EXHIBIT 2.5
SUBSCRIPTION AND SHAREHOLDERS AGREEMENT
THIS SUBSCRIPTION AND SHAREHOLDERS AGREEMENT (this
"Agreement") is made as of March 31, 2000, among WinsLoew
Furniture, Inc., a Florida corporation (the "Company"), the
Lead Trivest Investor (as hereinafter defined) and Xxxxx X.
Xxxxxxxx (the "Shareholder").
Preliminary Statements:
1. The Shareholder desires to purchase shares (the "Shares")
of the Company's common stock, par value $.01 per share
("Common Stock"), on the terms and subject to the conditions
set forth in this Agreement.
2. The Company desires to issue and sell the Shares to the
Shareholder.
3. The Company and the Shareholder desire to enter into this
Agreement setting forth the terms and conditions relating to
the purchase and sale of the Shares.
4. The Company, the Lead Trivest Investor and the
Shareholder believe that it would be in the best interest of
the Company to make provisions governing the purchase of the
Shareholder Stock in the event of his death or disability or
if he ceases to be employed by the Company or any of its
Subsidiaries for any reason.
5. The Company, the Lead Trivest Investor and the
Shareholder believe that it would be in the best interest of
the Company to place certain restrictions upon the right of
transfer of the Shareholder Stock.
6. The directors of the Company, having considered the
provisions of this Agreement, have resolved that in their
opinion the restrictions upon the transfer of the
Shareholder Stock, the provisions for the redemption and/or
purchase of the Shareholder Stock, and the establishment of
rights and obligations upon the occurrence of certain
events, all as hereinafter set forth, are in the best
interest of the Company and its shareholders.
7. Contemporaneously with the execution and delivery of this
Agreement and pursuant to that certain Stock Purchase
Agreement dated as of March 31, 2000 (the "Stock Purchase
Agreement") among the Company, Wabash Valley Manufacturing,
Inc., an Indiana corporation ("Wabash"), and the
shareholders of Wabash, the Company will acquire all of the
issued and outstanding shares of capital stock of Wabash.
Agreement:
NOW THEREFORE, in consideration of the mutual covenants
contained herein, the parties hereto agree as follows:
1. Interpretation of this Agreement.
a) Terms Defined. As used herein, the following terms when
used in this Agreement have the meanings set forth below:
"Acquisition" means the acquisition of Wabash by Acquisition
pursuant to the Stock Purchase Agreement, together with the
merger of Acquisition with and into Wabash immediately
thereafter.
"Affiliate" (whether or not capitalized) has the meaning set
forth in Rule 12b-2 of the regulations promulgated under the
Securities Exchange Act.
"Annual Report" means the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1999, filed with
the Securities and Exchange Commission.
"Applicable Percentage" on any date shall mean a fraction
(expressed as a percentage), the numerator of which is the
aggregate number of Company Securities to be transferred by
the Lead Trivest Investor and the denominator of which is
the aggregate number of Company Securities owned by (and/or
purchasable by) the Lead Trivest Investor; all such
calculations shall be on a fully-diluted basis and carried
out to one hundredth of a share and then rounded to the
nearest share.
"Authorization Period" shall have the meaning given to it in
Section 4(b) of this Agreement.
"Available Shares" shall have the meaning given to it in
Section 3(d) of this Agreement.
"Board" shall mean the Company's Board of Directors.
"Buyer" shall have the meaning specified in Section 4 of
this Agreement.
"Cause" shall have the meaning assigned to it in any written
employment agreement to between the Company (or any of its
Subsidiaries) and the Shareholder and, if there shall be no
such written employment agreement, shall mean (i) the
commission of any act by the Shareholder constituting
financial dishonesty against the Company or its
Subsidiaries, (ii) the commission by the Shareholder of a
felony or other crime involving moral turpitude, (iii) the
repeated failure by the Shareholder to follow the reasonable
written directives of the Company's Board, (iv) the
Shareholder's gross dereliction of duty to the Company or
its Subsidiaries or (v) any breach by the Shareholder of any
of the provisions of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder.
"Common Stock" shall have the meaning given to it in Clause
A of the recitals hereof.
"Company" shall have the meaning given to it in the first
sentence of this Agreement.
"Company's Board" means the Board of Directors of the
Company.
"Company Registration Statement" shall have the meaning
specified in Section 7.5.
"Company Securities" shall mean all shares of Common Stock
and all securities convertible into or exercisable or
exchangeable for Common Stock. For purposes of this
Agreement (1) each holder of Restricted Securities shall be
deemed to own or control that number of shares of Common
Stock then directly owned or controlled by such holder, plus
that number of shares of Common Stock into or for which any
securities then directly or indirectly owned or controlled
by such holder are then, directly or indirectly,
convertible, exercisable or exchangeable and (2) references
in this Agreement to "shares" of Restricted Securities other
than Common Stock shall be deemed to refer to the number of
shares of Common Stock into or for which any securities then
directly or indirectly owned or controlled by such holder
are then, directly or indirectly, convertible, exercisable
or exchangeable.
"Drag Along Notice" shall have the meaning specified in
Section 5 of this Agreement.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Exempt Transfer" shall have the meaning specified in
Section 4(a) of this Agreement.
"Family Group" shall mean an individual's spouse and lineal
descendants, parents, grandparents and any family limited
partnership or trust or other fiduciary relationship solely
for the benefit of such individual and/or such individual's
spouse, parents, grandparents and/or lineal descendants.
"Fleet Credit Facility" means the credit facility provided
for pursuant to that certain Loan and Security Agreement
dated as of August 27, 1999 among (i) the Company, Winston
Furniture Company of Alabama, Inc., Loewenstein, Inc.,
Texacraft, Inc., Tropic Craft, Inc., Winston Properties,
Inc. and Pompeii Furniture Co., Inc., as Borrowers, (ii) the
Lenders named therein, (iii) Xxxxxx Financial, Inc. and
Canadian Imperial Bank of Commerce, as Co-Agents, (iv) Fleet
Capital Corporation, as Administrative Agent, and (v)
BancBoston Xxxxxxxxx Xxxxxxxx Inc., as Arranger, pursuant to
and as more fully described in the Prospectus, and as
amended as of the date hereof.
"Indemnified Person" shall have the meaning specified in
Section 7 of this Agreement.
"Investors Agreement" means that certain Investors'
Agreement dated as of August 27, 1999 among the Company and
the Investors named therein.
"Key Employee Equity Plan" means the WinsLoew 1999 Key
Employee Equity Plan under which an aggregate of 20,000
shares of Common Stock are reserved for direct sale to
employees and independent sales representatives of WinsLoew
Furniture, Inc.
"Lead Trivest Investor" means Trivest Fund II Group, Ltd., a
Florida limited partnership, and its successors and assigns.
"Liquidity Event" means (i) the sale of all, or
substantially all, of the Company's consolidated assets in
any single transaction or series of related transactions;
(ii) the sale or issuance, or series of related sales or
issuances, of Common Stock in any single transaction or
series of related transactions which results in any Person
or group of affiliated Persons (other than the holders of
Common Stock as of the date of this Agreement and affiliates
of such holders) owning more than 50% of the Common Stock
outstanding at the time of such sale or issuance or such
series of sales and/or issuances; (iii) the consummation of
a Qualified Public Offering; or (iv) any merger or
consolidation of the Company with or into another
corporation (regardless of which entity is the surviving
corporation) if, after giving effect to such merger or
consolidation, the holders of the Company's voting
securities (on a fullydiluted basis) immediately prior to
the merger or consolidation own voting securities of the
surviving or resulting corporation representing less than a
majority of the ordinary voting power to elect directors of
the surviving or resulting corporation (on a fullydiluted
basis).
"Management Stock Option Plan" means any stock option plan
which may be adopted by the Company for the benefit of the
employees of the Company or its Subsidiaries, as the same
may from time to time be amended or supplemented.
"Market Value" of each share of Shareholder Stock means the
fair value of a share of the Common Stock as of the
Termination Date (without applying any minority or
illiquidity discounts to such valuation), as determined
jointly by the Board and the Shareholder. If such parties
are unable to reach an agreement within 21 days after the
Termination Date, then (i) Market Value will be determined
by an independent investment banker or other valuation
expert of national standing selected by the Board and
reasonably acceptable to the Shareholder (the "Valuation
Firm"), (ii) the Company shall promptly deliver to the
Valuation Firm and the Shareholder a certificate setting
forth in reasonable detail the Board's calculation of Market
Value (the "Company's Proposed Value") and (iii) the
Shareholder shall promptly deliver to the Valuation Firm and
the Company a certificate setting forth in reasonable detail
the Shareholder's calculation of Market Value (the
"Shareholder's Proposed Value"). The parties shall use
reasonable efforts to cause the Valuation Firm to complete
such valuation within 55 days after the Termination Date.
Each party shall pay its, his or her own costs and expenses
incurred in connection with such determination of Market
Value; provided, that the fees and expenses of the Valuation
Firm shall be borne as follows:
(6) if the Valuation Firm determines that the Market Value
is equal to or less than the Company's Proposed Value (the
Market Value so determined is referred to herein as the "Low
Amount"), the Shareholder will be responsible for all of the
fees and expenses of the Valuation Firm;
(7) if the Valuation Firm determines that the Market Value
is equal to or greater than the Shareholder's Proposed Value
(the Market Value so determined is referred to herein as the
"High Amount"), the Company will be responsible for all of
the fees and expenses of the Valuation Firm; and
(8) if the Valuation Firm determines that the Market Value
is greater than the Company's Proposed Value but less than
the Shareholder's Proposed Value (the Market Value so
determined is referred to herein as "Actual Amount"), the
Shareholder will be responsible for that fraction of the
fees and expenses of the Valuation Firm equal to (1) the
difference between the High Amount and the Actual Amount
over (2) the difference between the High Amount and the Low
Amount, and the Company will be responsible for the
remainder of the fees and expenses.
"Notice of Transfer" shall have the meaning specified in
Section 6 of this Agreement.
"Option Notice" shall have the meaning given to it in
Section 3(d) of this Agreement.
"Original Cost" of each share of Shareholder Stock means
$124.34 for each share of Common Stock (as proportionally
adjusted for all stock splits, stock dividends and other
recapitalization affecting Common Stock subsequent to the
date of this Agreement); provided, however, that the
Original Cost for each share of Common Stock purchased by
the Shareholder pursuant to the exercise of options granted
to him under any Management Stock Option Plan shall be the
exercise price thereof (as such term is defined in such
Management Stock Option Plan), as proportionally adjusted
pursuant to the provisions of the Management Stock Option
Plan.
"Other Subscriptions" means, collectively, the subscriptions
of shares of Common Stock simultaneously herewith by the
following Persons who will acquire, together with the Shares
acquired hereunder, an aggregate of 57,103.6009 shares of
Common Stock at the Subscription Price: (i) the
subscription of 8,755.36559 shares of Common Stock by
Xxxxxxx Xxxxxxxx pursuant to that certain Subscription and
Shareholders Agreement dated as of the date hereof among the
Company, the Lead Trivest Investor and Xxxxxxx Xxxxxxxx; and
(ii) the subscription of 18,902.3202 shares of Common stock
by the Lead Trivest Investor and 18,094.3789 shares of
Common Stock by Trivest Furniture Partners, Ltd.
"Person" means an individual, a partnership, a corporation,
a limited liability company, an association, a joint stock
company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department,
agency or political subdivision thereof.
"Prohibited Amount" shall have the meaning given to it in
Section 3(f) of this Agreement.
"Prospectus" means the Company's Prospectus, dated November
19, 1999, a copy of which has been previously provided to
the Shareholder.
"qualification" or "compliance" shall mean the qualification
or compliance of all Registrable Shares included in any
registration pursuant to Section 7 under all applicable blue
sky or other applicable securities laws.
"Qualified Public Offering" shall mean a firm commitment
underwritten public offering of the Company's Common Stock
underwritten by a nationally recognized full-service
investment bank pursuant to which the aggregate gross
proceeds received by the Company is at least $20,000,000 at
a price per share of not less than $10.00 (following
appropriate adjustment in the event of any stock dividends,
stock split, combination or other similar recapitalization
affecting such shares).
"register", "registered" and "registration" as used in
Section 7 refer to a registration effected by filing a
registration statement in compliance with the Securities Act
to permit the sale and disposition of the Registrable Shares
and any amendment filed or required to be filed to permit
any such disposition.
"Registrable Shares" shall mean any shares of Shareholder
Stock, except that, as to any particular Registrable Shares,
such securities, once issued, shall cease to be Registrable
Shares when (a) a registration statement covering such
securities has been declared effective and such securities
have been disposed of pursuant to an effective registration
statement, or (b) such securities have been sold to the
public without registration in accordance with Rule 144 (or
any similar provision then in force) under the Securities
Act.
"Registration Expenses" shall mean all fees, expenses and
disbursements related to any registration, qualification or
compliance pursuant to Section 7, including, without
limitation, all registration, filing, rating and listing
fees, blue sky fees and expenses, printing expenses,
reasonable fees and disbursements of counsel (including,
without limitation, the reasonable fees, expenses and
disbursements of one counsel for the holder or holders of
the Registrable Shares), and reasonable expenses of any
special audits incidental to or required by any
registration, qualification or compliance, except that
Registration Expenses shall not include any Selling
Expenses.
"Repurchase Notice" shall have the meaning given to it in
Section 3(c) of this Agreement.
"Repurchase Note(s)" shall have the meaning given to it in
Section 3(f) of this Agreement.
"Repurchase Option" shall have the meaning given to it in
Section 3(d) of this Agreement.
"Sale Notice" shall have the meaning given to it in Section
4(a) of this Agreement.
"Securities Act" means the Securities Act of 1933, as
amended.
"Selling Expenses" shall mean all underwriters' discounts,
selling commissions, transfer taxes and other similar
expenses (except to the extent included in Registration
Expenses) attributable to the Registrable Shares.
"Senior Debt" shall have the meaning given to it in Section
3(f) of this Agreement.
"Senior Subordinated Notes" means the Senior Subordinated
Notes of the Company in the aggregate principal amount of
$105 million pursuant to and as more fully described in the
Prospectus.
"Shareholder" shall have the meaning given to it in the
first sentence of this Agreement.
"Shareholder Stock" means (i) all Company Securities now
owned or hereafter acquired by the Shareholder or any member
of the Shareholder's Family Group, and (ii) all Company
Securities issued with respect to the Company Securities
referred to in clause (i) above by way of stock dividend or
stock split or in connection with any combination of shares,
merger, consolidation, recapitalization or other
reorganization. All Shareholder Stock will continue to be
Shareholder Stock in the hands of any transferee, other than
(x) the Company, (y) any Trivest Affiliate and (z)
purchasers pursuant to an offering registered with the
Securities and Exchange Commission pursuant to the
Securities Act or purchasers pursuant to a public sale
through a marketmaker, broker or dealer under Rule 144 (or
any successor rule) promulgated under the Securities Act.
Shareholder Stock under this Agreement does not include any
stock which is "Shareholder Stock" under other agreements
among the Company, the Lead Trivest Investor and employees
(or independent sales representatives) of the Company or its
Subsidiaries regarding the purchase of the Company's Common
Stock.
"Shareholders Agreements" means, collectively, the
Shareholders Agreements, each substantially in the form
attached as Exhibit B to the Key Employee Equity Plan,
entered into by the Company with the respective shareholders
party thereto.
"Shares" shall have the meaning given to it in Clause A of
the recitals hereof.
"Subject Securities" shall have the meaning specified in
Section 8 hereof.
"Subscription Closing" shall have the meaning given to it in
Section 2(a) hereof.
"Subscription Price" shall have the meaning given to it in
Section 2(a) hereof.
"Subsidiary" when used with respect to any Person means any
other Person, whether incorporated or unincorporated, of
which (i) more than 50% of the securities or other ownership
interests or (ii) securities or other interests having by
their terms ordinary voting power to elect more than 50% of
the board of directors or others performing similar
functions with respect to such corporation or other
organization, is directly owned or controlled by such Person
or by any one or more of its Subsidiaries.
"Supplemental Repurchase Notice" shall have the meaning
given to it in Section 3(d) of this Agreement.
"Termination Date" shall have the meaning given to it in
Section 3(c) of this Agreement.
"Transfer" shall mean any issue, sale, pledge, gift,
assignment or other transfer.
"Trivest Affiliates" shall mean each of the Trivest
Investors and each other Person that is controlled directly
or indirectly by the Persons now or hereafter controlling
directly or indirectly the Trivest Investors.
"Trivest Investors" shall mean each of Trivest Furniture
Partners, Ltd., a Florida limited partnership, and the Lead
Trivest Investor.
b) Interpretation. The words "herein," "hereof,"
"hereunder" and other words of similar import refer to this
Agreement as a whole, as the same from time to time may be
amended or supplemented and not any particular section,
paragraph, subparagraph or clause contained in this
Agreement. Wherever from the context it appears
appropriate, each term stated in either the singular or
plural shall include the singular and the plural, and
pronouns stated in masculine, feminine or neuter gender
shall include the masculine, feminine and the neuter.
2. Subscription to Purchase Shares.
a) Purchase, Issuance and Sale of Stock.
i) The Shareholder hereby subscribes for and agrees to
purchase and the Company hereby agrees to issue and sell to
the Shareholder ELEVEN THOUSAND THREE-HUNDRED FIFTY-ONE AND
53,611/100,000 (11,351.53611) Shares of Common Stock, for
the purchase price of $124.34 per share (the "Subscription
Price").
ii) The purchase and sale of the Shares (the "Subscription
Closing") will be consummated immediately prior to the
consummation of the transactions contemplated by the Stock
Purchase Agreement and contemporaneously with the Other
Subscriptions, at which time the Company shall deliver to
the Shareholder a certificate representing the Shares
against the Shareholder's delivery of the Subscription
Price. The Subscription Price for the Shares shall be paid
by wire transfer of immediately available funds to an
account designated by the Company in writing.
b) Representations and Warranties of the Company. The
Company hereby represents and warrants to the Shareholder as
follows:
i) Organization; Power and Authority. The Company is a
corporation duly organized, validly existing, and in good
standing under the laws of Florida. The Company has full
corporate power and authority to carry on the business in
which it is engaged and to own and use the properties owned
and used by it.
ii) Authorization of Transaction. The Company has full
corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding
obligation of the Company, enforceable in accordance with
its terms.
iii) Capitalization. The Common Stock constitutes the
Company's only authorized class of capital stock. Upon the
Shareholder's payment of the Subscription Price, the Shares
purchased by the Shareholder pursuant to the provisions of
this Agreement will be duly authorized, validly issued,
fully paid and nonassessable. Immediately following the
Subscription Closing and after giving effect to the Other
Subscriptions, 828,103.3509 shares of Common Stock will be
issued and outstanding. Except for this Agreement, the
Other Subscriptions, the Shareholders' Agreements, the
Investors' Agreement and the Trivest Furniture Partners,
Ltd. Partnership Agreement, there are no outstanding
subscriptions, warrants, options or other agreements or
rights of any kind to purchase or otherwise receive or be
issued, or securities or obligations of any kind convertible
into, any shares of capital stock or any other security of
the Company.
iv) Other Subscriptions. The shares of Common Stock issued
in connection with the Other Subscriptions are of the same
class with identical rights under the Company's Articles of
Incorporation and are being issued at the identical
Subscription Price, as the Shares issued to Shareholder
under this Agreement.
c) Representations and Warranties of Shareholder. The
Shareholder hereby represents and warrants to the Company as
follows:
i) State Securities Laws. The Shareholder received this
Agreement and first learned of the offer and sale of the
Shares contemplated hereby in the State set forth below the
Shareholders' name on the signature page hereof. The
Shareholder intends that the laws of such state govern the
offering of the Shares to the Shareholder. The Shareholder
is a resident of such State.
ii) Capacity. The Shareholder has full capacity to execute
and deliver this Agreement and to perform the Shareholder's
obligations hereunder.
iii) Agreement Binding. This Agreement constitutes the
valid and legally binding obligation of the Shareholder,
enforceable in accordance with its terms.
iv) Acquisition for Investment. The Shareholder is
acquiring the Shares for investment solely for the
Shareholder's account and not for distribution, transfer or
resale to others in violation of the federal securities laws
or this Agreement.
v) Restrictions on Transfer. The Shareholder understands
that the Shareholder must bear the economic risk of the
purchase of the Shares for an indefinite period of time
because, except as provided in this Agreement, (A) the
Company's sale of the Shares to the Shareholder will not be
registered under the Securities Act and applicable state
securities laws in reliance on the Shareholder's
representations, (B) the Shares may not be sold,
transferred, pledged, or otherwise disposed of without an
opinion of counsel for or satisfactory to the Company that
registration under the Securities Act or any applicable
state securities laws is not required, (C) the Company does
not have an obligation to register a sale of the Shares nor
has it agreed to do so in the future, (D) the exemption
provided in Rule 144 under the Securities Act is not
presently available for the resale of any of the Shares and
it is unlikely that such exemption will be available at any
time in the future with respect to any proposed transfer of
the Shares, and (E) the Company is not under any obligation
to perfect any exemption for the resale of any of the
Shares. The Shareholder also acknowledges the Shareholder's
understanding that transfers of the Shares will be subject
to the limitations set forth in this Agreement.
vi) Restrictive Legends. The Shareholder understands that
the certificate evidencing the Shares will bear a
restrictive legend prohibiting the transfer thereof except
in compliance with (A) applicable state and federal
securities laws (and may not be transferred of record except
in compliance therewith), and (B) the terms of this
Agreement, as well as any other legends required by
applicable state securities laws.
vii) Opportunity to Ask Questions. The Shareholder has had
an opportunity to ask questions and receive answers
concerning the capitalization of the Company and the terms
hereof and has had full access to such other information
concerning the Company, both prior to and following the
Merger, as the Shareholder has requested.
viii) Certain Risk Factors. The Shareholder understands the
speculative nature of and risks involved in the proposed
investment in the Company, and all matters relating to the
structure and the operations of the Company and its
Subsidiaries, both prior to and following the Acquisition,
have been discussed and explained to Shareholder's
satisfaction, including but not limited to:
A) the senior loans provided to the Company pursuant to the
Fleet Credit Facility; and
B) the Senior Subordinated Notes.
The Shareholder specifically acknowledges the Shareholder's
understanding that:
aa) the presence of substantial amounts of debt creates
significant risks, including that (1) although equity
investments in highly leveraged companies such as the
Company offer the opportunity for significant capital
appreciation, such investments involve the highest degree of
risks and can result in the loss of the Shareholder's entire
investment, (2) other general business risks, including the
effects of a recession, may have a more pronounced effect,
(3) lending institutions may have rights to participate in
certain decisions relating to the management of the Company,
and (4) for the Company's debt to be repaid and for the
Shareholder's equity investment in the Common Stock to have
any value, the Company must achieve significant continued
growth in financial performance;
bb) the Subscription Price may not be indicative of the fair
market value of the Shares;
cc) the Shareholder, as a minority shareholder, will have no
control over or influence in the management of the Company,
and that the purchase of the Shares does not entitle the
Shareholder to continued employment by the Company;
dd) the terms of the Fleet Credit Facility, the Senior
Subordinated Notes and other documents relating to an
investment in the Company are quite complex, that all such
documents are available for inspection, that a review
thereof is recommended, and that the Shareholder should
consider obtaining counsel or other competent advisors
before purchasing the Shares; and
ee) Trivest Partners, L.P. (an affiliate of the controlling
shareholders of the Company) will receive from the Company
(i) an annual management fee of $350,000, subject to cost of
living increases and certain increases in respect of
business operations acquired, as well as certain fees in
connection with acquisitions and dispositions of business
operations negotiated by Trivest Partners, L.P. pursuant to
that certain Management Agreement dated as of August 27,
1999, a copy of which has been made available to the
Shareholder, and (ii) a one-time transaction fee of $618,750
upon consummation of the Acquisition.
ix) Representations Relied Upon by Shareholder. The
Shareholder acknowledges receipt of (i) the Prospectus,
which describes, among other things, the issuance of the
Senior Subordinated Notes, the Fleet Credit Facility and
certain risk factors relating to such matters and (ii) the
Annual Report. The Shareholder is acquiring the Shares
without having been furnished any representations or
warranties of any kind whatsoever with respect to the
business and financial condition of the Company and its
Subsidiaries, other than the representations contained
herein. The Shareholder specifically understands that the
financial projections for the Company that have been made
available for such Shareholder's review are based upon
certain key assumptions, that such assumptions are subject
to uncertainties relating to the effect that economic or
other circumstances may have on future events, and that
there can be no assurance that the assumptions or data upon
which they are based are achievable.
x) Reliance. The Shareholder has discussed with, and relied
upon the advice of the Shareholder's counsel with regard to,
the meaning and legal consequences of the Shareholder's
representations and warranties herein and the considerations
involved in making an investment in the Company, and the
Shareholder understands that the Company is relying on the
information set forth herein.
xi) No Liquidity. The Shareholder has adequate means of
providing for such Shareholder's current financial needs and
possible personal contingencies and has no need for
liquidity in such Shareholder's investment in the Company.
xii) Risk of Loss. The Shareholder is able to bear the
economic risks inherent in an investment in the Company and
can afford a complete loss of such Shareholder's entire
investment in the Company.
xiii) Other Illiquid Investments. The Shareholder's overall
commitment to investments which are not readily marketable
is not disproportionate to such Shareholder's net worth, and
such Shareholder's investment in the Company will not cause
such overall commitment to be disproportionate.
xiv) Sophistication; Accredited Investor Status. The
Shareholder has such knowledge and experience in financial
and business matters that such Shareholder is capable of
evaluating the merits and risks of an investment in the
Company and of making an informed investment decision. The
Shareholder is an "accredited investor" within the meaning
of Rule 501 of Regulation D under the Securities Act.
xv) Certain Tax Matters. The Shareholder certifies under
penalty of perjury that (i) the Taxpayer Identification
Number and address provided under the Shareholder's name on
the signature page to this Agreement are correct, (ii) the
Shareholder is not subject to backup withholding either
because the Shareholder has not been notified that she is
subject to backup withholding as a result of a failure to
report all interest or dividends or because the Internal
Revenue Service has notified the Shareholder that she is no
longer subject to backup withholding and (iii) the
Shareholder is not a nonresident alien, foreign partnership,
foreign trust or foreign estate.
xvi) Lender Agreements. The Shareholder acknowledges and
agrees that, notwithstanding anything to the contrary in
this Agreement, any purchase or sale of Restricted
Securities under this Agreement is subject in all respects
to the provisions of the Fleet Credit Facility.
3. Termination Repurchase Option.
a) If the Shareholder's employment with the Company or any
of its Subsidiaries is terminated by the Company or any such
Subsidiary for any reason whatsoever other than Cause or the
Shareholder's resignation (including termination without
Cause, death or disability), then all (but not less than
all) of the Shareholder Stock (whether held by the
Shareholder, any member of the Shareholder's Family Group or
one or more transferees), shall be subject to repurchase by
the Company at the Company's option at a price per share
equal to Market Value and on the other terms and conditions
set forth in this Section 3.
b) If the Shareholder's employment with the Company or
any of its Subsidiaries is terminated by the Company or any
such Subsidiary for Cause or by the Shareholder's
resignation, then all (but not less than all) of the
Shareholder Stock (whether held by the Shareholder, any
member of the Shareholder's Family Group or one or more
transferees) shall be subject to repurchase by the Company
at the Company's option at a price per share determined as
follows:
i) If the date on which the Shareholder's employment
terminates is on or after the date of this Agreement, but
prior to the first anniversary date of this Agreement, then
all of the outstanding shares of Shareholder Stock shall be
subject to repurchase at a price per share equal to the
lower of Original Cost or Market Value.
ii) If the date on which the Shareholder's employment
terminates is on or after the first anniversary date of this
Agreement, but prior to the second anniversary date of this
Agreement, two-thirds of the outstanding shares of
Shareholder Stock shall be subject to repurchase at a price
per share equal to Original Cost and the remaining one-third
of the outstanding shares of Shareholder Stock shall be
subject to repurchase at a price per share equal to Market
Value; provided, however, that if the Market Value of such
shares is less than their Original Cost, then all of such
shares shall be subject to repurchase at a price per share
equal to Market Value.
iii) If the date on which the Shareholder's employment
terminates is on or after the second anniversary date of
this Agreement, but prior to the third anniversary date of
this Agreement, one-third of the outstanding shares of
Shareholder Stock shall be subject to repurchase at a price
per share equal to Original Cost and the remaining two-
thirds of the outstanding shares of Shareholder Stock shall
be subject to repurchase at a price per share equal to
Market Value; provided, however, that if the Market Value of
such shares is less than their Original Cost, then all of
such shares shall be subject to repurchase at a price per
share equal to Market Value.
iv) If the date on which the Shareholder's employment
terminates is on or after the third anniversary date of this
Agreement, then all of the outstanding shares of Shareholder
Stock shall be subject to repurchase at a price per share
equal to Market Value.
c) The Company's Board may elect to cause the Company to
purchase all (but not less than all) of Shareholder Stock
subject to repurchase by delivery of written notice (the
"Repurchase Notice") to the holder or holders of Shareholder
Stock within 95 days after the termination of the
Shareholder's employment (the date of such termination is
herein referred to as the "Termination Date"). The
Repurchase Notice shall set forth the number of shares of
Shareholder Stock to be acquired from such holder, the
aggregate consideration to be paid for such shares (if
known) and the time and place for the closing of the
transaction.
d) If for any reason the Company does not elect to purchase
all of the shares of Shareholder Stock pursuant to the
repurchase option under Section 3(a) or Section 3(b), as the
case may be (the "Repurchase Option"), the Lead Trivest
Investor shall be entitled to exercise the Company's
Repurchase Option in the manner set forth in Section 3(c)
for all of the shares of Shareholder Stock (the "Available
Shares"). As soon as practicable after the Company has
determined that there will be Available Shares, but in any
event within 60 days after the Termination Date, the Company
shall deliver written notice (the "Option Notice") to the
Lead Trivest Investor setting forth the number of Available
Shares and the price thereof (if known). The Lead Trivest
Investor may elect to purchase all of Available Shares by
delivering written notice to the Company within 30 days
after receipt of the Option Notice from the Company. As
soon as practicable, and in any event within 5 days after
the expiration of the 30day period set forth above, the
Company shall notify each holder of Shareholder Stock as to
the number of shares being purchased from such holder by the
Lead Trivest Investor (the "Supplemental Repurchase
Notice"). At the time the Company delivers the Supplemental
Repurchase Notice to the holder(s) of Shareholder Stock, the
Lead Trivest Investor shall also receive written notice from
the Company setting forth the number of shares it is
entitled to purchase, the aggregate purchase price (if
known) and the time and place of the closing of the
transaction.
e) The closing of the purchase transactions shall take place
on the date designated by the Company in the Repurchase
Notice or Supplemental Repurchase Notice, which date shall
not be more than 30 days and not less than 10 days after the
delivery of the later of either such notice to be delivered,
provided that, if the Market Value has not yet been
determined, the closing shall be delayed to a date
designated by the Company, which date shall be not more than
20 days after such determination is made. The Company and/or
Lead Trivest Investor will pay for the Shareholder Stock to
be purchased pursuant to the Repurchase Option, by delivery
of a check or checks (or, at the election of the Company
and/or Lead Trivest Investor, by wire transfer of
immediately available funds) in an amount equal to the
purchase price of the shares being repurchased. The
purchasers of Shareholder Stock under this Agreement will be
entitled to receive customary representations and warranties
from the seller(s) regarding the seller(s)' good title to,
and freedom from liens, encumbrances and restrictions on the
sale of Shareholder Stock.
f) Notwithstanding anything contained herein to the
contrary, the provisions of this Section 3 will terminate
if, prior to the Termination Date, a Liquidity Event is
consummated.
4. Restrictions on Transfer.
a) Transfer of Shareholder Stock. The Shareholder will not
sell, pledge or otherwise directly or indirectly transfer
any interest in or any beneficial interest in any shares of
Shareholder Stock except pursuant to the provisions of
Sections 3, 5, 6 or 7 of this Agreement ("Exempt Transfers")
and except pursuant to the provisions of this Section 4.
Any transfer of Shareholder Stock which is not consummated
in accordance with this Agreement shall be void.
b) First Refusal Rights. At least 60 days prior to making
any transfer other than an Exempt Transfer, the Shareholder
will deliver a written notice (the "Sale Notice") to the
Company and the Lead Trivest Investor. The Sale Notice will
disclose in reasonable detail the identity of the
prospective transferee(s) and the terms and conditions of
the proposed transfer. The Company may elect to purchase
all (but not less than all) of the shares of Shareholder
Stock to be transferred upon the same terms and conditions
as those set forth in the Sale Notice by delivering a
written notice of such election to the Shareholder within 30
days after the receipt of the Sale Notice by the Company. If
the Company has not elected to purchase all of the shares of
Shareholder Stock to be transferred, the Lead Trivest
Investor may elect to purchase all (but not less than all)
of the shares of Shareholder Stock to be transferred upon
the same terms and conditions as those set forth in the Sale
Notice by delivering a written notice of such election to
the Shareholder within 60 days after the receipt of the Sale
Notice by the Lead Trivest Investor. Any Person who has the
right to acquire Shareholder Stock pursuant to this Section
4(b) will be given up to 60 days (after it has been
determined that such Person has such right) to consummate
the purchase and sale of Shareholder Stock (the
"Authorization Period"). If neither the Company nor the Lead
Trivest Investor has elected to purchase all of the shares
of Shareholder Stock specified in the Sale Notice, the
Shareholder may transfer the shares of Shareholder Stock
specified in the Sale Notice at a price and on terms no more
favorable to the transferee(s) thereof than specified in the
Sale Notice during the 60day period immediately following
the Authorization Period. Any shares of Shareholder Stock
not transferred within such 60day period will be subject to
the provisions of this Section 4(b) upon subsequent
transfer.
c) Certain Permitted Transfers. The restrictions contained
in this Section 4 will not apply with respect to transfers
of Shareholder Stock (i) pursuant to applicable laws of
descent and distribution or (ii) among the Shareholder's
Family Group; provided that the restrictions contained in
this Section 4 will continue to be applicable to Shareholder
Stock after any such transfer; and provided further that the
transferees of such Shareholder Stock have agreed in writing
to be bound by the provisions of this Agreement relating to
Shareholder Stock.
d) Termination of Restrictions. The restrictions on the
transfer of Shareholder Stock set forth in this Section 4
will continue with respect to each share of Shareholder
Stock until the date on which such Shareholder Stock has
been transferred in a transaction permitted by this Section
4 (except in a transaction contemplated by Section 4(c));
provided, however, that in any event the restrictions on
transfers set forth in this Section 4 will terminate upon a
Liquidity Event.
5. Drag Along Rights.
a) If, at any time following the date hereof, the Lead
Trivest Investor shall enter into an agreement to sell, in a
single transaction or a series of transactions, any of the
Company Securities at the time owned by (and/or purchasable
by) the Lead Trivest Investor to any Person or group of
Persons who is not a Trivest Affiliate or an Affiliate of
the Company (the "Buyer") (including, without limitation, a
sale of the Company by merger, consolidation, sale of all or
substantially all of its assets, sale of all of the
outstanding Common Stock or otherwise), then the Lead
Trivest Investor may require each holder of Shareholder
Stock to sell all of the Shareholder Stock owned by (and/or
purchasable by) such holders to the Buyer contemporaneously
with the sale by the Lead Trivest Investor and at the same
price per share and on the same terms and conditions as are
applicable to the Company Securities to be sold by the Lead
Trivest Investor; provided, that if the Lead Trivest
Investor is selling less than all of Company Securities
owned by (and/or purchasable by) it, each holder of
Shareholder Stock shall sell an Applicable Percentage of the
Shareholder Stock owned by (and/or purchasable by) such
holder. Without limitation as to the foregoing, each holder
of Shareholder Stock shall consent to and raise no
objections against such a sale. If such sale is structured
as a merger or consolidation, each such holder shall waive
any dissenters rights, appraisal rights or similar rights in
connection with such merger or consolidation to the fullest
extent permitted by law.
b) If the Lead Trivest Investor wishes to exercise the right
granted pursuant to Section 5(a), the Lead Trivest Investor
must give written notice to such effect to each holder of
Shareholder Stock (a "DragAlong Notice") not less than 20
nor more than 60 days prior to the date upon which such sale
is scheduled to close. Each DragAlong Notice shall (i)
specify in reasonable detail all of the terms and conditions
upon which such sale is to occur (including a description of
all consideration payable in connection with the sale) and
(ii) make explicit reference to this Section 5 and state
that each such holder is obligated to sell its Shareholder
Stock pursuant to such sale.
c) If the Lead Trivest Investor exercises the right granted
pursuant to Section 5(a), subject to the consummation of the
sale of all Shareholder Stock to the Buyer and subject to
compliance with the other applicable terms of this
Agreement, each holder of Shareholder Stock shall promptly
take such actions and shall promptly execute such documents
and instruments as shall be necessary and desirable to
consummate the proposed sale.
d) At the closing of any such sale, each holder of
Shareholder Stock shall deliver a certificate or
certificates, registered in such holder's name, properly
endorsed and with all required transfer stamps, if any,
representing the securities being sold by such holder
against delivery of the applicable consideration from the
Buyer.
e) The provisions of this Section 5 shall terminate upon
the completion of a Qualified Public Offering.
6. Co-Sale Rights of the Shareholder with Respect to
Transfers by the Lead Trivest Investor.
a) Subject to Section 5, if the Lead Trivest Investor at any
time proposes to transfer any Company Securities, then, as a
condition precedent thereto, the Lead Trivest Investor shall
afford each holder of Shareholder Stock the right to
participate in such transfer in accordance with this Section
6. Notwithstanding the foregoing, the provisions of this
Section 6 shall not apply to (i) any transfer of Restricted
Securities by the Lead Trivest Investor to any Trivest
Affiliate or any Affiliate of the Company, (ii) any transfer
of Restricted Securities by the Lead Trivest Investor which
is a pledge, (iii) any transfer to the public pursuant to a
registration effected in accordance Section 7 hereof or (iv)
a distribution by the Lead Trivest Investor to its partners.
b) The Lead Trivest Investor shall give written notice to
each holder of Shareholder Stock (a "Notice of Transfer")
not less than twenty (20) nor more than sixty (60) days
prior to any proposed transfer of any such Company
Securities. Each such Notice of Transfer shall:
i) specify in reasonable detail (A) the number and type of
Company Securities which the Lead Trivest Investor proposes
to transfer, (B) the identity of the proposed transferee or
transferees of such Company Securities, (C) the time within
which, the price per share at which and all other terms and
conditions upon which the Lead Trivest Investor proposes to
transfer such Company Securities, (including a description
of all consideration payable in connection with the
transfer) and (D) the percentage of the Company Securities
then owned by the Lead Trivest Investor which the Lead
Trivest Investor proposes to transfer to such proposed
transferee or transferees; and
ii) make explicit reference to this Section 6 and state that
the right of each such holder to participate in such
transfer under this Section 6 shall expire unless exercised
within fifteen (15) days after receipt of such Notice of
Transfer.
c) Each holder of Shareholder Stock shall have the right
to transfer to the proposed transferee or transferees that
number of shares of Shareholder Stock which is equal to the
Applicable Percentage of the Shareholder Stock owned by
(and/or purchasable by) such holder, at the same price per
share and on the same terms and conditions as are applicable
to the proposed transfer by the Lead Trivest Investor.
d) Each holder of Shareholder Stock must notify the Lead
Trivest Investor, within fifteen (15) days after receipt of
the Notice of Transfer, if he desires to accept such offer
and to transfer any of his Shareholder Stock in accordance
with this Section 6. The failure of any such holder to
provide such notice within such 15day period shall, for the
purposes of this Section 6, be deemed to constitute a waiver
by any such holder of his right to transfer any of his
Shareholder Stock in connection with the proposed transfer
described in such Notice of Transfer. The Lead Trivest
Investor shall use all commercially reasonable efforts to
obtain the agreement of the prospective transferee or
transferees to the participation of each such holder
electing to participate in such proposed transfer and shall
not consummate any such proposed transfer unless each such
electing holder is permitted to participate in accordance
with the provisions of this Section 6. No holder of
Shareholder Stock shall be obligated to transfer any
Shareholder Stock pursuant to this Section 6. Any and all
transfers of Shareholder Stock by a holder of Shareholder
Stock pursuant to this Section 6 shall be made concurrently
with the transfer of Company Securities by the Lead Trivest
Investor.
e) Subject to the consummation of the transfer contemplated
by the Notice of Transfer and subject to compliance with the
other applicable terms of this Agreement, each holder that
exercises his right granted pursuant to Section 6(a) shall
promptly execute such documents and instruments as shall be
necessary and desirable to consummate the proposed sale.
f) At the closing of any such transfer, each holder of
Shareholder Stock exercising the right granted pursuant to
Section 6(a) shall deliver a certificate or certificates,
registered in his name, properly endorsed and with all
required transfer stamps, if any, representing the
securities being sold by him against delivery of the
applicable consideration by the proposed transferee.
g) Notwithstanding anything to the contrary contained in
this Section 6, no holder of Shareholder Stock shall have
any rights pursuant to this Section 6 to participate in any
other transfer by the Lead Trivest Investor.
h) The provisions of this Section 6 shall terminate upon the
completion of a Qualified Public Offering.
7. Registration Rights.
7. 1 Incidental Registration.
a) If, after a Qualified Public Offering, the Company at any
time or from time to time shall determine to effect the
registration, qualification and/or compliance of any of its
equity securities (otherwise than pursuant to a registration
on a form inappropriate for an underwritten public offering
or relating solely to securities to be issued in a merger,
acquisition of the stock or assets of another entity or in a
similar transaction or relating solely to securities issued
or to be issued under any employee stock option or purchase
plan), then, in each such case, the Company shall:
i) promptly give written notice of the proposed
registration, qualification and/or compliance (which shall
include a list of the jurisdictions in which the Company
intends to register or qualify such securities under the
applicable blue sky or other securities laws) to the
Shareholder; and
ii) use all commercially reasonable efforts to include
among the securities which it then registers or qualifies
all Registrable Shares specified by the Shareholder in a
written request or requests, made within 30 days after
receipt of such written notice from the Company.
b) The obligations of the Company under this Section 7.1 are
subject to the following qualifications:
i) subject to Section 7.7, the Company shall pay all
Registration Expenses related to any registration,
qualification and/or compliance requested pursuant to this
Section 7.1 and the Shareholder shall pay his Selling
Expenses pro rata on the basis of the Registrable Shares so
registered and sold; and
ii) in the event that any registration pursuant to this
Section 7.1 shall be, in whole or in part, an underwritten
public offering of Common Stock, the number of Registrable
Shares to be included in such an underwriting may be reduced
if and to the extent that the managing underwriter shall be
of the opinion that the inclusion of some or all of the
Registrable Shares would adversely affect the marketing of
the securities to be sold by the Company therein; provided,
that any such limitation shall be imposed in such manner so
as to avoid any diminution in the number of shares the
Company may register for sale by (i) giving first priority
for the shares to be registered for issuance and sale by the
Company and, pursuant to Section 5.2 of the Investors'
Agreement, the Trivest Investors and any demanding
shareholder, (ii) giving second priority pari passu for the
shares requested to be registered pursuant to Section 5.1 of
the Investors' Agreement, pursuant to this Agreement and
pursuant to that certain Subscription and Shareholders
Agreement dated as of the date hereof among the Company, the
Lead Trivest Investor and Xxxxxxx Xxxxxxxx and for other
securities with pari passu registration rights requested to
be registered (pro rata among the requesting holders of the
securities covered by this clause (ii) based upon the number
of securities owned by such holders), and (iii) giving third
priority for the other securities requested to be included
in such registration not covered by clauses (i) or (ii)
above.
7.2 Registration Procedures. In the case of' each
registration, qualification and/or compliance contemplated
by this Section 7, the Company shall keep the Shareholder
advised in writing as to the initiation of proceedings for
such registration, qualification and compliance and as to
the completion thereof, and shall advise the Shareholder,
upon request, of the progress of such proceedings. In
addition, the Company shall follow procedures customarily
observed by issuers in public offerings, and accord to the
Shareholder all rights (including, without limitation, the
right to perform appropriate "due diligence") customarily
accorded to selling shareholders in secondary distributions
and accord such rights to the managing underwriters if the
transaction in question is an underwritten public offering.
At the expense of the Company or of the party or parties
bearing the expenses of such registration, qualification and
compliance, the Company shall (a) use all commercially
reasonable efforts to keep such registration, qualification
and compliance current and effective by such action as may
be necessary or appropriate, including, without limitation,
the filing of post-effective amendments and supplements to
any registration statement or prospectus, for such period
(not to exceed one hundred eighty (180) days) as is
necessary to permit the sale and distribution of the
Registrable Shares pursuant thereto, (b) use all
commercially reasonable efforts to take all necessary action
under any applicable blue sky or other applicable securities
law to permit such sale and/or distribution, all as
reasonably requested by the Shareholder, and comply with
applicable requirements of all regulatory entities,
provided, that the Company shall not be required to so
register or qualify the Registrable Shares in any
jurisdiction if, solely as a result thereof, the Company
must qualify generally to do business therein, consent to
general service of process therein, or submit to liability
for state or local taxes, (c) furnish the Shareholder such
number of registration statements, prospectuses,
supplements, amendments, and offering circulars as the
Shareholder from time to tie may reasonably request, (d) use
all commercially reasonable efforts to list all Registrable
Shares on each securities exchange on which securities of
the same class are then listed and (e) use all commercially
reasonable efforts to furnish (or cause to be furnished) to
the managing underwriters all undertakings, agreements,
certificates, opinions, financial statements and "comfort
letters" of the sort customarily provided to managing
underwriters, if the transaction in question is an
underwritten public offering. In connection with and as a
condition to each registration hereunder, the Shareholder
shall (a) provide such information and execute such
documents as may reasonably be required in connection with
such registration, (b) agree to sell Registrable Shares on
the basis provided in any underwriting arrangements, and (c)
complete and execute all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents
reasonably required or requested under the terms of such
underwriting arrangements. In connection with each
registration pursuant to Section 7.1 covering an
underwritten public offering, the Company and the
Shareholder agree to enter into a written agreement with the
managing underwriter in such form and containing such
provisions as are customary in the securities business for
such an arrangement between such underwriter and companies
of the Company's size and investment stature.
7.3 Indemnification.
a) The Company shall indemnify, defend and hold harmless the
Shareholder, to the fullest extent enforceable under
applicable law against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration
statement, prospectus, supplement, amendment or offering
circular related to any registration, qualification or
compliance or any omission (or alleged omission) to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or
any violation (or alleged violation) of applicable
securities laws in connection with any such registration,
qualification or compliance, and shall reimburse the
Shareholder for any legal or any other expenses reasonably
incurred in connection with investigating and/or defending
(and/or preparing for any investigation or defense of) any
such claim, loss, damage, liability, action or violation;
provided, that the Company shall not be liable in any such
case to the Shareholder if, but only to the extent that, any
such claim, loss, damage, liability, action, violation or
expense arises out of or is based upon any untrue statement
or alleged untrue statement in or omission or alleged
omission if so made in reliance upon and in conformity with
written information furnished to the Company by the
Shareholder specifically for use therein; provided, further,
however, that the Company shall not be liable to the
Shareholder in any such case to the extent that any such
loss, claim, damage, liability or action arises out of or is
based upon an untrue or alleged untrue statement or omission
or an alleged omission made in any preliminary prospectus or
final prospectus if (1) the Shareholder failed to send or
deliver a copy of the final prospectus or prospectus
supplement with or prior to the delivery of written
confirmation of the sale of the Registrable Shares, and (2)
the final prospectus or prospectus supplement would have
corrected such untrue statement or omission.
b) The Shareholder shall, if securities held by him
are included in a registration, qualification or compliance
contemplated pursuant to this Section 7, indemnify, defend
and hold harmless the Company, each of its directors and
officers and each Person, if any, who controls the Company
or such underwriter within the meaning of applicable
securities laws, and their respective directors, officers,
employees, agents, advisors and Affiliates, to the fullest
extent enforceable under applicable law against all claims,
losses, damages and liabilities (or actions in respect
thereto) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, supplement,
amendment or offering circular related to any such
registration, qualification or compliance, or any omission
(or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, and shall reimburse the
Company and such directors, officers or other Persons for
any legal or any other expenses reasonably incurred in
connection with investigating or defending (and/or preparing
for any investigation or defense of') any such claim, loss,
damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) was made
in (or omitted from) such registration statement,
prospectus, supplement, amendment or offering circular in
reliance upon and in conformity with written information
furnished to the Company by the Shareholder specifically for
use therein; provided, that the aggregate liability of the
Shareholder under this Section 7.3 shall be limited to the
net sales proceeds actually received by the Shareholder as a
result of the sale by it of securities in such registration,
qualification or compliance.
c) Promptly after receipt by an indemnified party
under this Section 7.3 of notice of the commencement of any
action, such party shall, if a claim in respect thereof is
to be made against the indemnifying party under this Section
7.3, notify the indemnifying party in writing thereof, but
the omission so to notify the indemnifying party shall not
relieve the indemnifying party from any liability which it
may have to such indemnified party except to the extent the
indemnifying party is prejudiced by such omission. In case
any such action shall be brought against any indemnified
party and such indemnified party shall notify the
indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and,
to the extent it shall wish, to assume and undertake the
defense thereof with counsel reasonably satisfactory to such
indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume
and undertake the defense thereof, the indemnifying party
shall not be liable to such indemnified part, under this
Section 7.3 for any legal expenses subsequently incurred by
such indemnified party in connection with the defense
thereof, provided, that, if the defendants in any such
action include both the indemnified party and the
indemnifying party and the indemnified party shall have
reasonably concluded (based upon the advice of counsel) that
there may be reasonable defenses available to it that are
different from or additional to those available to the
indemnifying party or if the interests of the indemnified
party reasonably may be deemed to conflict with the
interests of the indemnifying party, then the indemnified
party shall have the right to select one separate counsel
and to assume such legal defenses and otherwise to
participate in the defense of such action, with the expenses
and fees of such one separate counsel and other expenses
related to such participation to be reimbursed by the
indemnifying party as incurred, it being understood,
however, that the indemnifying party shall not, in
connection with any one such action or separate but
substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more
than one separate firm of attorneys (together with
appropriate local counsel as required by the local rules of
such jurisdiction) at any time for all such indemnified
parties.
d) To provide for just and equitable, contribution
to joint liability under the Securities Act in any case in
which (i) an indemnified party makes a claim for
indemnification pursuant to this Section 7.3 but it is
judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right
of appeal) that such indemnification may not be enforced in
such case notwithstanding the fact that this Section 7.3
provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the
part of the Shareholder or the Company, any director or
officer of the Company or any controlling Person of the
Company (within the meaning of applicable securities laws)
of the Company in circumstances for which indemnification is
provided under this Section 7.3, then, and in each such
case, the Company and the Shareholder shall contribute to
the aggregate losses, claims, damages or liabilities to
which they may be subject (after contribution from others)
as is appropriate to reflect the relative fault of the
Company and the Shareholder in connection with the
statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as the relative
benefit received by the Company and the Shareholder as a
result of the offering in question, it being understood that
the parties acknowledge that the overriding equitable
consideration to be given effect in connection with this
provision is the ability of one party or the other to
correct the statement or omission which resulted in such
losses, claims, damages or liabilities, and that it would
not be just and equitable if contribution pursuant thereto
were to be determined by pro rata allocation or by any other
method of allocation which does not take into consideration
the foregoing equitable considerations; provided, that (x)
in any such case no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent
misrepresentation, and (y) in no event shall the Shareholder
be obligated to make any contribution in excess of the
amount specified in Section 7.3(b).
7.4 Restrictions on Other Agreements. The Company shall
not grant any right relating to the registration,
qualification or compliance of its securities if the
exercise thereof violates or is inconsistent with any of the
rights granted under this Section 7, without the written
consent of the Shareholder, which consent may be given or
withheld in the sole discretion of such holders. The
Company shall not permit any of its Subsidiaries to effect,
or to grant any right relating to, the registration of its
securities.
7.5 Limitations on Registration Rights. Notwithstanding
anything to the contrary contained in this Agreement, the
Company may delay the filing or effectiveness of, or may
terminate or withdraw, any registration statement referred
under Section 7.1 at any time for any reason whatsoever
without incurring any liability to the Shareholder, but the
Company shall be and remain obligated to pay all
Registration Expenses, if any, incurred in connection
therewith.
7.6 Holdback Agreement.
a) In addition to any other restrictions on transfer of the
Registrable Shares contained in this Agreement, if the
Company shall at any time register securities under the
Securities Act (including, without limitation, any
registration relating to a Qualified Public Offering or any
registration pursuant to this Section 7) for offer or sale
to the public, then the Shareholder shall not make any short
sale of, grant an option for the transfer of, or otherwise
transfer, any Registrable Shares (other than (i) for the
public sale of those Registrable Shares included in and sold
pursuant to such registration in accordance with this
Section 7 or (ii) in a private sale complying with this
Agreement to transferee who agrees to the restrictions in
this Section 7.6(a)) without the prior written consent of
the Company for such reasonable period (but in no event
longer than 180 days following the effective date of the
related registration statement) as may be designated in
writing to the Shareholder by the Company, or, if the
registration shall be, in whole or in part, an underwritten
offering, by the managing underwriter; provided, that after
the Company's initial public offering, the foregoing
provisions of this Section 7.6(a) shall only apply to the
Shareholder if he (A) is offering Registrable Shares for
sale to the public in connection with such registration or
(B) beneficially owns (as that term is used in Rule 13d-3
promulgated under the Exchange Act) five percent or more of
the outstanding shares of Common Stock.
b) In addition to the restriction contained in Section
7.6(a), the Shareholder shall execute any restrictive
agreement or "lock-up" agreement that any underwriter
engaged by the Company in connection with any underwritten
public offering shall request; provided, that the
restrictive or "lock-up" period thereunder is not more than
one hundred eighty (180) days after the effective date of
the registration statement for which such restrictive
agreement or "lock-up" agreement is sought; provided,
further, that, after the Company's initial public offering,
the foregoing provisions of this Section 7.6(b) shall only
apply to the Shareholder if he (A) is offering Registrable
Shares for sale to the public in the offering or (B)
beneficially owns (as that term is used in Rule 13d-3
promulgated under the Exchange Act) five percent or more of
the outstanding shares of Company Common Stock.
c) The Company may impose stop-transfer instructions with
respect to the Registrable Shares until the end of any
restrictive period provided for pursuant to this Section
7.6.
7.7 Registration Expenses and Selling Expenses. The Company
shall pay all Registration Expenses related to any
registration, qualification and/or compliance contemplated
by this Agreement, except to the extent that such
Registration Expenses relate to any Registrable Shares
requested to be included in any registration proceeding
pursuant to Section 7.1, the request of which has been
withdrawn by the Shareholder.
7.8 Changes in Common Stock. If, and as often as, there is
any change in the Common Stock by way of a stock split,
stock dividend, combination or reclassification, or through
a merger, consolidation, reorganization or recapitalization,
or by any other means, appropriate adjustment shall be made
in the provisions hereof so that the rights and privileges
granted hereby shall continue with respect to the Common
Stock as so changed.
7.9 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Securities
and Exchange Commission that may at any time permit the
resale of the Registrable Shares without registration, the
Company will at all times after 90 days after the first
registration statement covering a public offering of
securities of the Company under the Securities Act shall
have become effective or following registration under
Section 12 of the Exchange Act, use its commercially
reasonable efforts to: (i) make and keep public information
available, as those terms are understood and defined in Rule
144 under the Securities Act; (ii) file with the Securities
and Exchange Commission in a timely manner all reports and
other documents required of the Company under the Securities
Act and the Exchange Act; and (iii) furnish to the
Shareholder forthwith upon request a written statement by
the Company as to its compliance with the reporting
requirements of such Rule 144 and of the Securities Act and
the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and
documents so filed by the Company as the Shareholder may
reasonably request in availing itself of any rule or
regulation of the Securities and Exchange Commission
allowing the Shareholder to sell any Registrable Shares
without registration.
8. Legends. No Shareholder Stock may be transferred
except pursuant to a registration under applicable
securities laws or pursuant to an exemption from such
registration. Until the date on which Shareholder Stock is
so registered, each certificate evidencing the same shall
bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY OTHER
APPLICABLE SECURITIES LAW AND MAY NOT BE TRANSFERRED IN THE
ABSENCE OF REGISTRATION THEREUNDER OR AN EXEMPTION
THEREFROM."
So long as any Shareholder Stock shall be subject to the
terms of this Agreement, all certificates evidencing the
same shall bear a legend in substantially the following
form:
"THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS
OF THE SUBSCRIPTION AND SHAREHOLDERS AGREEMENT DATED MARCH
[31], 2000 AMONG THE ISSUER HEREOF AND CERTAIN OTHER
PERSONS, AS AMENDED, MODIFIED AND SUPPLEMENTED FROM TIME TO
TIME. COPIES OF SUCH AGREEMENT ARE ON FILE AT THE ISSUER'S
PRINCIPAL OFFICES AND, UPON WRITTEN REQUEST, COPIES THEREOF
SHALL BE MAILED WITHOUT CHARGE WITHIN TEN DAYS OF RECEIPT OF
SUCH REQUEST TO APPROPRIATELY INTERESTED PERSONS."
Upon receipt from any holder of Shareholder Stock by the
Company of an opinion of counsel reasonably satisfactory to
it to the effect that any of the foregoing legends are no
longer required or applicable, the Company shall reissue the
certificates evidencing the applicable Shareholder Stock
without such legends.
9. Notices. Any notice provided for in this Agreement
must be in writing and must be either personally delivered,
or mailed by certified or registered mail, return receipt
requested, postage prepaid to the recipient at the address
below indicated:
To the Company:
x/x Xxxxxxx, Xxx.0000 Xxxxx Xxxxxxxx DriveSuite 800Miami,
Florida 33133Attention: [General Counsel]
To the Shareholder:
at the address of the Shareholder set forth on the signature
page hereto
or such other address or to the attention of such other
person as the recipient party shall have specified by prior
written notice to the sending party. Any notice under this
Agreement will be deemed to have been given when so
delivered or mailed.
10. Severability. Whenever possible, each provision of
this Agreement will 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 will not affect any other provision or any
other jurisdiction, but this Agreement will be reformed,
construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been
contained herein.
11. Complete Agreement. This Agreement, those documents
expressly referred to herein and other documents of even
date herewith embody the complete agreement and
understanding among the parties and supersede and preempt
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.
12. Counterparts. This Agreement may be executed on
separate counterparts, each of which is deemed to be an
original and all of which taken together constitute one and
the same agreement. Any telecopied signature shall be
deemed a manually executed and delivered original.
13. Successors and Assigns. This Agreement is intended to
bind and inure to the benefit of and be enforceable by the
Shareholder and the Company, and their respective successors
and assigns and, where applicable, heirs and personal
representatives, including subsequent holders of Shareholder
Stock (except as otherwise provided herein).
14. Choice of Law. Except as otherwise provided herein,
this Agreement shall be governed and construed in accordance
with the laws of the State of Florida without regard to
conflicts of laws principles thereof and all questions
concerning the validity and construction hereof shall be
determined in accordance with the laws of said state. Each
party hereby irrevocably submits to the exclusive
jurisdiction of any state or federal court sitting in the
County of Miami-Dade, State of Florida in any action or
proceeding arising out of or relating to this Agreement and
hereby irrevocably agrees, on behalf of itself or herself
and on behalf of such party's successor's and assigns, that
all claims in respect of such action or proceeding may be
heard and determined in any such court and irrevocably
waives any objection such person may now or hereafter have
as to the venue of any such suit, action or proceeding
brought in such a court or that such court is an
inconvenient forum.
15. Waiver of Jury Trial. THE PARTIES HERETO HEREBY WAIVE
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY
OR INDIRECTLY, ANY MATTER (WHETHER IN TORT, CONTRACT OR
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS AGREEMENT, THE RELATED DOCUMENTS OR THE
RELATIONSHIP ESTABLISHED HEREUNDER.
16. Remedies. Each of the parties to this Agreement will 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 its 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
any party may in its sole discretion apply to any court of
law or equity of competent jurisdiction for specific
performance and/or injunctive relief in order to enforce or
prevent any violations of the provisions of this Agreement.
17. Amendments and Waivers. No provision of this Agreement
may be amended or waived without the prior written consent
of the Company and the Shareholder.
18. Business Days. Whenever the terms of this Agreement
call for the performance of a specific act on a specified
date, which date falls on a Saturday, Sunday or legal
holiday, the date for the performance of such act shall be
postponed to the next succeeding regular business day
following such Saturday, Sunday or legal holiday.
19. No Third Party Beneficiary. Except for the parties to
this Agreement and their respective successors and assigns,
nothing expressed or implied in this Agreement is intended,
or will be construed, to confer upon or give any person
other than the parties hereto and their respective
successors and assigns any rights or remedies under or by
reason of this Agreement.
SIGNATURES APPEAR ON FOLLOWING PAGE
IN WITNESS WHEREOF, the parties have executed this Agreement
on the day and year first above written.
WINSLOEW FURNITURE, INC.
By:__________________________________
Xxxxx Xxxxxx
President and Chief Executive Officer
SHAREHOLDER:
_______________________________________
Xxxxx Xxxxxxxx
Address:
_____________________________________
_____________________________________
_____________________________________
Taxpayer Identification Number:
_____________________________________
TRIVEST FUND II GROUP, LTD.
By: Trivest Equities, Inc., General Partner
By:____________________________
Xxxxxxx X. Xxxxxxxxx, Xx.
Managing Director
