AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
by and among
XXXXXX'X FURNITURE, INC.
and
THE STOCKHOLDERS LISTED ON
THE SIGNATURE PAGES HEREOF
Dated as of January 14, 2000
TABLE OF CONTENTS
PAGE
Section 1. Definitions .......................................... 2
Section 2. Corporate Governance ................................. 8
2.1 Board of Directors ................................... 8
2.2 Certain Actions Requiring Consent of the GECC
Designee and the THLi Fund Designee ................ 11
2.3 Management ........................................... 14
2.4 Directors' Indemnification ........................... 15
2.5 Expenses ............................................. 15
2.6 Cooperation .......................................... 16
Section 3. Restrictions on Transfers of Stock ................... 16
Section 4. Rights of First Offer ................................ 16
Section 4A. Xxxxxx Trust Stock Rights of First Offer ............. 18
Section 5. Tag-Along Rights ..................................... 20
Section 6. Conflicting Agreements ............................... 21
Section 7. Legend ............................................... 21
Section 8. Representations and Warranties ....................... 22
Section 9. Duration of Agreement ................................ 23
Section 10. Further Assurances ................................... 24
Section 11. Amendment and Waiver ................................. 24
Section 12. Severability ......................................... 24
Section 13. Entire Agreement ..................................... 24
Section 14. Successors and Assigns ............................... 24
Section 15. Counterparts ......................................... 25
Section 16. Remedies ............................................. 25
Section 17. Notices and Other Communications ..................... 25
Section 18. Governing Law; Consent to Jurisdiction ............... 27
Section 19. Descriptive Headings ................................. 27
Section 20. Construction ......................................... 28
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
This Amended and Restated Stockholders Agreement (this "Agreement") is
made as of January 14, 2000 by and among Xxxxxx'x Furniture, Inc., a
Delaware corporation (the "Company") and each of the stockholders of the
Company listed on the signature pages hereof (each, a "Signatory
Stockholder" and collectively, the "Signatory Stockholders").
W I T N E S S E T H :
WHEREAS, pursuant to a Securities Purchase Agreement between the
Company and General Electric Capital Corporation (collectively, with GE
Capital Equity Investments, Inc., "GECC") dated August 26, 1996 (the "1996
Securities Purchase Agreement"), GECC purchased from the Company 5,000,000
shares of the Company's common stock, par value $.001 per share (the
"Common Stock"), for an aggregate purchase price of $5,000,000, the
Company's 10% Subordinated Pay-in-Kind Notes due August 31, 2001, as
described in the Securities Purchase Agreement (the "Notes"), in the
initial principal amount of $5,000,000, and, in connection with the Notes,
a warrant (the "First Warrant") to purchase 1,400,000 shares of Common
Stock;
WHEREAS, concurrently with such purchase by GECC, (i) Xxxxxx Group
purchased 1,000,000 shares of Common Stock for an aggregate purchase price
of $1,000,000, (ii) certain other investors purchased 3,000,000 shares of
Common Stock for an aggregate purchase price of $3,000,000 and (iii) Japan
Omnibus Ltd. (formerly named Xxxxx Investments Inc.) and certain other
holders of indebtedness of the Company exchanged such indebtedness for
shares of Common Stock, as more fully described in the Securities Purchase
Agreement;
WHEREAS, in connection with the 1996 Securities Purchase Agreement,
the Company entered into a Stockholders Agreement with certain stockholders
dated August 26, 1996 (the "Prior Stockholders Agreement");
WHEREAS, pursuant to a Supplemental Securities Purchase Agreement
between the Company, GECC and Japan Omnibus LTD. ("JOL"), dated August 14,
1997, (i) the Company and GECC amended and restated the provisions of the
Notes, (ii) GECC and JOL purchased certain additional notes, (iii) in
connection with the Notes, GECC and JOL received warrants (the "Second
Warrants") to purchase 1,300,000 shares of Common Stock and (iv) GECC and
JOL received an additional warrant (the "Performance Warrant," and
collectively with the First Warrant and the Second Warrants, the
"Warrants") to purchase 1,000,000 shares of Common Stock;
WHEREAS, pursuant to a Securities Purchase Agreement among the
Company, TH Xxx.Xxxxxx Internet Partners, L.P. and TH Xxx.Xxxxxx Internet
Parallel Partners, L.P. (collectively with their Affiliates, "THLi"), and
the purchasers listed on the signature pages thereto (collectively, the
"Purchasers"), dated the date hereof (the "2000 Securities Purchase
Agreement," and, together with the 1996 Securities Purchase Agreement, the
"Securities Purchase Agreements"), the Purchas ers are purchasing from the
Company 380,000 shares of the Company's Series A Convertible Preferred
Stock, par value $.001 per share (the "Series A Preferred Stock"), for an
aggregate purchase price of $19,000,000;
WHEREAS, pursuant to the 2000 Securities Purchase Agreement, the
Company will restructure the Notes, as more fully described in the 2000
Securities Purchase Agreement; and
WHEREAS, it is a condition to the consummation of the foregoing
transactions that the parties hereto enter into this Agreement to amend,
restate and supersede the Prior Stockholders Agreement in accordance with
Section 11 of the Prior Stockholders Agreement, and the parties hereto deem
it to be in their best interests to enter into this Agreement establishing
and setting forth their agreement with respect to certain rights and
obligations associated with ownership of shares of capital stock of the
Company.
SECTION 1. DEFINITIONS. As used herein, the following terms shall have
the following meanings (capitalized terms used herein and not defined
herein shall have the meanings assigned to such terms in the 2000
Securities Purchase Agreement):
"Affiliate" and "Associate" have the meanings ascribed to such terms
in Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
"Beneficially Own" with respect to any securities shall mean having
"benefi cial ownership" of such securities (as determined pursuant to Rule
13d-3 under the Exchange Act), including pursuant to any agreement,
arrangement or understanding, whether or not in writing.
"Board" has the meaning assigned to it in Section 2.1. "By-laws" means
the By-laws of the Company as in effect on the date hereof, as they may be
amended from time to time hereafter.
"Capitalized Lease" shall mean, with respect to any person, any lease
or any other agreement for the use of property which, in accordance with
generally accepted accounting principals, should be capitalized on the
lessee's or user's balance sheet.
"Capitalized Lease Obligation" of any person shall mean and include,
as of any date as of which the amount thereof is to be determined, the
amount of the liability capitalized or disclosed (or which should be
disclosed) in a balance sheet of such person in respect of a Capitalized
Lease of such person.
"Certificate" means the Certificate of Incorporation of the Company as
in effect on the date stated hereof, as it may be amended from time to time
hereafter.
"Common Stock Equivalents" means rights, options, scrip, warrants or
other securities convertible into, or exchangeable or exercisable for,
shares of Common Stock.
"Company" has the meaning assigned to it in the first paragraph
hereof.
"Current Market Price", when used with reference to shares of Common
Stock for any given date, shall mean the closing price per share of Common
Stock on such date. The closing price for each day shall be the last quoted
sale price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System or such
other system then in use, or, if on any such date the Common Stock or such
other securities are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market
maker making a market in the Common Stock or such other securities selected
by the Board of Directors of the Company. If the Common Stock is listed or
admitted to trading on a national securities exchange, the closing price
shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading
on the New York Stock Exchange or, if the Common Stock or such other
securities are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national
securities exchange on which the Common Stock or such other securities are
listed or admitted to trading.
"E-Commerce Activities" shall mean business-to-business and e-commerce
activities, including commerce related to transactions on the Internet,
related to the E-Commerce Proceed Uses.
"Employment Agreement" shall mean the Employment Agreement dated as of
August 26, 1996, as amended, between the Company and Xxxxxx X. Xxxxxx
("Xxxxxx").
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor Federal statute, and the rules and regulations of
the omission thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Exchange Act of 1934,
as amended, shall include reference to the comparable section, if any, of
any such successor Federal statute.
"Fully Diluted" shall mean, when used with reference to the Common
Stock, at any date as of which the number of shares thereof is to be
determined, (i) all shares of Common Stock outstanding at such date and
(ii) all shares of Common Stock issuable in respect of vested options or
warrants to purchase, or securities convertible into, exercisable for or
exchangeable for, shares of Common Stock outstanding on such date, the
conversion, exercise or exchange price of which is less than the Current
Market Price.
"Group" has the meaning assigned such term for purposes of Rule 13d-5
under the Exchange Act.
"Guarantee" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments
for deposit or collection) of any Person guaranteeing, or in effect
guaranteeing, any Indebtedness, dividend or other obligation of any other
Person (the "Primary Obligor") in any manner, whether directly or
indirectly, including, without limitation, all obligations incurred through
an agreement, contingent or otherwise, by such Person: (i) to purchase such
Indebtedness or obligation or any property or assets constituting security
therefor, (ii) to advance or supply funds (x) for the purchase or payment
of such Indebtedness or obligation, (y) to maintain working capital or
other balance sheet condition or otherwise to advance or make available
funds for the purchase or payment of such Indebtedness or obligation, (iii)
to lease property or to purchase securities or other property or services
primarily for the purpose of assuring the owner of such Indebtedness or
obligation of the ability of the primary obligor to make payment of such
Indebtedness or obligation, or (iv) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of any computations made under this Agreement, a
Guarantee in respect of any Indebtedness for borrowed money shall be deemed
to be Indebtedness equal to the principal amount of the Indebtedness for
borrowed money which has been guaranteed, and a Guarantee in respect of any
other obligation or liability or any dividend shall be deemed to be
Indebtedness equal to the maximum aggregate amount of such obligation,
liability or dividend.
"Xxxxxx Group" shall mean those Persons listed on Schedule A attached
hereto.
"Xxxxxx Trusts" shall mean the Xxxxxx Group other than Xxxxxx X.
Xxxxxx and Xx. Xxxxxx X. Xxxxxx, Xx.
"Indebtedness" shall mean, with respect to any person, (i) all
obligations of such person for borrowed money, or with respect to deposits
or advances of any kind, (ii) all obligations of such person evidenced by
bonds, debentures, notes or similar instruments, (iii) all obligations of
such person under conditional sale or other title retention agreements
relating to property purchased by such person, (iv) all obligations of such
person issued or assumed as the deferred purchase price of property or
services (other than accounts payable to suppliers and similar accrued
liabilities incurred in the ordinary course of business and paid in a
manner consistent with industry practice), (v) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any lien or security
interest on property owned or acquired by such person whether or not the
obligations secured thereby have been assumed, but only to the extent of
such security, if such obligations have not been assumed, (vi) all
Capitalized Lease Obligations of such person, (vii) all Guarantees of such
person, (viii) all obligations (including but not limited to reimbursement
obligations) relating to the issuance of letters of credit for the account
of such person, (ix) all obligations arising out of foreign exchange
contracts, and (x) all obligations arising out of interest rate and
currency swap agreements, cap, floor and collar agreements, interest rate
insurance, currency spot and forward contracts and other agreements or
arrangements designed to provide protection against fluctuations in
interest or currency exchange rates.
"Permal Group" shall mean those Persons listed on Schedule C attached
hereto.
"Permitted Transfer" shall mean any Transfer (i) by an individual
Stock holder to such Stockholder's spouse, former spouse, child, parent,
parent of a spouse, sibling or grandchild (collectively, "Relatives") or to
or among a trust of which there are no principal beneficiaries other than
one or more Relatives of such Stockholder; (ii) from a Relative of an
individual Stockholder to another Relative of that individual Stockholder
or to that individual Stockholder; (iii) by any Stockholder to any of its
Affiliates or partners; or (iv) by an Individual Stockholder pursuant to
laws of descent or survivorship.
"Person" means any individual, corporation, limited liability company,
limited or general partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any agency or
political subdivisions thereof.
"Proportionate Share" means, with respect to each Stockholder, a
number of shares of Common Stock which bears the same ratio to the number
of shares of Common Stock beneficially owned by such Stockholder on a Fully
Diluted basis as the Tag-Along Number bears to the number of shares of
Common Stock beneficially owned by the Selling Stockholders on a Fully
Diluted basis.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, between the Company and the
stockholders listed on the signature page thereto as it may be amended from
time to time.
"Related Party" shall mean any officer, director or beneficial holder
of 3% or more of the outstanding shares of capital stock of the Company or
any Subsidiary, any Relative of any such officer, director or beneficial
holder of the Company or any Subsidiary, and any Affiliate or Associate of
any of the foregoing persons.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Sell" as to any Stock, shall mean to sell, or in any other way
directly or indirectly transfer (including by operation of law, by merger
or consolidation, or sale of securities of a holding company), assign,
distribute or otherwise dispose of, such Stock; and the terms "Sale" and
"Sold" shall have meanings correlative to the foregoing. A Permitted
Transfer shall not constitute a Sale for purposes of this Agreement.
"Stock" means (i) any shares of Common Stock and (ii) any Common Stock
Equivalents (including, without limitation, the Common Stock issuable upon
conversion, exercise or exchange thereof), in each case, whether owned on
the date hereof or acquired hereafter.
"Stockholder" and "Stockholders" shall mean the stockholders listed on
Schedule B hereto; provided that any transferee of Stock pursuant to a
Permitted Transfer shall be treated as a Stockholder for purposes of this
Agreement and shall be entitled to the benefits of, and shall be bound by,
the provisions of this Agreement.
"Stockholder's Group" shall mean, with respect to any Stockholder who
is a member of the Xxxxxx Group or the Permal Group, either the Xxxxxx
Group or the Permal Group, as the case may be.
"Subsidiary" means with respect to any Person, (i) any corporation,
partnership or other entity of which shares of capital stock or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other similar managing body of such corporation,
partnership or other entity are at the time owned by such Person, or (ii)
the management of which is otherwise controlled, directly or indirectly,
through one or more intermediaries by such Person.
"Transfer" as to any Stock, means to Sell, or in any other way
directly or indirectly transfer, assign, distribute, pledge, encumber or
otherwise dispose of, either voluntarily or involuntarily, and whether or
not for value.
"Voting Shares" means shares of any class of capital stock of the
Company the holders of which are generally entitled to vote in the election
of members of the Board.
SECTION 2. CORPORATE GOVERNANCE.
2.1 BOARD OF DIRECTORS.
(a) Members. Subject to the provisions of Section 6.10 of the
1996 Securities Purchase Agreement and Section 4.7 of the 2000 Securities
Purchase Agreement, the Board of Directors of the Company (the "Board")
shall consist of nine members, of whom:
(i) one shall be designated by GECC (such person so
designated, and any successor thereto, being referred to herein as the
"GECC Designee");
(ii) one shall be designated by Permal Group (such person so
designated, and any successor thereto, being referred to herein as the
"Permal Designee");
(iii) one shall be Xxxxxx, or, in the event of death or
incapacity of Xxxxxx, shall be Xxxx Xxxxxx, or, if Xxxx Xxxxxx is
unavailable to serve as director or ceases to serve as director, then
an individual nominated by the trustee(s) of the Xxxxxx Trusts, having
qualifications similar to those of Xxxx Xxxxxx or any other director
of the Company shall serve as director under the same terms that would
have applied to Xxxx Xxxxxx hereunder (the "Xxxxxx Designee").
(iv) an E-commerce and/or business to business expert shall
be designated by THLi (the "THLi Internet Designee") and one
additional member shall be designated by THLi (the "THLi Fund
Designee" and, together with the THLi Internet Designee and any
successors to either of them, being referred to herein as the "THLi
Designees" );
(v) one shall be unanimously designated by GECC and THLi
(such person so designated, and any successor thereto, being referred
to herein as the "GECC/THLi Designee"); and
(vi) three shall be selected by the vote of the GECC
Designee, the Permal Designee, the THLi Fund Designee and the Xxxxxx
Designee (such persons so designated, any successors thereto, being
referred to herein as the "Joint Designees" and, together with the
GECC Designee, the Permal Designee, the Xxxxxx Designee, the THLi
Designees and the GECC/THLi Designee, the "Designees").
At each meeting of the stockholders of the Company held for the
purpose of electing directors, the Stockholders (other than the Xxxxxx
Trusts) shall take such action as shall be necessary to cause the Designees
(or any successor to any such person designated in accordance with
paragraph (b) of this Section) to be elected as directors (including, in
the case of GECC, Permal Group and THLi, causing their respective designees
on the Board to nominate, and recommend to the stockholders of the Company
the election of, the Designees to the Board and opposing, and causing their
respective designees on the Board to oppose, any proposal to remove any
Designee at each meeting of the stockholders of the Company at which the
election or removal of members of the Board is on the agenda), and shall
take no action which would diminish the prospects of any Designee being
elected to the Board or increase the prospects of any Designee being
removed from the Board. The Company shall take all necessary action to
reduce the size of the Board to the extent required by the first sentence
of this paragraph and shall cause the current members of the Board to
resign from office as necessary to implement the provisions of the first
sentence of this paragraph.
(b) Vacancies. Each of the GECC Designee, the Permal Designee,
the THLi Designees and the GECC/THLi Designee shall hold office until his
death, resignation or removal or until his successor shall have been duly
elected and qualified. If any GECC Designee shall cease to serve as a
director of the Company for any reason, the vacancy resulting thereby shall
be filled by another person designated by GECC. If any Permal Designee
shall cease to serve as a director of the Company for any reason, the
vacancy resulting thereby shall be filled by another person designated by
Permal Group. If any of the THLi Designees shall cease to serve as a
director of the Company for any reason, the vacancy resulting thereby shall
be filled by another person designated by THLi. If any GECC/THLi Designee
shall cease to serve as a director of the Company for any reason, the
vacancy resulting thereby shall be filled by another person unanimously
designated by GECC and THLi. If the Xxxxxx Designee shall cease to serve as
a director of the Company for any reason, the vacancy resulting thereby
shall be filled by another person unanimously designated by the Xxxxxx
Group. In the event that at any time there exist vacancies on the Board
such that there is either no GECC Designee, no Permal Designee, no
GECC/THLi Designee or less than two THLi Designees, no action may be taken
by the Board until such vacancy is filled. GECC, Permal Group, the Xxxxxx
Group and THLi agree to use their best efforts to designate successors to
fill any such vacancies as promptly as practicable.
(c) Removal. No GECC Designee may be removed from office except
by GECC, no Permal Designee may be removed from office except by Permal
Group, no THLi Designee may be removed from office except by THLi, no
Xxxxxx Designee may be removed from office except by the Xxxxxx Group;
provided that such limitation shall not apply to the removal of Xxxxxx as
Chairman so long as Xxxxxx remains a Director, no GECC/THLi Designee may be
removed from office except unanimously by GECC and THLi. GECC shall have
the right to remove any GECC Designee, Permal Group shall have the right to
remove any Permal Designee, THLi shall have the right to remove any THLi
Designee, the Xxxxxx Group shall have the right to remove any Xxxxxx
Designee and GECC and THLi shall unanimously have the right to remove any
GECC/THLi Designee, with or without cause, at any time.
(d) Quorum Requirements. Subject to Section 2.2, the quorum which
shall be required for action to be taken by the Board (other than an
adjournment of any meeting of the Board) shall be the GECC Designee, the
Permal Designee, the THLi Fund Designee and the Xxxxxx Designee. Directors
participating by telephone conference in any meeting of the Board shall be
considered in determining whether a quorum of directors is present.
(e) Committees. The Company shall cause the GECC Designee, the
Permal Designee and at least one THLi Designee to be appointed to each of
the committees of the Board as may be requested at any time or from time to
time by GECC, Permal Group or THLi, as the case may be.
(f) Chairman of the Board. Xxxxxx shall serve as Chairman of the
Board for as long as he is Chief Executive Officer. GECC, Permal Group and
THLi presently intend to continue to nominate Xxxxxx to serve as a director
and Chairman of the Board after Xxxxxx retires as Chief Executive Officer,
provided that Xxxxxx shall not be obligated to accept such nomination.
(g) Board and Committee Meetings. The Company shall hold regular
meetings of its Board on at least a quarterly basis. The Company agrees,
and shall cause its By-laws to be amended to the extent necessary to
provide, that the GECC Designee, any THLi Designee and the GECC/THLi
Designee shall have the right, upon reasonable notice, to call meetings of
the Board and of each committee of the Board on which he or she is a
member.
(h) Duration. The right of each of GECC, Permal Group and THLi to
designate directors pursuant to this Section shall continue only for so
long as GECC and its Affiliates, Permal Group, or THLi and its Affiliates,
as the case may be, beneficially owns at least 2,000,000 shares of Common
Stock on a Fully Diluted Basis, as adjusted for stock splits, combinations
or similar transactions. The right of the Xxxxxx Group to designate
directors pursuant to this Section 2.1(h) shall continue only for so long
as the Xxxxxx Group beneficially owns at least 1,000,000 shares of Common
Stock on a Fully Diluted Basis, as adjusted for stock splits, combinations
or similar transactions.
(i) Observation. In addition to THLi's right to designate members
of the Board pursuant to Section 2.1(a), so long as THLi is the owner of
any Stock, it shall have the right to designate an observer to attend
meetings of the Board, but such observer shall not have a vote with respect
to any matter presented to the Board of Directors for action thereon. In
connection with such observer's right, THLi shall receive all notices and
information provided to Board members.
2.2 CERTAIN ACTIONS REQUIRING CONSENT OF THE GECC DESIGNEE AND THE
THLI FUND DESIGNEE. Notwithstanding any other provision of this Agreement,
without the approval, at a meeting of the Board or a committee thereof duly
called and held, (1) for so long as GECC is entitled to designate the GECC
Designee, of the GECC Designee and (2) for so long as THLi is entitled to
designate the THLi Fund Designee, of the THLi Fund Designee, the Company
shall not, directly or indirectly, and shall not permit any of its
Subsidiaries to, directly or indirectly, take any of the following actions
(except to the extent any such action is specifically authorized under this
Agreement, the Securities Purchase Agreements, the Registration Rights
Agreement or an annual business plan previously approved by the GECC
Designee and the THLi Fund Designee in accordance with this Section):
(a) merge with or into or consolidate with any other Person;
(b) voluntarily liquidate, dissolve or wind up or file any
voluntary petition in bankruptcy or for receivership or make any assignment
for the benefit of creditors;
(c) in any transaction or series of transactions, acquire
(including pursuant to a merger or consolidation) all or any substantial
portion of the business or assets of any Person;
(d) enter or commit to enter into any joint venture or
partnership or establish any non-wholly-owned subsidiaries or otherwise
make any debt or equity investment in any Person (other than extensions of
credit in the ordinary course of business);
(e) expand into new lines of business (it being understood that
"new lines of business" do not include (i) geographic expansion of the
retail operations conducted by the Company and its Subsidiaries as of the
date of this Agreement and (ii) E-Commerce Activities);
(f) assign to any other Person any rights of the Company under
this Agreement, the Registration Rights Agreement or the Securities
Purchase Agreements;
(g) in any transaction or series of transactions, sell, lease or
exchange any assets of the Company and/or any Subsidiary, except for (i)
sales of inventory in the ordinary course of business, (ii) subleasing of
vacant retail space on arm's-length terms and (iii) entering into or
terminating leases in the ordinary course of business pursuant to a
procedure adopted by the Board of Directors and approved by the GECC
Designee and the THLi Fund Designee;
(h) adopt or change any material accounting policy of the Company
or any of its Subsidiaries, except as required by generally accepted
accounting principles;
(i) create, incur, assume or suffer to exist any Indebtedness
other than (a) Indebtedness in existence as of the date of this Agreement
and interest thereon, reduced to the extent such amounts are repaid or
retired, and any refinancing of such Indebtedness, (b) Indebtedness under
the Loan and Security Agreement dated as of January 20, 1995 between the
Company and Congress Financial Corporation (Western), as amended to the
date of this Agreement, including premium (if any), and interest thereon,
(c) Indebtedness already approved in accordance with this subsection,
reduced to the extent such amounts are repaid, refinanced or retired, and
(d) other Indebtedness not to exceed in the aggregate $200,000 at any time
outstanding;
(j) mortgage, encumber, create, incur or suffer to exist, liens
on its assets (other than liens on assets under Indebtedness outstanding as
of the date hereof and materialmen's, mechanics' and other similar liens
arising for work performed in the ordinary course of business which are not
overdue for more than 30 days);
(k) pay, declare or set aside any sums for the payment of, any
dividends, or make any distribution on, any shares of its capital stock or
redeem, repurchase or otherwise acquire any outstanding shares of its
capital stock or any other of its outstanding securities or Indebtedness
(except for Indebtedness (other than indebtedness to any Related Party,
excluding indebtedness for expenses incurred in the ordinary course of
business on behalf of the Company and its Subsidiaries) to the extent it
becomes due in accordance with its terms);
(l) make or commit to make (with respect to the Company and all
of its Subsidiaries taken together) during (i) the calendar year ended
December 31, 2000, any capital expenditure or capital expenditures in an
amount in excess of $8,000,000 with respect to the Company's retail
business and $100,000 with respect to the Company's E-commerce business and
(ii) any other calendar year any capital expenditure or capital
expenditures in an amount in excess of $100,000;
(m) issue or sell any shares of capital stock or rights, options,
warrants or other securities exercisable for, exchangeable for or
convertible into shares of capital stock of the Company or any of the
Company's Subsidiaries, other than upon the exercise of options or warrants
outstanding on the date of this Agreement or previously approved in
accordance with this Section, or grant, amend or terminate any stock
appreciation right or other stock-based award;
(n) enter into, adopt, amend or terminate any employment or
consulting agreement, or hire or retain any person who will report directly
to the Chief Executive Officer or to whom the Company shall pay total
compensation (including, without limitation, compensation in the form of
benefits) in excess of $150,000 per year, or enter into, adopt, amend or
terminate any employee benefit plan, policy or arrangement, except as
required by law or generally accepted accounting principles; provided that
the renewal by the Company in the ordinary course of its business of
benefit plans applicable to employees of the Company, generally, shall not
require consent pursuant to this subparagraph (n);
(o) amend its Certificate or By-laws, including, without
limitation, any change in the number of directors comprising its Board of
Directors, or adopt, amend, redeem or terminate any shareholder rights plan
or similar plan or arrangement;
(p) amend, modify or waive an provision of this Agreement, the
Securities Purchase Agreements, the Registration Rights Agreement or the
agreements ancillary thereto, or become a party to any agreement which by
its terms restricts the Company's or any of its Subsidiaries', or any
Stockholder's, performance of the terms of any of such agreements;
(q) change its independent certified accountants or actuaries;
(r) register any securities under the Securities Act or grant any
registration rights therefor;
(s) enter into, amend or terminate, or waive any material rights
of the Company and its Subsidiaries under, any contract, arrangement or
transaction involving consideration in excess of $100,000 or which is
otherwise material to the Company or any of its Subsidiaries;
(t) enter into, amend or terminate any contract, arrangement or
transaction with a Related Party, other than (i) any action to terminate
the Consumer Credit Card Agreement by and among Xxxxxx'x Sofa Factory,
Xxxxxx Convertible Corporation and Monogram Credit Bank of Georgia, dated
as of April 27, 1997, and (ii) the payment of salary and benefits pursuant
to employment arrangements entered into in the ordinary course of business
in compliance with this Agreement;
(u) enter into, adopt, amend (whether by agreement or by conduct
of the business), except as required by law or generally accepted
accounting principles, or terminate any annual business plan;
(v) take any action required by law to be approved by the Board;
or
(w) agree or otherwise commit to take any of the actions set
forth in the foregoing subparagraphs (a) through (v).
2.3 MANAGEMENT.
(a) Chief Executive Officer. Subject to the provisions of this
Agreement and the Employment Agreement, Xxxxxx shall be the Chief Executive
Officer of the Company. In the event of the death, resignation, removal or
other termination of Xxxxxx'x services as Chief Executive Officer, any
successor Chief Executive Officer (and any successor(s) thereto) shall be
selected by a majority of the Board; provided that no such person shall be
selected without the unanimous approval of the GECC Designee and the THLi
Fund Designee.
(b) Appointment of Management. Subject to Section 2.2 hereof, all
members of management of the Company (other than the Chief Executive
Officer) shall be designated by, their compensation shall be determined by,
and they may be removed, promoted or demoted by, the Chief Executive
Officer of the Company; provided, however, that the designation of, setting
of compensation for, or removal, promotion or demotion of, any person who
will report directly to the Chief Executive Officer or earn total
compensation (including benefits) from the Company and its Subsidiaries of
$150,000 or more per year shall be subject to the prior approval of the
Board.
2.4 DIRECTORS' INDEMNIFICATION.
(a) The Company shall obtain and cause to be maintained in
effect, with financially sound insurers, a policy of directors' and
officers' liability insurance covering the Designees (and their respective
successors) in an amount of at least $15,000,000 or such other amount the
Board shall specify (as such amount shall be increased from time to time at
the request of GECC or THLi).
(b) The Certificate, By-laws and other organizational documents
of the Company and each of its Subsidiaries shall at all times, to the
fullest extent permitted by law, provide for indemnification of,
advancement of expenses to, and limitation of the personal liability of,
the members of the Board and the members of the boards of directors or
other similar managing bodies of each of the Company's Subsidiaries and
such other persons, if any, who, pursuant to a provision of such
Certificates, By-laws or other organizational documents, exercise or
perform any of the powers or duties otherwise conferred or imposed upon
members of the Board or the boards of directors or other similar managing
bodies of each of the Company's Subsidiaries. Such provisions may not be
amended, repealed or otherwise modified in any manner adverse to any member
of the Board or any member of the boards of directors or other similar
managing bodies of any of the Company's Subsidiaries, until at least six
years following the termination of this Agreement.
(c) Each of the Designees is intended to be a third-party
beneficiary of the obligations of the Company pursuant to this Section 2.4,
and the obligations of the Company pursuant to this Section 2.4 shall be
enforceable by the Designees.
2.5 EXPENSES. The Company shall pay the reasonable out-of-pocket
expenses incurred by each of the GECC designee, the Permal Designee, the
THLi Designees, the GECC/THLi Designees and the Joint Designees in
connection with performing his or her duties, including without limitation
the reasonable out-of-pocket expenses incurred by such person attending
meetings of the Board or any committee thereof or meetings of any board of
directors or other similar managing body (and any committee thereof) of any
subsidiary of the Company.
2.6 COOPERATION. Each Stockholder (other than the Xxxxxx Trusts)
shall vote all of its voting shares and shall take all other necessary or
desirable actions within its control (including, without limitation,
attending all meetings in person or by proxy for purposes of obtaining a
quorum, executing all written consents in lieu of meetings and voting to
remove members of the Board or to amend the Certificate, as applicable),
and the Company shall take all necessary and desirable actions within its
control (including, without limitation, calling special Board and
stockholder meetings and voting to remove members of the Board or to amend
the Certificate, as applicable), to (a) effectuate the provisions of
Section 2.1 and (b) cause the Company to have a sufficient number of
authorized and unissued shares of Company Stock reserved for issuance
solely for the purpose of effecting conversion of outstanding Series A
Preferred Stock.
SECTION 3. RESTRICTIONS ON TRANSFERS OF STOCK.
(a) Notwithstanding anything to the contrary contained herein, no
Stockholder shall Transfer any Stock, except for Sales in bona fide
transactions for value complying with the provisions of this Section 3 and
Permitted Transfers. The Company shall not reflect on its books any Sale of
Stock, unless (a) the Sale is pursuant to an effective registration
statement under the Securities Act and under any applicable state
securities or blue sky laws, or (b) the Selling Stockholder shall have
furnished the Company with evidence reasonably satisfactory to the Company
that no such registration is required because of the availability of an
exemption from registration under the Securities Act and under applicable
state securities or blue sky laws. A written opinion of counsel of
recognized standing to the effect set forth in clause (b) of the preceding
sentence shall satisfy the requirements of such clause.
(b) Any Transfer or attempted Transfer of Stock in violation of
any provision of this Agreement shall be void, and the Company shall not
record such Transfer on its books or treat any purported transferee of such
Stock as the owner of such Stock for any purpose.
SECTION 4. RIGHTS OF FIRST OFFER.
(a) If any Stockholder (other than the Xxxxxx Trusts) intends to
Sell any Stock (other than (1) Sales pursuant to a registered public
offering or (2) Sales on a national securities exchange which, when
aggregated with all other Sales under this clause (2) by such Stockholder
or, if such Stockholder is a member of a Stockholder Group, all other Sales
under this clause (2) by the members of such Stockholder Group from and
after the date of this Agreement, would represent, in the aggregate, not
more than 1,000,000 shares of Common Stock on a Fully Diluted Basis, as
adjusted for stock splits, combinations or similar transactions):
(i) The Stockholder intending to transfer such Stock (the
"Proposing Seller") shall give each other Stockholder (each an
"Offeree") written notice of its intent to Sell such Stock, specifying
the number of securities to be sold and the minimum price and terms
and conditions of such sale and offering to Sell to such Offeree, at
such minimum price and on such terms and conditions, its pro rata
share of such Stock (based on the number of shares of Common Stock
beneficially owned by each Offeree on a Fully Diluted basis); provided
that any Offeree may, by written notice to the Proposing Seller, elect
to purchase, in addition to its pro rata share of such Stock, all or
any portion of the Stock (if any) with respect to which any other
Offeree fails to exercise its right of first offer under this Section
4, and such additional Stock shall be pro-rated among such Offerees in
the manner described above to the extent such additional Stock is
oversubscribed;
(ii) if any Offeree shall not, within 15 days after receipt of
the notice given pursuant to clause (i) above, accept such offer in
writing with respect to the Stock specified in such notice, then the
Proposing Seller shall be free to Sell the Stock specified in the
notice to such Offeree (but only those securities covered by the
notice of intention to Sell which no other Offeree shall have agreed
to purchase) at a price equal to or above the minimum price and on
other terms and conditions no less favorable to the Proposing Seller
than those specified in such notice, at any time within 90 days of the
expiration of such 15-day period;
(iii) if the Proposing Seller shall not have consummated the
proposed Sale within 90 days after the expiration of the 15-day period
referred to in clause (ii) above, then the Proposing Seller may not
thereafter Sell such Stock without complying with the provisions of
this Section 4; and
(iv) if any Offeree shall accept such offer within 15 days after
the notice given pursuant to clause (i) above, then such Offeree shall
purchase the Stock specified in such notice as promptly as is
reasonably practicable, but in any event within 45 days after the
notice given pursuant to clause (i) above or such later date as the
Proposing Seller may designate within the 90-day period referred to in
clause (iii) above.
(b) THLi, GECC and each of the members of the Xxxxxx Group, each
in favor of the others, covenants that if any of them (for purposes of this
Section, a "Permal Offeree") has the opportunity to purchase any Common
Stock ("Offered Shares") owned by any member of the Permal Group, whether
by offer to the Permal Offeree from a member of the Permal Group or due to
a solicitation by the Permal Offeree, or otherwise, the Permal Offeree
shall promptly notify the parties subject to (and entitled to the benefits
of) this Section 4(b)(v) of the opportunity and shall allow them the right
to participate in such purchase and acquire Offered Shares. The number of
Offered Shares that may be purchased by each of them, respectively, shall
be (i) as among GECC, THLi and all of the members of the Xxxxxx Group
together, in proportion to the number of shares of Common Stock owned by
GECC, THLI or the Xxxxxx Group, respectively, as a percentage of the
aggregate number of shares of Common Stock then owned by GECC, THLi and all
members of the Xxxxxx Group together, and (ii) as among the members of the
Xxxxxx Group, in proportion to the number of shares of Common Stock owned
by such member as a percentage of the number of shares of Common Stock then
owned by all Xxxxxx Group members electing to purchase Common Stock
hereunder. The rights in this Section 4(b) are in addition to and
subordinate to the other provisions of this Stockholders Agreement. Any
failure to exercise the rights in the Section within 15 days of receipt of
notice shall be deemed a waiver of such rights.
SECTION 4A. XXXXXX TRUST STOCK RIGHTS OF FIRST OFFER. If any of the
Xxxxxx Trusts intends to sell any Stock (other than (1) Sales pursuant to a
registered public offering or (2) Sales on a national securities exchange
which, when aggregated with all other Sales under this clause (2) by the
Xxxxxx Group from and after the date of this Agreement, would represent, in
the aggregate, not more than 1,000,000 shares of Common Stock on a Fully
Diluted Basis, as adjusted for stock splits, combinations or similar
transactions):
(i) the Xxxxxx Trust intending to transfer such Stock (the
"Xxxxxx Trust Seller") shall give the Company, GECC, THLi and the
Permal Group written notice (the "Xxxxxx Trust Seller Notice") of its
intent to Sell such Stock, specifying the number of securities to be
sold and the minimum price and terms and conditions of such sale, and
offering to Sell to the Company, GECC, THLi and the Permal Group, at
such minimum price and on such terms and conditions. The Company shall
provide a copy of any Xxxxxx Trust Seller Notice to each Stockholder
within two days after receipt by it of the Xxxxxx Trust Seller Notice.
The Company shall have the right to purchase all or any part of such
Stock by giving written notice to the Xxxxxx Trust Seller, GECC, THLi
and the Permal Group within two days after receipt by it of the Xxxxxx
Trust Seller Notice, specifying the number of shares of such Stock to
be so purchased by the Company. If the Company elects to purchase none
of, or less than all, the Stock that is the subject of the proposed
Transfer by the Xxxxxx Trust Seller, then GECC, THLi and the Permal
Group shall have the right to purchase their pro rata share of any or
all of the available Stock (and, if either elects not to purchase its
full pro rata share, the Stock not so purchased) by giving written
notice to the Xxxxxx Trust Seller and the Company within seven days
after receipt by it of the Xxxxxx Trust Seller Notice (the "Notice
Period"); provided that any other Stockholder (each, an "Electing
Stockholder") may, by written notice to GECC, THLi and the Permal
Group prior to the expiration of the Notice Period elect to purchase
its pro rata share of the available Stock, and any such Electing
Stockholder may elect to purchase, in addition to its pro rata share
of the available Stock, all or any portion of the Stock (if any) with
respect to which GECC, THLi, the Permal Group or any other Stockholder
fails to exercise its right under this Section 4A, and such additional
Stock shall be pro-rated among such Electing Stockholders in the
manner described above to the extent such additional Stock is
oversubscribed;
(ii) GECC shall act as agent for the Electing Stockholders in
connection with any exercise by an Electing Stockholder of its rights
under this Section and the Xxxxxx Trust Seller shall not be obligated
to deal with any Stockholder other than GECC in connection with any
purchase and sale under this Section 4A; provided that GECC shall have
no liability to the Xxxxxx Trust Seller if GECC fails to purchase any
Stock which GECC disclosed in writing to the Xxxxxx Trust Seller at
the time of delivery of GECC's election to purchase was being
purchased by GECC solely as agent for one or more Electing
Stockholders; and GECC shall have no liability to any other
Stockholder for any act or omission by GECC under this Section 4A;
(iii) if the Company, GECC, THLi and the Permal Group fail to
elect to purchase all the Stock specified in the Xxxxxx Trust Seller
Notice, then the Xxxxxx Trust Seller shall be free to sell, pursuant
to a Shelf Registration Statement, the portion of such Stock as to
which no election to purchase has been made by the Company, GECC, THLi
or the Permal Group at a price equal to or above the minimum price and
on other terms and conditions no less favorable to the Xxxxxx Trust
Seller than those specified in the Xxxxxx Trust Seller Notice, at any
time within 90 days of the expiration of the seven-day period referred
to in clause (i) above;
(iv) if the Xxxxxx Trust Seller shall not have consummated the
proposed Transfer within 90 days after the expiration of the seven-day
period referred to in clause (ii) above, then the Xxxxxx Trust Seller
may not thereafter Transfer such Stock without complying with the
provisions of this Section 4A;
(v) any Electing Stockholder shall provide to GECC all funds
required, and shall execute and deliver to GECC all documents
reasonably requested by GECC, in connection with the purchase by GECC
of any Stock as agent for such Electing Stockholder, and GECC shall
deliver certificates representing the Stock acquire by such Electing
Stockholder to such Stockholder promptly following the consummation of
any purchase under this Section 4A and the satisfaction by such
Electing Stockholder of his obligations under this clause (v).
SECTION 5. TAG-ALONG RIGHTS.
(a) If GECC, any member of Permal Group, or THLi whether acting
alone or in concert with any other Stockholder (collectively, the "Selling
Stockholders") pursuant to a common plan, understanding or arrangement,
shall enter into an agreement to Sell or otherwise propose to Sell to any
Person or Group (other than pursuant to a registered public offering) (such
Person or Group, the "Tag-along Transferee"), in one transaction or a
series of related transactions, any Stock, such that immediately following
the consummation of such Sale, the Selling Stockholders would have Sold to
such Person or Group in the aggregate Stock representing in excess of
3,000,000 shares of Common Stock on a Fully Diluted Basis, as adjusted for
stock splits, combinations or similar transactions (a "Tag-along Sale")
(such number of shares of Stock being referred to herein as the "Tag-along
Number"), then each of the other Stockholders (each a "Tag-along Offeree")
shall have the right to participate in such Tag-Along Sale by selling a
number of shares of Common Stock equal to such Stockholder's Proportionate
Share, as part of the Tag-Along Sale by the Selling Stockholders, on the
same terms as those applicable to the Tag-Along Sale (except that, if the
Tag-Along Sale involves Common Stock Equivalents, the economic terms of
such Sale shall be appropriately adjusted to reflect that the Tag-Along
Offerees are selling Common Stock).
(b) The Selling Stockholders shall provide to each Tag-Along
Offeree written notice of any Tag-Along Sale (the "Tag-along Notice"), not
more than 45 and not less than 15 days prior to the Tag-Along Sale, setting
forth the terms of the Tag-Along Sale and specifically identifying the
Tag-Along Transferee of the Stock, and shall give each Tag-Along Offeree at
least 10 days after delivery of the Tag-Along Notice within which to
exercise its rights contained in this Section 5, by written notice thereof
to the Selling Stockholder.
SECTION 6. CONFLICTING AGREEMENTS. Each Stockholder represents and
warrants that such Stockholder has not granted and is not a party to any
proxy, voting trust or other agreement which is inconsistent with or
conflicts with any provision of this Agreement, and no holder of Stock
shall grant any proxy or become party to any voting trust or other
agreement which is inconsistent with or conflicts with any provision of
this Agreement.
SECTION 7. LEGEND. (a) Each Stockholder and the Company shall take all
such action necessary (including exchanging with the Company certificates
representing shares of Stock issued prior to the date hereof) to cause each
certificate representing outstanding shares of Stock (other than shares
which have been registered under the Securities Act, to which the first
paragraph of such legends shall not apply) to bear legends substantially in
the form as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
"THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED BY A STOCKHOLDERS AGREEMENT BY AND AMONG XXXXXX'X FURNITURE,
INC. (THE "COMPANY") AND THE STOCKHOLDERS PARTIES THERETO (THE
"STOCKHOLDERS AGREEMENT"), A COPY OF WHICH IS ON FILE AT THE OFFICES OF THE
COMPANY."
"IN ADDITION TO THE RESTRICTIONS SET FORTH IN THE STOCKHOLDERS
AGREEMENT, THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE RESTRICTIONS SET FORTH IN A SECURITIES PURCHASE AGREEMENT BETWEEN THE
COMPANY AND GENERAL ELECTRIC CAPITAL CORPORATION AND A SECURITIES PURCHASE
AGREEMENT BY AND AMONG THE COMPANY AND THE PURCHASERS LISTED ON THE
SIGNATURE PAGES THERETO, A COPY OF EACH OF WHICH IS ON FILE AT THE OFFICES
OF THE COMPANY."
The first paragraph of the legends shall be removed from certificates
for shares transferred pursuant to Rule 144 under the Securities Act or
when such shares are transferred in any other transaction, in each case if
the seller delivers to the Company an opinion of its counsel, which counsel
and opinion shall be reasonably satisfactory to the Company, or a
"no-action" letter from the staff of the Securities and Exchange
Commission, in either case to the effect that such legend is no longer
necessary in order to protect the Company against a violation by it of the
Securities Act upon any Sale or other disposition of such shares without
registration thereunder. The requirement that the above legend regarding
this Agreement be placed upon certificates evidencing shares of Stock shall
cease and terminate upon the Sale of such shares, other than pursuant to a
Permitted Transfer. Upon the consummation of any event requiring the
removal of a legend hereunder, the Company, upon the surrender of
certificates containing such legend, shall, at its own expense, deliver to
the holder of any such shares as to which the requirement for such legend
shall have terminated, one or more new certificates evidencing such shares
not bearing such legend.
(b) Any provision herein to the contrary notwithstanding,
certificates for up to 1,000,000 shares of Common Stock held by the Xxxxxx
Trusts shall not be required to bear legends required by this Agreement so
long as such shares may sold under Rule 144(k) under the Securities Act or
are not "restricted securities" within the meaning of Rule 144 under the
Securities Act.
SECTION 8. REPRESENTATIONS AND WARRANTIES.
(a) Each party hereto represents and warrants to the other
parties hereto as follows:
(i) it has full power and authority to execute, deliver and
perform its obligations under this Agreement;
(ii) this agreement has been duly and validly authorized,
executed and delivered by it, and constitutes a valid and binding
obligation of it, enforceable against it in accordance with its terms
except to the extent that enforceability may be limited by bankruptcy,
insolvency or other similar laws affecting creditors' rights
generally;
(iii) the execution, delivery and performance of this Agreement
by it does not (x) violate, conflict with, or constitute a breach of
or default under its organizational documents, if any, or any
agreement to which it is a party or by which it is bound or (y)
violate any law, regulation, order, writ, judgment, injunction or
decree applicable to it;
(iv) no consent or approval of, or filing with, any governmental
or regulatory body is required to be obtained or made by it in
connection with the transactions contemplated hereby; and
(v) it is not a party to any agreement which is inconsistent with
the rights of any party hereunder or otherwise conflicts with the
provisions hereof.
(b) each Signatory Stockholder severally represents and warrants
to GECC and THLi with respect only to GECC and THLi and not any other
Stockholder as follows:
(i) Schedule B hereto sets forth a list of all securities of the
Company (including, without limitation, shares of capital stock,
convertible securities, debentures, etc.) held of record or
beneficially owned by it immediately after the date hereof; and
(ii) except as set forth on Schedule B hereto and other than this
Agreement and the Registration Rights Agreement, it is not a party to
any contract or agreement, written or oral, with respect to the voting
or transfer of securities of the Company (including, without
limitation, any voting agreement, voting trust, stockholder's
agreement, registration rights agreement, etc.).
SECTION 9. DURATION OF AGREEMENT. Subject to the last sentence of this
Section, the rights and obligations of a Stockholder under this Agreement
shall terminate at such time as such Stockholder no longer is the
beneficial owner of any shares of Stock. As to any of GECC's rights or
obligations under this Agreement, this Agreement shall terminate at such
time as GECC no longer is the beneficial owner of 2,000,000 or more of the
outstanding shares of Common Stock on a Fully Diluted Basis, subject to
adjustment for stock splits, combinations or similar transactions, or at
such earlier time as may be agreed by GECC, Permal Group and THLi (or, if
applicable, THLi's transferee pursuant to Section 14(ii)).
As to any of THLi's rights or obligations under this Agreement, this
Agreement shall terminate at such time as THLi (and any transferee's
assigned rights under this Agreement pursuant to Section 14) no longer
beneficially owns 2,000,000 or more of the outstanding shares of Common
Stock on a Fully Diluted Basis, subject to adjustment for stock splits,
combinations or similar transactions, or at such earlier time as may be
agreed by GECC, Permal Group and THLi (or such transferee, if applicable).
This Agreement (other than Section 4A), shall terminate as to any
member of the Xxxxxx Group six months after Xxxxxx ceases to be a Director
of the Company.
Any provision herein to the contrary notwithstanding, the provisions
of Sections 3, 4, 4A, 5 and 7 of this Agreement shall not be applicable to
any shares of Stock first acquired by any member of the Xxxxxx Group after
August 26, 1996 or by any member of the Permal Group, GECC or THLi after
the date hereof.
SECTION 10. FURTHER ASSURANCES. At any time or from time to time after
the date hereof, the parties agree to cooperate with each other, and at the
request of any other party, to execute and deliver any further instruments
or documents and to take all such further action as the other party may
reasonably request in order to evidence or effectuate the consummation of
the transactions contemplated hereby and to otherwise carry out the intent
of the parties hereunder.
SECTION 11. AMENDMENT AND WAIVER. Except as otherwise provided herein,
no modification, amendment or waiver of any provision of this Agreement
shall be effective against the Company or any Stockholder unless such
modification, amendment or waiver is approved in writing by the Company,
Stockholders holding at least a majority of the Common Stock, and, so long
as it holds any shares of Stock, by GECC or THLi. The failure of any party
to enforce any of the provisions of this Agreement shall in no way be
construed as a waiver of such provisions and shall not affect the right of
such party thereafter to enforce each and every provision of this Agreement
in accordance with its terms.
SECTION 12. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law
or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision or any other
jurisdiction, but this Agreement shall be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision
had never been contained herein.
SECTION 13. ENTIRE AGREEMENT. Except as otherwise expressly set forth
herein, this document and the other documents dated the date hereof
executed in connection herewith embody the complete agreement and
understanding among the parties hereto with respect to the subject matter
hereof and supersedes and preempts any prior understandings, agreements or
representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.
SECTION 14. SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be
enforceable by the Company and its successors and assigns and each
Stockholder and their respective successors, assigns, heirs and personal
representatives, so long as they hold Stock. No Stockholder shall have the
right to assign its rights and obligations under this Agreement, except
pursuant to (i) a Permitted Transfer or (ii) a transfer by THLi of more
than 50% of the Stock (calculated as if all shares of Series A Preferred
Stock had been converted into shares of Common Stock as of the date of such
calculation) held by THLi as of the date of this Agreement (in which case
the transferee shall be entitled to exercise all rights, and shall be bound
by all obligations, of its transferor under this Agreement).
SECTION 15. COUNTERPARTS. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken
together shall constitute one and the same agreement.
SECTION 16. REMEDIES. Each Stockholder shall be entitled to enforce
its rights under this Agreement specifically to recover damages by reason
of any breach of any provision of this Agreement and to exercise all other
rights existing in their favor. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that each party may in its sole discretion
apply to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive relief (without posting a bond or other
security) in order to enforce or prevent any violation of the provisions of
this Agreement.
SECTION 17. NOTICES AND OTHER COMMUNICATIONS. All notices, consents,
requests, instructions, approvals, financial statements, proxy statements,
reports and other communications provided for herein shall be in writing
and shall be delivered personally, by facsimile or sent by prepaid
overnight courier service, to the Company and to each Stockholder as set
forth below and to any subsequent holder of Stock subject to this Agreement
at such address as indicated by the Company's records, or at such address
or to the attention of such other person as the recipient party has
specified by written notice to the sending party:
The Company:
Xxxxxx'x Furniture, Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxxx, XX 00000-0000
Facsimile #: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
with copies to:
Xxxxxx'x Furniture, Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxxx, XX 00000-0000
Facsimile #: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
and
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxx 0xx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000-0000
Facsimile #: (000) 000-0000
Attention: Xxxxxxx Xxxxxxx, Esq.
To each Stockholder:
At the address for such Stockholder set forth
on Schedule B attached hereto.
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile #: (000) 000-0000
Attention: Xxxxxx xx Xxxx, Esq.
and
Stroock & Stroock & Xxxxx LLP
0 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile #: (000) 000-0000
Attention: Xxxxx Xxxxxxx, Esq.
and
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile #: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
SECTION 18. GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement
shall be governed by and construed in accordance with the laws of the State
of New York, including, without limitation, Sections 5-1401 and 5-1402 of
the New York General Obligations Law and New York Civil Practice Laws and
Rules 327(b). Each of the parties hereto hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the
courts of the State of New York and of the United States of America, in
each case located in the County of New York, for any action, proceeding or
investigation in any court or before any governmental authority
("litigation") arising out of or relating to this Agreement and the
transactions contemplated hereby (and agrees not to commence any litigation
relating thereto except in such courts), and further agrees that service of
any process, summons, notice or document by U.S. Registered Mail to its
respective address set forth in this Agreement shall be effective service
of process for any litigation brought against it in any such court. Each of
the parties hereto hereby irrevocably and unconditionally waives any
objection to the laying of venue of any litigation arising out of this
Agreement or the transactions contemplated hereby in the courts of the
State of New York or the United States of America, in each case located in
the County of New York, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such
litigation brought in any such court has been brought in an inconvenient
forum. Each of the parties irrevocably and unconditionally waives, to the
fullest extent permitted by applicable law, any and all rights to trial by
jury in connection with any litigation arising out of or relating to this
Agreement or the transactions contemplated hereby.
SECTION 19. DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
SECTION 20. CONSTRUCTION. Where specific language is used to clarify
by example a general statement contained herein, such specific language
shall not be deemed to modify, limit or restrict in any manner the
construction of the general statement to which it relates. The language
used in this Agreement shall be deemed to be the language chosen by the
parties hereto to express their mutual intent, and no rule of strict
construction shall be applied against any party.
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement on the day and year first above written.
XXXXXX'X FURNITURE, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President and
Chief Financial Officer
GE CAPITAL EQUITY INVESTMENTS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxx, Xx.
-----------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx, Xx.
Title: Senior Vice President
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxxx, Xx.
-----------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx, Xx.
Title: Department Operations Manager
PERMAL CAPITAL MANAGEMENT, INC.
By: /s/ Xxxxxx X. XxXxxxx
-----------------------------------------
Name:
Title:
PERMAL SERVICES, INC.
By: /s/ Xxxxxx X. XxXxxxx
-----------------------------------------
Name:
Title:
PERMAL CAPITAL PARTNERS, L.P.
By: PERMAL MANAGEMENT CORPO RATION,
its Investment Manager
By: /s/ Xxxxxx X. XxXxxxx
-----------------------------------------
Name:
Title:
PERMAL ASSET MANAGEMENT
By: /s/ Xxxxxx X. XxXxxxx
-----------------------------------------
Name:
Title:
PERMAL SPECIAL OPPORTUNITIES, LTD.
By: /s/ Xxxxx X. Xxxxx
-----------------------------------------
Name:
Title:
JAPAN OMNIBUS LTD.
By: /s/ Xxxxx X. Xxxxx
-----------------------------------------
Name:
Title:
XXXX X. XXXXXXXX
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------------
XXXXX XXXXXX SOUEDE
By: /s/ Xxxxx Xxxxxx Souede
-----------------------------------------
XXXXXX X. XXXXXXX
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
XXXXXX X. AND XXXXX X. XXXXXXX
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxxx X. XxXxxxx
By:
-----------------------------------------
Name: Xxxxx X. XxXxxxx
UNITED GULF BANK (B.S.C.) E.C.
By:
-----------------------------------------
Name:
Title:
KUWAIT INVESTMENT PROJECTS COMPANY
By:
-----------------------------------------
Name:
Title:
ATCO HOLDINGS, LTD.
By: /s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Name:
Title:
ATCO DEVELOPMENT, INC.
By: /s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Name:
Title:
PILOT HOLDINGS, L.P.
By: SHED INVESTMENTS, LLC, its
General Partner
By: /s/ Xxxxxx X. XxXxxxx
-----------------------------------------
Name: Xxxxxx X. XxXxxxx
Title: Managing Member
XXXXXXX XXXXX XXXXXX TRUST I
By:
-----------------------------------------
Name:
Title:
XXXXXXX XXXX XXXXXX TRUST I
By:
-----------------------------------------
Name:
Title:
XXXXXXX XXXX XXXXXX TRUST I
By:
-----------------------------------------
Name:
Title:
XXXXXXX XXXXXX XXXXXX TRUST I
By:
-----------------------------------------
Name:
Title:
XXXXXX FAMILY TRUST
By:
-----------------------------------------
Name:
Title:
XX. XXXXXX X. XXXXXX, XX.
By:
-----------------------------------------
XXXXXX X. XXXXXX
By:
-----------------------------------------
TH XXX.XXXXXX INTERNET PARTNERS, L.P.
By: TH XXX.XXXXXX INTERNET FUND AD
VISORS, L.P., its General Partner
By: TH XXX.XXXXXX INTERNET FUND
ADVISORS, LLC, its General Partner
By: /s/ Xxxxxxxxx Xxx
-----------------------------------------
Name: Xxxxxxxxx Xxx
Title: Vice President
TH XXX.XXXXXX INTERNET PARALLEL
PARTNERS, L.P.
By: TH XXX.XXXXXX INTERNET FUND AD
VISORS, L.P., its General Partner
By: TH XXX.XXXXXX INTERNET FUND
ADVISORS, LLC, its General Partner
By: Xxxxxxxxx Xxx
-----------------------------------------
Name: Xxxxxxxxx Xxx
Title: Vice President
ASCEND PARTNERS, L.P.
By:
-----------------------------------------
Name:
Title:
XXXXX XXXXX
By:
-----------------------------------------
XXXXXXX REVOCABLE TRUST
By:
-----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Trustee
By:
-----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Trustee
XXXXXXX XXXXXXX XXXXXX - XXX
By:
-----------------------------------------
Name:
Title:
XXXXXXX X. XXXXX
By:
-----------------------------------------
XXXXX X. XXXXX, UTMA, CA
By:
-----------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Custodian
XXXXX X. XXXXX, UTMA, CA
By:
-----------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Custodian
XXXX X. XXX
By:
-----------------------------------------
XXXX XXXXXX
By:
-----------------------------------------
DIAMOND A. PARTNERS, L.P.
By:
-----------------------------------------
Name:
Title:
J. XXXXXX XXXXXXX
By:
-----------------------------------------
XXXXX XXXXXXXXX - XXX
By:
-----------------------------------------
Name:
Title:
XXXXXXX XXXXXXXXX - XXX
By:
-----------------------------------------
Name:
Title:
XXXXXXX X. AND XXXXXXXX X. XXXXXX
By:
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx
By:
-----------------------------------------
Name: Xxxxxxxx X. Xxxxxx
XXXXXXXX & XXXXX XXXXXX FAMILY TRUST
By:
-----------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Trustee
By:
-----------------------------------------
Name: Xxxxx Xxxxx Xxxxxx
Title: Trustee
XXXXXX X. XXXXXX
By:
-----------------------------------------
XXXXXX X. XXXXXX
By:
-----------------------------------------
XXXXXX X. XXXXXX
By:
-----------------------------------------
XXXXXXX XXXXX
By:
-----------------------------------------
XXXXXXX XXXXXXX TRUST
By:
-----------------------------------------
Name:
Title:
XXXXX XXXXXXX
By:
-----------------------------------------
XXXXXXX X. XXXXXX
By:
-----------------------------------------
XXXXXXX X. XXXXXX
By:
-----------------------------------------
XXXXXXX X. XXXXXX PROFESSIONAL
CORPORATION DEFINED BENEFIT PLAN
By:
-----------------------------------------
Name:
Title:
XXXX XXXXXXX
By:
-----------------------------------------
XXXXXX XXXXXX
By:
-----------------------------------------
XXXXXXXX X. XXXXXXXXX
By:
-----------------------------------------
XXXXX XXXX
By:
-----------------------------------------
XXXXXX LONDON
By:
-----------------------------------------
XXXXXXX X. XXXXXX
By:
-----------------------------------------
THE MUHL FAMILY TRUST
By:
-----------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Trustee
By:
-----------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Trustee
PACIFIC SECURITY GROUP, INC.
By:
-----------------------------------------
Name:
Title:
POINTE INVESTMENTS CAPITAL, LTD.
By:
-----------------------------------------
Name:
Title:
POLLAT, XXXXX & CO., INC.
By:
-----------------------------------------
Name:
Title:
XXXXX AND XXXX XXXXXXXXX
By:
-----------------------------------------
Name: Xxxxx Xxxxxxxxx
By:
-----------------------------------------
Name: Xxxx Xxxxxxxxx
XXXXXXX X. XXXXXXX, XX.
By:
-----------------------------------------
XXXXXXX X. XXXXXXX, III
By:
-----------------------------------------
G. XXXXX XXXXXXX
By:
-----------------------------------------
LORD XXXXX XXXXXXX
By:
-----------------------------------------
XXXXXXX XXXXXXX XXXXXXX
By:
-----------------------------------------
WAVE ENTERPRISES, INC.
By:
-----------------------------------------
Name:
Title:
XXX XXXXXXXXXX
By:
-----------------------------------------
X.X. XXXXX
By:
-----------------------------------------
ZAXIS PARTNERS, L.P.
By:
-----------------------------------------
Name:
Title:
SCHEDULE A
XXXXXX GROUP CONSISTS OF:
Xxxxxxx Xxxxx Xxxxxx Trust I
Xxxxxxx Xxxx Xxxxxx Trust I
Xxxxxxx Xxxx Xxxxxx Trust I
Xxxxxxx Xxxxxx Xxxxxx Trust I
Xxxxxx Family Trust
Xx. Xxxxxx X. Xxxxxx, Xx.
Xxxxxx X. Xxxxxx
SCHEDULE B
STOCKHOLDER INFORMATION
[FINAL VERSION TO COME]
SCHEDULE C
PERMAL GROUP CONSISTS OF:
Permal Capital Management, Inc.
Permal Services, Inc.
Permal Capital Partners, L.P.
Permal Asset Management
Permal Special Opportunities, Ltd.
Japan Omnibus Ltd.
Xxxx X. Xxxxxxxx
Xxxxx Xxxxxx Xxxxxx
Xxxxxx X. XxXxxxx
Xxxxxx X. & Xxxxx X. XxXxxxx
United Gulf Bank (B.S.C.) E.C.
Kuwait Investment Projects
ATCO Holdings Ltd.
ATCO Development, Inc.
