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EXHIBIT 10.10
EXECUTION COPY
SAFELITE GLASS CORP.
STOCKHOLDERS' AGREEMENT
Dated as of December 20, 1996
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SAFELITE GLASS CORP.
STOCKHOLDERS' AGREEMENT
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Table of Contents
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Page
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ARTICLE I Definitions
ARTICLE II Covenants and Conditions
Section 2.1 Restrictions on Transfers; Right of First Refusal
Section 2.2 Call by the Company
Section 2.3 Come Along
Section 2.4 Take Along
Section 2.5 Preemptive Rights
Section 2.6 Synthetic Sales
Section 2.7 Corporate Governance
ARTICLE III Registration Rights
Section 3.1 General
Section 3.2 Demand Registrations
Section 3.3 Piggyback Registration
Section 3.4 Obligations of the Company
Section 3.5 Furnish Information
Section 3.6 Expenses of Registration
Section 3.7 Underwriting Requirements
Section 3.8 Indemnification
Section 3.9 Lock-Up Agreement
Section 3.10 No Inconsistent Agreements
Section 3.11 Stock Split
ARTICLE IV Miscellaneous
Section 4.1 Remedies
Section 4.2 Entire Agreement; Amendment; Waiver
Section 4.3 Severability
Section 4.4 Notices
Section 4.5 Binding Effect; Assignment
Section 4.6 Governing Law
Section 4.7 Termination
Section 4.8 Recapitalizations, Exchanges, Etc.
Section 4.9 Transaction with Affiliates
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Section 4.10 Action Necessary to Effectuate the Agreement
Section 4.11 Purchase for Investment; Legend on Certificate
Section 4.12 Effectiveness of Transfers
Section 4.13 Additional Stockholders
Section 4.14 No Waiver
Section 4.15 Counterpart
Section 4.16 Headings
Section 4.17 Number; Gender
EXHIBIT A Schedule of Stockholders
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STOCKHOLDERS' AGREEMENT
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This Stockholders' Agreement (this "Agreement") is entered into as of the
20th day of December, 1996, by and among Safelite Glass Corp., a Delaware
corporation (the "Company"), those persons listed as ▇▇▇ Group Stockholders on
the signature pages hereof, including ▇▇▇▇▇▇ ▇. ▇▇▇ Equity Fund III, L.P., a
Delaware limited partnership ("Equity Fund") (collectively, the "▇▇▇ Group
Stockholders"), and those persons listed as the Management Stockholders on the
signature pages hereof (the "Management Stockholders"). The ▇▇▇ Group
Stockholders and the Management Stockholders are sometimes collectively referred
to herein as the "Stockholders".
WHEREAS, upon consummation of the transactions contemplated by that certain
Recapitalization Agreement and Plan of Merger and Stock Purchase Agreement dated
as of November 8, 1996 (the "Recapitalization Agreement") by and among ▇▇▇▇
Sieglar Holdings Corp., the LS Selling Stockholders, Safelite Glass Corp., LSNWY
Corp., L.S. Acquisition Corp. and Lite Acquisition Corp., the Stockholders will
own the number of shares of Common Stock set forth opposite their respective
names on EXHIBIT A hereto; and
WHEREAS, each of the Stockholders desires to enter into this Agreement for
the purpose of regulating certain aspects of the Stockholders' relationships
with regard to the Company and certain restrictions on the Common Stock owned by
the Stockholders; and
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Agreement, and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
ARTICLE I
Definitions
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For the purposes of this Agreement, the following terms shall be defined as
follows:
1933 ACT. The "1933 Act" shall mean the Securities Act of 1933, as amended.
1934 ACT. The "1934 Act" shall mean the Securities Exchange Act of 1934, as
amended.
AFFILIATE. An "Affiliate" of a specified person, corporation or other
entity shall mean a person, corporation or other entity which, directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, the corporation or other entity specified and
when used with respect to the Company or any Subsidiary of the Company, shall
include any holder of at least 5% of the capital stock, or any officer or
director, of the Company.
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ASSOCIATE. "Associate," (i) when used to indicate a relationship with any
Person shall mean, (a) any corporation or organization of which such Person is
an officer or partner or is, directly or indirectly, the beneficial owner of ten
percent (10%) or more of any class of equity securities, (b) any trust or other
estate in which such Person has a substantial beneficial interest or as to which
such Person serves as a trustee or in a similar fiduciary capacity and (c) any
relative of such Person who has the same home as such Person, is a parent, aunt
or uncle, sibling, spouse, in-law, child, niece or nephew or grandchild of such
Person, or the spouse of any of them, or (ii) when used to indicate a
relationship with the Company, shall also mean a director or officer of the
Company or any Subsidiary. Neither the Company nor any of its Subsidiaries shall
be deemed an Associate of any Stockholder.
BOARD. The "Board" shall mean the Board of Directors of the Company as the
same shall be constituted from time to time.
CAUSE. "Cause" shall mean (i) the commission of any fraud, embezzlement or
other material act of dishonesty with respect to the Company or any of its
Subsidiaries (including the unauthorized disclosure of confidential or
proprietary information of the Company or any of its Subsidiaries), (ii) a
conviction of, or plea of guilty or NOLO CONTENDERE to, a felony or other crime
involving moral turpitude, (iii) willful misconduct or (iv) willful failure or
refusal to perform one's duties and responsibilities to the Company or any of
its Subsidiaries, which failure or refusal to perform is not remedied within
three (3) days after receipt of a written notice from the Company detailing such
failure or refusal to perform.
COMMON STOCK. "Common Stock" shall mean the Company's common stock, $.01
par value, that the Company may be authorized to issue from time to time, any
other securities of the Company into which such Common Stock may hereafter be
changed or for which such Common Stock may be exchanged after giving effect to
the terms of such change or exchange (by way of reorganization,
recapitalization, merger, consolidation or otherwise) and shall also include any
common stock of the Company hereafter authorized and any capital stock of the
Company of any other class hereafter authorized which is not preferred as to
dividends or distribution of assets in liquidation over any other class of
capital stock of the Company and which has ordinary voting power for the
election of directors of the Company.
THE COMPANY. The "Company" shall mean Safelite Glass Corp., a Delaware
corporation, and its successors and assigns.
PERMITTED TRANSFER. A "Permitted Transfer" shall mean:
(a) a Transfer of Shares by any Stockholder who is a natural person to
such Stockholder's spouse, children, grandchildren, parents or siblings, a
trust for the benefit of any of such persons or a family limited
partnership of which such persons are the only partners, provided such
Transfer is reasonably acceptable to the Company;
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(b) a bona fide pledge of Shares by a Stockholder to a bank, financial
institution or other lender reasonably acceptable to the Company;
(c) a Transfer of Shares between any Stockholder who is a natural
person and such Stockholder's guardian or conservator;
(d) a bona fide gift of Shares by a Stockholder to a charitable
institution as defined in Section 501(c) of the Internal Revenue Code of
1986, as amended, provided such Transfer is reasonably acceptable to the
Company;
(e) a Transfer of Shares from any Stockholder which is a partnership
to its partners, provided such Transfer is reasonably acceptable to the
Company;
(f) a Transfer of Shares from any Stockholder which is a corporation
or partnership to any Affiliate of such Stockholder, provided such Transfer
is reasonably acceptable to the Company; or
(g) a Transfer of Shares by a ▇▇▇ Group Stockholder to another ▇▇▇
Group Stockholder or other employee of ▇▇▇▇▇▇ ▇. ▇▇▇ Company.
No Permitted Transfer shall be effective unless and until the transferee of the
Shares so transferred, if such transferee is not already a party to this
Agreement, executes and delivers to the Company an executed counterpart of this
Agreement in accordance with the terms of Section 4.13 hereof. No Permitted
Transfer shall conflict with or result in any violation of a judgment, order,
decree, statute, law, ordinance, rule or regulation.
PERMITTED TRANSFEREE. A "Permitted Transferee" shall mean any person or
entity who shall have acquired and who shall hold shares pursuant to a Permitted
Transfer described above.
PERSON. "Person" means an individual, corporation, partnership, trust, or
unincorporated association, or a government or any agency or political
subdivision thereof.
PUBLIC OFFERING. A "Public Offering" shall mean the completion of a sale of
Common Stock pursuant to a registration statement which has become effective
under the 1933 Act, excluding registration statements on Form ▇-▇, ▇-▇ or
similar limited purpose forms and also excluding the registration of any equity
security issued to non-Affiliates of the Company as part of a bona fide debt
offering of units comprised of such equity security and a debt security of the
Company.
REGISTRABLE SECURITIES. "Registrable Securities" shall mean all shares of
Common Stock held from time to time by any party hereto and any other securities
of the Company or any of its Subsidiaries issued in exchange for, upon a
reclassification of, or in a distribution
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with respect to, such Common Stock. As to any particular Registrable Securities,
such securities shall cease to be Registrable Securities when (a) a registration
statement with respect to the sale of such securities shall have become
effective under the 1933 Act and such securities shall have been disposed of in
accordance with such registration statement, (b) such securities shall have been
sold under a Rule 144 Transaction or (c) such securities shall have ceased to be
outstanding.
RULE 144 TRANSACTION. "Rule 144 Transaction" means a transfer of Shares (A)
complying with Rule 144 under the 1933 Act as such Rule or a successor thereto
is in effect on the date of such transfer (but not including a sale other than
pursuant to a "brokers transaction" as defined in clauses (i) and (ii) of
paragraph (g) of Rule 144 as in effect on the date hereof) and (B) occurring at
a time when Shares are registered pursuant to Section 12 of the 1934 Act.
SCHEDULE. "Schedule" shall refer to the Schedule of Stockholders attached
hereto as EXHIBIT A.
SHARES. "Shares" shall mean all (i) shares of Common Stock held by
Stockholders from time to time, (ii) shares of Common Stock subsequently held by
Permitted Transferees who acquire them in one or more Permitted Transfers, (iii)
securities of the Company issued in exchange for, upon reclassification of, or
as a distribution in respect of, any of the foregoing.
STOCKHOLDER. "Stockholder" shall have the meaning set forth in the first
paragraph of this Agreement.
SUBSIDIARY. "Subsidiary" with respect to any entity (the "parent") shall
mean any corporation, firm, association or trust of which such parent, at the
time in respect of which such term is used, (i) owns directly or indirectly more
than fifty percent (50%) of the equity or beneficial interest, on a consolidated
basis, and (ii) owns directly or controls with power to vote, indirectly through
one or more Subsidiaries, shares of capital stock or beneficial interest having
the power to cast for the election of directors, trustees, managers or other
officials having powers analogous to that of directors of a corporation. Unless
otherwise specifically indicated, when used herein the term Subsidiary shall
refer to a direct or indirect Subsidiary of the Company.
SYNTHETIC SALE. "Synthetic Sale" shall mean any hedge, sale or purchase of
any derivative security or other action (other than Transfers expressly
permitted by the terms hereof) having the effect of reducing a Stockholder's
economic interest in Shares or reducing a Stockholder's exposure to a decrease
in fair market value of Shares.
THIRD PARTY. "Third Party" shall mean any person other than the Company.
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TRANSFER. "Transfer" shall mean to transfer, sell, assign, pledge,
hypothecate, give, create a security interest in or lien on, place in trust
(voting or otherwise), assign or in any other way encumber or dispose of,
directly or indirectly and whether or not by operation of law or for value, any
Shares.
ARTICLE II
Covenants and Conditions
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2.1 RESTRICTIONS ON TRANSFERS; RIGHT OF FIRST REFUSAL. No Stockholder may
Transfer all or any part of the Shares owned by any of them to anyone other than
a Permitted Transferee except in accordance with the following procedures:
(a) If at any time a Stockholder desires to Transfer Shares to
anyone other than a Permitted Transferee (each, an "Offeror"), such
Offeror shall give notice of such offer (the "Transfer Notice") to the
Company. The Transfer Notice shall state the terms and conditions of
such offer, including the name of the prospective purchaser, the
proposed purchase price per share of such Shares (the "Offer Price"),
payment terms (including a description of any proposed non-cash
consideration), the type of disposition and the number of such Shares
to be transferred ("Offered Shares"). The Transfer Notice shall
further state (i) that the Company may acquire, in accordance with the
provisions of this Agreement, any of the Offered Shares for the price
and upon the other terms and conditions, including deferred payment
(if applicable), set forth therein, and (ii) that the Company may not
purchase any of such Offered Shares unless the Company purchases all
of such Offered Shares.
(b) For a period of thirty (30) business days after receipt of
the Transfer Notice (the "Option Period"), the Company may, by notice
in writing to the Offeror or Permitted Transferee delivering such
Transfer Notice, elect in writing to purchase all, but not less than
all, of the Offered Shares at the Offer Price. The closing of the
purchase of Offered Shares pursuant to Section 2.1(b) or Section
2.1(c), as the case may be, shall take place at the principal office
of the Company on the tenth (10th) day after the expiration of the
Option Period. At such Closing the Company shall deliver to the
Offeror against delivery of certificates duly endorsed and stock
powers representing the Offered Shares being acquired by the Company,
the Offer Price, on the same terms as set forth in the Transfer Notice
(including any non-cash consideration described therein), payable in
respect of the Offered Shares being purchased by the Company. All of
the foregoing deliveries will be deemed to be made simultaneously and
none shall be deemed completed until all have been completed.
(c) Notwithstanding anything set forth in this Section 2.1 to the
contrary, prior to the termination of the Option Period, the Board of
Directors of the Company (the "Board") may, in its sole discretion,
elect to assign the Company's right to
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purchase all, but not less than all, of the Offered Shares pursuant to
this Section 2.1 to the Stockholders. If the Board so elects, the
Company shall give notice of such assignment to each Stockholder (the
"Assignment Notice"), indicating the number of Shares each such
Stockholder is entitled to purchase (including the right to
over-allotment of Offered Shares, if any), the Offer Price of such
Shares, and any other relevant payment terms. Within five (5) days of
the Assignment Notice, those Stockholders who intend to purchase the
Offered Shares pursuant to this Section 2.1(c) (the "Offered Shares
Electing Stockholders") shall notify the Company in writing of such
intention, indicating the number of Offered Shares (including
over-allotments, if any) they intend to purchase. The right to
purchase such Offered Shares shall be allocated to the Stockholders
PRO RATA (based on the number of Shares each Stockholder (together
with each such Stockholder's Permitted Transferees) owns in relation
to the total number of Shares owned by all of the Stockholders);
PROVIDED, HOWEVER, that if any Stockholder does not elect to purchase
the number of Offered Shares which such Stockholder (and its Permitted
Transferees) may purchase pursuant to this Section 2.1(c), then the
Offered Shares Electing Stockholders (and their Permitted Transferees)
may elect to purchase the remaining Offered Shares. The right to
purchase the remaining Offered Shares shall be allocated to the
Offered Shares Electing Stockholders pro rata (based on the number of
Shares each Offered Shares Electing Stockholder (together with their
Permitted Transferees) owns in relation to the total number of Shares
owned by all of the Offered Shares Electing Stockholders).
(d) If the Company or the Stockholders, as the case may be, do
not elect to purchase all of the Offered Shares, all, but not less
than all, of the Offered Shares may be Transferred, but only in
accordance with Sections 2.1(e) and 2.1(f) and the terms of the
Transfer Notice, within sixty (60) days after expiration of the Option
Period, after which, if the Offered Shares have not been Transferred,
all restrictions contained herein shall again be in full force and
effect.
(e) Five (5) days prior to the closing of the purchase of any
Offered Shares pursuant to Section 2.1(d) hereof (the "Closing"), the
Offeror shall notify the Company of the disposition of the Offered
Shares, including the name of each purchaser and the number of shares
bought by each purchaser. The Closing shall take place no later than
sixty (60) days after the expiration of the Option Period. At such
Closing, each purchaser of Offered Shares shall deliver to the Offeror
against delivery of certificates duly endorsed and stock powers
representing the Offered Shares being acquired by such purchaser, the
Offer Price, on the same terms as set forth in the Transfer Notice
(including any non-cash consideration described therein), payable in
respect of the Offered Shares being purchased by such purchaser. All
of the foregoing deliveries will be deemed to be made simultaneously
and none shall be deemed completed until all have been completed.
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(f) Any Transfer of Shares pursuant to this Section 2.1 shall
remain subject to the Transfer restrictions of this Agreement and each
intended transferee pursuant to this Section shall execute and deliver
to the Company a counterpart of this Agreement, which shall evidence
such transferee's agreement that the Shares intended to be transferred
shall continue to be subject to this Agreement and that as to such
Shares the transferee shall be bound by the restrictions of this
Agreement as a Stockholder hereunder.
(g) Any Stockholder who is the subject of an Involuntary Transfer
(as defined below) (the "Transferring Stockholder"), shall notify the
Company in writing within ten (10) days of such Involuntary Transfer
but the failure to give such notice shall not affect the rights of the
parties hereunder. Upon the Company's receipt of such notice, the
Company shall treat the Involuntary Transfer as an offer under this
Section 2.1. The Company shall act upon the deemed offer under this
Section within the time periods and following the applicable
procedures set forth in this Section 2.1, with the date of the deemed
offer being the later of the date of the Company's receipt of written
notice setting forth the existence of such an Involuntary Transfer and
the date of such Involuntary Transfer, such later date being the date
of notification for the purpose of Section 2.1.
(h) The purchase price for the Shares being transferred as a
result of an Involuntary Transfer under Sections 2.1(g) shall be fair
market value, as fair market value is agreed to by the Company and the
transferee in each such Involuntary Transfer, or if no such agreement
is reached, as determined by an independent appraiser selected by the
Company and reasonably acceptable to the transferee in such
Involuntary Transfer. All costs of any appraisal under this Section
2.1(h) shall be paid by the Company.
(i) For purposes of this Agreement, the term "Involuntary
Transfer" shall mean any involuntary sale, transfer, encumbrance or
other disposition by or in which any Stockholder shall be deprived or
divested of any right, title or interest in or to any Shares,
including without limitation, any levy of execution, transfer in
connection with bankruptcy, reorganization, insolvency or similar
proceedings or any transfer to a public officer or agency pursuant to
any abandoned property or escheat law. A Transfer pursuant to Section
2.2 hereof shall not be deemed to be an Involuntary Transfer.
(j) Except as otherwise provided herein, for two years from the
date hereof, no ▇▇▇ Group Stockholder or Management Stockholder may
sell any Shares in a Rule 144 Transaction.
(k) The provisions of this Section 2.1 shall not apply to a
Transfer of Shares which is (i) a Permitted Transfer, (ii) pursuant to
a Public Offering, (iii) for any ▇▇▇
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Group Stockholder, made after a Public Offering, pursuant to a Rule 144
Transaction or (iv) for any Management Stockholder, made after the
later of (A) a Public Offering and (B) two years (or such shorter
period of time as is required under Rule 144) from the date hereof, in
either case, pursuant to a Rule 144 Transaction.
2.2 Call by the Company.
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(a) If the employment of a Management Stockholder by the Company
or any of its Subsidiaries shall terminate (a "Call Event") prior to
the earlier of (i) three (3) years from the date hereof or (ii) the
completion of the Company's initial Public Offering, the Company shall
have the right to purchase (the "Call Option"), by delivery of a
written notice (the "Call Notice") to such terminated Management
Stockholder no later than ninety (90) days after the date of such Call
Event, and such Management Stockholder and such Management
Stockholder's Permitted Transferees (the "Call Group") shall be
required to sell all (but not less than all) of the Shares which are
owned by the members of the Call Group on the date of such Call Event
(collectively, the "Call Securities") at a price per share equal to
the Call Price (as defined in Section 2.2(c) below) applicable to such
Shares.
(b) Notwithstanding anything set forth in this Section 2.2 to the
contrary, prior to the exercise of the Call Option by the Company, the
Board may, in its sole discretion, elect to assign the Company's right
to exercise the Call Option to purchase all, but not less than all, of
the Call Securities to the Stockholders. If the Board so elects, the
Company shall give notice of such assignment to each Stockholder (the
"Call Assignment Notice"), indicating the number of Call Securities
each such Stockholder is entitled to purchase (including the right to
over-allotment of Call Securities, if any), the Call Price applicable
to such Shares and the date of the closing of such purchase under this
Section 2.2. Within five (5) days of the Call Assignment Notice, those
Stockholders who intend to purchase Call Securities pursuant to this
Section 2.2(b) (the "Call Securities Electing Stockholders"), shall
notify the Company in writing of such intention, indicating the number
of Call Securities (including over-allotments, if any) they intend to
purchase. The right to purchase such Call Securities shall be
allocated to the Stockholders pro rata (based on the number of Shares
each Stockholder (together with each such Stockholder's Permitted
Transferees) owns in relation to the total number of Shares owned by
all of the Stockholders); PROVIDED, HOWEVER, that if any Stockholder
does not elect to purchase the number of Call Securities which such
Stockholder (and its Permitted Transferees) may purchase pursuant to
this Section 2.2(b), then the Call Securities Electing Stockholders
(and their Permitted Transferees) may elect to purchase the remaining
Call Securities. The right to purchase the remaining Call Securities
shall be allocated to the Call Securities Electing Stockholders pro
rata (based on the number of Shares each Call Securities Electing
Stockholder (together with their Permitted Transferees) owns in
relation to the total number of Shares owned by all of the Call
Securities Electing Stockholders).
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(c) For purposes of this Section 2.2, the term "Call Price" shall
mean (i) if the employment of the Management Stockholder is terminated
for Cause or if such Management Stockholder voluntarily terminates his
or her employment with the Company or one of its Subsidiaries, (A) for
Shares held as of the date hereof, the price per Share paid by the ▇▇▇
Group Stockholders pursuant to the Recapitalization Agreement, and (B)
for Shares acquired after the date hereof, the purchase price thereof;
and (ii) if the employment of the Management Stockholder is not
terminated for Cause and the Management Stockholder did not
voluntarily terminate his or her employment with the Company or one of
its Subsidiaries, the fair market value (as determined by the Board)
of the Shares; PROVIDED, HOWEVER, that for purposes of this subsection
(ii), for a period of twelve (12) months from the date hereof, the
term "fair market value" shall mean the Call Price as if determined
under clause (i) of this paragraph. If the Management Stockholder
objects to the fair market value of the Shares as determined by the
Board as provided in subsection (ii) above, the fair market value for
the Shares shall be as determined by an independent appraiser selected
by the Company and reasonably acceptable to the Management
Stockholder. All costs of any appraisal under this section shall be
paid by the Company.
(d) The closing of any purchase of Call Securities by the Company
pursuant to Sections 2.2(a) or 2.2(b) shall take place at the
principal office of the Company on the tenth (10th) business day after
the date of the Call Notice. At such closing, the Company, the
Stockholders or the Designated Employee, as the case may be, shall
deliver to the Call Group, against delivery of certificates duly
endorsed and stock powers representing the Call Securities, a
certified check or checks payable to the Management Stockholder and/or
the Permitted Transferees, as the case may be, in an amount equal to
the aggregate Call Price payable in respect of such Call Securities.
All of the foregoing deliveries will be deemed to be made
simultaneously and none shall be deemed completed until all have been
completed.
(e) Notwithstanding anything set forth in this Section 2.2 to
the contrary, prior to the exercise by the Company of its Call Option
to purchase Call Securities pursuant to this Section 2.2, one or more
new or existing employees of the Company or any Subsidiary may, in the
sole discretion of the Board, be designated by the Board (individually
a "Designated Employee" and collectively, "Designated Employees") who
shall have the right, but not the obligation, to exercise the Call
Option and to acquire, in lieu of the Company, some or all (as
determined by the Company) of the Call Securities that the Company is
entitled to purchase from the Call Group hereunder, for cash and on the
same terms and conditions as set forth in Section 2.2(d) which apply to
the repurchase of Call Securities by the Company. Concurrently with any
such purchase of Call Securities by any such Designated Employee, such
Designated Employee who is not already a Management Stockholder shall
execute a counterpart of this Agreement whereupon such Designated
Employee shall be deemed a
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"Management Stockholder" and shall have the same rights and be bound
by the same obligations as a Management Stockholder hereunder.
(f) If neither the Company nor any Designated Employee elect to
exercise the Call Option and deliver a Call Notice within 90 days of a
Call Event, then the Call Option provided in this Section 2.2 shall
terminate but the Management Stockholder or his Permitted Transferees
shall continue to hold such Call Securities pursuant to all of the
other provisions of this Agreement.
2.3 COME ALONG. Except as provided in Section 2.3(c) hereof, no
Stockholder shall Transfer more than 15% of the outstanding Common Stock of the
Company to a Third Party who is not a Permitted Transferee without complying
with the terms and conditions set forth in Section 2.3(a) and 2.3(b) below and,
if applicable, the terms and conditions set forth in Section 4.1 below;
PROVIDED, HOWEVER, that this Section 2.3 shall not in any way limit or affect
the restrictions of Section 2.1.
(a) Any Stockholder, when desiring to Transfer Shares (the
"Transferor"), shall give not less than seven (7) days prior written
notice of such intended Transfer to each other Stockholder and to the
Company. Such notice (the "Participation Notice") shall set forth the
terms and conditions of such proposed Transfer, including the name of
the prospective transferee, the number of Shares proposed to be
transferred (the "Participation Securities") by the Transferor, the
purchase price per share proposed to be paid therefor and the payment
terms and type of transfer to be effectuated. Within five (5) days
following the delivery of the Participation Notice by the Transferor
to each other Stockholder and to the Company, each Stockholder
desiring to participate in such proposed Transfer (each, a
"Participating Offeree") shall, by notice in writing to the Transferor
and to the Company, have the opportunity and right to sell to the
purchasers in such proposed Transfer (upon the same terms and
conditions as the Transferor) up to that number of Shares owned by
such Participating Offeree as shall equal the product of (i) a
fraction, the numerator of which is the number of Shares owned by such
Participating Offeree as of the date of such proposed Transfer and the
denominator of which is the aggregate number of Shares actually owned
as of the date of such Participation Notice by the Transferor and by
all Participating Offerees, multiplied by (ii) the number of
Participation Securities. The amount of Participation Securities to be
sold by the Transferor shall be reduced to the extent necessary to
provide for such sales of Shares by Participating Offerees.
(b) At the closing of any proposed Transfer in respect of which a
Participation Notice has been delivered, the Transferor, together with
all Participating Offerees, shall deliver to the proposed transferee
certificates evidencing the Shares to be sold thereto duly endorsed
with stock powers and shall receive in exchange therefor the
consideration to be paid or delivered by the proposed transferee in
respect of such Shares as described in the Participation Notice.
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(c) The provisions of this Section 2.3 shall not apply to (i) any
Permitted Transfer, (ii) any Transfer pursuant to or following a
Public Offering or (iii) any Transfer pursuant to Section 2.4.
2.4 Take Along.
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(a) If a Stockholder or group of Stockholders holding more than
50% of the then outstanding Shares (the "Take Along Group") determine
to sell or exchange (in a business combination or otherwise) in one or
a series of bona fide arms-length transactions to a Third Party who is
not an Affiliate of the Take Along Group, 50% or more of the Shares
owned by it or them then, upon five (5) days written notice by the
Take Along Group to each other Stockholder, which notice shall include
reasonable details of the proposed sale or exchange including the
proposed time and place of closing and the consideration to be
received by the Take Along Group (such notice being referred to as the
"Sale Request"), each other Stockholder (each, a "Seller") shall be
obligated to, and shall sell, transfer and deliver, or cause to be
sold, transferred and delivered, to such Third Party on the same terms
as the Take Along Group, that number of Shares owned by such Seller as
shall equal the product of (A) a fraction, the numerator of which is
the number of Shares proposed to be transferred by the Take Along
Group as of the date of such Sale Request and the denominator of which
is the aggregate number of Shares actually owned as of the date of
such Sale Request by the Take Along Group, multiplied by (B) the
number of Shares actually owned as of the date of such Sale Request by
such Seller. Each Seller shall (i) deliver certificates for all of its
Shares at the closing of the proposed Transfer, free and clear of all
claims, liens and encumbrances and (ii) if stockholder approval of the
transaction is required, vote his or her Shares in favor thereof.
(b) The provisions of this Section 2.4 shall not apply to (i) any
Transfer pursuant to a Public Offering, or (ii) a Permitted Transfer.
2.5 Preemptive Rights.
-----------------
(a) PREEMPTIVE RIGHT. The Company hereby grants to each
Stockholder so long as it shall own any Shares or, if sooner, until a
Public Offering, the right to purchase up to a PRO RATA portion of New
Securities (as defined in paragraph (b) below) which the Company, from
time to time, proposes to sell or issue following the date hereof. A
Stockholder's PRO RATA portion, for purposes of this Section 2.5, is
the product of (i) a fraction, the numerator of which is the number of
outstanding Shares which such Stockholder then owns and the
denominator of which is the total number of Shares of Common Stock
then actually outstanding on a fully diluted basis after giving effect
to the exercise of all options, warrants and the like and the
conversion of all securities convertible into or exchangeable for
Common Stock, multiplied by (ii) the number of New Securities the
Company proposes to sell or issue.
- 11 -
15
(b) DEFINITION OF NEW SECURITIES. "New Securities" shall mean any
Common Stock of the Company whether now authorized or not, any rights,
options or warrants to purchase Common Stock and any indebtedness or
preferred stock of the Company which is convertible into Common Stock
(or which is convertible into a security which is, in turn,
convertible into Common Stock); PROVIDED that the term "New
Securities" does not include (i) indebtedness of the Company; (ii)
Common Stock issued as a stock dividend to all holders of Common Stock
PRO RATA or upon any subdivision or combination of shares of Common
Stock; (iii) the issuance of securities of the Company pursuant to a
Public Offering or merger; (iv) any employee stock options approved by
the Board of Directors of the Company; (v) the issuance of any Common
Stock upon the exercise or conversion of any rights, options or
warrants to purchase Common Stock; or (vi) the issuance of any equity
security issued to non-Affiliates of the Company as part of a bona
fide debt offering of investment units comprised of such equity
security and a debt security of the Company or the issuance of Common
Stock upon the conversion of such equity security pursuant to its
terms.
(c) NOTICE FROM THE COMPANY. In the event the Company proposes to
issue New Securities, the Company shall give each Stockholder who has
a preemptive right under this Section 2.5 written notice of such
proposal, describing the type of New Securities and the price and the
terms upon which the Company proposes to issue the same. For a period
of five (5) days following the delivery of such notice by the Company,
the Company shall be deemed to have irrevocably offered to sell to
each Stockholder its PRO RATA share of such New Securities for the
price and upon the terms specified in the notice. Each Stockholder may
exercise its preemptive rights hereunder by giving written notice to
the Company and stating therein the quantity of New Securities to be
purchased.
(d) SALE BY THE COMPANY. In the event any Stockholder who has a
preemptive right under this Section 2.5 fails to exercise in full its
preemptive right within said five (5) day period, the Company shall
have one hundred twenty (120) days thereafter to sell the New
Securities with respect to which the preemptive right was not
exercised, at a price and upon terms no more favorable to the
purchasers thereof than specified in the Company's notice given
pursuant to Section 2.5(c).
(e) CLOSING. The Closing for any such issuance shall take place
as proposed by the Company with respect to the Shares to be issued, at
which Closing the Company shall deliver certificates for the shares in
the respective names of the purchasing Stockholders against receipt of
payment therefor.
2.6 SYNTHETIC SALES. Any Synthetic Sales by a Management Stockholder then
employed by the Company or any of its Subsidiaries shall require the prior
written approval of the Board.
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16
2.7 Corporate Governance. Until the completion of a Public Offering by the
--------------------
Company:
(a) ELECTION OF DIRECTORS. The Company's Board of Directors shall
consist of persons designated by a majority in interest of the ▇▇▇
Group Stockholders; provided however, that for so long as each of
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇ are employees of the Company, they
shall be entitled to be included as directors of the Company to be
designated by the ▇▇▇ Group Stockholders. The initial Board of
Directors shall consist of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
(b) REMOVAL AND REPLACEMENT OF DIRECTOR DESIGNEES. With the
exception of Messrs. Staglin and ▇▇▇▇▇▇, the ▇▇▇ Group Stockholders
shall be entitled to request that the directors designated by the ▇▇▇
Group Stockholders pursuant to this Section 2.7 be removed or replaced
and the other Stockholders hereby agree to take any action, including
the voting of their Shares to take action to effectuate such request.
(c) RESTRICTIONS ON OTHER AGREEMENTS. No Stockholder shall grant
any proxy or enter into or agree to be bound by any voting trust with
respect to the Shares nor shall any Stockholder enter into any
stockholders agreements or arrangements of any kind with any person
with respect to the Shares on terms which conflict with the provisions
of this Agreement (whether or not such agreements and arrangements are
with other Stockholders), including but not limited to, agreements or
arrangements with respect to the acquisition, disposition or voting of
Shares inconsistent herewith.
(d) STOCKHOLDER ACTION. Each Stockholder agrees that, in its
capacity as a stockholder of the Company, such Stockholder will vote,
or grant proxies relating to such Shares to vote, all of its Shares of
Common Stock in favor of any merger, consolidation, sale or transfer
of Shares or any similar transaction pursuant to Section 2.4 hereof
if, and to the extent that, approval of the Company's stockholders is
required in order to effect such transaction.
ARTICLE III
Registration Rights
-------------------
3.1 GENERAL. For purposes of Article III: (a) the terms "register",
"registered" and "registration" refer to a registration effected by preparing
and filing a registration statement in compliance with the 1933 Act and the
declaration or ordering of effectiveness of such registration statement; and (b)
the term "Holder" means any Stockholder or Permitted Transferee thereof.
3.2 Demand Registrations.
--------------------
- 13 -
17
(a) If the Company shall receive a written request (specifying
that it is being made pursuant to this Section 3.2) from persons
owning a majority in interest of the Common Stock owned by the ▇▇▇
Group Stockholders, that the Company file a registration statement
under the 1933 Act, or a similar document pursuant to any other
statute then in effect corresponding to the 1933 Act, covering the
registration of Common Stock, then the Company shall not later than
ninety (90) days after receipt by the Company of a written request for
a demand registration pursuant to this Section 3.2, file a
registration statement with the Securities and Exchange Commission
(the "SEC") relating to such Registrable Securities as to which such
request for a demand registration relates (the "Requested Shares") and
the Company shall use its best efforts to cause the offering of such
Requested Shares to be registered under the 1933 Act. The Company
shall be obligated to effect _________ registrations of Registrable
Securities pursuant to this Section 3.2.
(b) Except as provided in subsection (c) below, if, pursuant to
Section 3.3, the total amount of Registrable Securities that all
Holders request to be included in an offering made pursuant to this
Section 3.2 exceeds the amount of securities that the underwriters
reasonably believe compatible with the success of the offering, then
the Company will include in such registration only the number of
securities which, in the good faith opinion of such underwriters, can
be sold, selected from the Registrable Securities requested to be
included by all Holders PRO RATA based on the number of Registrable
Securities which each of them owns.
(c) If, in the good faith opinion of the underwriters, the
success of any offering under this Section 3.2 or Section 3.3 would be
compromised due to the inclusion of Registrable Securities owned by
Management Stockholders, then the Company will include in such
registration only the number of securities which, in the good faith
opinion of such underwriters, can be sold, selected from the
Registrable Securities requested to be included by such Management
Stockholders PRO RATA based on the number of Registrable Securities
which each of them owns.
3.3 PIGGYBACK REGISTRATION. If, at any time, the Company determines to
register any of its equity securities, for its own account or for the account of
others under the 1933 Act in connection with the public offering of such
securities (other than the first Public Offering), the Company shall, at each
such time, promptly give each Holder written notice of such determination no
later than ten (10) days before the effective date of any such registration.
Upon the written request of any Holder received by the Company within five (5)
days after the giving of any such notice by the Company, the Company shall use
its best efforts to cause to be registered under the 1933 Act all of the
Registrable Shares of each Holder that such Holder has requested be registered.
If the total amount of Registrable Securities that are to be included by either
the Company (or other person (including any Stockholder) for whose account the
registration is made) for its own account and at the request of Holders pursuant
to this Section 3.3 exceeds the amount of securities that the underwriters
reasonably believe
- 14 -
18
compatible with the success of the offering, then the Company will include in
such registration only the number of securities which in the opinion of such
underwriters can be sold, in the following order:
(i) first, the equity securities of the Company (or other person
at whose request the registration is made, provided that if the
registration is made);
(ii) second, the Registrable Securities requested to be included
by the Holders PRO RATA based on the number of Registrable Securities
which each of them owns; PROVIDED, HOWEVER, that if an underwriter who
is not an Affiliate or Associate of any Stockholder or the Company, in
good faith, requests for the success of the offering that the number
of Registrable Securities to be sold by the Holders exercising
piggyback rights pursuant to this Section 3.3 be apportioned or
excluded, such number of Registrable Securities of such Holders shall
be reduced or not included to the extent so requested by said
underwriter.
3.4 Obligations of the Company.
--------------------------
(a) Whenever required under Sections 3.2 or 3.3 hereof to use its best
efforts to effect the registration of any Registrable Securities, the Company
shall:
(1) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause
such registration statement to become and remain effective, including,
without limitation, filing of post-effective amendments and supplements to
any registration statement or prospectus necessary to keep the registration
statement current; provided, however, that if such registration statement
does not become effective, then any demand registration pursuant to Section
3.2 prompting such undertaking by the Company shall be deemed to be
rescinded and retracted and shall not be counted as, or deemed or
considered to be or to have been, a demand registration pursuant to Section
3.2 for any purpose;
(2) as expeditiously as reasonably possible, prepare and file with the
SEC such amendments and supplements to such registration statement and the
prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the 1933 Act with respect to the
disposition of all securities covered by such registration statement and to
keep each registration and qualification under this Agreement effective
(and in compliance with the 1933 Act) by such actions as may be necessary
or appropriate for a period of up to 180 days (if, in the reasonable
discretion of the Holders owning securities covered by such registration
statement, such period of time is necessary for the successful completion
of the offering of such securities) after the effective date of such
registration statement, all as requested by such Holders;
- 15 -
19
(3) as expeditiously as reasonably possible furnish to the Holders
such numbers of copies of a prospectus, including a preliminary prospectus,
in conformity with the requirements of the 1933 Act, and such other
documents as they may reasonably request in order to facilitate the
disposition of Registrable Securities owned by them;
(4) as expeditiously as reasonably possible use its best efforts to
register and qualify the securities covered by such registration statement
under such securities or "blue sky" laws of such jurisdictions as shall be
reasonably appropriate for the distribution of the securities covered by
the registration statement, PROVIDED that the Company shall not be required
in connection therewith or as a condition thereto to qualify to do business
or to file a general consent to service of process in any such
jurisdiction, and further provided that (anything in this Agreement to the
contrary notwithstanding with respect to the bearing of expenses) if any
jurisdiction in which the securities shall be qualified shall require that
expenses incurred in connection with the qualification of the securities in
that jurisdiction be borne by selling stockholders, then such expenses
shall be payable by selling stockholders PRO RATA, to the extent required
by such jurisdiction;
(5) use its best efforts to cause all Registrable Securities covered
by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable
the seller or sellers thereof to consummate the disposition or such
Registrable Securities;
(6) notify each seller of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the 1933 Act, upon discovery that, or upon
the happening of any event as a result of which, the prospectus included in
such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made,
and at the request of any such seller or Holders promptly prepare to
furnish to such seller or Holders a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
under which they were made;
(7) otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC, and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering the period
of at least twelve months, but not more than eighteen months, beginning
with the first full calendar month after the effective date of such
registration statement, which earnings statement
- 16 -
20
shall satisfy the provisions of Section 11(a) of the 1933 Act, and will
furnish to each such seller at least two business days prior to the filing
thereof a copy of any post-effective amendment or supplement to such
registration statement or prospectus and shall not file any thereof to
which any such seller shall have reasonably objected, except to the extent
required by law, on the grounds that such amendment or supplement does not
comply in all material respects with the requirements of the 1933 Act or of
the rules or regulations thereunder;
(8) provide and cause to be maintained a transfer agent and registrar
for all Registrable Securities covered by such registration statement from
and after a date not later than the effective date of such registration
statement; and
(9) use its best efforts to list all Registrable Securities covered by
such registration statement on any securities exchange on which any class
of Registrable Securities is then listed.
(b) The Company will furnish to each Holder on whose behalf
Registrable Securities have been registered pursuant to this Agreement a signed
counterpart, addressed to such Holder, an opinion of counsel for the Company
dated the effective date of such registration statement, and such opinion of
counsel shall cover those matters which are customarily covered in opinions of
issuer's counsel delivered to underwriters in connection with underwritten
public offerings of securities.
(c) Except as otherwise set forth in Section 3.3, if the Company at
any time proposes to register any of its securities under the 1933 Act, whether
or not for sale for its own account, and such securities are to be distributed
by or through one or more underwriters, then the Company will make reasonable
efforts, if requested by any Holder of Registrable Securities who requests
registration of Registrable Securities in connection therewith pursuant to
Section 3.2 or 3.3 hereof, to arrange for such underwriters to include such
Registrable Securities among the securities to be distributed by or through such
underwriters.
(d) In connection with the preparation and filing of each registration
statement registering Registrable Securities under this Agreement, the Company
will give the Holders of Registrable Securities on whose behalf such Registrable
Securities are to be so registered and their underwriters, if any, and their
respective counsel and accountants, the opportunity to participate in the
preparation of such registration statement, each prospectus included therein or
filed with the SEC, and each amendment thereof or supplement thereto, and will
give each of them such access to its books and records and such opportunities to
discuss the business of the Company with its officers, its counsel and the
independent public accountants who have certified its financial statements, as
shall be necessary, in the opinion of such Holders or such underwriters or their
respective counsel, in order to conduct a reasonable and diligent investigation
within the meaning of the 1933 Act.
- 17 -
21
3.5 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Article III that the
Holders shall furnish to the Company such information regarding them, the
Registrable Securities held by them, and the intended method of disposition of
such securities as the Company shall reasonably request and as shall be required
in connection with the action to be taken by the Company.
3.6 EXPENSES OF REGISTRATION. All expenses incurred in connection with a
registration pursuant to Sections 3.2 or 3.3 hereof (excluding underwriters'
discounts and commissions, which shall be borne by the sellers), including
without limitation all registration and qualification fees, printers' and
accounting fees, fees and disbursements of counsel for the Company and the
reasonable fees and disbursements of one counsel for the selling Holders (which
counsel shall be selected by a majority in interest of such Holders) shall be
borne by the Company; PROVIDED, HOWEVER, that the Holders requesting a demand
registration pursuant to Section 3.2 may withdraw such request, in which event
so long as such Holders agree to pay all expenses incurred by the Company in
connection with such requested registration, such withdrawn request shall be
deemed for all purposes herein not to have been made.
3.7 UNDERWRITING REQUIREMENTS. In connection with any registration of
Registrable Securities under this Agreement, the Company will, if requested by
the underwriters for any Registrable Securities included in such registration,
enter into an underwriting agreement with such underwriters for such offering,
such agreement to contain such representations and warranties by the Company,
and such other terms and provisions as are customarily contained in underwriting
agreements with respect to secondary distributions, including, without
limitation, provisions relating to indemnification and contribution. The Holders
on whose behalf Registrable Securities are to be distributed by such
underwriters shall be parties to any such underwriting agreement, and the
representations and warranties by, and the other agreements on the part of the
Company to and for the benefit of such underwriters shall be also made to and
for the benefit of such Holders of Registrable Securities. The Company shall use
its reasonable best efforts to cause the underwriting agreement to comply with
Section 3.8. Such underwriters shall be selected (i) by the Company, in the case
of a registration pursuant to Section 3.3, or (ii) by the Holders requesting a
demand registration, in the case of a registration pursuant to Section 3.2.
3.8 INDEMNIFICATION. In the event any Registrable Securities are included
in a registration statement under Article III:
(a) To the fullest extent permitted by law, the Company will indemnify
and hold harmless each Holder requesting or joining in a registration, any
underwriter (as defined in the ▇▇▇▇ ▇▇▇) for it, and each person, if any,
who controls such Holder or such underwriter within the meaning of the 1933
Act, from and against any losses, claims, damages, expenses (including
reasonable attorneys' fees and expenses and reasonable costs of
investigation) or liabilities, joint or several, to which they or any of
them may become subject under the 1933 Act or otherwise, insofar as such
losses,
- 18 -
22
claims, damages, expenses or liabilities (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are
based on any untrue or alleged untrue statement of any material fact
contained in such registration statement including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein, or necessary to make the statements therein not misleading, or
arise out of any alleged violation by the Company of any rule or regulation
promulgated under the 1933 Act applicable to the Company and relating to
action or inaction required of the Company in connection with any such
registration; PROVIDED, HOWEVER, that the indemnity agreement contained in
this Section 3.8(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be liable to anyone for any
such loss claim, damage, liability or action to the extent that it arises
out of or is based upon an untrue statement or omission made in connection
with such registration statement, preliminary prospectus, final prospectus
or amendments or supplements thereto in reliance upon and in conformity
with written information furnished expressly for use in connection with
such registration by such Holder, underwriter or control person. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Holder, underwriter or control
person and shall survive the transfer of such securities by such Holder.
(b) To the fullest extent permitted by law, each Holder requesting or
joining in a registration will indemnify and hold harmless the Company, as
the case may be, each of its directors, each of its officers who has signed
the registration statement, each person, if any, who controls the Company
within the meaning of the 1933 Act, and each agent and any underwriter for
the Company and any person who controls any such agent or underwriter and
each other Holder and any person who controls such Holder (within the
meaning of the ▇▇▇▇ ▇▇▇) against any losses, claims, damages or liabilities
to which the Company or any such director, officer, control person, agent,
underwriter, or other Holder may become subject, under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon an untrue
statement of any material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein
or any amendments or supplements thereto, or arise out of or are based upon
the omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to
the extent, but only to the extent, that such untrue statement or omission
was made in such registration statement, preliminary or final prospectus,
or amendments or supplements thereto, in reliance upon and in conformity
with written information furnished by such Holder with respect to such
Holder expressly for use in connection with such registration; and such
Holder will reimburse any legal or other expenses reasonably incurred by
the
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Company or any such director, officer, control person, agent, underwriter,
or other Holder in connection with investigating or defending any such
loss, claim, damage, liability or action; PROVIDED HOWEVER, the indemnity
obligation of each such Holder hereunder shall be limited to and shall not
exceed the proceeds actually received by such Holder upon a sale of
Registrable Securities pursuant to a registration statement hereunder; and
PROVIDED, further that the indemnity agreement contained in this Section
3.8(b) shall not apply to amounts paid in settlements effected without the
consent of such Holder (which consent shall not be unreasonably withheld).
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any such director,
officer, Holder, underwriter or control person and shall survive the
transfer of such securities by such Holder.
(c) Any person seeking indemnification under this Section 3.8 will (i)
give prompt notice to the indemnifying party of any claim with respect to
which it seeks indemnification (but the failure to give such notice will
not affect the right to indemnification hereunder, unless the indemnifying
party is materially prejudiced by such failure) and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest may exist
between such indemnified and indemnifying parties with respect to such
claim, permit such indemnifying party, and other indemnifying parties
similarly situated, jointly to assume the defense of such claim with
counsel reasonably satisfactory to the parties. In the event that the
indemnifying parties cannot mutually agree as to the selection of counsel,
each indemnifying party may retain separate counsel to act on its behalf
and at its expense. The indemnified party shall in all events be entitled
to participate in such defense at its expense through its own counsel. If
such defense is not assumed by the indemnifying party, the indemnifying
party will not be subject to any liability for any settlement made without
its consent (but such consent will not be unreasonably withheld). No
indemnifying party will consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release
from all liability in respect of such claim or litigation. An indemnifying
party who is not entitled to, or elects not to, assume the defense of a
claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect
to such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other
of such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the reasonable fees and
expenses of such additional counsel.
(d) If for any reason the foregoing indemnification is unavailable to
any party or insufficient to hold it harmless as and to the extent
contemplated by the preceding paragraphs of this Section 3.8, then each
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such loss, claim, damage expense or
liability in such proportion as is appropriate to reflect the relative
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24
benefits received by the Company, on the one hand, and the applicable
indemnified party, as the case may be, on the other hand, and also the
relative fault of the Company and any applicable indemnified party, as the
case may be, as well as any other relevant equitable considerations.
3.9 LOCK-UP AGREEMENT. If required by the underwriter, each Stockholder
agrees not to sell or otherwise transfer or dispose of any Common Stock (or
other securities) of the Company held by such Stockholder (other than securities
included in the applicable registration statement or shares purchased in the
public market after the effective date of registration) or any interest or
future interest therein during such period (not to exceed 180 days) as is
acceptable to the underwriter following the effective date of each registration
statement of the Company filed under the 1933 Act which includes securities to
be sold to the public in an underwritten offering. The Company may impose stop
transfer instructions with respect to the shares (or securities) subject to the
foregoing restriction until the end of said period.
3.10 NO INCONSISTENT AGREEMENTS. The Company agrees that it has not entered
into, and it will not hereafter enter into, any Agreement with respect to the
registration of its securities that is inconsistent with (or superior to) the
rights granted to the Holders of Registrable Securities in this Agreement.
3.11 STOCK SPLIT. If, on or after the receipt by the Company of a request
for registration of a public offering pursuant to Section 3.2 hereof, the
proposed managing underwriter or underwriters of such offering reasonably
believes that the number of shares to be registered is less than the minimum
number necessary for the success of such offering, the Company use its best
efforts to cause each share of its outstanding Common Stock to be converted into
such number of shares of such Common Stock so that the number of shares of
Registrable Securities to be registered is equal to the minimum number which
such managing underwriter or underwriters reasonably believes is necessary for
the success of such offering. If necessary in connection therewith, the Company
shall use its best efforts to cause to be recommended, approved and adopted by
its Board of Directors and approved and adopted by its stockholders, and, if so
approved and adopted, file and cause to become effective, an amendment to its
certificate of incorporation increasing the number of shares of Common Stock
which the Company is authorized to issue. Each Stockholder, together with his or
its Permitted Transferees, hereby agrees to vote the Shares held by it in favor
of adopting such amendment.
ARTICLE IV
Miscellaneous
-------------
4.1 REMEDIES. The parties to this Agreement acknowledge and agree that the
covenants of the Company and the Stockholders set forth in this Agreement may be
enforced in equity by a decree requiring specific performance. In the event of a
breach of any material
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provision of this Agreement, the aggrieved party will be entitled to institute
and prosecute proceeding in any court of competent jurisdiction to enforce
specific performance of such provision, as well as to obtain damages for breach
of this Agreement. Without limiting the foregoing, if any dispute arises
concerning the sale or other disposition of any of the Shares subject to this
Agreement or concerning any other provisions hereof or the obligations of the
parties hereunder, the parties to this Agreement agree that an injunction may be
issued in connection therewith (including, without limitation, restraining the
sale or other disposition of such Shares or rescinding any such sale or other
disposition). Such remedies shall be cumulative and non-exclusive and shall be
in addition to any other rights and remedies the parties may have under this
Agreement or otherwise.
4.2 ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement, together with the
Schedule hereto, sets forth the entire understanding of the parties, and as of
the Closing contemplated by the Recapitalization Agreement supersedes all prior
agreements and all other arrangements and communications, whether oral or
written, with respect to the subject matter hereof. The Schedule may be amended
to reflect changes in the composition of the Stockholders and changes in stock
ownership that may occur from time to time as a result of Permitted Transfers or
Transfers permitted under Article II hereof. Amendments to the Schedule
reflecting Permitted Transfers or Transfers permitted under Article II hereof
shall become effective when a copy of the Agreement as executed by any new
transferee, are filed with the Company, except as otherwise provided in Section
4.13 hereof. Any other amendments to, or the termination of, this Agreement
shall require the prior written consent of a majority in interest of each of the
▇▇▇ Group Stockholders and the Management Stockholders. Notwithstanding the
preceding sentence, no consent by a majority in interest of any such Stockholder
Group which owns less than 5% of the fully diluted Common Stock then outstanding
shall be necessary to make such other amendments to this Agreement; PROVIDED,
HOWEVER, that no amendment may adversely affect the ▇▇▇ Group Stockholders or
the Management Stockholders at any time, unless consented to in writing by a
majority in interest of such adversely affected group. Notwithstanding any
provisions to the contrary contained herein, the ▇▇▇ Group Stockholders, the
Management Stockholders or any party may waive any rights with respect to which
such party is entitled to the benefits under this Agreement. No waiver of or
consent to any departure from any provision of this Agreement shall be effective
unless signed in writing by the holders of a majority in interest of the stock
owned by the party entitled to the benefit thereof.
4.3 SEVERABILITY. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if the invalid or
unenforceable provision were omitted.
4.4 NOTICES. All notices and other communications necessary or contemplated
under this Agreement shall be in writing and shall be delivered in the manner
specified herein or, in the absence of such specification, shall be deemed to
have been duly given three business days after mailing by certified mail, when
delivered by hand upon confirmation of
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receipt by facsimile, or one day after sending by overnight delivery service, to
the respective addresses of the parties set forth below:
(a) For notices and communications to the Management Stockholders, to
the respective addresses set forth in the Schedule, with a copy to in each case
to:
Seigfreid, Bingham, Levy, ▇▇▇▇▇▇ & ▇▇▇
A Professional Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b)(i) for notices and communications to the Company:
Safelite Glass Corp.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) for notices and communications to the ▇▇▇ Group Stockholders, to
the respective addresses set forth in the Schedule;
(iii) in the case of each of (i) and (ii) above, with a copy to:
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
By notice complying with the foregoing provisions of this Section 4.4, each
party shall have the right to change the mailing address for future notices and
communications to such party.
4.5 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and to their respective transferees,
successors and assigns; PROVIDED, HOWEVER, that the rights under this Agreement
may not be assigned except as expressly provided herein, it being understood
that the Company's rights hereunder may be assigned by the Company to any
corporation which is the surviving entity in a merger, consolidation or like
event involving the Company. No such assignment shall relieve an assignor of its
obligations hereunder.
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27
4.6 GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Delaware (regardless of the laws that might otherwise govern under
applicable Delaware principles of conflicts of law) as to all matters, including
but not limited to matters of validity, construction, effect, performance and
remedies.
4.7 TERMINATION. This Agreement shall terminate ten (10) years from the
date hereof, unless earlier terminated by the parties hereto pursuant to the
provisions of Section 4.2 hereof. Notwithstanding the preceding sentence, and
without affecting any other provision of this Agreement requiring termination of
any rights in favor of any Stockholder, Permitted Transferee or any other
transferee of Shares, the provisions of Articles II and III of this Agreement
shall terminate as to such Stockholder, Permitted Transferee or other
transferee, when, pursuant to and in accordance with this Agreement, such
Stockholder, Permitted Transferee or other transferee, as the case may be, no
longer owns any Shares; PROVIDED, that termination pursuant to this Section 4.7
shall only occur in respect of a Stockholder after all Permitted Transferees in
respect thereof also no longer own any Shares. As provided above, the provisions
of Sections 2.3 and 2.5 shall not apply to the Shares owned by Stockholders
following a Public Offering.
4.8 RECAPITALIZATIONS, EXCHANGES, ETC. The provisions of this Agreement
shall apply, to the full extent set forth herein with respect to Shares, to any
and all shares of capital stock of the Company or any successor or assign of the
Company (whether by merger, consolidation, sale of assets or otherwise) which
may be issued in respect of, in exchange for, or in substitution of the Shares,
by reason of a stock dividend, stock split, stock issuance, reverse stock split,
combination, recapitalization, reclassification, merger, consolidation or
otherwise.
4.9 TRANSACTIONS WITH AFFILIATES. The Company shall not enter into any
transactions, other than the Management Agreement as of the date hereof between
the Company and ▇▇▇▇▇▇ ▇. ▇▇▇ Company, with any Person under common control with
the Company or any officer or director of the Company, unless such transaction
is on an arms-length basis, on terms no less advantageous to the Company then
those available to third parties.
4.10 ACTION NECESSARY TO EFFECTUATE THE AGREEMENT. The parties hereto agree
to take or cause to be taken all such corporate and other action as may be
necessary to effect the intent and purposes of this Agreement.
4.11 PURCHASE FOR INVESTMENT; LEGEND ON CERTIFICATE. Each of the parties
acknowledges that all of the Shares held by such party are being (or have been)
acquired for investment and not with a view to the distribution thereof and that
no transfer, hypothecation or assignment of Shares may be made except in
compliance with applicable federal and state securities laws. All the
certificates of Shares of the Company which are now or hereafter
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28
owned by the Stockholders and which are subject to the terms of this Agreement
shall have endorsed in writing, stamped or printed, thereon the following
legend:
THESE SECURITIES ARE SUBJECT TO THE TERMS AND CONDITIONS, INCLUDING
RESTRICTIONS ON TRANSFER, OF A STOCKHOLDERS' AGREEMENT DATED AS OF
DECEMBER 20, 1996, AS AMENDED FROM TIME TO TIME. A COPY OF THE
STOCKHOLDERS' AGREEMENT IS ON FILE WITH THE SECRETARY OF THE COMPANY
AND WILL BE MAILED TO ANY PROPERLY INTERESTED PERSON WITHOUT CHARGE
UPON THE COMPANY'S RECEIPT OF A WRITTEN REQUEST THEREFOR.
All shares shall also bear all legends required by federal and state
securities laws.
4.12 EFFECTIVENESS OF TRANSFERS. All Shares transferred by a Stockholder
(other than pursuant to an effective registration statement under the 1933 Act
or pursuant to a Rule 144 Transaction) shall, except as otherwise expressly
stated herein, be held by the Transferee thereof pursuant to this Agreement.
Such Transferee shall, except as otherwise expressly stated herein, have all the
rights and be subject to all of the obligations of a Stockholder under this
Agreement (as though such party had so agreed pursuant to Section 4.13 hereof)
automatically and without requiring any further act by such transferee or by any
parties to this Agreement. Without affecting the preceding sentence, if such
transferee is not a Stockholder on the date of such transfer, then such
transferee, as a condition to such transfer, shall confirm such transferee's
obligations hereunder in accordance with Section 4.13 hereof. No Shares shall be
transferred on the Company's books and records, and no transfer of Shares shall
be otherwise effective, unless any such transfer is made in accordance with the
terms and conditions of this Agreement, and the Company is hereby authorized by
all of the Stockholders to enter appropriate stop transfer notations on its
transfer records to give effect to this Agreement.
4.13 ADDITIONAL STOCKHOLDERS. Subject to the restrictions on transfers of
Shares contained herein, any person or entity who is not already a Stockholder
acquiring Shares (except for transferees acquiring Shares in an offering
registered under the 1933 Act or in a Rule 144 Transaction), shall, on or before
the transfer or issuance to it of Shares, sign a counterpart signature page
hereto in form reasonably satisfactory to the Company and shall thereby become a
party to this Agreement to be bound hereunder as (i) a Management Stockholder if
a Permitted Transferee or an employee of the Company or any of its Subsidiaries
or (ii) a ▇▇▇ Group Stockholder if a Permitted Transferee, Transferee or an
employee or affiliate of ▇▇▇▇▇▇ ▇. ▇▇▇ Company; PROVIDED that a transferee which
is a Permitted Transferee under clause (b) of the definition of Permitted
Transferee shall not be obligated to so agree until foreclosure on its pledge.
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29
4.14 NO WAIVER. No course of dealing and no delay on the part of any party
hereto in exercising any right, power or remedy conferred by this Agreement
shall operate as waiver thereof or otherwise prejudice such party's rights,
powers and remedies. No single or partial exercise of any rights, powers or
remedies conferred by this Agreement shall preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
4.15 COUNTERPART. This Agreement may be executed in two or more
counterparts each of which shall be deemed an original but all of which together
shall constitute one and the same instrument, and all signatures need not appear
on any one counterpart.
4.16 HEADINGS. All headings and captions in this Agreement are for purposes
of reference only and shall not be construed to limit or affect the substance of
this Agreement.
4.17 NUMBER; GENDER. When the context so requires, the singular shall
include the plural and the plural shall include the singular and the gender of
any pronoun shall include the other genders.
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30
SAFELITE GLASS CORP.
STOCKHOLDERS' AGREEMENT
Counterpart Signature Page
--------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
SAFELITE GLASS CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
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31
SAFELITE GLASS CORP.
STOCKHOLDERS' AGREEMENT
Counterpart Signature Page
--------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
▇▇▇ GROUP STOCKHOLDERS:
▇▇▇▇▇▇ ▇. ▇▇▇ EQUITY FUND III, L.P.
By: THL Equity Advisors III Limited
Partnership, General Partner
By: THL Equity Trust, General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇▇ ▇. ▇▇▇ FOREIGN FUND III, L.P.
By: THL Equity Advisors III Limited
Partnership, General Partner
By: THL Equity Trust, General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------
THL-CCI INVESTORS LIMITED
PARTNERSHIP
By: THL Investment Management Corp.,
general partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------
BIG BEND INVESTMENTS, L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: General Partner
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32
SAFELITE GLASS CORP.
STOCKHOLDERS' AGREEMENT
Counterpart Signature Page
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first above written.
MANAGEMENT STOCKHOLDERS:
----------------------------------
Print Name:_______________________
Address:__________________________
----------------------------------
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33
EXHIBIT A
---------
Schedule of Stockholders
No. of
Name and Address of Stockholder Shares
------------------------------- ------
▇▇▇ GROUP STOCKHOLDERS
▇▇▇▇▇▇ ▇. ▇▇▇ Equity Fund III, L.P. 3,724,438
▇▇▇▇▇▇ ▇. ▇▇▇ Foreign Fund III, L.P. 230,457
THL-CCI Investors Limited Partnership 386,345
c/o ▇▇▇▇▇▇ ▇. ▇▇▇ Company
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Big Bend Investments, L.P. 37,449
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
MANAGEMENT STOCKHOLDERS
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