (as defined in the Performance Options) and the number of Shares
the prospective transferee will ultimately purchase in the proposed Transfer.
"Board Participation Determination" shall mean for each Management
Stockholder a good faith estimate of the number of Time Options which will vest
upon the consummation of the proposed Transfer and the number of Performance
Options which will vest upon consummation of the proposed Transfer, determined
in accordance with the Board Determination Procedures.
"Call Event" shall have the meaning as set forth in Section 2.2(a).
"Call Group" shall have the meaning as set forth in Section 2.2(a).
"Call Notice" shall have the meaning as set forth in Section 2.2(a).
"Call Option" shall have the meaning as set forth in Section 2.2(a).
"Call Price" shall have the meaning as set forth in Section 2.2(b).
"Call Securities" shall mean all of (i) the Shares, (ii) vested Time
Options, (iii) Rollover Options and (iv) vested Performance Options, in each
case which are owned by the members of the Call Group on the date of a Call
Event.
"Cause" shall have the meaning as set forth below, except with
respect to any Management Stockholder who is employed by the Company or one of
its Subsidiaries pursuant to an effective written employment agreement, if any,
between the Company and/or one of its Subsidiaries and such Management
Stockholder in which there is a definition of "Cause," in which event the
definition of "Cause" as set forth in such employment agreement shall be deemed
to be the definition of "Cause" herein solely for such Management Stockholder
and only for so long as such employment agreement remains effective.
In all other events, the term "Cause" shall mean that the Board of
Directors has determined in its reasonable judgement, that any one or more of
the following has occurred:
(i) the Management Stockholder shall have been convicted
of, or shall have pleaded guilty or NOLO CONTENDERE to, any felony or
any crime involving dishonesty or moral turpitude;
(ii) the Management Stockholder shall have committed any
fraud, theft, embezzlement, misappropriation of funds, breach of
fiduciary duty or act of dishonesty;
(iii) the Management Stockholder shall have breached, in
any material respect, any of the provisions of this Agreement or any
other agreement between the Management Stockholder and the Company;
(iv) the Management Stockholder shall have engaged in
conduct likely to make the Company or any of its Affiliates subject
to criminal liabilities other than those arising from the Company's
normal business activities;
(v) the Management Stockholder shall have openly
disregarded his or her responsibilities to the Company and/or its
Affiliates and shall have refused to devote substantial time and
energy to the business and affairs of the Company and/or its
Affiliates (other than due to Disability or temporary disability
which, in the reasonable judgment of the Board of Directors, causes
the Management Stockholder to be incapable of devoting such time and
energy); or
(vi) the Management Stockholder shall have willfully
engaged in any other conduct that involves a breach of fiduciary
obligation on the part of the Management Stockholder or otherwise
could reasonably be expected to have a material adverse effect upon
the business, interests or reputation of the Company or any of its
Affiliates.
"Change in Control" shall mean (i) any transaction or series of
related transactions in which any Person who is not an Affiliate of the Company,
or any two or more such Persons acting as a group, and all Affiliates of such
Person or Persons, who prior to such time owned no Shares or Shares representing
less than fifty percent (50%) of the voting power at elections for the Board,
shall (A) acquire, whether by purchase, exchange, tender offer, merger,
consolidation, recapitalization or otherwise, or (B) otherwise be the owner of
(as a result of a redemption of Shares or otherwise), Shares (or shares in a
successor corporation by merger, consolidation or otherwise) such that following
such transaction or transactions, such Person or group and their respective
Affiliates beneficially own fifty percent (50%) or more of the voting power at
elections for the board of directors of the Company or any successor
corporation, or (ii) the sale or transfer of all or substantially all of the
Company's or The Xxxxxxx Xxxxxx Company's assets and following such sale or
transfer, there is a liquidation of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Come Along Percentage" shall have the meaning set forth in Section
2.4(a).
"Common Stock" shall mean the Company's common stock, par value $.01
per share, that the Company may be authorized to issue from time to time, any
other securities of the Company into which such Common Stock may hereafter be
changed or for which such Common Stock may be exchanged after giving effect to
the terms of such change or exchange (by way of reorganization,
recapitalization, merger, consolidation or otherwise) and shall also include any
common stock of the Company hereafter authorized and any capital stock of the
Company of any other class hereafter authorized which is not preferred as to
dividends or distribution of assets in liquidation over any other class of
capital stock of the Company and which has ordinary voting power for the
election of directors of the Company.
"Common Stock Equivalents" shall mean all shares of Common Stock (i)
owned by, or (ii) issuable upon exercise of Performance Options (solely to the
extent such Performance Options, on or prior to the time the determination of
Common Stock Equivalents is made, are vested), Time Options (solely to the
extent such Time Options, on or prior to the time the determination of Common
Stock Equivalents is made, are vested) and Rollover Options held by, each
Stockholder.
"Company" shall have the meaning set forth in the first paragraph of
this Agreement.
"Company Note" shall have the meaning as set forth in Section 2.2(c).
"Company Option Period" shall have the meaning as set forth in
Section 2.1(c)(ii).
"Company Sale" shall mean any transaction or a series of related
transactions through which the holders of Common Stock Equivalents and their
Affiliates immediately prior to the transaction or series of related
transactions shall own less than fifty percent (50%) of all Common Stock
Equivalents (including without limitation, all shares issued in respect of any
such Common Stock Equivalents by way of stock dividend, stock split or
combination of shares) immediately following the transaction or series of
related transactions.
"Default" shall have the meaning as set forth in Section 2.2(c).
"Designated Employee" or "Designated Employees" shall have the
meaning as set forth in Section 2.2(d).
"Disability" shall mean permanent disability within the meaning of
Section 22(e)(3) of the Code, unless otherwise defined in a separate written
employment agreement between the Company and/or one of its Subsidiaries and the
person whose disability is in question in which event the definition of
"Disability" as set forth in such employment agreement shall be deemed to be the
definition of "Disability" herein solely for such person and only for so long as
such employment agreement remains effective.
"Existing Stock Purchase Agreements" shall mean the Stock Purchase
Agreements between the Company and each of Xxxxxx Xxxxx (dated April 1, 1997),
Xxxxxx X. Xxxxx (dated January 1, 1998), Xxxxx X. Xxxxxxx (dated June 19, 1997)
and Xxxxx Xxxxxx (dated March 1, 2000).
"Fair Market Value" shall mean the fair value per share of the
applicable Shares as of the applicable date on the basis of a sale of such
Shares in an arms length private sale between a willing buyer and a willing
seller, neither acting under compulsion. In determining such Fair Market Value,
no discount shall be taken for constituting a minority interest or for the
illiquidity of such Shares and no upward adjustment or discount shall be taken
relating to the fact that the Shares in question are subject to the restrictions
and entitled to the rights provided hereunder. Such Fair Market Value shall be
determined in good faith by the Board of Directors.
"Federal Bankruptcy Code" means Title 11 of the United States Code.
"Gross-Up Amount" shall mean the amount, if any, by which the Fair
Market Value per Share or Option is less than the amount the Management
Stockholder would have received in the Change in Control transaction or the
Public Offering, as the case may be, had his or her securities not been called
pursuant to Section 2.2., such amount to be determined in good faith by the
Board.
"Holder" or "Holders" have the meaning as set forth in Section 3.1.
"Incentive Plan" shall mean Xxxxxx Holdings, Inc. 2001 Equity
Incentive Plan.
"Investment Price" shall mean an amount per Share equal to the price
per Share paid for such Share at the time of initial purchase thereof (subject
to appropriate adjustments for stock splits, recapitalizations and the like).
"Involuntary Transfer" shall have the meaning as set forth in Section
2.1(c)(vi).
"Management Proxy" shall have the meaning as set forth in Section
4.1.
"Management Representatives" shall have the meaning as set forth in
Section 2.5(a).
"Management Stockholders" shall mean (i) those Persons listed as the
Management Stockholders on the signature pages hereof and (ii) their Permitted
Transferees (other than the Company), as evidenced by an executed counterpart to
the Agreement or a joinder to this Agreement, in either case, indicating that
such Permitted Transferee will be a Management Stockholder.
"Mid-term Applicable Federal Rate" shall mean the mid-term applicable
federal rate as defined in Section 1274 of the Code.
"New Securities" shall have the meaning as set forth in Section
2.6(b).
"Options" shall mean Performance Options, Time Options and Rollover
Options.
"Other Stockholders" shall mean (i) those Persons listed as the Other
Stockholders on the signature pages hereof, (ii) their Permitted Transferees
(other than the Company) as evidenced by an executed counterpart to the
Agreement or a joinder to this Agreement, in either case, indicating that such
Permitted Transferee will be an Other Stockholder and (iii) those Persons
described in Section 4.13(iii).
"Participating Offeree" shall have the meaning as set forth in
Section 2.4(a).
"Participation Notice" shall have the meaning as set forth in Section
2.4(a).
"Participation Securities" shall have the meaning as set forth in
Section 2.4(a).
"Performance Options" shall mean, collectively, the options granted
to certain Management Stockholders under the Incentive Plan to purchase shares
of Common Stock, the
number of vested options of which is subject to the attainment of certain
targets set forth in the Incentive Plan and the option certificates issued
pursuant thereto.
"Permitted Transfer" shall mean:
(i) a Transfer of Shares by any Stockholder who is a
natural person to (a) such Stockholder's spouse, children (including
legally adopted children and stepchildren), spouses of children,
grandchildren, spouses of grandchildren, parents or siblings; (b) a
trust for the benefit of the Stockholder and/or any of the Persons
described in clause (a); or (c) a corporation, limited partnership or
limited liability company whose sole shareholders, partners or
members, as the case may be, are the Stockholder and/or any of the
Persons described in clause (a) or clause (b); PROVIDED, that in any
of clauses (a), (b) or (c), the Stockholder transferring such Shares
retains exclusive power to exercise all rights under this Agreement.
(ii) a Transfer of Shares by any Stockholder to the
Company (including, without limitation, any pledge of Shares or
Options to the Company);
(iii) a Transfer of Shares by a Stockholder upon death or
incapacity to such Stockholder's estate, executors, administrators
and personal representatives, and then to such Stockholder's legal
representatives, heirs or legatees (whether or not such recipients
are a spouse, children, spouses of children, grandchildren, spouses
of grandchildren, parents or siblings of such Stockholder); PROVIDED,
that, in the case of a Management Stockholder whose Shares were
subject to the provisions of Section 2.2 immediately prior to such
Management Stockholder's death, the Company has not exercised its
Call Option with respect to such Shares under Section 2.2;
(iv) a Transfer of Shares (a) by the initial Berkshire
Stockholders to any Affiliate of Berkshire Partners LLC or any of the
employees, partners, members or Affiliates of such Berkshire
Stockholder or any such Affiliate, or (b) between any Berkshire
Stockholders; or
(v) a Transfer of Shares by any Other Stockholder who is
not a natural person to any Affiliate of such Other Stockholder;
PROVIDED, HOWEVER, that Performance Options, Time Options and Rollover Options
may only be transferred in accordance with the terms of the Incentive Plan; and
PROVIDED, FURTHER, that a Permitted Transfer from a Management Stockholder to
any Permitted Transferee must be approved by the Management Proxy; and PROVIDED,
FURTHER, that no Permitted Transfer shall be effective unless and until the
transferee of the Shares, Performance
Options, Time Options or Rollover Options so transferred complies with Section
4.13 including without limitation, executing and delivering to the Company a
counterpart of this Agreement and agreeing to be bound hereunder in the same
manner and to the same extent as the Stockholder from whom the Shares,
Performance Options, Time Options or Rollover Options were transferred. Except
in the case of a Permitted Transfer pursuant to clause (ii) above, from and
after the date on which a Permitted Transfer becomes effective, the Permitted
Transferee of the Shares, Performance Options, Time Options or Rollover Options
so transferred shall have the same rights, and shall be bound by the same
obligations, under this Agreement as the transferor of such Shares, Performance
Options, Time Options or Rollover Options and shall be deemed for all purposes
hereunder (i) a "Berkshire Stockholder" in the case of a Permitted Transfer from
a Berkshire Stockholder, (ii) a "Management Stockholder" in the case of a
Permitted Transfer from a Management Stockholder or (iii) an "Other Stockholder"
in the case of a Permitted Transfer from an Other Stockholder. No Permitted
Transfer shall conflict with or result in any violation of a judgment, order,
decree, statute, law, ordinance, rule or regulation.
"Permitted Transferee" shall mean any Person who shall have acquired
and who shall hold Shares, Performance Options, Time Options or Rollover Options
pursuant to a Permitted Transfer.
"Person" shall mean any individual, partnership, corporation,
association, limited liability company, trust, joint venture, unincorporated
organization or entity, or any government, governmental department or agency or
political subdivision thereof.
"Proportionate Share" shall have the meaning as set forth in Section
2.1(c)(iii).
"Proprietary Information" shall have the meaning as set forth in
Section 2.7.
"Public Offering" shall mean the completion of a sale of Common Stock
pursuant to a registration statement which has become effective under the 1933
Act (excluding registration statements on Form X-0, X-0 or similar limited
purpose forms), in which the Common Stock shall be listed and traded on a
national exchange or on the NASDAQ National Market System.
"register," "registered" and "registration" shall have the meaning as
set forth in Section 3.1.
"Registrable Securities" shall mean (i) all shares of Common Stock
held by any Stockholder, (ii) all shares of Common Stock issuable upon the
exercise of Performance Options, Time Options and Rollover Options, in each
case, to the extent exercisable, held by any Stockholder, and (iii) any other
common equity securities of the Company issued in exchange for, upon a
reclassification of, or in a distribution with respect to, such Common Stock. As
to any particular Registrable Securities, such securities shall cease to be
Registrable Securities when (a) a registration statement (other than a
registration statement on Form S-8) with respect to the sale of such securities
shall have become effective under the 1933 Act and such securities shall have
been disposed of in accordance with such registration statement, (b) a
registration statement on Form S-8 with respect to such securities shall have
become effective under the 1933 Act, or (c) such securities shall have been sold
under Rule 144 (or any successor provision) under the 1933 Act and such
securities may be resold by the Holder thereof without registration under the
1933 Act.
"Rollover Options" shall mean, collectively, the vested options
retained by certain Management Stockholders under the Incentive Plan, to
purchase shares of Common Stock on the terms set forth therein and in the Stock
Option Agreements issued pursuant thereto.
"Sale Request" shall have the meaning as set forth in Section 2.3(a).
"Schedule" shall refer to the Schedule of Stockholders attached
hereto as Exhibit A, as amended from time to time.
"SEC" shall mean the United States Securities and Exchange
Commission.
"Seller" shall have the meaning as set forth in Section 2.3(a).
"Shares" shall mean (i) shares of Common Stock held by Stockholders
from time to time, or (ii) securities of the Company issued in exchange for,
upon reclassification of, or as a distribution in respect of, the foregoing.
"Stock Acquisition Agreements" shall mean the Stock Acquisition
Agreements dated as of October 30, 1996, by and between the Company and each of
Xxxx X. Xxxxxx, Xxxxx X. Xxxxx, Xxxxxxx X. Xxxxxxxxx, Xxxxxxx X. Xxxxxxx,
Xxxxxxx X. Xxxxx, X. Xxxxxx Xxxxxx, Xxxxx X. Xxx, Xxxxxxxx X. Xxxxxx, Xxxxxxx X.
Xxxxx, Xxx X. Xxxxx, Xxxxx X. Xxxx, Xxxxxx Xxxxxxxx, Xxxxxxxxx X. Xxxxx, XX,
Xxxxxxx X. Xxxxxxx, Xx. and Xxxxxx X. Xxxxxx, Xx.
"Stock Option Agreements" shall mean the Stock Option Agreement
pursuant to the Xxxxxx Holdings, Inc. Senior Management Stock Incentive Plan
between the Company and each of Xxxxxxxxx X. Xxxxx, XX (dated October 30, 1996,
as amended April 28, 1998), Xxxxx X. Xxxxx (dated October 30, 1996, as amended
April 28, 1998), Xxxxxx Xxxxxxxx (dated October 30, 1996, as amended April 28,
1998), Xxxxxxx X. Xxxxxxx, Xx. (dated October 30, 1996, as amended April 28,
1998), Xxxxxxx X. Xxxxx (dated October 30, 1996, as amended April 28, 1998,
dated April 1, 1998 and dated March 17, 1999), Xxxxxxx Xxxxx (dated March 22,
1999), Xxxxxx Xxxxx (dated March 1, 1998, as amended May 4, 1998), Xxxxxxx X.
Xxxxxxx (dated October 30, 1996, as amended April 28, 1998), Xxxxxx X. Xxxxx
(dated October 30, 1996, as amended April 28, 1998), Xxxxxxxx X. Xxxxxx (dated
October 30, 1996, as amended April 28, 1998), Xxx X. Xxxxx (dated October 30,
1996, as amended April 28, 1998), Xxxxxx X. Xxxxxx, Xx. (dated October 30, 1996,
as amended April 28, 1998), X. Xxxxxx Xxxxxx (dated June 1, 1999), Xxxxxx
Xxxxxxxx (dated June 1, 1999), Xxxxx X. Xxxxxx (dated June 1, 1999), Xxxxx X.
Xxxxxxx (dated June 19, 1997, as amended April 28, 1998 and dated March 17,
1999) and Xxxxxx X. Xxxxx (dated April 1, 1997, as amended April 28, 1998).
"Stock Purchase Agreement" shall have the meaning set forth in the
recitals.
"Stockholders" shall mean, collectively, the Berkshire Stockholders,
the Management Stockholders and the Other Stockholders.
"Subsidiary" with respect to any entity (the "parent") shall mean any
corporation, company, firm, association or trust of which such parent, at the
time in respect of which such term is used, (i) owns directly or indirectly more
than fifty percent (50%) of the equity or beneficial interest, on a consolidated
basis, or (ii) owns directly or controls with power to vote, directly or
indirectly through one or more Subsidiaries, shares of the equity or beneficial
interest having the power to elect more than fifty percent (50%) of the
directors, trustees, managers or other officials having powers analogous to that
of directors of a corporation. Unless otherwise specifically indicated, when
used herein the term Subsidiary shall refer to a direct or indirect Subsidiary
of the Company.
"Take Along Group" shall have the meaning as set forth in Section
2.3(a).
"Third Party" shall mean any Person other than the Company.
"Time Options" shall mean, collectively, the time vested options,
granted to certain Management Stockholders under the Incentive Plan, to purchase
shares of Common Stock on the terms set forth therein and in the certificates
and agreements issued pursuant thereto.
"Transfer" shall mean to transfer, sell, assign, pledge, hypothecate,
give, create a security interest in or lien on, place in trust (voting or
otherwise), assign or in any other way encumber or dispose of, directly or
indirectly and whether or not by operation of law or for value, any Shares,
Performance Options, Time Options or Rollover Options.
"Transfer Date" shall have the meaning as set forth in Section
2.1(c)(i).
"Transferor" shall have the meaning as set forth in Section 2.4(a).
"Transferring Stockholder" shall have the meaning as set forth in
Section 2.1(c)(i).
"Voluntary Termination" shall mean any voluntary termination of
employment with the Company or a Subsidiary of the Company by a Management
Stockholder, except as otherwise specified in an effective written agreement, if
any, between the Company and/or one of its Subsidiaries and such Management
Stockholder. The term Voluntary Termination shall not include termination of
employment due to death, Disability or retirement in accordance with Company
policy.
ARTICLE II.
COVENANTS AND CONDITIONS
Subject to the provisions of Section 4.8 hereof relating to the
termination of certain provisions of this Agreement, the following covenants and
conditions shall apply.
2.1. RESTRICTIONS ON TRANSFERS; INVOLUNTARY TRANSFERS.
(a) No Management Stockholder or Other Stockholder may
Transfer all or any of the Shares owned by such Management
Stockholder or Other Stockholder to any Person other than (i) a
Permitted Transferee, (ii) pursuant to Section 2.2, (iii) pursuant to
Section 2.3 in accordance with a Sales Request, or (iv) pursuant to
Section 2.4 as a Participating Offeree. Any attempted Transfer of
Shares not permitted by this Section 2.1 shall be null and void, and
the Company shall not in any way give effect to such nonpermissible
Transfer. Any attempted Transfer of Performance Options, Time Options
or Rollover Options not permitted by the Incentive Plan shall be null
and void, and the Company shall not in any way give effect to such
nonpermissible Transfer.
(b) Transferred Shares Subject to Transfer Restrictions.
Any Shares Transferred pursuant to this Section 2.1 shall remain
subject to the Transfer restrictions of this Agreement and each
intended transferee pursuant to this Section shall execute and
deliver to the Company a counterpart of this Agreement, which shall
evidence such transferee's agreement that the Shares intended to be
transferred shall continue to be subject to this Agreement and that
as to such Shares the transferee shall be bound by the restrictions
of this Agreement as a Stockholder hereunder.
(c) INVOLUNTARY TRANSFERS.
(i) Any Stockholder who is the subject of an
Involuntary Transfer (as defined below) (the "Transferring
Stockholder"), shall notify the Company and the other
Stockholders in writing within ten (10) days of such
Involuntary Transfer (but the failure to give such notice
shall not affect the rights of the parties hereunder). For
purposes of this Section 2.1(c), the later of receipt of
such notice by the Company and the other Stockholders and
the date of such Involuntary Transfer shall be the
"Transfer Date".
(ii) For a period of twenty (20) days after the
Transfer Date (the "Company Option Period"), the Company
may, by notice in writing to the Transferring Stockholder,
elect in writing to purchase any or all of the Shares
subject to the Involuntary Transfer at the Fair Market
Value of such Shares.
(iii) If the Company does not elect to purchase
any of the Shares subject to the Involuntary Transfer, or
exercises such right only with respect to a portion of
such Shares, then for a period of twenty (20) days
commencing on the earlier of (a) the date, if any, that
the Transferring Stockholder notifies the other
Stockholders in writing that the Company has determined
either not to exercise such right of purchase or to
exercise such right only with respect to a portion of the
Shares subject to the Involuntary Transfer, and (b) the
expiration of the Company Option Period, the other
Stockholders shall have the right to purchase all or any
portion of such Shares subject to the Involuntary Transfer
not so elected to be purchased by the Company, at the Fair
Market Value of such Shares. The specific number of such
Shares subject to the Involuntary Transfer remaining after
the Company has exercised its right pursuant to clause
(ii) to which each other Stockholder shall be entitled to
purchase shall be determined on a PRO RATA basis in
proportion to the respective number of shares of Common
Stock owned beneficially by each such Stockholder as of
the Transfer Date in relation to the total number of
shares of Common Stock owned beneficially by all such
Stockholder (for each such Stockholder, its "Proportionate
Share"). Each such Stockholder shall also be entitled to
indicate a desire to purchase all or a portion of any
Shares subject to the Involuntary Transfer remaining after
such PRO RATA allocation. Each such Stockholder shall be
allocated the maximum amount of Shares subject to the
Involuntary Transfer set forth in such Stockholder's offer
to purchase, unless such allocation would result in the
allocation of more securities in the aggregate than are
available for purchase by the other Stockholders, in which
case such Shares subject to the Involuntary Transfer shall
be allocated among the Stockholders PRO RATA in accordance
with each such Stockholder's Proportionate Share;
PROVIDED, HOWEVER, that if the foregoing results in any
Stockholder being allocated more than the maximum amount
of Shares subject to
the Involuntary Transfer specified in such Stockholder's
offer to purchase, such Stockholder will be allocated such
maximum amount and the excess will be allocated as
provided in this sentence (including this proviso).
(iv) Any Shares subject to the Involuntary
Transfer not accepted pursuant to clauses (ii) and (iii)
above shall be Transferred in accordance with the terms
and conditions of the Involuntary Transfer.
(v) The closing of the purchase and sale of any
Shares subject to the Involuntary Transfer hereunder shall
be held at the offices of the Company on such dates and
times as the parties may agree but in all events within
twenty (20) days following termination of the offer period
granted to the other Stockholders.
(vi) For purposes of this Agreement, the term
"Involuntary Transfer" shall mean any involuntary sale,
transfer, encumbrance or other disposition (other than as
a result of the death of the Stockholder) by or in which
any Stockholder shall be deprived or divested of any
right, title or interest in or to any Shares, including
without limitation (I) any levy of execution, transfer in
connection with bankruptcy, reorganization, insolvency or
similar proceedings, (II) any transfer to a public officer
or agency pursuant to any abandoned property or escheat
law, or (III) any transfer to the spouse of an individual
or change in the record holder made pursuant to divorce
proceedings. A Transfer pursuant to Section 2.2 shall not
be deemed to be an Involuntary Transfer.
2.2. CALL BY THE COMPANY OF MANAGEMENT STOCKHOLDERS' EQUITY
INTERESTS.
(a) Upon the termination of the employment of any Management
Stockholder by the Company or any of its Subsidiaries (a "Call Event") for any
reason, the Company or its designee shall have the right to purchase (the "Call
Option"), by delivery of a written notice (the "Call Notice") to such terminated
Management Stockholder no later than ninety (90) days after the date of such
Call Event, and such Management Stockholder and such Management Stockholder's
Permitted Transferees (collectively, the "Call Group") shall be required to sell
all (but not less than all) of the Call Securities at a price per share (or per
option) equal to the Call Price (as defined below) of such Call Securities
determined as of the date of repurchase pursuant to the Call Notice.
(b) For purposes of this Section 2.2, the term "Call Price" shall
mean:
(i) with respect to any Shares (including Shares purchased
upon exercise of Rollover Options, Time Options and Performance
Options) held by the Call Group,
(A) in the event of a termination of a
Management Stockholder's employment (w) by the Company
without Cause, (x) by virtue of death or Disability, (y)
upon retirement in accordance with Company policy, or (z)
by Voluntary Termination on or after the third anniversary
of the date hereof, the Fair Market Value of such Shares;
and
(B) in the event of a termination of a
Management Stockholder's employment by (x) Voluntary
Termination prior to the third anniversary of the date
hereof or (y) by the Company for Cause, the lower of (I)
the Investment Price of such Shares, or (II) the Fair
Market Value of such Shares.
(ii) with respect to any vested Time Options, vested
Performance Options or Rollover Options, the difference between (x)
the Call Price for the Shares underlying such Time Options or
Rollover Options, as the case may be (calculated as if the Shares
underlying such Time Options, Performance Options or Rollover
Options, as the case may be were outstanding and had been called
pursuant to this Section 2.2 and therefore calculated in accordance
with the procedures set forth in clause 2.2(b)(i) above) minus (y)
the exercise price of such vested Time Options, vested Performance
Options or Rollover Options, as the case may be; PROVIDED, that such
difference shall not be less than zero;
(iii) with respect to any unvested Time Options or
unvested Performance Options, such options shall automatically expire
as set forth in the Option Certificates pursuant to which they were
granted.
(c) The closing of any purchase of Call Securities by the Company
pursuant to Section 2.2(a) shall take place at the principal office of the
Company no later than 185 days after the Call Event. At such closing, the
Company shall deliver to the Call Group consideration in an amount equal to the
aggregate Call Price payable in respect of such Call Securities against delivery
of (i) original stock certificates and stock powers duly endorsed in favor of
the Company representing the Call Securities, and (ii) an executed agreement, in
form reasonably satisfactory to the Company, evidencing the cancellation of any
vested Time Options, Rollover Options and vested Performance Options purchased
at such closing. The Company shall pay the Call Price by paying the Call Group
in cash; PROVIDED, HOWEVER, that in the event that any such cash payment could,
in the reasonable judgement of the Board, cause the Company or any Subsidiary to
be in violation of applicable law or in default under or otherwise in violation
of the terms of any material loan or credit agreement to which the Company or
any of its Subsidiaries is a party (a "Default"), the Company shall pay such
cash portion of the Call Price by issuing a subordinated promissory note in a
principal amount equal to the cash portion of the purchase price (the "Company
Note"). The principal of such note will be due and payable in five equal annual
installments, the first such installment becoming due and payable on the first
anniversary of the issuance of such note, and interest will accrue thereon at a
rate equal to the Mid-term Applicable Federal Rate plus three percent (3%) from
the date of issuance of the Company Note and will be payable quarterly in
arrears. Such Company Note may be prepaid by the Company in whole at any time or
in part from time to time without premium or penalty and shall otherwise be in
the form acceptable to the Board; PROVIDED, HOWEVER, that if at any time after a
Company Note has been issued, the Board determines that prepaying such Company
Note in whole would not reasonably be likely to cause a Default, the Company
Note shall then be prepaid in full at such time. Notwithstanding anything to the
contrary in this Agreement, the Company shall not be obligated to make any cash
payment pursuant to this Section 2.2(c)
or any cash payment of principal or interest due under a Company Note if such
payment would cause a Default. In the event the Company cannot make any cash
payment under this Section 2.2(c) or the cash payments of principal and interest
due under a Company Note because it is in Default or would be in Default by
virtue of such payments, the Company will undertake to make such payments at
such time as the Company is no longer in, or would no longer be by virtue of
such payments in, Default.
(d) Notwithstanding anything set forth in this Section 2.2 to the
contrary, prior to the exercise by the Company of its Call Option to purchase
Call Securities pursuant to this Section 2.2, the Board of Directors may
designate one or more new or existing employees of the Company or any Subsidiary
(individually a "Designated Employee" and collectively, the "Designated
Employees") or another Stockholder who shall have the right, but not the
obligation, to exercise the Call Option and to acquire, in lieu of the Company,
some or all (as determined by the Company) of the Call Securities that the
Company is entitled to purchase from the Call Group hereunder, on the same terms
and conditions as set forth in Section 2.2(c) which apply to the purchase of
Call Securities by the Company, except all payments pursuant to this Section
2.2(d) shall be made in immediately available funds or by certified or cashier's
check, and shall not be payable in the form of a note of any kind. Concurrently
with any such purchase of Call Securities by any such Designated Employee, such
Designated Employee shall execute a counterpart of this Agreement, whereupon
such Designated Employee shall be deemed a "Management Stockholder" and shall
have the same rights and be bound by the same obligations as the Management
Stockholders hereunder.
(e) In the event of a termination of a Management Stockholder for any
reason other than the Voluntary Termination of such Management Stockholder or
for Cause and, within six (6) months after such termination, the Company
consummates a Public Offering or a Change in Control transaction, or a Change in
Control transaction is agreed upon in a definitive agreement, the Company shall
pay to the Management Stockholder, subject to the provisions of clauses (c) and
(d) above, cash in an amount equal to the Gross-Up Amount for each Share or
Option purchased pursuant to this Section 2.2. Notwithstanding the foregoing, in
the case of a Change in Control transaction that is agreed upon in a definitive
agreement within six (6) months after the date of termination of the Management
Stockholder, the Management Stockholder shall not be entitled to receive any
cash pursuant to this clause (e) unless such Change in Control transaction is
consummated within six (6) months after execution of such definitive agreement.
2.3. TAKE ALONG.
(a) If at any time, any of the Stockholders constituting more than
fifty (50%) of the Common Stock Equivalents, individually or acting as a group
(such Stockholders, as applicable, being referred to herein as the "Take Along
Group") elect to consummate, or cause the Company to consummate, a Company Sale
to a Third Party which is not an Affiliate of any Stockholder included in the
Take Along Group, then upon twenty (20) days' written notice by the Take Along
Group to each other Stockholder, which notice shall set forth the terms and
conditions of such proposed Company Sale, including the name of the prospective
transferee, the number of shares of Common Stock and Common
Stock Equivalents proposed to be sold by the Take Along Group in the Company
Sale, the consideration to be received by the Take Along Group and the proposed
time and place of closing (such notice being referred to as the "Sale Request"),
each other Stockholder (each, a "Seller"), in the event the Company Sale is
consummated, shall be obligated to consummate, consent to and raise no objection
to the proposed Company Sale and take all other actions reasonably necessary or
desirable to consummate the proposed Company Sale on the terms proposed by the
Take Along Group as set forth in the Sale Request. Without limiting the
generality of the foregoing, (i) if the Company Sale is structured as a merger,
consolidation or similar business transaction, each Seller will vote or cause to
be voted all Shares that he holds or with respect to which he has the power to
direct the voting and which he is entitled to vote on such proposed Company Sale
in favor of such proposed Company Sale and will waive all appraisal and
dissenters rights and hereby grants a proxy in favor of the Take Along Group to
vote the Seller's Shares in accordance with this Section 2.3(a) and (ii) if the
Company Sale is structured as a sale or redemption of Common Stock, each Seller
will agree to sell his PRO RATA portion of Common Stock Equivalents (including
his pro rata portion of Time Options, Rollover Options and Performance Options
which would become Common Stock Equivalents by reason of the Company Sale) being
sold in the Company Sale on the same terms and conditions as the Take Along
Group. A Stockholder's PRO RATA portion, for purposes of this Section 2.3(a), is
the product of (i) a fraction, the numerator of which is the number of
outstanding Common Stock Equivalents which such Stockholder then owns and the
denominator of which is the total number of such Common Stock Equivalents then
actually outstanding and (ii) the total number of Common Stock Equivalents being
sold in the Company Sale. Each proxy granted above in this Section 2.3(a) is
irrevocable, coupled with an interest and shall survive until the expiration of
the provisions of this Section 2.3(a). If required, each Seller shall (i)
deliver certificates for all of its Shares being Transferred pursuant to this
Section 2.3(a) at the closing of the proposed Transfer, free and clear of all
claims, liens and encumbrances. The terms and conditions of any sale pursuant to
this Section 2.3(a) shall be the same as set forth in the Sale Request;
PROVIDED, HOWEVER, that in the case of Performance Options, Time Options and
Rollover Options, the holders of such securities shall have the opportunity to
either (i) exercise such Performance Options, Time Options and Rollover Options
(if such Performance Options, Time Options or Rollover Options are exercisable
or would be exercisable upon consummation of the Company Sale) and participate
in such sale as holders of Common Stock issuable upon such exercise, or (ii)
upon the consummation of the sale, receive in exchange for such Performance
Options, Time Options and Rollover Options the amount determined by multiplying
(1) the same amount of consideration per share received by the Stockholders for
which the Performance Option or Time Option is exercisable less the exercise
price or conversion price per share of such Performance Option or Time Option by
(2) the number of shares of Common Stock represented by such Performance
Options, Time Options and Rollover Options.
(b) Each Stockholder, whether in his capacity as a Seller,
Stockholder, officer or director of the Company, or otherwise, shall take or
cause to be taken all commercially reasonable actions in order expeditiously to
consummate any Company Sale and any related transactions, including, without
limitation, executing, acknowledging and delivering consents, assignments,
waivers and other documents or instruments as may be
reasonably requested and otherwise cooperating with the Take Along Group and any
prospective buyer; PROVIDED, HOWEVER, that Stockholders shall be obligated to
become liable in respect of any representations, warranties, covenants,
indemnities or otherwise to the Third Party solely to the extent provided in the
immediately following sentence. Without limiting the generality of the
foregoing, each Stockholder agrees to execute and deliver such agreements as may
be reasonably specified by the Take Along Group to which such Take Along Group
will also be party, including, without limitation, agreements to (i) (1) make
individual representations, warranties, covenants and other agreements as to the
unencumbered title to its Shares and the power, authority and legal right to
Transfer such Shares and the absence of any Adverse Claim with respect to such
Shares and (2) be liable without limitation as to such representations,
warranties, covenants (including without limitation, covenants not to compete,
as appropriate) and other agreements and (ii) be liable (whether by purchase
price adjustment, indemnity payments or otherwise) in respect of
representations, warranties, covenants and agreements in respect of the Company
and its subsidiaries; PROVIDED, HOWEVER, that the aggregate amount of liability
described in this clause (ii) in connection with any Company Sale shall not
exceed the lesser of (I) such Stockholder's pro rata portion of any such
liability, to be determined in accordance with such Stockholder's portion of the
total value for his, her or its Shares included in such Company Sale or (II) the
proceeds to such Stockholder in connection with such Company Sale.
2.4. COME ALONG. No Stockholder may Transfer Shares to a Third Party
who is not a Permitted Transferee without complying with the terms and
conditions set forth in this Section 2.4.
(a) Any Stockholder or group of Stockholders when desiring
to Transfer Shares (the "Transferor") shall give not less than
fifteen (15) days prior written notice of such intended Transfer to
each other Stockholder and the Company. Such notice (the
"Participation Notice") shall set forth the terms and conditions of
such proposed Transfer, including the name of the prospective
transferee, the number of Shares proposed to be transferred (the
"Participation Securities") by the Transferor, the percentage of the
total number of shares of Common Stock held by the Transferor that
the Participation Securities constitutes of such class (the "Come
Along Percentage"), the purchase price per share of Common Stock
proposed to be paid therefor, the payment terms and type of transfer
to be effectuated and the proposed time and place of closing. Within
fifteen (15) days following the delivery of the Participation Notice
by the Transferor to each other Stockholder and to the Company, each
other Stockholder desiring to participate in such proposed Transfer
(each, a "Participating Offeree") shall, by notice in writing to the
Transferor and to the Company, have the opportunity and right to sell
to the purchasers in such proposed Transfer (upon the same terms and
conditions as the Transferor) up to that number of shares of Common
Stock, as the case may be, subject to the last sentence of Section
2.4(c) below, as shall equal the product of (i) the Come Along
Percentage for the Common Stock, as the case may be, and (ii) the
number of shares of Common Stock which will be owned by such
Participating Offeree as of the proposed date of closing set forth in
the Participation Notice without giving effect to the transfer
contemplated hereby; PROVIDED, HOWEVER, that for purposes of
determining whether Options owned by a Management Stockholder will be
vested, such determination will be made after giving
effect to the transfer contemplated hereby and the Board, in its
reasonable judgment, within five (5) business days after the
Participation Notice is delivered to the Company, will make a Board
Participation Determination for each Management Stockholder and
notify such Management Stockholder of such Board Participation
Determination. No Management Stockholder may participate in the
proposed Transfer with respect to any Options which may vest upon
consummation of the Transfer in excess of the Board Participation
Determination and notwithstanding the Board Participation
Determination, no Management Stockholder may sell or transfer in the
proposed Transfer any unvested Time Options or any unvested
Performance Options if such options do not become vested upon
consummation of the proposed Transfer. The Transferor shall attempt
to obtain inclusion in the proposed Transfer of the entire number of
Shares which the Transferor and the Participating Offerees desire to
have included in the proposed Transfer. In the event the Transferor
shall be unable to obtain the inclusion of such entire number of
shares of Common Stock in the proposed Transfer, the number of shares
of Common Stock to be sold in the Proposed Transfer by each
Participating Offeree and the Transferor shall be determined in
accordance with Section 2.4(c) below. The terms and conditions of any
sale pursuant to this Section 2.4(a) shall be the same as set forth
in the Participation Notice, except as is provided in Section 2.4(c)
below and except that the actual date of the closing of any proposed
Transfer may change.
(b) At the closing of any proposed Transfer in respect of
which a Participation Notice has been delivered, the Transferor,
together with all Participating Offerees, shall deliver to the
proposed transferee certificates evidencing the Shares to be sold
thereto duly endorsed with stock powers and shall receive in exchange
therefor the consideration to be paid or delivered by the proposed
transferee in respect of such Shares as described in the
Participation Notice.
(c) The acceptance of each Participating Offeree shall be
irrevocable except as hereinafter provided, and each such
Participating Offeree shall be bound and obligated to sell, on the
same terms and conditions specified in the Participation Notice as
the Transferor (subject to all of the provisions of this Agreement),
such number of Shares as specified in such Participating Offeree's
written commitment; provided, however, that in the case of
Performance Options, Time Options and Rollover Options (for which the
exercise price is less than the price per share of Common Stock being
paid in the Transfer), the holders of such securities shall have the
opportunity to either (i) exercise such Performance Options, Time
Options and Rollover Options (if then exercisable) and participate in
such sale as holders of Common Stock issuable upon such exercise or
conversion, or (ii) upon the consummation of the sale, receive in
exchange for such Options the amount determined by multiplying (1)
the same amount of consideration per share of Common Stock received
by the other Stockholders less the exercise price per share of such
Performance Option and Time Option by (2) the number of shares of
Common Stock of such class represented by such Performance Option or
Time Option. In the event the Transferor shall be unable to obtain
the inclusion in the sale of all Shares which the Transferor and each
Participating Offeree desires to have included in the sale, the
number of Shares to be sold in the sale by the Transferor and each
Participating Offeree shall be reduced on a PRO RATA basis according
to the proportion which the number of Shares which each such party
desires to have included in the sale bears to the total number of
Shares desired by all such parties to have included in the sale.
(d) The provisions of this Section 2.4 shall not in any
way limit or affect the restrictions placed on the Stockholders by
Section 2.1 and shall not apply to (i) any Transfer to the Company or
other Stockholders pursuant to Section 2.1, (ii) any Transfer
pursuant to Section 2.2, (iii) any Transfer pursuant to Section 2.3
or (iv) any Permitted Transfer.
2.5. CORPORATE GOVERNANCE.
(a) BOARD OF DIRECTORS. At each annual meeting of the Stockholders
and at each special meeting of the Stockholders called for the purpose of
electing directors of the Company, and at any time at which stockholders of the
Company shall have the right to, or shall, vote for directors of the Company,
then, and in each event, the Stockholders hereby agree to attend each meeting in
person or by proxy and hereby agree to vote stock of the Company and shares of
the Company now owned or hereafter acquired by him, her or it (whether at a
meeting or by written consent in lieu thereof) (i) to fix the number of members
of the Board at up to seven (7) (unless the Board is expanded pursuant to
Section 2.4(b) hereto, in which case to fix the number of members of the Board
in accordance with Section 2.4(b) hereto), and (ii) to elect and thereafter to
continue in office as a director of the Company the following: (a) two (2)
directors nominated by the Berkshire Stockholders (who shall initially be
Xxxxxxx X. Xxxxx and Xxxx X. Xxxxx) (collectively the "Berkshire
Representatives"); (b) three (3) directors nominated by the Management
Stockholders (who shall initially be Xxxxxxxxx X. Xxxxx, XX, Xxxxx X. Xxxxx and
Xxxxxx Xxxxxxxx) (collectively, the "Management Representatives"), and (c) up to
two (2) directors who are not officers or employees of the Company, who shall be
nominated by mutual consent of the Berkshire Stockholders (as a group) and the
Management Stockholders (as a group) (the "Outside Representatives"). As to the
directors elected to the Board pursuant to this Section 2.4(a) or Section
2.4(b), the following provisions shall apply: (i) no Berkshire Representative
may be removed without the consent of a majority in interest of the Berkshire
Stockholders, except for cause as determined in good faith by unanimous decision
of all directors other than the Berkshire Representatives, (ii) no Management
Representative may be removed without the consent of a majority in interest of
the Management Stockholders, except for cause as determined in good faith by
unanimous decision of all directors other than the Management Representatives,
PROVIDED, that in the event of a determination by the Board pursuant to clause
(i) or (ii) of this sentence to remove a director, each Stockholder shall take
all action as may be necessary or appropriate, including without limitation, the
voting of all Shares owned by such Stockholder, to effect the removal of such
director. Any vacancy on the Board shall be filled by the designee of the
Stockholders who would be entitled to designate such director pursuant to this
Section 2.5(a) or Section 2.5(b), as the case may be, and if there shall be no
such designation right, such vacancy may be filled by the remaining directors.
Each Stockholder shall, upon receipt of notice identifying such designee, take
all action as may be necessary or appropriate, including without limitation, the
voting of all Shares owned by such Stockholder, to elect the director so
designated.
(b) PROPORTIONAL REPRESENTATION. Upon a majority vote of the holders
of Common Stock, the composition of the directors constituting the Board of
Directors shall be changed so that after designating directors in accordance
with this Section 2.5(b), each of the Berkshire Stockholders and the Management
Stockholders shall have represented on the Board that number of directors
(rounded up to the nearest whole number) represented by the percentage equal to
(x) the number of shares of Common Stock held by such stockholder group over (y)
the total number of shares of Common Stock held by all Stockholders. In the
event that the size of the Board of Directors needs to be increased in order to
establish the foregoing representation, each Stockholder shall take all action
as may be necessary or appropriate, including without limitation, the voting of
all Shares owned by such Stockholder, to effect the increase in the size of the
Board. Each Stockholder agrees that such Stockholder shall take all action as
may be necessary or appropriate, including without limitation, the voting of all
Shares owned by them, to elect the directors so designated by the Stockholders
as set forth in this Section 2.5(b).
(c) SUBSIDIARIES; COMMITTEES. Unless the Board unanimously determines
otherwise, the board of directors of each Subsidiary of the Company and the
audit committee, the compensation committee and all other authorized committees
of the Board and of each Subsidiary's board of directors shall be composed so
that the representation thereon shall be in the same proportion, as nearly as
may be possible (subject to any foreign law requirements, where applicable), as
the representation of such directors on the Board; PROVIDED, HOWEVER, that no
Management Representative shall sit on the audit committee or the compensation
committee.
2.6. RIGHTS OF PARTICIPATION.
(a) RIGHTS OF PARTICIPATION. The Company hereby grants to each
Stockholder so long as it shall own any Shares, the right to purchase up to a
PRO RATA portion of New Securities (as defined in paragraph (b) below) which the
Company, from time to time, proposes to sell or issue following the date hereof.
A Stockholder's PRO RATA portion, for purposes of this Section 2.6, is the
product of (i) a fraction, the numerator of which is the number of outstanding
Shares which such Stockholder then owns (on a fully diluted basis after giving
effect to the exercise of all Rollover Options, vested Time Options and vested
Performance Options and the like and the conversion of all securities
convertible into or exchangeable for Common Stock) and the denominator of which
is the total number of such Shares then actually outstanding (on a fully diluted
basis after giving effect to the exercise of all Rollover Options, vested Time
Options and vested Performance Options and the like and the conversion of all
securities convertible into or exchangeable for Common Stock), multiplied by
(ii) the number of New Securities the Company proposes to sell or issue.
(b) DEFINITION OF NEW SECURITIES. "New Securities" shall mean any
Common Stock or other equity securities of the Company whether now authorized or
not, any rights, options or warrants to purchase Common Stock or other equity
securities and any indebtedness or preferred stock of the Company which is
convertible into Common Stock or other equity securities (or which is
convertible into a security which is, in turn, convertible into Common Stock or
other equity securities); PROVIDED, that the term "New
Securities" does not include (i) indebtedness of the Company which is not by its
terms convertible into Common Stock; (ii) Common Stock issued as a stock
dividend to all holders of Common Stock PRO RATA or upon any subdivision or
combination of shares of Common Stock; (iii) Common Stock issued to any employee
or director and approved by the Board of Directors and any employee or director
stock options approved by the Board of Directors; (iv) Common Stock issued in
exchange for the cancellation or retirement of any debt securities of the
Company or in connection with any restructuring or other financial workout of
the Company; (v) Common Stock or warrants to purchase Common Stock issued to
non-Affiliates of the Company as part of a bona fide debt offering of units
comprised of such Common Stock or warrants and a debt security of the Company;
(vi) Common Stock issued in connection with the acquisition of another
corporation or other entity by the Company by merger, purchase of substantially
all assets or other reorganization; (vii) the issuance of Common Stock upon the
exercise or conversion of any rights, options or warrants to purchase Common
Stock; (viii) Common Stock issuable in a Public Offering; or (ix) Common Stock
issued in respect of services provided (other than as an employee) to the
Company or its subsidiaries and approved by the Board of Directors; and
PROVIDED, FURTHER, that if any "New Securities" include Common Stock and other
equity securities coupled as a package, "New Securities" shall mean the package
of securities and not each class of securities individually.
(c) NOTICE FROM THE COMPANY. In the event the Company proposes to
issue New Securities, the Company shall give each Stockholder who has a right of
participation under this Section 2.6 written notice of such proposal, describing
the type of New Securities and the price and the terms upon which the Company
proposes to issue the same. For a period of ten (10) business days following the
delivery of such notice by the Company, the Company shall be deemed to have
irrevocably offered to sell to each Stockholder its PRO RATA share of such New
Securities for the price and upon the terms specified in the notice. Each
Stockholder may exercise its rights of participation hereunder by giving written
notice to the Company and stating therein the quantity of New Securities to be
purchased. Each Stockholder shall also be entitled to indicate a desire to
purchase all or a portion of any New Securities remaining after such PRO RATA
allocation. If, as a result of such oversubscription right, such
oversubscriptions exceed the total number of New Securities available in respect
of such oversubscription right, the oversubscribing Stockholders shall be cut
back with respect to their oversubscriptions on a pro rata basis or as they may
otherwise agree among themselves.
(d) SALE BY THE COMPANY. In the event that the Stockholders who have
a right of participation under this Section 2.6 fail to commit to purchase all
of such New Securities within said ten (10) business day period, the Company
shall have ninety (90) days thereafter to sell the New Securities with respect
to which the right of participation was not exercised, at a price and upon terms
no more favorable to the purchasers thereof than specified in the Company's
notice given pursuant to Section 2.6(c).
(e) CLOSING. The closing for any such issuance shall take place as
proposed by the Company with respect to the New Securities to be issued, at
which closing the Company shall deliver certificates for the New Securities in
the respective names of the purchasing Stockholders against receipt of payment
therefor.
2.7. CONFIDENTIALITY. Each Stockholder shall maintain the
confidentiality of any confidential and proprietary information of the Company
("Proprietary Information") using the same standard of care, but in no event
less than reasonable care, as it applies to its own confidential information,
except for any Proprietary Information which is publicly available or a matter
of public knowledge generally. Nothing herein shall prevent any Stockholder from
using Proprietary Information to enforce its rights under this Agreement or from
disclosing a summary of Proprietary Information to the partners of such
Stockholder as to the performance of the Company.
ARTICLE III.
REGISTRATION RIGHTS
3.1. GENERAL. For purposes of Article III: (a) the terms "register,"
"registered" and "registration" refer to a registration effected by preparing
and filing a registration statement in compliance with the 1933 Act and the
declaration or ordering of effectiveness of such registration statement; (b) the
term "Holder" means any Stockholder holding Registrable Securities; and (c) the
shares of Common Stock issuable upon the exercise of vested Time Options,
Rollover Options and vested Performance Options shall be deemed to be
outstanding and held by the holders of such vested Time Options, Rollover
Options and vested Performance Options.
3.2. DEMAND REGISTRATION INITIATED BY THE BERKSHIRE STOCKHOLDERS.
(a) Subject to paragraph (b) hereof, on or after the date
on which the Company has effected a Public Offering, if the Company
shall receive a written request (specifying that it is being made
pursuant to this Section 3.2) by or on behalf of Berkshire
Stockholders holding an aggregate of fifty percent (50%) or more of
the Registrable Securities held by the Berkshire Stockholders, that
the Company file a registration statement under the 1933 Act, or a
similar document pursuant to any other statute then in effect
corresponding to the 1933 Act, covering the registration of at least
the lesser of (i) $20 million of Registrable Securities (determined
based upon the Fair Market Value of such Registrable Securities on
the date of request), or (ii) one hundred percent (100%) of the
Registrable Securities then held by the Berkshire Stockholders, then
the Company shall promptly notify all other Holders of such request
and shall use its best efforts to cause all Registrable Securities
that the Holders have requested (within thirty (30) days after such
Company notice) be registered, to be registered under the 0000 Xxx.
(b) If the total amount of Registrable Securities that the
Holders request to be included in such offering exceeds the amount of
securities that the underwriters reasonably believe compatible with
the success of the offering, then the Company will include in such
registration only the number of securities which, in the opinion of
such underwriters, can be sold in accordance with the procedures set
forth in Section 3.3(b);
(c) The Company shall be obligated to effect for the
Berkshire Stockholders two (2) registrations of Registrable
Securities pursuant to this Section 3.2; PROVIDED, that
in the event that, at the request of the underwriters, the amount of
Registrable Securities that the Berkshire Stockholders requested to
be included in any offering is reduced by more than thirty percent
(30%), such offering shall be deemed not to be a registration
demanded by the Berkshire Stockholders for purposes of this Section
3.2.
3.3. PIGGYBACK REGISTRATION; REDUCTION IN REGISTRATION.
(a) If, at any time, the Company determines to register
any of its equity securities for its own account under the 1933 Act
in connection with a Public Offering of such securities, other than
the first Public Offering of its Common Stock, solely for cash on a
form that would also permit the registration of any of the
Registrable Securities, the Company shall, at each such time,
promptly give each Holder written notice of such determination. Upon
the written request of any Holder received by the Company within
thirty (30) days after the giving of any such notice by the Company,
the Company shall use its best efforts to cause to be registered
under the 1933 Act all of the Registrable Securities of such Holder
that each Holder has requested be registered. If the total amount of
Registrable Securities that are to be included by the Company for its
own account and at the request of Holders exceeds the amount of
securities that the underwriters reasonably believe compatible with
the success of the offering, then the Company will include in such
registration only the number of securities which in the opinion of
such underwriters can be sold, in the following order:
(i) first, the equity securities to be
registered on behalf of the Company; and
(ii) then the Registrable Securities requested
to be included by the Holders, PRO RATA, based on the
number of Registrable Securities owned by each of them
which each of them request be included in such
registration; PROVIDED, HOWEVER, that if an underwriter
who is not an Affiliate or Associate of any Holder, in
good faith requests for the success of the offering, that
the number of Registrable Securities to be sold by any
Holder be apportioned or excluded, such number of
Registrable Securities of such Holder shall be reduced or
not included to the extent so requested by said
underwriter.
(b) If the Company at any time proposes to register any of
its equity securities for the account of any Holder pursuant to
Section 3.2 or Section 3.9 of this Agreement, under the 1933 Act in
connection with the public offering of such securities solely for
cash on a form that would also permit the registration of any of the
Registrable Securities, the Company shall, at each such time,
promptly give each Holder written notice of such determination. Upon
the written request of any Holder received by the Company within
thirty (30) days after the giving of any such notice by the Company,
the Company shall use its best efforts to cause to be registered
under the 1933 Act all of the Registrable Securities of such Holder
that such Holder has requested be registered. If the total amount of
Registrable Securities requested to be included by the requesting
Holders under Section 3.2 or 3.9, and at the request of the Company
and the other Holders, exceeds the amount of securities that the
underwriters reasonably believe compatible with the success of the
offering, then the Company will include in such registration only the
number of securities which in the opinion of such underwriters can be
sold, in the following order:
(i) first, the equity securities to be
registered on behalf of Stockholders initiating the
demand, PRO RATA, based on the number of Registrable
Securities owned by each of them which each of them
request be included in such registration;
(ii) second, the equity securities to be
registered on behalf of the Company; and
(iii) third, the Registrable Securities
requested to be included by the other Holders, PRO RATA,
based on the number of Registrable Securities owned by
each of them which each of them request be included in
such registration;
PROVIDED, HOWEVER, that if an underwriter who is not an Affiliate or
Associate of any Holder or the Company, in good faith, requests for
the success of the underwritten offering that the number of
Registrable Securities to be sold by any Holder or the Company be
apportioned or excluded, such number of Registrable Securities of
such Holder or the Company shall be reduced or not included to the
extent so requested by said underwriter.
3.4. OBLIGATIONS OF THE COMPANY. Whenever required under Sections
3.2, 3.3 or 3.9 to use its best efforts to effect the registration of any
Registrable Securities, the Company shall:
(a) prepare and file with the SEC a registration statement
with respect to such Registrable Securities, and use its best efforts
to cause such registration statement to become and remain effective;
(b) as expeditiously as reasonably possible, prepare and
file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with
such registration statement as may be necessary to comply with the
provisions of the 1933 Act with respect to the disposition of all
securities covered by such registration statement;
(c) as expeditiously as reasonably possible, furnish to
the Holders such numbers of copies of a prospectus, including a
preliminary prospectus, in conformity with requirements of the 1933
Act, and such other documents they may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them;
(d) as expeditiously as reasonably possible, use its best
efforts to register and qualify the securities covered by such
registration statement under the securities or Blue Sky laws of such
jurisdictions as shall be reasonably appropriate for the distribution
of the securities covered by the registration statement, PROVIDED
that the Company shall not be required in connection therewith or as
a condition thereto to qualify to do business or to file a general
consent to service of process in any such jurisdiction, and further
PROVIDED that (anything in this Agreement to the contrary
notwithstanding with respect to the bearing of expenses) if any
jurisdiction in which the securities shall be qualified shall
require that expenses incurred in connection with the qualification
of the securities in that jurisdiction be borne by selling
stockholders, then such expenses shall be payable by selling
stockholders PRO RATA, to the extent required by such jurisdiction;
(e) use its best efforts to cause all Registrable
Securities covered by such registration statement to be registered
with, or approved by, such other governmental agencies or authorities
as may be necessary to enable the seller or sellers thereof to
consummate the disposition of such Registrable Securities;
(f) 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 registration 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 at the request
of any such seller or Holder, promptly prepare and file with the SEC
and furnish to such seller or Holder a reasonable number of copies 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; PROVIDED, that, each Holder agrees that it shall not sell any
Registrable Securities covered by such a registration statement upon
notice from the Company until receipt of notice that such statement
or omission has been corrected.
(g) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to
its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve (12) months, but not
more than eighteen (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 will furnish to each seller at
least two (2) business days prior to the filing thereof a copy of any
amendment or supplement to such registration statement or prospectus
and shall not file any amendment or supplement thereof to which any
such seller shall have reasonably objected, except to the extent
required by law, on the grounds that such amendment or supplement
does not comply in all material respects with the requirements of the
1933 Act or of the rules or regulations thereunder;
(h) provide and cause to be maintained a transfer agent
and registrar for all Registrable Securities covered by such
registration statement from and after a date not later than the
effective date of such registration statement; and
(i) use its best efforts to list all Registrable
Securities covered by such registration statement on a securities
exchange or the NASDAQ National Market on which any class of
Registrable Securities is then listed.
3.5. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any act pursuant to this Article III that the
Holders selling Registrable Securities shall furnish to the Company such
information regarding them, the Registrable Securities held by them and the
intended method of disposition of such securities as the Company shall
reasonably request and as shall be required in connection with the action to be
taken by the Company.
3.6. EXPENSES OF REGISTRATION. All expenses incurred in connection
with a registration pursuant to Sections 3.2, 3.3 or 3.9 (excluding
underwriters' discounts and commissions, which shall be borne by the sellers),
including without limitation all registration and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company (which
counsel shall be reasonably satisfactory to the holders of a majority of the
Registrable Securities then being registered), and the reasonable fees and
disbursements of one counsel for the selling Holders (which counsel shall be
selected by the Holders which own a majority of the Registrable Securities being
sold under the applicable registration) shall be borne by the Company; PROVIDED,
HOWEVER, that all such expenses in connection with any amendment or supplement
to a registration statement or prospectus filed more than nine (9) months after
the effective date of such registration statement because any Holder of
Registrable Securities has not effected the disposition of the securities
requested to be registered shall be paid by such Holder; PROVIDED, FURTHER,
HOWEVER, that Holders initiating a demand may withdraw any request made pursuant
to Section 3.2, in which event such first withdrawn request shall be deemed for
all purposes herein not to have been made.
3.7. UNDERWRITING REQUIREMENTS. Each Holder selling Registrable
Securities in any registration pursuant to Sections 3.2 or 3.3 shall, as a
condition for inclusion of such Registrable Securities in such underwritten
registration, execute and deliver an underwriting agreement acceptable to the
Company and consented to by the Berkshire Stockholders, in the case of a
registration pursuant to Section 3.2, or acceptable to Holders who own a
majority of the Registrable Securities to be included in such registration, in
the case of a registration pursuant to Section 3.3, and the underwriters with
respect to such registration. Such underwriters shall be selected (i) by the
Company and consented to by the Berkshire Stockholders, in the case of a
registration pursuant to Section 3.3, or (ii) by a majority in interest of the
Registrable Securities to be included in such registration in all other cases
and shall be reasonably acceptable to the Company, in the case of a registration
pursuant to Section 3.3.
Notwithstanding the foregoing, each Holder shall take all action
reasonably necessary with respect to executing such underwriting agreement,
including being liable in respect of (i) any representations and warranties
being made by each selling Holder, and (ii) any indemnification agreements and
"lock-up" agreements made by each selling Holder for the benefit of the
underwriters in such underwriting agreement; PROVIDED, HOWEVER, that except with
respect to individual representations and warranties regarding such matters as
legal capacity or due organization of such participating Holder, authority to
participate in the Public Offering, compliance by such Holder with laws and
agreements applicable to it, ownership (free and clear of liens, charges,
encumbrances and adverse claims) of Registrable Securities to be sold by such
Holder and accuracy of information with respect to such Holder furnished for
inclusion in any disclosure document relating to each Public Offering, the
aggregate amount of the liabilities of such participating Holder pursuant to
such underwriting agreement shall not exceed either (a)
such participating Holder's PRO RATA portion of any such liability, in
accordance with such participating Holder's portion of the total number of
Registrable Securities included in the public offering, or (b) the net proceeds
received by such participating Holder from the public offering.
3.8. INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Article III:
(a) To the fullest extent permitted by law, the Company
will indemnify and hold harmless each Holder (which term, for
purposes of this Section 3.8, shall include each Stockholder,
including the Berkshire Stockholders, the Management Stockholders and
the Other Stockholders holding Registrable Securities, and shall also
include the directors, officers and employees of the Stockholders and
their Affiliates) requesting or joining in a registration, any
underwriter (as defined in the 0000 Xxx) for a registration, and each
Person, if any, who controls such Holder or such underwriter within
the meaning of the 1933 Act, against any and all losses, claims,
damages or liabilities, joint or several, to which any such Holder,
underwriter or Person may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based on any untrue or alleged untrue
statement of any material fact contained in a registration statement
relating to a registration pursuant to this Article III, including
any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material
fact required to be stated therein, or necessary to make the
statements therein not misleading, or arise out of any violation by
the Company of the 1933 Act or any rule or regulation promulgated
under the 1933 Act applicable to the Company and relating to action
or inaction required of the Company in connection with any such
registration, and will reimburse each such Holder, underwriter or
control Person for any and all legal or other expenses reasonably
incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, action or proceeding; PROVIDED,
HOWEVER, that the indemnity agreement contained in this Section
3.8(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability, action or proceeding if such
settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld), nor shall the Company be
liable to anyone for any such loss, claim, damage, liability, action
or proceeding to the extent that it arises out of or is based upon an
untrue statement or omission made in connection with such
registration statement, preliminary prospectus, final prospectus or
amendments or supplements thereto in reliance upon and in conformity
with written information furnished expressly for use in connection
with such registration by such Holder, underwriter or control Person.
Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Holder, underwriter or
control Person and shall survive the transfer of such securities by
such Holder.
(b) To the fullest extent permitted by law, each Holder
requesting or joining in a registration will indemnify and hold
harmless the Company, each of its directors, each of its officers who
has signed the registration statement, each Person, if any, who
controls the Company within the meaning of the 1933 Act, and each
agent and any underwriter for the Company and any Person who controls
any such agent or underwriter
and each other Holder and any Person who controls such Holder (within
the meaning of the 0000 Xxx) against any and all losses, claims,
damages or liabilities, joint or several, to which the Company or any
such director, officer, control Person, agent, underwriter or other
Holder may become subject, under the 1933 Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened in respect thereto)
arise out of or are based upon an untrue statement of any material
fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, or arise out of or are based upon
the omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue
statement or omission was made in such registration statement,
preliminary or final prospectus, or amendments or supplements
thereto, in reliance upon and in conformity with written information
furnished by such Holder (other than information furnished by such
Holder on behalf of the Company in his or her capacity as an officer
or director of the Company) expressly for use in connection with such
registration; and such Holder will reimburse the Company and each
such director, officer, control Person, agent, underwriter or other
Holder for any and all legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss,
claim, damage, liability, action or proceeding; PROVIDED, HOWEVER,
the indemnity obligation of each such Holder hereunder shall be
limited to and shall not exceed the proceeds actually received by
such Holder upon a sale of Registrable Securities pursuant to a
registration statement hereunder; and PROVIDED, FURTHER that the
indemnity agreement contained in this Section 3.8(b) shall not apply
to amounts paid in settlement of any such loss, claim, damage,
liability, action or proceeding if such settlement is effected
without the consent of such Holder (which consent shall not be
unreasonably withheld). Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the
Company or any such director, officer, Holder, underwriter or control
Person and shall survive the transfer of such securities by such
Holder.
(c) Any Person seeking indemnification under this Section
3.8 will (i) give prompt notice to the indemnifying party of any
claim with respect to which it seeks indemnification (but the failure
to give such notice will not affect the right to indemnification
hereunder, unless and to the extent the indemnifying party is
materially prejudiced by such failure) and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest may
exist between such indemnified and indemnifying parties with respect
to such claim, permit such indemnifying party, and other indemnifying
parties similarly situated, jointly to assume the defense of such
claim with counsel reasonably satisfactory to the parties. In the
event that the indemnifying parties cannot mutually agree as to the
selection of counsel, each indemnifying party may retain separate
counsel to act on its behalf and at its expense. The indemnified
party shall in all events be entitled to participate in such defense
at its expense through its own counsel. If such defense is not
assumed by the indemnifying party, the indemnifying party will not be
subject to any liability for any settlement made without its consent
(but such consent will not be unreasonably withheld). No indemnifying
party will consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such indemnified party of
a release from
all liability in respect of such claim or litigation. An indemnifying
party who is not entitled to, or elects not to, assume the defense of
a claim will not be obligated to pay the fees and expenses of more
than one counsel for all parties indemnified by such indemnifying
party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between
such indemnified party and any other of such indemnified parties with
respect to such claim, in which event the indemnifying party shall be
obligated to pay the reasonable fees and expenses of such additional
counsel.
(d) If for any reason the foregoing indemnification is
unavailable to any party or insufficient to hold it harmless as and
to the extent contemplated by the preceding paragraphs of this
Section 3.8, then each indemnifying party shall contribute to the
amount paid or payable by the indemnified party as a result of such
loss, claim, damage or liability in such proportion as is appropriate
to reflect the relative benefits received by the applicable
indemnifying party, on the one hand, and the applicable indemnified
party, as the case may be, on the other hand, and also the relative
fault of the applicable indemnifying party and the applicable
indemnified party, as the case may be, as well as any other relevant
equitable considerations.
3.9. REGISTRATION ON FORM S-3. After the date on which the Company
has effected a Public Offering, if (i) a Holder or Holders request in writing
(specifying that such request is being made pursuant to this Section 3.9) that
the Company file a registration statement on Form S-3 (or any successor form to
Form S-3 regardless of its designation) for a public offering of securities
having an aggregate value of not less than $1,000,000 and (ii) the Company is
entitled to use such form to register such securities, then the Company shall
file a Form S-3 with respect to such securities within ninety (90) days from the
date of such request, and shall use its best efforts to cause such registration
statement to become effective; PROVIDED, that the Company shall not be required
to effect such registration more frequently than once every six (6) months.
3.10. REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to
making available to the Holders and their Permitted Transferees the benefits of
Rule 144 promulgated under the 1933 Act and any other rule or regulation of the
SEC that may at any time permit a Holder to sell securities of the Company to
the public without registration, the Company agrees to use its best efforts to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144, at all times subsequent
to ninety (90) days after the effective date of the first
registration statement covering a Public Offering filed by the
Company;
(b) file with the SEC in a timely manner all reports and
other documents required of the Company under the 1933 Act and the
1934 Act; and
(c) furnish to any Holder forthwith upon request a written
statement by the Company that it has complied with the reporting
requirements of Rule 144 (at any time after ninety (90) days after
the effective date of said first registration statement filed by the
Company), and of the 1933 Act and the 1934 Act (at any time after it
has become subject to such reporting requirements), a copy of the
most recent annual or quarterly
report of the Company, and such other reports and documents so filed
by the Company as may be reasonably requested in availing any Holder
of any rule or regulation of the SEC permitting the selling of any
such securities without registration.
3.11. NO INCONSISTENT AGREEMENTS. The Company represents and warrants
that it has not entered into, and covenants that it will not hereafter enter
into, any agreement with respect to the registration of its securities that is
inconsistent with the rights granted to the Holders of Registrable Securities in
this Agreement without the prior written consent of a majority in interest of
the Holders.
3.12. STOCK SPLIT. If, on or after the receipt by the Company of a
request for registration of a public offering pursuant to Section 3.2, the
proposed managing underwriter or underwriters of such offering reasonably
believes that the number of shares to be registered is less than the minimum
number necessary for the success of such offering, the Company will promptly
prepare and submit to its Board of Directors, use its best efforts to cause to
be adopted by its Board of Directors and stockholders, and, if so adopted, file
and cause to become effective, an amendment to its certificate of incorporation
so as to cause each share of its outstanding Common Stock to be converted into
such number of shares of such Common Stock so that the number of shares of
Registrable Securities to be registered is equal to the minimum number which
such managing underwriter or underwriters reasonably believes is necessary for
the success of such offering. Each Stockholder, together with his or its
Permitted Transferees, hereby agrees to vote the shares of the Company's Common
Stock held by him or it in favor of adopting such amendment.
3.13. TIMING AND OTHER LIMITATIONS.
(a) No request shall be made with respect to any
registration pursuant to Section 3.2 within one hundred twenty (120)
days immediately following the effective date of any registration
statement filed pursuant to this Article III.
(b) If the Company shall furnish to the Holders of
Registrable Securities requesting a registration pursuant to Section
3.2 a certificate signed by a majority of the Board of Directors
stating that in the good faith judgment of the Board of Directors, it
would be seriously detrimental to the Company or its stockholders for
such registration statement to be filed on or before the date filing
would be required and it is therefore advisable to defer the filing
of such registration statement, then the Company shall have the right
to defer the filing of the registration statement for a period of not
more than one hundred twenty (120) days and the request pursuant to
Section 3.2 then made shall not be counted for purposes of
determining the number of registrations pursuant to Section 3.2;
PROVIDED, HOWEVER, that the Company may not utilize such right more
than once in any twelve-month period.
3.14. LOCK-UP. In connection with any Public Offering of Shares, no
holder of Shares shall Transfer any Shares for a period beginning seven (7) days
immediately preceding the date upon which the Company in good faith believes
that the relevant registration statement shall become effective, and ending on
the one hundred eightieth (180th) day (or, at the discretion of the underwriter,
such lesser period) following the effectiveness of such registration statement
with respect to such Public Offering without the prior written consent of the
underwriters managing the offering, and at the request of the underwriter, each
holder of Shares shall enter into an agreement to such effect with the
underwriter; PROVIDED, HOWEVER, that the provisions of this Section 3.14 shall
not prohibit any Permitted Transfers, provided that the Permitted Transferee
agrees to be bound by the terms of this Agreement, including this Section 3.14.
ARTICLE IV.
MISCELLANEOUS
4.1. APPOINTMENT OF THE MANAGEMENT PROXY. Each of the Management
Stockholders hereby appoints Xxxxxxxxx X. Xxxxx, XX (the "Management Proxy") as
the agent, proxy, and attorney-in-fact for the Management Stockholders
(including, without limitation, full power and authority to act on the
Management Stockholders' behalf) to take any action, should the Management Proxy
elect to do so in his sole discretion: (i) to vote on all matters to be voted on
under this Agreement, (ii) to receive all notices on behalf of each Management
Stockholder, (iii) to execute and deliver on behalf of the Management
Stockholders any amendment to this Agreement so long as such amendments shall
apply to all Management Stockholders and (vii) to take all other actions to be
taken by or on behalf of the Management Stockholders as a group and exercise any
and all rights which the Management Stockholders are permitted or required to do
or exercise under this Agreement other than exercise any rights with respect to
investment decisions set forth in Sections 2.1(c), 2.4, 2.6 or 3.3 hereof. Each
of the Management Stockholders hereby agrees not to assert any claim against,
and agrees to indemnify and hold harmless, the Management Proxy from and against
any and all losses incurred by the Management Proxy or any of his Affiliates,
partners, employees, agents, investment bankers or representatives, or any
Affiliate of any of the foregoing, relating to the Management Proxy's capacity
as the Management Proxy other than such claims or losses resulting from the
Management Proxy's gross negligence or willful misconduct. By execution hereof,
Xxxxxxxxx X. Xxxxx, XX hereby agrees to act as Management Proxy until such time
as a new Management Proxy is elected by the majority in interest of the
Management Stockholders.
4.2. REMEDIES. The parties to this Agreement acknowledge and agree
that the covenants of the Company and the Stockholders set forth in this
Agreement may be enforced in equity by a decree requiring specific performance.
In the event of a breach of any material provision of this Agreement, the
aggrieved party will be entitled to institute and prosecute a proceeding to
enforce specific performance of such provision, as well as to obtain damages for
breach of this Agreement. Without limiting the foregoing, if any dispute arises
concerning the Transfer of any of the Shares subject to this Agreement or
concerning any other provisions hereof or the obligations of the parties
hereunder, the parties to this Agreement agree that an injunction may be issued
in connection therewith (including, without limitation, restraining the Transfer
of such Shares or rescinding any such Transfer). Such remedies shall be
cumulative and non-exclusive and shall be in addition to any other rights and
remedies the parties may have under this Agreement or otherwise.
4.3. ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement, together
with the Schedule hereto, set forth the entire understanding of the parties, and
as of the closing contemplated by the Stock Purchase Agreement supersedes all
prior agreements including, without limitation the Stock Acquisition Agreements,
the Stock Option Agreements and the
Existing Stock Purchase Agreements, and all other arrangements and
communications, whether oral or written, with respect to the subject matter
hereof. The Schedule may be amended to reflect changes in the composition of the
Stockholders as a result of Permitted Transfers or Transfers permitted under
Article II. Amendments to the Schedule reflecting Permitted Transfers or
Transfers permitted under Article II shall become effective when a copy of the
Agreement as executed by any new transferee is filed with the Company, except as
otherwise provided in Section 4.13. Any other amendments to, or the termination
of, this Agreement shall require the prior written consent of a majority of the
Stockholders. Without the consent of the Management Stockholders holding a
majority of the Shares held by the Management Stockholders, no amendment may be
made to Section 2.2. Notwithstanding any provisions to the contrary contained
herein, any party may waive any rights with respect to which such party is
entitled to benefits under this Agreement. No waiver of or consent to any
departure from any provision of this Agreement shall be effective unless signed
in writing by the party entitled to the benefit thereof.
4.4. SEVERABILITY. It is the desire and intent of the parties that
the provisions of this Agreement be enforced to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, the invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if the invalid
or unenforceable provision were omitted. Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid or unenforceable
in such jurisdiction, it shall, as to such jurisdiction, be so more narrowly
drawn, without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of such provision in any other
jurisdiction.
4.5. NOTICES. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered in
the manner specified herein or, in the absence of such specification, shall be
deemed to have been duly given seven (7) days after mailing by certified mail,
when delivered by hand, upon confirmation of receipt by telecopy, or one (1)
business day after sending by overnight delivery service, to the respective
addresses of the parties set forth below:
(a) For notices and communications to the Company to:
Xxxxxx'x, Inc.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxxxxxx X. Xxxxx, XX
Facsimile: 000-000-0000
with a copy to:
Berkshire Partners LLC
Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xx. Xxxxxxx Xxxxx
Facsimile: (000) 000-0000
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
(b) for notices and communications to the Berkshire
Stockholders, to their respective addresses set forth in the
Schedule, with a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
(c) for notices and communications to any Management
Stockholders, to their respective addresses set forth in the
Schedule, with a copy to:
The Xxxxxxx Xxxxxx Company
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxx
Facsimile: 000-000-0000
(d) for notices and communications to any Other
Stockholders, to their respective addresses set forth in the
Schedule.
By notice complying with the foregoing provisions of this Section 4.5, each
party shall have the right to change the mailing address for future notices and
communications to such party.
4.6. BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and to their respective
transferees, successors and assigns; PROVIDED, HOWEVER, that no right or
obligation under this Agreement may be assigned except as expressly provided
herein, it being understood that the Company's rights hereunder may be assigned
by the Company to any corporation which is the surviving entity in a merger,
consolidation or like event involving the Company. No such assignment shall
relieve an assignor of its obligations hereunder.
4.7. GOVERNING LAW. This Agreement shall be governed by the law of
The Commonwealth of
Massachusetts (regardless of the laws that might otherwise
govern under applicable
Massachusetts principles of conflicts of law) as to all
matters, including but not limited to matters of validity, construction, effect,
performance and remedies.
4.8. TERMINATION. Without affecting any other provision of this
Agreement requiring termination of any rights in favor of any Stockholder or any
transferee of Shares, the provisions
of Article II shall terminate as to such Stockholder or transferee, when,
pursuant to and in accordance with this Agreement, such Stockholder or
transferee, as the case may be, no longer owns any Shares, Performance Options,
Rollover Options or Time Options; PROVIDED, that termination pursuant to this
Section 4.8. shall only occur in respect of a Stockholder after all Permitted
Transferees in respect thereof also no longer own any Shares. Notwithstanding
the foregoing, Article II shall terminate upon the earlier of a Change in
Control or the consummation of the first Public Offering; PROVIDED, that the
Company shall be obligated to consummate the purchase of any vested Time
Options, Rollover Options and vested Performance Options which have been called
pursuant to Section 2.2 prior to such termination, but have not otherwise been
paid for as of such date.
4.9. RECAPITALIZATIONS, EXCHANGES, ETC. The provisions of this
Agreement shall apply, to the full extent set forth herein with respect to
Shares, to any and all shares of capital stock of the Company or any successor
or assign of the Company (whether by merger, consolidation, sale of assets or
otherwise) which may be issued in respect of, in exchange for, or in
substitution of the Shares, by reason of a stock dividend, stock split, stock
issuance, reverse stock split, combination, recapitalization, reclassification,
merger, consolidation or otherwise.
4.10. ACTION NECESSARY TO EFFECTUATE THE AGREEMENT. The parties
hereto agree to take or cause to be taken all such corporate and other action as
may be necessary to effect the intent and purposes of this Agreement.
4.11. PURCHASE FOR INVESTMENT; LEGEND ON CERTIFICATE. Each of the
parties acknowledges that all of the Shares held by such party are being (or
have been) acquired for investment and not with a view to the distribution
thereof and that no transfer, hypothecation or assignment of Shares may be made
except in compliance with applicable federal and state securities laws. All the
certificates of Shares which are now or hereafter owned by the Stockholders and
which are subject to the terms of this Agreement shall have endorsed in writing,
stamped or printed, thereon the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE TERMS AND CONDITIONS, INCLUDING CERTAIN RESTRICTIONS ON
TRANSFER, OF A
STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 15,
2001, AS AMENDED FROM TIME TO TIME, AND NONE OF SUCH
SECURITIES, OR ANY INTEREST THEREIN, SHALL BE TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT AS
PROVIDED IN THAT AGREEMENT. A COPY OF THE
STOCKHOLDERS
AGREEMENT IS ON FILE WITH THE CLERK OF THE COMPANY AND WILL BE
MAILED TO ANY PROPERLY INTERESTED PERSON WITHOUT CHARGE WITHIN
FIVE (5) BUSINESS DAYS AFTER RECEIPT OF A WRITTEN REQUEST."
All shares shall also bear all legends required by federal and state
securities laws.
4.12. EFFECTIVENESS OF TRANSFERS. All Shares transferred by a
Stockholder (other than pursuant to an effective registration statement under
the 1933 Act or pursuant to a Rule 144 transaction) shall, except as otherwise
expressly stated herein, be held by the transferee thereof subject to this
Agreement. Such transferee shall, except as otherwise expressly stated herein,
have all the rights and be subject to all of the obligations of a Stockholder
under this Agreement (as though such party had so agreed pursuant to Section
4.13) automatically and without requiring any further act by such transferee or
by any parties to this Agreement. Without affecting the preceding sentence, if
such transferee is not a Stockholder on the date of such transfer, then such
transferee, as a condition to such transfer, shall confirm such transferee's
obligations hereunder in accordance with Section 4.13. No Shares shall be
transferred on the Company's books and records, and no transfer of Shares shall
be otherwise effective, unless any such transfer is made in accordance with the
terms and conditions of this Agreement, and the Company is hereby authorized by
all of the Stockholders to enter appropriate stop transfer notations on its
transfer records to give effect to this Agreement.
4.13. OTHER STOCKHOLDERS. Subject to the restrictions on transfers of
Shares contained herein, any Person who is not already a Stockholder acquiring
Shares, shall, on or before the transfer or issuance to it of Shares, sign a
counterpart or joinder to this Agreement in form reasonably satisfactory to the
Company and shall thereby become a party to this Agreement to be bound hereunder
as (i) a Berkshire Stockholder if a transferee (other than the Company) of a
Berkshire Stockholder, (ii) a Management Stockholder if a transferee (other than
the Company) of a Management Stockholder or (iii) an Other Stockholder if such
transferee (other than the Company) does not fall within clause (i) or (ii)
above. Each such additional Stockholder shall be listed on the Schedule, as
amended from time to time.
4.14. NO WAIVER. No course of dealing and no delay on the part of any
party hereto in exercising any right, power or remedy conferred by this
Agreement shall operate as waiver thereof or otherwise prejudice such party's
rights, powers and remedies. No single or partial exercise of any rights, powers
or remedies conferred by this Agreement shall preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
4.15. COSTS AND EXPENSES. Each party shall pay its own costs and
expenses incurred in connection with this Agreement, and any and all other
documents furnished pursuant hereto or in connection herewith.
4.16. COUNTERPART. This Agreement may be executed in two or more
counterparts each of which shall be deemed an original but all of which
together shall constitute one and the same instrument, and all signatures need
not appear on any one counterpart.
4.17. HEADINGS. All headings and captions in this Agreement are for
purposes of reference only and shall not be construed to
limit or affect the substance of this Agreement.
4.18. THIRD PARTY BENEFICIARIES. Nothing in this Agreement is
intended or shall be construed to entitle any Person other than the
Company and the Stockholders to any claim, cause of action, right or remedy of
any kind.
4.19. CONSENT TO JURISDICTION. The Company and each of the
Stockholders, by its, his or her execution hereof, (i) hereby irrevocably submit
to the exclusive jurisdiction of the state courts in The Commonwealth of
Massachusetts for the purposes of any claim or action arising out of or based
upon this Agreement or relating to the subject matter hereof, (ii) hereby waive,
to the extent not prohibited by applicable law, and agree not to assert by way
of motion, as a defense or otherwise, in any such claim or action, any claim
that it or he is not subject personally to the jurisdiction of the above-named
courts, that its, his or her property is exempt or immune from attachment or
execution, that any such proceeding brought in the above-named court is improper
or that this Agreement or the subject matter hereof may not be enforced in or by
such court and (iii) hereby agree not to commence any claim or action arising
out of or based upon this Agreement or relating to the subject matter hereof
other than before the above-named courts nor to make any motion or take any
other action seeking or intending to cause the transfer or removal of any such
claim or action to any court other than the above-named courts whether on the
grounds of inconvenient forum or otherwise. The Company and each of the
Stockholders hereby consent to service of process in any such proceeding, and
agree that service of process by registered or certified mail, return receipt
requested, at its address specified pursuant to Section 4.5 is reasonably
calculated to give actual notice.
4.20. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES AND
COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE)
ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE OR ACTION,
CLAIM, CAUSE OF ACTION OR SUIT (IN CONTRACT, TORT OR OTHERWISE), INQUIRY,
PROCEEDING OR INVESTIGATION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE
SUBJECT MATTER HEREOF OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO
THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING. EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY
THE OTHER PARTIES HERETO THAT THIS SECTION 4.20 CONSTITUTES A MATERIAL
INDUCEMENT UPON WHICH THEY ARE RELYING AND WILL RELY IN ENTERING INTO THIS
AGREEMENT. ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION 4.20 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH
PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF, each of the stockholders of Xxxxxx'x, Inc. has
duly executed this
Stockholders Agreement (or caused this
Stockholders Agreement
to be executed on its behalf by its officer or representative thereunto duly
authorized) as of the date first above written.
