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EXHIBIT 9.2
SECURITYHOLDERS AGREEMENT
This Securityholders Agreement ("Agreement"), dated as of February 25,
1998, is entered into by and among American Restaurant Group, Inc., a Delaware
corporation ("Company"), American Restaurant Group Holdings, Inc., a Delaware
corporation ("Holdings"), Jefferies & Company, Inc. ("Jefferies"), TCW Shared
Opportunity Fund II, L.P. ("TCW Opp II"), TCW Leveraged Income Trust, L.P.
("TCW Lev"), Xxxxx University ("Xxxxx"), TCW Shared Opportunity Fund IIB, LLC
("TCW Opp IIB" and, together with TCW Opp II, TCW Lev and Xxxxx, the "TCW
Investors"), TCW Asset Management Company ("TAMCO"), and each of the persons
identified on the signature pages hereto as "Management Stockholders"
(collectively, "Management Stockholders" and, together with Holdings,
Jefferies, TCW Investors and TAMCO, "Holders").
WHEREAS, Holdings is the owner of the number of shares of common stock of
the Company, par value $.01 per share ("Common Stock"), set forth opposite
Holdings' name on Schedule I;
WHEREAS, each Management Stockholder is the owner of the aggregate number
of shares of Common Stock set forth opposite the name of such Management
Stockholder on Schedule I;
WHEREAS, pursuant to a Purchase Agreement, dated as of February 13, 1998
(as the same exists on the date hereof without any amendment, modification or
waiver, "Purchase Agreement"), by and among Xxxxxxxxx, Company and the other
ARG Entities identified on the signature pages thereto, Company has issued, and
Jefferies has purchased, among other things, 35,000 units ("Units") consisting
of $35,000,000 aggregate initial liquidation preference of Company's 12% Senior
Exchangeable Preferred Stock ("Preferred Stock") and 35,000 Warrants
("Warrants") exercisable for shares of Common Stock.
WHEREAS, Company has agreed to issue to Jefferies, as a fee in connection
with the transactions contemplated by the Offering Circular prepared by
Company, dated February 17, 1998, relating to, among other things, the offering
of the Units ("Offering Circular"), warrants exercisable for the number of
shares of Common Stock set forth opposite Jefferies' name on Schedule I
("Jefferies Warrants");
WHEREAS, Company has agreed to issue to TAMCO, as a fee in connection
with the transactions contemplated by the Offering Circular, warrants
exercisable for the number of shares of Common Stock set forth opposite TAMCO's
name on Schedule I ("TAMCO Warrants" and, together with Jefferies Warrants,
"Fee Warrants");
WHEREAS, each TCW Investor desires to purchase from Jefferies a portion of
the Units, including Warrants which are exercisable for the number of shares of
Common Stock set forth opposite such TCW Investor's name on Schedule I, and as a
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condition to such purchase each of the parties hereto has agreed to enter into
this Agreement.
NOW, THEREFORE, in consideration of the promises and the mutual
agreements, covenants and provisions contained herein, and other valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES
Section 1.1. Company Representations and Warranties. Company hereby
represents and warrants to the TCW Investors and TAMCO as follows:
(a) Company is duly incorporated and validly existing under the laws
of the State of Delaware, has full right, power and authority to execute
and enter into this Agreement, and this Agreement constitutes the legal,
valid and binding obligation of Company enforceable in accordance with its
terms.
(b) There is no provision of any existing mortgage, indenture,
contract, agreement or instrument to which Company or any of its
Subsidiaries is a party or to which Company or any of its Subsidiaries is
subject, and no statute, rule or decree of any court or government
instrumentality binding upon Company or any of its Subsidiaries, which has
been or may be contravened, breached or defaulted by Company's execution,
delivery or performance of this Agreement.
(c) There is no legal, administrative or arbitration proceeding or
investigation pending or, to the knowledge of Company, threatened against
Company or any other Person which questions the validity of this
Agreement.
(d) There is no covenant, approval or authorization of, or
designation, declaration or filing with, any Person that is required in
connection with the execution, delivery or performance by Company of this
Agreement or any action taken or to be taken by Company hereunder, except
those that have been obtained and are in full force and effect as of the
date of the execution and delivery hereof.
(e) Each of the following is in full force and effect and has not
been further amended or modified (and, with respect to the Certificate of
Incorporation and Certificate of Designation, has been duly filed with the
Secretary of State of the State of Delaware):
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(i) The Certificate of Incorporation, the Certificate of Designation
and Bylaws of Company (the "Charter Documents"); and
(ii) The Employment Agreements.
(f) Immediately upon issuance of the Warrants, and without any
further action on the part of any Person, (i) Xxxxxxx X. XxXxxxxxx, Xx.'s
resignation from the Board and all committees of the Board will be
effective in all respects; (ii) the Board will be comprised solely of
Xxxxxx Xxxxx, Xxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxx and Xxxxxx Xxxxxxxx, and
the fifth director position on the Board will be vacant; (iii) the
Compensation Committee will be comprised solely of Xxxxxx Xxxxx, Xxxxx X.
Xxxxxxx and Xxxxxx Xxxxxxxx, and a fourth director position on the
Compensation Committee will be vacant and (iv) all other committees of the
Board shall be comprised of at least Xxxxxx Xxxxx and have at least one
vacancy.
(g) The authorized Capital Stock of Company consists solely of
1,000,000 shares of Common Stock and 160,000 shares of preferred stock, of
which only the Preferred Stock and the other shares identified on Schedule
I are outstanding. All such outstanding shares are duly authorized,
validly issued, fully paid and nonassessable. The only Convertible
Securities of Company are the Warrants and the Fee Warrants and there is
no other outstanding commitments on the part of Company to issue any
Common Stock, Convertible Securities or other Capital Stock of Company,
other than dividends paid, at the option of Company, in shares of
Preferred Stock on the Preferred Stock.
(h) Company has no Subsidiaries other than the ARG Entities
identified on the signature pages to the Purchase Agreement, each of which
is a Wholly Owned Subsidiary, and there is no commitment on the part of
any such ARG Entity to issue any of its Capital Stock to a Person other
than to Company or to a Wholly Owned Subsidiary.
(i) Each stock certificate evidencing outstanding shares of Common
Stock set forth on Schedule I will contain the legend set forth in Section
3.4.
Section 1.2. Holder Representations and Warranties. Each Holder
hereby represents and warrants, severally but not jointly, to the other Holders
as follows:
(a) If such Holder is not a natural person, such Holder is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization.
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(b) Such Holder has full right, power and authority to execute and
enter into this Agreement, and this Agreement constitutes the legal, valid
and binding obligation of such Holder enforceable against such Holder in
accordance with its terms.
(c) There is no provision of any existing mortgage, indenture,
contract, agreement or instrument to which such Holder is a party or to
which such Holder is subject, and no statute, rule or decree of any court
or government instrumentality binding upon such Holder, which has been or
may be contravened, breached or defaulted by such Holder's execution,
delivery or performance of this Agreement.
(d) There is no legal, administrative or arbitration proceeding or
investigation pending or, to the knowledge of such Holder, threatened
against such Holder or any other Person which questions the validity of
this Agreement.
(e) There is no covenant, approval or authorization of, or
designation, declaration or filing with, any Person that is required in
connection with the execution, delivery or performance by such Holder of
this Agreement or any action taken or to be taken by such Holder
hereunder, except those that have been obtained and are in full force and
effect as of the date of the execution and delivery hereof.
(f) The total number of shares of Common Stock or Capital Stock
(other than shares of Preferred Stock) of the Company and the number of
shares of Common Stock issuable upon exercise of the Warrants, the Fee
Warrants or other Convertible Securities of Company, owned or controlled,
directly or indirectly, by such Holder is set forth on Schedule I. No
Holder has the right to purchase any shares of the Capital Stock of any
Subsidiary of the Company.
ARTICLE II
BOARD OF DIRECTORS; SIGNIFICANT BUSINESS DECISIONS
Section 2.1. Number of Directors. Each Holder agrees that, except as
otherwise specifically provided herein or in the Certificate of Designation
under which the Preferred Stock is issued, the Board of Directors of the Company
(the "Board") shall consist of five (5) directors.
Section 2.2. Identity of Directors. Each Holder agrees that the
Board shall be comprised of (x) two (2) directors nominated by the TCW Investors
("TCW Directors"), (y) two (2) directors nominated by the Management
Stockholders ("Management Directors"), and (z) one (1) director nominated by
Jefferies (the "Remaining Director"); provided that on and after the Public
Company Date, the right to nominate, replace and remove the
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Remaining Director shall be mutually agreed upon by the TCW Investors and the
Management Stockholders (subject to the occurrence of the New Management Date),
and Jefferies shall have no further right hereunder to designate any person to
serve as a member of the Board; provided, further, that from and after the date
upon which both Xxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxx cease to be employed as
executive officers of Company (such date, the "New Management Date"), (i) the
right of the Management Stockholders hereunder to nominate, replace and remove
the Management Directors as provided in clause (y) above shall terminate and
each Holder agrees that the directors for the two Board seats formerly reserved
for the Management Directors shall be nominated, replaced and removed by the
stockholders of the Company by a vote of holders of a majority of the
outstanding shares of Common Stock or such lesser vote as is required to elect
directors at a duly called stockholders meeting (such vote, a "Stockholder
Vote") and (ii) if the Public Company Date has also occurred, the right of the
Management Stockholders hereunder to participate in the nomination, replacement
and removal of the Remaining Director as provided in the first proviso shall
terminate and each Holder agrees that the director for the one Board seat
formerly reserved for the Remaining Director shall be designated by the majority
of the members of the Board, subject to election by a Stockholder Vote. No
Holder to this Agreement shall transfer or assign, directly or indirectly, such
Holder's right to designate a director to serve on the Board of the Company or
otherwise enter into any arrangement or agreement that has the effect of
transferring or assigning such designation rights, except with respect to
transfers or assignments to a Permitted Transferee of such Holder; provided,
that such Permitted Transferee agrees to be bound by the terms of this Agreement
to the same extent as the Holder from whom the transfer was made; provided,
further, that Jefferies shall not transfer its right to designate a director
under any circumstances.
The TCW Investors hereby nominate Xxxxxx Xxxxx as one of the initial
TCW Directors; the other initial TCW Director shall be nominated by the TCW
Investors after the date hereof. The Management Stockholders hereby nominate
Xxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxx as the initial Management Directors.
Jefferies hereby nominates Xxxxxx Xxxxxxxx as the initial Remaining Director.
Should these initial directors or any other individual nominated as a director
pursuant to this Section 2.2 be unwilling or unable to serve, or otherwise cease
to serve for any reason (including by means of removal or replacement in
accordance with the following sentence), the TCW Investors (with respect to the
Board seats reserved for the TCW Directors), the Management Stockholders for so
long as they have the right hereunder to nominate the Management Directors (with
respect to the Board seats reserved for the Management Directors), Jefferies for
so long as Jefferies has the right hereunder to nominate the Remaining Director
(with respect to the Board seat reserved for the Remaining Director), the
stockholders by Stockholder Vote after the New Management Date (with respect to
the Board seats
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formerly reserved for the Management Directors), and a majority of the Board
after both the Public Company Date and the New Management Date (with respect to
nomination of a person to fill the Board seat formerly reserved for the
Remaining Director), as the case may be, shall be entitled at any time to
nominate or designate any replacement to fill the vacancy existing in a Board
seat for which they or it, as the case may be, have a right of nomination under
this Section 2.2; provided that the majority of the members of the Board shall
have the exclusive right hereunder, once both the Public Company Date and the
New Management Date have occurred, to nominate a person to fill any vacancy
created in the Board seat formerly reserved for the Remaining Director, subject
to election by the stockholders by Stockholder Vote. (i) If the TCW Investors
propose to remove or replace any TCW Director; or (ii) if (a) the Management
Stockholders, for so long as Management Stockholders have the right to nominate
the Management Directors, propose to remove or replace any Management Director
and (b) following the New Management Date, the stockholders of Company by
Stockholder Vote, propose to remove or replace any Management Director or any
director holding a Board seat formerly reserved for a Management Director; or
(iii) if (x) Jefferies, for so long as Jefferies has the right to nominate the
Remaining Director, proposes to remove or replace the Remaining Director and (y)
following the Public Company Date but before the New Management Date, the TCW
Investors and the Management Stockholders, acting by mutual consent, propose to
remove or replace the Remaining Director and (z) following both the Public
Company Date and the New Management Date, the stockholders by Stockholder Vote
remove the Remaining Director or the director elected to the Board Seat formerly
reserved for the Remaining Director, as applicable, then each Holder agrees,
with respect to each of clauses (i) through (iii), to take all action in its
power to cause such removal or replacement and any resulting vacancy shall be
filled in accordance with the preceding sentence and the nominating rights set
forth in the first paragraph of this Section 2.2. The Holders agree not to take
any action to remove or replace, with or without cause, any director other than
in accordance with the foregoing.
The failure to exercise any nominating rights, or other rights with
respect to directors pursuant to this Section 2.2, shall not constitute a waiver
or diminution of such rights, nor shall it prevent a Holder or group of Holders
from fully exercising such rights prospectively. Nothing in this Agreement shall
limit the rights of the holders of the Preferred Stock pursuant to Section 5 of
the Certificate of Designation to elect additional directors to serve on the
Company's Board of Directors and each Holder agrees to take all action, to the
extent that it has the power to do so, necessary to increase the size of the
Board and cause the additional directors elected by the holders of the Preferred
Stock to fill the vacancies thereby created in accordance with such holders'
rights under the Certificate of Designation.
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Section 2.3. Board Action. Each Holder covenants and agrees to take
all action, to the extent that it has the power to do so, so that at least three
directors must be present, in person, by telephone or by proxy, at every meeting
of the Board to constitute a quorum. Each director shall be given notice at
least ten (10) business days prior to all Board meetings unless such director
attends the meeting or waives such notice in writing. Any proposal to be acted
upon by the Board (other than a proposal with respect to or relating to any
matter referred to a committee established pursuant to Sections 2.4 and 2.5
hereof) shall require the approval of the majority of a quorum.
Section 2.4. Compensation Committee. Each Holder covenants and
agrees to take all action in its power, so that a compensation committee of the
Board ("Compensation Committee") is established and comprised of four directors,
consisting of the two TCW Directors, one Management Director and the Remaining
Director. The Compensation Committee shall determine the compensation of
management and the structuring of performance incentive plans, including without
limitation any issuances of Capital Stock or Convertible Securities by Company
to the management of Company and its Subsidiaries (other than stock owned by
Management Stockholders and listed on Schedule I) and any amendments or renewals
of the Employment Agreements.
Section 2.5. Other Committees of the Board of Directors. Each Holder
covenants and agrees that in its power, the two TCW Directors shall be entitled,
but not obligated, to serve on any committee established by the Board.
Section 2.6. Significant Business Decisions. Notwithstanding that no
vote may be required, or that a lesser percentage vote may be specified, by law,
by the Charter Documents, or otherwise, Company and each of the Holders covenant
and agree, to the extent such Holder has the power to do so, that Company shall
not take, and shall not cause or permit any Subsidiary of Company to take, any
of the following actions, in a single transaction or a series of related
transactions, without the written approval of the TCW Investors:
(a) merge or consolidate with or into any other corporation (other
than transactions solely involving the merger or consolidation of a Wholly
Owned Subsidiary of Company with or into Company or another Wholly Owned
Subsidiary of Company);
(b) purchase, lease or otherwise acquire any material amount (as
hereinafter defined) of securities or assets of any other Person;
(c) commence any proceeding or file any petition seeking relief
under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other federal or state bankruptcy, insolvency or
receivership or similar
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law; consent to the institution of or fail to contest in a timely and
appropriate manner any such proceeding or filing; apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for Company or any of its Subsidiaries;
file an answer admitting the material allegations of a petition filed
against it in any such proceeding; make a general assignment for the
benefit of creditors; admit in writing its inability or fail generally to
pay its debts as they become due; or take any action for the purpose of
effecting any of the foregoing;
(d) sell, lease, exchange, transfer or otherwise dispose of any
capital stock of Subsidiaries, or a material amount of its other assets;
(e) except as otherwise contemplated herein, enter into or engage
in, or amend or modify the terms of, or terminate any transaction or
arrangement between Company or any of its Subsidiaries, on the one hand,
and any director of Company, any relative of any such director or any
Affiliate of any such director or relative (including, without limitation,
(i) any transaction or arrangement regarding employment or the appointment
or removal of any such Person as an officer or employee of Company or any
of its Subsidiaries and (ii) any transaction or arrangement regarding
employment or the appointment or removal of any of Xxxxx X. Xxxxxxx, Xxxxx
X. Xxxxxxx or Xxxxxxx X. Xxxxxxxxx as an officer, employee or director of
Company or any of its Subsidiaries), on the other hand;
(f) amend, modify or repeal any provision of the Charter Documents
or any similar governing document of any Subsidiary of Company, or any
provision of this Agreement;
(g) purchase, redeem or otherwise acquire or retire for value,
directly or indirectly, any equity securities, other than the Preferred
Stock, of Company;
(h) issue any equity securities of Company or of any Subsidiary of
Company (except, (i) issuances to Company or a Wholly Owned Subsidiary of
Company or (ii) Permitted Issuances; or
(i) enter into any contract, agreement, arrangement or commitment to
do or engage in any of the foregoing.
For purposes of this Section 2.6, a "material amount" means a cash amount (or
its equivalent) that equals or exceeds $15,000,000.
Section 2.7. Further Assurances. Each of the Holders covenants and
agrees, subject to compliance with applicable law, to take all action, including
voting, or taking action by consent
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with respect to, all shares of Common Stock owned or controlled, directly or
indirectly, at any time by such Holder, in accordance with the terms of this
Agreement, including without limitation, voting, or acting promptly by written
consent, in favor of (i) the election of the directors nominated in accordance
with Section 2.2 hereof and (ii) any amendment to the Charter Documents to cause
the parties hereto to comply with the terms of this Agreement. Except for rights
granted to a Holder pursuant to the Certificate of Designation, each Holder
hereby waives, to the fullest extent permitted by law, any rights it has under
any other agreement or arrangement that are inconsistent with the provisions of
this Agreement.
ARTICLE III
RESTRICTIONS ON TRANSFERS
Section 3.1. Restrictions on Transfers; Permitted Transferees. (a)
Company and each Holder, severally and not jointly, agrees and acknowledges that
Company or such Holder, as applicable, will not, directly or indirectly, offer,
issue, sell, assign, pledge, encumber or otherwise transfer (each, a "Transfer")
any shares of Common Stock or Convertible Securities or solicit any offers to
purchase or otherwise acquire or make a pledge of any shares of Common Stock or
Convertible Securities unless such Transfer complies with the provisions of this
Agreement; provided, however, that immediately prior to an IPO the parties
hereto agree to negotiate in good faith and without seeking any additional
compensation to establish an arrangement that both (x) permits the Holders and
the Holders' Permitted Transferees hereunder to Transfer their equity securities
of the Company without the Transfer being subject to the provisions of this
Agreement, including any Transfer restrictions (other than those restrictions
imposed by Section 3.2 and 3.3 hereof) and (y) preserves the rights of the TCW
Investors to designate and cause the TCW Directors to serve on the Board under
Article II and, to the extent practicable, to preserve such other rights as the
TCW Investors deem significant.
(b) No Holder shall Transfer any shares of Common Stock or
Convertible Securities to any Person (regardless of the manner in which such
Holder initially acquired such shares or securities) nor shall Company Transfer
any shares of Common Stock or Convertible Securities to any Person (all Persons
acquiring or receiving a Transfer of shares of Common Stock or Convertible
Securities from a Holder or from Company or from one of their respective
Permitted Transferees, regardless of the method of Transfer, shall be referred
to collectively as "Transferees" and individually as a "Transferee"), unless (i)
such shares of Common Stock or Convertible Securities bear legends as provided
in Section 3.4 hereof and (ii) such Transferee shall have executed and delivered
to Company and the TCW Investors, as a condition precedent to any Transfer of
shares of Common Stock or
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Convertible Securities, an instrument in form and substance satisfactory to
Company and the TCW Investors confirming that such Transferee takes such shares
or securities subject to all the terms and conditions of this Agreement, and
agrees to be bound by the terms of this Agreement to the same extent as the
Holder from whom the Transfer was made. Company shall not transfer upon its
books any shares of Common Stock or Convertible Securities to any Person except
in accordance with this Agreement and any attempted Transfer that is not in
compliance with the terms hereof shall be void. Notwithstanding the foregoing,
this Section 3.1(b) shall not apply to:
(i) Permitted Issuances by Company approved by the Board or, as
applicable, approved by the Compensation Committee;
(ii) Any Transfer by the TCW Investors, by TAMCO, by the TCW Investors'
Permitted Transferees, or by TAMCO's Permitted Transferees, in each case,
to any Transferee; or
(iii) Any Transfer by any of the Holders (other than TCW Investors, TAMCO,
TCW Investors' Permitted Transferees or TAMCO's Permitted Transferees) or
such Holder's respective Permitted Transferees; provided that immediately
after giving effect to such Transfer, all Holders and Permitted
Transferees who are then parties to this Agreement own and control
(including, without limitation, the power to vote for directors and
approve amendments to the Charter Documents) at least a majority of the
outstanding shares of Common Stock measured on both an actual and fully
diluted basis (assuming, with respect solely to the determination of
outstanding shares on a fully diluted basis, the exercise of all
Convertible Securities as of the time of determination); provided,
further, that with respect to Transfers under this clause (iii) by
Holdings and its Permitted Transferees, Holdings and its Permitted
Transferees first comply with the provisions of Sections 3.2 and 3.3
hereof.
(c) Except as specifically contemplated hereby, no Holder shall
grant any proxy or enter into or agree to be bound by any voting trust with
respect to any shares of Common Stock or Convertible Securities nor shall any
Holder enter into any stockholder agreements or arrangements of any kind with
any Person with respect to any shares of Common Stock or Convertible Securities
inconsistent with the provisions of this Agreement (whether or not such
agreements and arrangements are with other Holders or holders of shares of
Common Stock or Convertible Securities who are not parties to this Agreement),
including, but not limited to, agreements or arrangements with respect to the
acquisition, disposition or voting of shares of Common Stock, nor shall any
Holder act, for any reason, as a member of a group or in concert with any other
Persons in connection with the acquisition, disposition or voting of shares of
Common Stock or
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Convertible Securities in any manner which is inconsistent with the provisions
of this Agreement.
(d) The provisions of Section 3.2 and 3.3 hereof shall not apply:
(i) to any Transfer (for consideration or as a gift) by any Holder to any
spouse, child, parent, sibling or grandchild of such Holder, or by any of such
relatives to such Holder or to any one or more of such relatives, or by any
Holder or any such relatives to a trust of which there are no principal
beneficiaries other than one or more of such relatives; (ii) to any Transfer to
a legal representative in the event any Holder becomes mentally incompetent;
(iii) to any Transfer by will or the laws of descent; (iv) with respect to a
Holder which is a corporation, partnership or limited liability company, to any
Transfer by such Holder to any Affiliate thereof; (v) to bona fide pledgees of
shares of Common Stock or Convertible Securities by a Holder to Company, a bank
or other financial institution in order to secure indebtedness for borrowed
money incurred by such Holder in order to finance or refinance the purchase of
shares of Common Stock or Convertible Securities or to pay taxes related to the
sale of such shares or securities by such Holder; (vi) with respect to any
Holder which is a limited partnership, to the partners, or a liquidating trust
for the benefit of the partners, of such Holder in accordance with the
provisions of the limited partnership agreement governing such Holder as then in
effect; (vii) to any Transfer to any Affiliate of the TCW Investors or TAMCO;
(viii) subject to applicable securities laws, to any Transfer by Jefferies to an
employee of Jefferies; provided that with respect to each of clauses (i) through
(viii), each Transferee, donee, distributee or pledgee (a "Permitted
Transferee") agrees to take such shares subject to and to comply with the
provisions of Section 3.1(b) hereof. For purposes hereof, the Permitted
Transferees of a Holder shall include the Permitted Transferees of such Holder's
Permitted Transferees.
Section 3.2. Right of First Offer. (a) Except for Permitted
Issuances by Company, Transfers by Holdings to Permitted Transferees of Holdings
and, following an IPO, sales to the public in either registered underwritten
offerings or pursuant to Rule 144 under the Securities Act of 1933, as amended,
any action by Company, Holdings or any Permitted Transferees of Holdings (each,
a "Seller") to issue or Transfer any shares of Common Stock or Convertible
Securities shall first be preceded by written notice (a "Seller's Notice") to
the TCW Investors stating Seller's desire to make such Transfer, the number of
shares of Common Stock or Convertible Securities proposed to be Transferred (the
"Offered Securities") and the cash price which Seller proposes to be paid for
the Offered Securities (the "First Offer Price").
(b) Upon receipt of Seller's Notice (the "First Offer"), the TCW
Investors shall have the irrevocable and exclusive option to purchase up to all
of the Offered Securities at the First Offer Price. The TCW Investors shall have
15 days
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from the date of the Seller's Notice to accept the First Offer, in whole or in
part, by delivering a written notice to Seller stating the number of Offered
Securities the TCW Investors desire to purchase.
(c) If the Seller's Notice shall be duly given, and if the TCW
Investors shall not exercise their option to purchase the Offered Securities at
the First Offer Price, then Seller shall be free (subject to Section 3.3
hereof), for a period of 60 days from the earlier of (i) the 30th day following
the date of the Seller's Notice or (ii) the date Seller shall have received
written notice from the TCW Investors stating the TCW Investors' intention not
to exercise their rights under the First Offer, to Transfer the Offered
Securities to any third party Transferee at a cash price equal to or greater
than the First Offer Price; provided that such Transfer complies with the
provisions of Section 3.1 of this Agreement.
(d) If the proposed purchase price of a Transferee for the Offered
Securities is less than the First Offer Price, Seller shall not Transfer, in
compliance with Section 3.1, any of the Offered Securities unless the Seller
shall first reoffer the Offered Securities at such lesser price to the TCW
Investors by giving written notice (the "Reoffer Notice") thereof, stating the
Seller's intention to make such Transfer at such lower price (the "Reoffer
Price"). The TCW Investors shall then have the irrevocable and exclusive option
to purchase the Offered Securities at the Reoffer Price, exercisable in the same
order of priority, proportions and manner as provided in Section 3.2(b). Any
Offered Securities not purchased by the TCW Investors may be Transferred by
Seller (subject to Section 3.3 hereof) to any third party Transferee within 60
days following the earlier of (i) the 30th day from the date of the Reoffer
Notice or (ii) the date on which Seller shall have received written notice from
the TCW Investors stating the TCW Investors' intention not to exercise the
option granted in this Section 3.2(d), at a cash price equal to or greater than
the Reoffer Price; provided that such Transfer complies with the provisions of
Section 3.1 of this Agreement.
(e) If the TCW Investors do not exercise their option to purchase
the Offered Securities at the First Offer Price or at the Reoffer Price, and
Seller shall not have Transferred the Offered Securities to any third party
Transferee approved by the Board for any reason before the expiration of the
60-day period described in Section 3.2(d) in the event of a Reoffer or, if no
Reoffer Notice is given, the 60-day period described in Section 3.2(c), then
Seller shall not give a Seller's Notice with respect to a transaction which
would require compliance with this Section 3.2 for a period of three months from
the last day of such applicable 60-day period.
(f) The closing of all purchases pursuant to the first offer rights
granted under this Section 3.2 shall take place at
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13
the principal offices of the Company at 10 a.m. on the later of (x) the tenth
Business Day following the delivery to Seller of all notices exercising such
first offer rights with respect to the Offered Securities to be sold by Seller
or (y) the fifth Business Day following the expiration or termination of all
waiting periods under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, applicable to such purchases, or at such other time and/or place as
the parties to such purchases may agree. At such closing, (i) Seller shall
assign and Transfer to the TCW Investors (or any nominees thereof) good and
valid title to the shares being purchased by it, by delivery of the certificates
representing the shares of Common Stock or Convertible Securities to be sold and
Transferred, duly endorsed in blank, with the requisite stock transfer tax
stamps attached, together with such stock powers, certificates, legal opinions
and other instruments of Transfer as the TCW Investors shall reasonably request;
and (ii) the TCW Investors shall pay to Seller the purchase price for the shares
being purchased by them in cash, by delivery of a certified or bank check or by
wire transfer of immediately available funds to such account as Seller shall
direct by written notice delivered to the TCW Investors not later than two (2)
Business Days before such closing.
Section 3.3. Tag-Along Rights. In the event that (and without
limiting the obligations to comply with Sections 3.1 and 3.2 hereof) Holdings or
any of its Permitted Transferees (collectively, the "Tag Sellers") propose,
pursuant to a single transaction or series of related transactions, to Transfer
shares of Common Stock to any Person other than a Permitted Transferee of
Holdings or, following an IPO, sales to the public in either registered
underwritten offerings or pursuant to Rule 144 under the Securities Act of 1933,
as amended (a "Purchaser"), then, the Tag Sellers shall provide notice of such
proposed Transfer to the TCW Investors (a "Proposal Notice") no later than
twenty (20) days prior to the proposed closing of such Transfer, and the TCW
Investors shall have the right (a "Tag-Along Right") to require the Tag Seller
to reduce the number of shares of Common Stock to be sold by the Tag Seller, and
have Purchaser purchase from the TCW Investors, upon the same terms and
conditions applicable to the Tag Seller, that number of shares of Common Stock
derived by multiplying the total number of shares being offered to Purchaser by
the TCW Investors' fractional interest, rounded up to the nearest whole number.
For purposes of this Section, the term "fractional interest" means (a) the sum
of the total number of shares of Common Stock owned by the TCW Investors and its
Permitted Transferees (on a fully diluted basis, assuming exercise of all
Warrants and other Convertible Securities as of the time of determination),
divided by (b) the sum of (I) the aggregate number of shares of Common Stock
owned by the TCW Investors and TAMCO and their Permitted Transferees plus (II)
the aggregate number of shares of Common Stock owned by Holdings and, to the
extent shares were Transferred by Holdings to a Permitted Transferee of
Holdings, the number of shares of Common Stock
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14
owned by Holding's Permitted Transferees (on a fully diluted basis, assuming
exercise of all Warrants and other Convertible Securities as of the time of
determination). The TCW Investors shall give written notice of its decision to
exercise its Tag-Along Right to the Tag Seller no later than ten (10) days after
its receipt of a Proposal Notice.
Section 3.4. Legend on Certificates. During the term of this
Agreement, Company and each Holder, to the extent that such Holder has the power
to do so, covenants and agrees that each outstanding certificate representing
shares of Common Stock or Convertible Securities that are now owned or hereafter
acquired by the Holders or otherwise subject to this Agreement shall bear a
legend reading substantially as follows:
The sale, assignment, pledge, encumbrance or other transfer of the
securities represented by this certificate is subject to the
provisions of a Securityholders Agreement, dated as of February 25,
1998, among the Company and the other parties named on the signature
pages thereto, a copy of which is on file at the principal executive
office of the Company.
ARTICLE IV
ADDITIONAL AGREEMENTS
Section 4.1. Restrictions on TCW Investors. The TCW Investors shall
not transfer any of their rights under this Agreement; provided, that the TCW
Investors and Permitted Transferees of the TCW Investors may Transfer, in whole
or in part, any of their respective rights hereunder to Permitted Transferees
who comply with the provisions of Section 3.1(b) hereof.
Section 4.2. Tax Issues. If any withholding taxes imposed by
Internal Revenue Code 1441 and 1442 (or any successor provision thereof)
("Taxes") with respect to the TCW Investors' partners that are not United States
persons (collectively, the "Foreign Partners"), are required to be deducted or
withheld from any amount payable to the TCW Investors either by Company or by
any TCW Investor with respect to the TCW Investors' Foreign Partner's allocable
share of the TCW Investors' income attributable to dividends on the Preferred
Stock paid to the TCW Investors by Company, Company shall pay additional amounts
in cash (either to the appropriate taxing authority or to the TCW Investors, as
appropriate) so that the amount received and retained by the TCW Investors after
the deduction or payment of such Taxes (including Taxes on such additional
amounts) equals the amount the TCW Investors would have received and retained if
no Taxes had been deducted or been payable by the TCW Investors; provided, that
the Company shall in no event be obligated to pay additional amounts to the TCW
Investors in the aggregate in
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15
excess of $125,000 each year. If Company acts as withholding agent, Company
shall pay to the appropriate taxing authority all Taxes required to be deducted
or withheld and shall, within 30 days after paying such Taxes, deliver to the
TCW Investors the original or a certified copy of the receipt for such payment.
The TCW Investors shall determine all amounts required to be paid by Company
with respect to Taxes under this Section; provided that, at the request of
Company, the TCW Investors shall provide Company with the information used in
determining such amounts; provided, further, that if Company objects to such
determination within 15 days, and such objection is accompanied by an opinion of
tax counsel in support of such objection, then Company and the TCW Investors
will negotiate in good faith to mutually resolve any disagreement over such
determination and following the failure to mutually resolve such disagreement,
either party may submit the matter to a "Big Six" accounting firm, reasonably
acceptable to both parties, which does not serve as the primary independent
accountants for either party, whose decision shall be final. The TCW Investors
and the TCW Investors' Foreign Partners shall provide Company, at Company's
request, properly completed forms, if applicable, W-8 and, if applicable, 1001
(or any successors thereto) with respect to the TCW Investors and the TCW
Investors' Foreign Partners, provided that no such additional amounts shall be
payable in respect of any dividends paid on the Preferred Stock to the extent
that Taxes would not have been imposed but for the failure of the TCW Investors
or the TCW Investors' Foreigner Partners to provide such forms. For purposes
hereof, the parties agree that dividends shall be deemed to be paid and
withholding required (x) with respect to dividends paid in stock, at such times
as dividends are paid in stock and (y) with respect to the redemption premium,
each regular dividend payment date based on the constant interest method;
provided, however, if the Company has no, or projects no, accumulated or current
earnings or profits for any taxable year, withholding shall not be required to
the extent permitted by law, and if withholding is required, the Company shall
pay such additional amounts but the TCW Investors and the TCW Investors' Foreign
Partners shall apply for any available refund of their withholding taxes and pay
it to the Company.
Section 4.3. Directors' and Officers' Indemnification, Insurance and
Expense. (a) The Company (together with its successors and assigns, the
"Indemnifying Party"), shall indemnify, defend and hold harmless each person who
is now, or becomes at any time after the date hereof, a director of Company
(each, an "Indemnified Party") against all losses, claims, damages, costs and
expenses (including reasonable attorneys' fees), liabilities, judgments and
settlement amounts that are paid or incurred in connection with any claim,
action, suit, proceeding or investigation (whether civil, criminal,
administrative or investigative and whether asserted or claimed before or after
the term of this Agreement) that is based in whole or in part on, or arises in
whole or in part out of, the fact that such Indemnified Party is or was a
director of Company
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16
and relates to or arises out of any action or omission ("Indemnified
Liabilities") to the full extent a corporation is permitted under applicable law
to indemnify its directors, as the case may be. Without limiting the foregoing,
in the event that any such claim, action, suit, proceeding or investigation is
brought against any Indemnified Party, (x) the Indemnifying Party will pay
expenses in advance of the final disposition of any such claim, action, suit,
proceeding or investigation to each Indemnified Party to the full extent
permitted by applicable law; (y) the Indemnifying Party shall pay all reasonable
fees and expenses of counsel for the Indemnified Parties promptly as statements
therefor are received; and (z) the Indemnifying Party shall use all commercially
reasonable efforts to assist in the defense of any such matter. Any Indemnified
Party wishing to claim indemnification under this Section 4.3, upon learning of
any such claim, action, suit, proceeding or investigation, shall notify the
Indemnifying Party, but the failure so to notify the Indemnifying Party shall
not relieve the Indemnifying Party from any liability which it may have under
this paragraph except to the extent such failure to give notice materially and
irreparably prejudices the Indemnifying Party.
(b) Except to the extent required by law, no party hereto will take
any action so as to amend, modify or repeal the provisions for indemnification
of directors contained in the Charter Documents of Company in such a manner as
would adversely affect the rights of any Indemnified Party.
(c) From and after the date hereof, to the extent commercially
available, Company shall maintain directors' liability insurance for each
director of Company of a character usually insured by corporations engaged in
the same or similar business in the amounts customarily insured against by such
corporations; provided, that such amount shall at least be $5,000,000.
(d) To the fullest extent permitted by applicable law, Company
shall, from time to time upon request therefor, promptly reimburse each director
of Company for the reasonable out-of-pocket expenses incurred by him or her in
connection with his or her attendance at meetings of the Board and committees
thereof and any other activities undertaken by him or her in his or her capacity
as a director of Company. The foregoing shall be in addition to, and not in lieu
of, any indemnification or reimbursement obligations of Company or its
Subsidiaries under the Charter Documents (or comparable charter documents) and
this Section 4.3.
(e) The provisions this Sections are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and his or her heirs and
legal representatives, and shall be in addition to any other rights such
Indemnified Party or director may have under the Charter Documents (or
comparable charter documents) of Company and its Subsidiaries.
- 16 -
17
Section 4.4. Financial Statements, Certificates and Information. The
Company will deliver to the TCW Investors:
(a) as soon as practicable, but in any event not later then ninety
(90) days after the end of each fiscal year of the Company, the consolidated
balance sheet of the Company and its Subsidiaries and the consolidating balance
sheet of the Company and its Subsidiaries, each as at the end of such year, and
the related consolidated statement of income and consolidated statement of cash
flow and consolidating statement of income for such year, each setting forth in
comparative form the figures for the previous fiscal year and all such
consolidated and consolidating statements to be in reasonable detail, prepared
in accordance with generally accepted accounting principles, and certified by
the Company's independent certified public accountants;
(b) as soon as practicable, but in any event not later than
forty-five (45) days after the end of each of the fiscal quarters of the
Company, copies of the unaudited consolidated balance sheet of the Company and
its Subsidiaries and the unaudited consolidating balance sheet of the Company
and its Subsidiaries, each as at the end of such quarter, and the related
consolidated statement of income and consolidated statement of cash flow and
consolidating statement of income for such quarter and the portion of the
Company's fiscal year then elapsed, all in reasonable detail and prepared in
accordance with generally accepted accounting principles, together with a
certification by the principal financial or accounting officer of the Company
that the information contained in such financial statements fairly presents the
financial position of the Company and their Subsidiaries on the date thereof
(subject to year-end adjustments);
(c) as soon as practicable, but in any event within thirty (30) days
after the end of each month in each fiscal year of the Company, the unaudited
consolidated balance sheet of the Company and its Subsidiaries and unaudited
consolidating balance sheet of the Company and their Subsidiaries, each as at
the end of such month, and the related consolidated statement of income and
consolidated statement of cash flow and consolidating statement of income for
such month, all in reasonable detail and each prepared in accordance with
generally accepted accounting principles, together with a certification by the
principal financial or accounting officer of the Company that the information
contained in such financial statements fairly presents the financial condition
of the Company and its Subsidiaries on the date thereof (subject to year-end
adjustments);
(d) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, a statement certified by the
principal financial or accounting officer of the Company setting forth in
reasonable detail
- 17 -
18
computations evidencing compliance with certain covenants made by the Company
and (if applicable) reconciliations to reflect changes in generally accepted
accounting principles to the Balance Sheet Date;
(e) contemporaneously with the filing or mailing thereof, copies of
all material of a financial nature filed with the Securities and Exchange
Commission or sent to the stockholders of the Company;
(f) on or prior to the end of each fiscal year of the Company and
their Subsidiaries and otherwise from time to time upon request of the TCW
Investors, a monthly budget for the next fiscal year of the Company and their
Subsidiaries including pro forma consolidated and consolidating (prepared by
division rather than by corporate entity) statements of income and consolidated
statement of cash flows of the Company and their Subsidiaries; and
(g) from time to time such other financial data and information
(including accountants, management letters) as the TCW Investors may reasonably
request.
(h) Company shall notify the TCW Investors forthwith in writing,
upon becoming aware of any default or event which is or would be, upon the
passing of time, a "Voting Rights Triggering Event," including any occasion upon
which the Maintenance Test Ratio exceeds the Maximum Test Ratio (as such terms
are defined in the Certificate of Designation).
Section 4.5. Additional Provisions.
(a) Notwithstanding anything herein to the contrary, the provisions
of this Agreement as they relate to securities of the Company owned or
controlled directly or indirectly at any time by Jefferies shall be limited to
the Jefferies Warrants and the Common Stock received upon exercise thereof.
(b) Following an IPO, if requested by Holdings, Company shall
cooperate in good faith with Holdings to register under the Securities Act of
1933, as amended, the shares of Common Stock held by Holdings; provided such
registration has no material adverse affect on the Company and does not
materially interfere with the rights of the Holders hereunder or materially
interfere with the rights granted under any registration rights agreement.
(c) So long as Holdings and Company are consolidated for federal
income tax purposes, Holdings shall not own any assets or conduct any operations
other than ownership of the stock of the Company and incidental activities
related thereto.
(d) Notwithstanding the fact that Company has agreed to issue to
TAMCO the TAMCO Warrants, each party to this
- 18 -
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Agreement acknowledges and agrees that TAMCO, the TCW Investors and their
respective Affiliates are not acting in any agency, advisory or other fiduciary
capacity with respect to the Company or any other Holder (except as provided in
Section 4.6 hereof) in connection with the transactions contemplated by the
Offering Circular.
Section 4.6. TCW Agent and Management Agent.
Each of the TCW Investors, individually and in the capacity in which
they are acting herein, hereby appoint TAMCO as agent (together with its
successors in such capacity herein referred to as the "TCW Agent") to act for
and on behalf of the TCW Investors under and pursuant to this Agreement, until
such time as the TCW Agent and Company receives written notice from the holders
of a majority of the shares of Common Stock (measured on a fully diluted basis,
assuming the exercise of all Convertible Securities as of the time of
determination) owned by the TCW Investors, that TAMCO has been removed as the
TCW Agent and a successor has been named, in which case such successor shall act
as the TCW Agent hereunder for all purposes.
Each of the Management Stockholders, individually and in the
capacity in which they are acting herein, hereby appoint Xxxxx X. Xxxxxxx as
agent (together with his successors in such capacity herein referred to as the
"Management Agent") to act for and on behalf of the Management Stockholders
under and pursuant to this Agreement, until such time as Xxxxx X. Xxxxxxx and
Company receives written notice from the holders of a majority of the shares of
Common Stock (measured on a fully dilute basis, assuming the exercise of all
Convertible Securities as of the time of determination) owned by the Management
Stockholders, that Xxxxx X. Xxxxxxx has been removed as the Management Agent and
a successor has been named, in which case such successor shall act as the
Management Agent hereunder for all purposes.
The TCW Agent and the Management Agent (collectively referred to
hereinafter as the "Agents") do hereby accept such appointment and are
authorized to act on behalf of the TCW Investors and the Management
Stockholders, respectively, in (i) exercising rights and remedies with respect
to any matter under or pursuant to this Agreement, (ii) giving notices to the
parties hereto, (iii) receiving information or notices from the parties hereto,
(iv) communicating to the parties hereto determinations required or permitted to
be made under this Agreement, and (v) all other actions which the TCW Investors
or the Management Stockholders, respectively, are entitled to take hereunder.
Such appointment of TAMCO as agent for the TCW Investors and Xxxxx X. Xxxxxxx as
agent for the Management Stockholders shall not, however, impair or modify any
rights, obligations or duties which TAMCO or any Affiliate of TAMCO otherwise
has with respect to any of the TCW Investors, individually or as a group, or
which Xxxxx X. Xxxxxxx otherwise has with respect to any of the Management
Stockholders.
- 19 -
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In its administration of this Agreement as an agent, the TCW Agent
and the Management Agent, respectively (i) shall have no duty or fiduciary
relationship, except as expressly set forth in this Agreement with respect
solely to the parties for whom such Agent acts, (ii) may request and rely on
written directions from the TCW Investors and the Management Stockholders,
respectively, (iii) may execute any duty under this Agreement by and through
agents or attorneys selected by it using reasonable care, (iv) shall have
liability only as to acts of gross negligence and willful misconduct, and shall
not be liable for any other party's failure to perform under this Agreement, and
(v) shall be entitled to rely upon any communication by a proper party which it
believes to be genuine.
ARTICLE V
CERTAIN DEFINITIONS
Except for capitalized terms defined elsewhere in this Agreement or
the following terms, which shall have the definitions set forth below,
capitalized terms used herein shall have the meanings set forth in the Purchase
Agreement:
"Affiliate" has the meaning given such term in Rule 12b-2 under the
Exchange Act.
"Board" has the meaning set forth in Section 1.1.
"Business Day" means any day (other than a day which is a Saturday,
Sunday or legal holiday in the State of New York) on which banks are open for
business in New York.
"Bylaws" means the By-laws of the Company as set forth in Exhibit
3.3 to the Company Annual Report on Form 10-K for the fiscal year ended December
30, 1996.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock of such Person; and (ii)
with respect to any other Person, any and all partnership or other equity
interests of such Person.
"Certificate of Designation" means the Certificate of Designation of
the Powers, Preferences and Relative, Participating, Optional and Other Special
Rights of the 12% Series A Senior Pay-In-Kind Exchangeable Preferred Stock and
the 12% Series B Senior Pay-In-Kind Exchangeable Preferred Stock and
Qualifications, Limitations or Restrictions Thereof, as filed with the Secretary
of State of the State of Delaware on February 24, 1998.
- 20 -
21
"Certificate of Incorporation" means the Amended and Restated
Certificate of Incorporation of the Company as filed with the Secretary of State
of the State of Delaware on February 23, 1998.
"Charter Documents" has the meaning set forth in Section 1.1 hereof.
"Common Stock" means any and all shares, interests or other
participations in, and other equivalents (however designated, whether voting or
non-voting) of Company's common stock, par value $.01 per share, whether
outstanding on the date hereof or issued after such date, and includes, without
limitation, all series and classes of such common stock.
"Compensation Committee" has the meaning set forth in Section 2.4.
"Convertible Securities" means any warrants, options or rights to
acquire shares or securities convertible into or exchangeable for shares of
Common Stock.
"Employment Agreements" means each of (i) the Amended and Restated
Employment Agreement dated as of December 14, 1992, between the Company and
Xxxxx X. Xxxxxxx; (ii) the Amended and Restated Employment Agreement dated as of
December 14, 1993, between the Company and Xxxxx X. Xxxxxxx; and (iii) the
Amended and Restated Employment Agreement dated as of December 14, 1993, between
the Company and Xxxxxxx X. Xxxxxxxxx.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession, and in the rules and regulations of the Securities and
Exchange Commission, that are in effect on the date hereof.
"IPO" means an underwritten initial public offering of Common Stock
by Company pursuant to an effective registration statement under the Securities
Act.
"Permitted Issuances" means, (i) any issuance of shares of Common
Stock by Company pursuant to the exercise or conversion of Convertible
Securities outstanding on the date hereof, including the Warrants and the other
Convertible Securities identified on Schedule I; (ii) the sale or issuance of
shares of Common Stock or Convertible Securities pursuant to any employee
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22
stock option plan, stock purchase plan, employee benefit plan, employment
contract, or any similar benefit or incentive program or agreement, where the
primary purpose of such plan, program or agreement is not to raise capital for
the Company and in case where such sale or issuance or plan is approved by the
Compensation Committee; (iii) the issuance of shares of Common Stock or
Convertible Securities pursuant to any merger transaction involving the Company
or any of its Subsidiaries as direct consideration for the acquisition by the
Company or any of its subsidiaries of assets or another business entity; (iv)
the issuance of preferred stock authorized under the Certificate of Designation;
or (v) a Registered Underwritten Public Offering, provided that immediately
after giving effect to such Registered Public Offering, Holders and Permitted
Transferees who are then parties to this Agreement own and control (including,
without limitation, the power to vote for directors and approve amendments to
the Charter Documents) at least a majority of the outstanding shares of Common
Stock measured on both an actual and fully diluted basis (assuming, with respect
solely to the determination of outstanding shares on a fully diluted basis, the
exercise of all Convertible Securities as of the time of determination).
"Permitted Transferees" has the meaning set forth in
Section 3.1(d) hereof.
"Person" means any natural person, corporation, general partnership,
limited partnership, limited liability company, proprietorship, other business
organization, trust, union or association.
"Public Company Date" means the date that is 45 days after the date
upon which underwritten primary public offerings of Common Stock of the Company
pursuant to effective registration statements under the Securities Act have
resulted in 35% of the Company's Common Stock (measured on a fully diluted basis
after giving effect to such offering) being sold to the public and in the
Company's Common Stock being listed for trading on any of the New York Stock
Exchange, the NASDAQ National Market or the American Stock Exchange.
"Registered Underwritten Public Offering" means issuances of Common
Stock by the Company to the public in an underwritten offering registered under
the Securities Act, immediately whereafter the Common Stock is listed for
trading on any of the New York Stock Exchange, NASDAQ National Market or the
American Stock Exchange.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Subsidiary" means any Person a majority of the equity ownership or
Voting Stock of which is at the time owned, directly or indirectly, by the
Company or by one or more other
- 22 -
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Subsidiaries or by the Company and one or more other Subsidiaries.
"Transfer" has the meaning set forth in Section 3.1(a).
"Transferee" has the meaning set forth in Section 3.1(b).
"Voting Stock" means, with respect to any Person (i) one or more
classes of the Capital Stock of such Person having general voting power to elect
at least a majority of the board of directors, managers or trustees of such
Person (irrespective of whether or not at the time Capital Stock of any other
class or classes have or might have voting power by reason of the happening of
any contingency); and (ii) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person described in clause (i) above.
"Wholly Owned Subsidiary" means a Person all of whose capital stock
is owned by the Company or a Wholly Owned Subsidiary of the Company.
ARTICLE VI
MISCELLANEOUS
Section 6.1. Amendment; Termination. This Agreement shall not be
terminated, modified or amended except as provided in the following sentence.
This Agreement (i) may be terminated by a majority of the entire Board, with the
concurrence of the TCW Investors and (ii) may be terminated, modified or amended
by approval of each of (A) the holders of a majority of the outstanding shares
of Common Stock of the Company (measured on a fully diluted basis assuming the
conversion of all Convertible Securities) owned by the TCW Investors; (B) the
holders of a majority of the outstanding shares of Common Stock of the Company
(measured on a fully diluted basis assuming the conversion of all Convertible
Securities) owned by the Management Stockholders; and (C) Holdings; provided
that Jefferies' approval shall be required with respect to modifications or
amendments to this Agreement that impose additional material obligations on
Jefferies and its Permitted Transferees.
Section 6.2. Notices. All notices to be given by any party hereunder
shall be in writing and shall be deemed to have been duly given if mailed, by
first class or registered mail, three (3) Business Days after deposit in the
United States Mail, or if telexed or telecopied, sent by telegram, or delivered
by hand or reputable overnight courier, when confirmation is received, in each
case as follows:
(i) in the case of Company, Holdings or any Management Stockholder to:
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c/o American Restaurant Group, Inc.
000 Xxxxxxx Xxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Chairman
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx III, Esq.
Telecopy: (000) 000-0000
(ii) in the case of TAMCO or the TCW Investors to:
TCW Asset Management Company
00000 Xxxxx Xxxxxx Xxxx., 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxxx X. Tell
Telecopy: (000) 000-0000
with a copy to:
Milbank, Tweed, Xxxxxx & XxXxxx
000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
(iii) in the case of Jefferies to:
Jefferies & Company, Inc.
00000 Xxxxx Xxxxxx Xxxx., 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Telecopy: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxx X. Xxxxxx, Xx.
Telecopy: (000) 000-0000
The parties may change their respective addresses for purposes of notice
hereunder by giving notice of such change to all other parties in the manner
provided in this Section 6.2.
Section 6.3. Binding Effect. This Agreement represents the entire
agreement among the parties hereto with respect to the subject matter hereof,
supersedes all prior
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25
negotiations, statements and agreements of the parties hereto with respect to
the subject hereof, and shall be binding upon and inure to the benefit of the
respective successors and assigns of the parties hereto.
Section 6.4. Counterparts. This Agreement may be executed in
counterparts and all of which are deemed to be one and the same agreement
binding upon each of the parties hereto.
Section 6.5. Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement.
Section 6.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to its conflicts of law doctrine, except for matters of corporate law, which
shall be governed by and construed in accordance with the General Corporation
Law of the State of Delaware.
Section 6.7. Injunctive Relief. It is hereby agreed and acknowledged
by each of the parties hereto that it will be impossible to measure in money the
damages that would be suffered if the parties to this Agreement fail to comply
with any of the obligations imposed on them by this Agreement and that in the
event of any such failure, an aggrieved person will be irreparably damaged and
will not have an adequate remedy at law. Any such person shall, therefore, be
entitled to injunctive relief, including specific performance, to enforce such
obligations, and if any action should be brought in equity to enforce any of the
provisions of this Agreement, none of the parties hereto shall raise the defense
that there is an adequate remedy at law.
Section 6.8. Severability. The invalidity or unenforceability of any
provisions of this Agreement in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Agreement in such
jurisdiction or the validity, legality or enforceability of any provision of
this Agreement in any other jurisdiction, it being intended that all rights and
obligations of the parties hereunder shall be enforceable to the fullest extent
permitted by law.
Section 6.9. Recapitalization, etc. In the event that any capital
stock or other securities are issued in respect of, in exchange for, or in
substitution of, any shares of Common Stock by reason of any reorganization,
recapitalization, reclassification, merger, consolidation, spin-off, partial or
complete liquidation, stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the shares of Common Stock or any other change in
the Company's capital structure, appropriate adjustments shall be made to the
provisions of this Agreement so as to fairly and equitably preserve, as far as
practicable,
- 25 -
26
the original rights and obligations of the parties hereto under this Agreement.
[SIGNATURE PAGES FOLLOW]
- 26 -
27
[SIGNATURE PAGE 1 OF 5 TO SECURITYHOLDERS AGREEMENT]
IN WITNESS WHEREOF, the undersigned, thereunto duly authorized, have
hereunto set their respective hands as of the day and year first above written.
"COMPANY": AMERICAN RESTAURANT GROUP, INC.
By: /s/ XXXXXXX X. XxXXXXXXX, XX.
----------------------------------------------
Name: Xxxxxxx X. XxXxxxxxx, Xx.
Its: Vice President and Chief Financial Officer
28
[SIGNATURE PAGE 2 OF 5 TO SECURITYHOLDERS AGREEMENT]
"HOLDERS":
"HOLDINGS": AMERICAN RESTAURANT GROUP HOLDINGS, INC.
By: /s/ XXXXXXX X. XxXXXXXXX, XX.
----------------------------------------------
Name: Xxxxxxx X. XxXxxxxxx, Xx.
Its: Vice President and Chief Financial Officer
29
[SIGNATURE PAGE 3 OF 5 TO SECURITYHOLDERS AGREEMENT]
"HOLDERS" (continued):
"JEFFERIES": JEFFERIES & COMPANY, INC.
By: /s/ XXXXXXX X. XXXXXXXXXX
----------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Its: Power of Attorney
30
[SIGNATURE PAGE 4 OF 5 TO SECURITYHOLDERS AGREEMENT]
"HOLDERS" (continued):
"MANAGEMENT
STOCKHOLDERS": /s/ XXXXXXX X. XxXXXXXXX, XX.
----------------------------------------------
Xxxxx X. Xxxxxxx
/s/ XXXXXXX X. XxXXXXXXX, XX.
----------------------------------------------
Xxxxxxx Family Limited Partnership
/s/ XXXXXXX X. XxXXXXXXX, XX.
----------------------------------------------
Xxxxxxx X. XxXxxxxxx, Xx.
/s/ XXXXXXX X. XxXXXXXXX, XX.
----------------------------------------------
Xxxxxxx X. Xxxxxxxxx
/s/ XXXXXXX X. XxXXXXXXX, XX.
----------------------------------------------
Xxxxxxx X. Xxxxxx
/s/ XXXXXXX X. XxXXXXXXX, XX.
----------------------------------------------
Xxxxxxxx Xxxxxx
31
[SIGNATURE PAGE 5 OF 5 TO SECURITYHOLDERS AGREEMENT]
"HOLDERS" (continued):
"TAMCO": TCW ASSET MANAGEMENT COMPANY
By: /s/ XXXXXXX X. XXXXXX
--------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Its: Managing Director
By: /s/ XXXXXXXX X. TELL
--------------------------------------------
Name: Xxxxxxxx X. Tell
Its: Senior Vice President
"TCW INVESTORS": TCW SHARED OPPORTUNITY FUND II, L.P.
By: TCW Investment Management Company
Its: Investments Manager
By: /s/ XXXXXXX X. XXXXXX
--------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Its: Managing Director
By: /s/ XXXXXXXX X. TELL
--------------------------------------------
Name: Xxxxxxxx X. Tell
Its: Senior Vice President
TCW LEVERAGED INCOME TRUST, L.P.
By: TCW Advisory (Bermuda), Ltd.
Its: General Partner
By: /s/ XXXXXXXX X. TELL
--------------------------------------------
Name: Xxxxxxxx X. Tell
Its: Senior Vice President
By: /s/ XXXXXXX X. XXXXXX
--------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Its: Managing Director
XXXXX UNIVERSITY
By: Xxxxx University Third Century Fund
By: /s/ XXXX X. XXXXXXXXX
--------------------------------------------
Name: Xxxx X. Xxxxxxxxx
Its: Investment Manager
TCW SHARED OPPORTUNITY FUND IIB, LLC
By: TCW Asset Management Company
Its: Investments Manager
By: /s/ XXXXXXX X. XXXXXX
--------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Its: Managing Director
By: /s/ XXXXXXXX X. TELL
--------------------------------------------
Name: Xxxxxxxx X. Tell
Its: Senior Vice President
32
SCHEDULE I
Shares of Type of Convertible
"Holders" Common Stock Security
--------- ------------ -------------------
"TAMCO"
TCW Asset Management TAMCO Warrants
Company 0 875
"TCW INVESTORS"
TCW Shared Opportunity Warrants
Fund II, L.P. 0 5,000
TCW Leveraged Income Warrants
Trust, L.P. 0 10,000
Warrants
Xxxxx University 0 1,000
Shared Opportunity Fund Warrants
IIB, LLC 0 2,000
"Jefferies" Jefferies Warrants
Jefferies & Company, Inc. 0 3,500
"Holdings"
American Restaurant Group
Holdings, Inc. 93,150 0
"Management Stockholders"
Xxxxx X. Xxxxxxx 19,409 0
Xxxxxxx Family Limited
Partnership 9,702 0
Xxxxxxx X. XxXxxxxxx, Xx. 2,426 0
Xxxxxxx X. Xxxxxxxxx 2,426 0
Xxxxxxx X. Xxxxxx 387 0
Xxxxxxxx Xxxxxx 581 0
TOTAL SHARES: 128,081 22,375
