___________________________________________________________
AMENDED AND RESTATED
STOCKHOLDER AGREEMENT
OUTSOURCING SERVICES GROUP, INC.
DATED AS OF JUNE 30, 1997
(Certain terms are defined in
Section 24 of this Agreement)
___________________________________________________________
AMENDED AND RESTATED STOCKHOLDER AGREEMENT
THIS AMENDED AND RESTATED STOCKHOLDER AGREEMENT is made
and entered into as of June 30, 1997, among OUTSOURCING SERVICES GROUP,
INC., as surviving company in the merger of Aerosol Services Holding
Corporation, a Delaware corporation, and Aerosol Companies Holding
Corporation, a Delaware corporation (the "Company"), XXXXXX + XXXXXX
INVESTMENT PARTNERSHIP, L.P., a Delaware limited partnership ("GMIP"), ASCP
INVESTMENT PARTNERS, L.P., a Delaware limited partnership ("ASCP"), XXXXXX
X. XXXXXXXXX, XXXXXX X. XXX and XXXXXX X. XXX (Messrs. Xxxxxxxxx, Lim and
Lim are sometimes collectively referred to as the "Founders"), CHASE
MANHATTAN CAPITAL, L.P., as the holder of certain warrants ("Chase"),
XXXXXXX VENTURE PARTNERS IV - DIRECT FUND, L.P. ("Xxxxxxx" and sometimes
with GMIP and ASCP referred to as the "Institutional Investors"), and
certain individuals listed on Exhibit A hereto who are members of the
management of the Company or its wholly owned subsidiaries Piedmont
Laboratories, Inc., a Georgia corporation ("Piedmont") or Aerosol Services
Company, Inc., a California corporation ("ASC") (such individuals, together
with any persons who become parties to this Agreement pursuant to Section
10.1 of this Agreement and each of their respective Permitted Transferees,
are referred to herein, collectively, as the "Management Shareholders").
GMIP, ASCP, the Founders, Xxxxxxx and the Management Shareholders are
hereinafter referred to collectively as the "Shareholders."
WHEREAS, the Company is the successor by merger (the
"Merger") to companies formed to acquire all of the issued and outstanding
stock of Piedmont and ASC;
WHEREAS, the Company is consummating the Merger on the
date hereof; and
WHEREAS, in connection with the Merger, on the date hereof
(the "Merger"), the Company will issue or will have outstanding shares of
its common stock, par value $0.001 per share ("Common Stock") to each
Shareholder in the number of shares of Common Stock set forth opposite the
Shareholder's name on Exhibit B hereto; and
WHEREAS, the Company anticipates that it will offer and
sell additional shares of Common Stock to stockholders and employees of the
Company and its subsidiaries or affiliates and such persons will become
parties to this Agreement pursuant to Section 10.1 hereof; and
WHEREAS, the Shareholders believe it to be in their best
interests and in the best interests of the Company that they enter into
this Agreement providing for certain rights and restrictions with respect
to the shares of Common Stock owned by them or their Permitted Transferees,
and amending, restating and superseding in their entirety the stockholder
agreements dated September 30, 1996 for Aerosol Companies Holding
Corporation and February 14, 1994 for Aerosol Services Holding Corporation;
NOW, THEREFORE, in consideration of the mutual covenants
and obligations set forth in this Agreement, the parties hereto agree as
follows:
1. Restrictions on Transfer of Common Stock.
1.1 General Restriction on Transfer. Prior to the
closing of a public offering pursuant to an effective registration
statement (a "Registration") under the Securities Act of 1933, as amended
(the "Act"), that covers (together with prior effective Registrations) (i)
not less than 50% of the outstanding shares of Common Stock on a fully
diluted basis or (ii) shares of Common Stock that, after the closing of
such public offering, will be traded on the New York Stock Exchange, the
American Stock Exchange or the National Association of Securities Dealers
Automated Quotation System (an "IPO"), no shares of Common Stock now or
hereafter owned by any Shareholder or any interest therein may, directly or
indirectly, be sold, assigned, mortgaged, transferred, pledged,
hypothecated or otherwise disposed of (collectively "Transferred"), except
for (a) Transfers to a Permitted Transferee pursuant to Section 1.2 (a
"Permitted Transferee"), (b) sales of shares of Common Stock to the Company
pursuant to this Agreement or (c) Transfers to a Shareholder or a third
party of shares of Common Stock pursuant to, or otherwise permitted under,
Section 6. A Transfer in violation of this Agreement shall be void.
1.2 Permitted Transferees.
(a) Affiliates, Trusts, etc. Subject to
subsection (c) of this Section 1.2, each Institutional Investor may
Transfer any shares of Common Stock or any interest therein or its rights
to subscribe for the same to any of its Affiliates, provided that such
transfer shall not have an adverse effect on any nonrecognition treatment
afforded under Section 351 of the Internal Revenue Code of 1986, as
amended. Subject to subsection (c) of this Section 1.2 and to the
provisions of Section 6, an Institutional Investor may sell shares of
Common Stock pursuant to Rule 144A under the Act. Subject to subsection
(c) of this Section 1.2, a Management Shareholder or a Founder may Transfer
any shares of Common Stock or any interest therein or his rights to
subscribe for the same (i) with the prior written consent of the Company's
Board of Directors (the "Board") (which consent shall not be withheld
unless, in the opinion of the Board, such Transfer together with all other
Transfers made after the Merger could result in or create a "significant
risk" that the Company may become subject to, or after any Registration
will continue to be subject to, the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), to a
trust, family partnership, limited liability company or corporation of
which all the beneficiaries, partners, owners or stockholders are the
Management Shareholder or Founder, his spouse, parents, members of his
immediate family or his lineal descendants, (ii) in case of death, by will
or by the laws of intestate succession to executors, administrators,
testamentary trustees, legatees or beneficiaries, (iii) with the prior
written consent of the Board, to one or more other Management Shareholders
or Founders or (iv) with the prior written consent of the Board, to any
person the Board identifies as a current member of management of the
Company or one of its Affiliates and who becomes a Management Shareholder
by executing this Agreement. In addition to the foregoing, any transferee
of a Shareholder described above may Transfer shares of Common Stock back
to such Shareholder or to another Permitted Transferee of such Shareholder.
For the purposes of this Section 1.2, a "significant risk" shall be deemed
to arise when the number of "holders of record" (as determined in
accordance with the Exchange Act) is greater than 80% of the number of
"holders of record" that would cause the application or continued
application of the informational requirements of the Exchange Act under the
then existing circumstances. Persons who acquire shares pursuant to this
Section 1.2(a) are "Permitted Transferees."
(b) Security Agreements. Subject to subsection
(c) of this Section 1.2, a Shareholder may pledge any or all shares of
Common Stock now or hereafter owned by him or grant a security interest
therein to secure indebtedness of the Shareholder owing to the Company or a
lender approved by the Company so long as such indebtedness was incurred
for the purpose of paying all or part of the purchase price of such shares
of Common Stock or for the purpose of refinancing indebtedness incurred for
such purpose, and Institutional Investors may pledge or grant a security
interest in shares of Common Stock now owned or hereafter owned by them;
provided, however, that any pledgee pursuant to this subsection (b) shall
acquire only a security interest in such shares of Common Stock entitling
such transferee to the proceeds from any sale of such shares of Common
Stock made in compliance with the terms of this Agreement and not title to
such shares of Common Stock or any other rights incident thereto, including
any rights under this Agreement. The pledge agreements or other related
financing agreements of any Shareholder shall be subject to and acknowledge
the rights of the Company and the other Shareholders set forth herein.
(c) Agreements to Be Bound. Any Transfer of
shares of Common Stock made pursuant to subsection (a) or (b) of this
Section 1.2 shall be effective only if the Permitted Transferee agrees in
writing to be bound by the terms and conditions of this Agreement pursuant
to an instrument of assumption reasonably satisfactory in substance and
form to the Board.
(d) Status of Certain Permitted Transferees and
Warrant Holders.
(i) A Permitted Transferee of an
Institutional Investor which is a fund, partnership, corporation or limited
liability company, is under common control with such Institutional
Investor, and is identified by the transferring Institutional Investor as
its successor shall be an Institutional Investor and shall succeed to all
rights of the transferring Institutional Investor under this Agreement. If
GMIP, ASCP or Xxxxxxx distributes shares to the holders of beneficial
interests in GMIP, ASCP or Xxxxxxx, or if any Institutional Investor sells
shares to a non-Affiliate, the transferees shall be Management Shareholders
except for purposes of Sections 2 and 3 (rights and duties to sell to the
Company) and shall not have any of the rights or duties of Institutional
Investors under Sections 6, 7, 9, 10.3, 11 or 13. If Chase exercises its
warrants, in whole or in part, it shall become an "Institutional Investor"
and a "Shareholder" with respect to the shares of Common Stock acquired
upon exercise of such warrants.
(ii) Permitted Transferees of Founders and
Management Shareholders shall be Management Shareholders but shall have no
rights under Section 2.1 to sell to the Company unless they are also
employees of the Company or one of its Affiliates.
2. Sales to the Company.
2.1 The Management Shareholders. Subject to all
subsections of this Section 2 and subject to Section 5, a Management
Shareholder shall have the right to sell to the Company, and the Company
shall have the obligation to purchase from such Management Shareholder,
all, but not less than all, of such Management Shareholder's shares of
Common Stock at their Fair Market Value, as defined in and determined
pursuant to Section 4.1, as of the date of termination if the employment of
such Management Shareholder with the Company and all its Affiliates thereof
is terminated by the Company without Cause (as defined in Section 24) or
terminates as a result of (a) the death or Disability (as defined in
Section 24) of such Management Shareholder, (b) the resignation of such
Management Shareholder for Good Reason (as defined in Section 24) or (c)
the retirement of such Management Shareholder upon or after reaching the
age of 65 ("Retirement").
2.2 Notice. If any Management Shareholder desires
to sell shares of Common Stock pursuant to Section 2.1, he (or his estate,
as the case may be) shall notify the Company not more than 30 days or, in
the case of a termination under clause (a) of Section 2.1, 90 days after
the occurrence of the event giving rise to such Management Shareholder's
right to sell his shares of Common Stock and shall specify the number of
shares of Common Stock such Management Shareholder owns.
2.3 Payment. Subject to Section 5, payment for
shares of Common Stock sold by a Shareholder pursuant to Section 2.1 shall
be made on the date 15 days (or the first business day thereafter if the
15th day is not a business day) following the date of the Management
Shareholder's notice unless one of the provisions of this Agreement
providing for a delayed payment is applicable.
(a) Right to Defer Sale on Death or Disability.
If the termination of employment of a Management Shareholder giving a right
to sell results from the death or Disability of such Management Shareholder
before the fifth anniversary of the Merger, then such Management
Shareholder (or his estate, as the case may be) may choose, in the notice
delivered to the Company pursuant to Section 2.2, that the Company's
purchase obligation shall be effective with respect to all or any portion
of such Management Shareholder's shares of Common Stock on the fifth
anniversary of the Merger (rather than immediately), as long as such choice
is made with respect to at least 1,000 shares of Common Stock. If the
notice delivered by such Management Shareholder (or his estate, as the case
may be) does not state a choice to delay the effectiveness of the Company's
obligation, the Company's purchase obligation shall be effective
immediately with respect to all of such Management Shareholder's shares of
Common Stock. If the Company's purchase obligation with respect to all or
any portion of any shares of Common Stock is not effective until the fifth
anniversary of the Merger by reason of a choice made under this Section
2.3, such fifth anniversary shall be deemed to be the "date of termination"
used to determine the purchase price to be paid for the shares of Common
Stock to be purchased following such fifth anniversary.
(b) Interest. Any payments required to be made
by the Company under this Section 2.3 shall accrue interest at 9% simple
interest per annum from the date used to determine the Fair Market Value to
the date the Company has paid in full for all of the shares of Common
Stock. Such interest shall not accrue or be paid for any period in which
payment is delayed solely by a failure to deliver certificates representing
the purchased shares.
2.4 Termination of Right to Sell. A Management
Shareholder's right to sell to the Company and the Company's obligation to
purchase such Shareholder's shares of Common Stock pursuant to Section 2.1
shall terminate on the earlier of (a) the tenth anniversary of the Merger
or (b) the closing of an IPO. Such termination of a Management
Shareholder's rights shall be effective notwithstanding the non-expiration
of any time period set forth in Section 2.2 but shall not affect the
Company's duties arising from a previously given valid notice exercising a
Management Shareholder's right to sell.
3. Right of the Company to Purchase From Management
Shareholders.
3.1 Right to Purchase. Subject to all subsections
of this Section 3 and subject to Section 5, the Company shall have the
right to purchase from a Management Shareholder, and each Management
Shareholder shall have the obligation to sell to the Company, all, but not
less than all, of such Management Shareholder's shares of Common Stock:
(a) Fair Market Value. If such Management
Shareholder's employment with the Company and all Affiliates thereof is
terminated as a result of (i) the death or Disability of such Management
Shareholder, (ii) the resignation of such Management Shareholder for Good
Reason, (iii) the Retirement of such Management Shareholder or (iv) the
termination by the Company and all its Affiliates of the employment of such
Management Shareholder without Cause, the Company may purchase at Fair
Market Value, or
(b) Other Purchases. If such Management
Shareholder's employment with the Company and all Affiliates thereof is
terminated by the Company for Cause or terminates for any reason except any
event described in subsection (a) of this Section 3.1, until the fifth
anniversary of the Merger, the Company may purchase at the lesser of the
Fair Market Value and the Carrying Value (as defined in Section 24), and
thereafter the Company may purchase at the Fair Market Value, of the shares
of Common Stock to be purchased.
3.2 Notice. If the Company desires to purchase
shares of Common Stock from a Management Shareholder pursuant to Section
3.1, it shall notify such Management Shareholder (or his estate, as the
case may be) not more than 30 days after the occurrence of the event giving
rise to the Company's right to acquire such Management Shareholder's shares
of Common Stock.
3.3 Payment.
(a) General. Subject to Section 5 and to the
right of the Company to prepay any amounts due under this Agreement,
payment for shares of Common Stock purchased by the Company pursuant to
Section 3.1(a) shall be made on the date 15 days (or the first business day
thereafter if the 15th day is not a business day) following the date of the
Company's notice unless one of the provisions of this Agreement providing
for a delay in payment is applicable.
(b) Certain Delayed Payments. For purchases
pursuant to Section 3.1(b) (terminations for Cause and resignations without
Good Reason):
(i) if the date of termination occurs
prior to the third anniversary of the Merger, then
one-third of the purchase price of the purchased shares
shall be paid within 15 days following each of the third,
fourth and fifth anniversaries of the Merger;
(ii) if the date of termination occurs on
or after the third anniversary of the Merger and prior to
the fourth anniversary of the Merger, then (x) two-thirds
of the purchase price of the purchased shares shall be
paid by the 15th day following such fourth anniversary and
(y) one-third of the purchase price of the purchased
shares shall be paid within 15 days following the fifth
anniversary of the Merger;
(iii) if the date of termination occurs on
or after the fourth anniversary of the Merger and prior to
the fifth anniversary of the Merger, then the purchase
price of the purchased shares shall be paid by the 15th
day following such fifth anniversary; and
(iv) if the date of termination occurs on
or after the fifth anniversary of the Merger, then the
purchase price of the purchased shares shall be paid by
the 15th day after the determination of the Fair Market
Value of the shares to be purchased, but subject to the
surrender of the certificates representing the purchased
shares.
(c) Management Shareholder's Right to Defer
Payment. Notwithstanding the foregoing, if the termination of employment
of a Management Shareholder giving rise to the purchase results from the
death or Disability of such Management Shareholder prior to the fifth
anniversary of the Merger, then such Management Shareholder (or his estate,
as the case may be) may choose, within 90 days of the receipt of the notice
specified in Section 3.2, that the Company's purchase right shall be
effective with respect to all or any portion (but not less than 1,000
shares) of such shares of Common Stock on the fifth anniversary of the
Merger (rather than immediately). If a Management Shareholder (or his
estate, as the case may be) does not give written notice of a choice under
Section 3.3(b), the Company's purchase right shall be effective immediately
with respect to all of such Management Shareholder's shares of Common
Stock. If the Company's purchase right with respect to all or any portion
of any shares of Common Stock is not effective until the fifth anniversary
of the Merger by reason of a choice made under this Section 3.3, such fifth
anniversary shall be deemed to be the "date of termination" used to
determine the purchase price to be paid for the shares of Common Stock to
be purchased after such fifth anniversary. The Company shall, subject to
Section 5, pay to such Management Shareholder (or his estate, as the case
may be) whose employment so terminates the Fair Market Value of such shares
by the 15th day following the "date of termination."
(d) Interest. Any payments based on Fair
Market Value required to be made by the Company under this Section 3.3
shall accrue interest at 9% simple interest per annum on the amounts not
paid from the date on which such payment became due to the date the Company
makes such payments. Interest shall not accrue on any payments made on a
delayed basis pursuant to subparagraphs (i), (ii), (iii) or (iv) of Section
3.3(b). No interest shall accrue or be paid for any period in which
payment is delayed solely by a failure to deliver certificates representing
the purchased shares.
3.4 Termination of Right to Purchase. The Company's
right to purchase from a Management Shareholder and such Management
Shareholder's obligation to sell shares of Common Stock pursuant to Section
3.1 shall terminate as to all shares for which no prior notice to purchase
has been given on the earlier of (a) the tenth anniversary of the Merger or
(b) the closing of an IPO. Such termination of the Company's rights shall
be effective even if the thirty-day time period set forth in Section 3.2
has not expired.
4. Purchase Price.
4.1 Fair Market Value.
(a) Appraisal. The Company shall engage, from
time to time, as determined by the Board or at the request of GMIP or
Xxxxxxx, an independent valuation consultant or appraiser of recognized
standing reasonably satisfactory to GMIP (the "Appraiser") to appraise the
Fair Market Value of the shares of Common Stock as of the last day of the
fiscal period then most recently ended or, at the request of the Board, as
of any more recent date (the "Appraisal Date") and to prepare and deliver a
report to the Company describing the results of such appraisal (the
"Appraisal"). However, by a vote of the Board of Directors, the Company
may, rather than obtaining an appraisal, agree with a Management
Shareholder on the value of such Management Shareholder's shares of Common
Stock and the result of such an agreement shall be an "Appraisal" but only
applicable to the Management Shareholder in question.
(b) Fair Market Value. For the purposes of
this Agreement, the "Fair Market Value" of any share of Common Stock being
purchased by or sold to the Company shall be $10.00 per share until
December 31, 1997, unless the Board requests an Appraisal for an earlier
date, and thereafter shall be the Fair Market Value of the entire Common
Stock equity interest of the Company taken as a whole, divided by the
number of outstanding shares of Common Stock, all calculated on a fully
diluted basis, without additional premiums for control or discounts for
minority interests or restrictions on transfer. After December 31, 1997
(or if earlier, the date of the first Appraisal), Fair Market Value shall
be determined (i) by the Board of Directors in good faith based on a bona
fide offer from a third party to purchase Common Stock that is as of a date
not more than sixty (60) days preceding the date for which Fair Market
Value is to be determined, (ii) if clause (i) does not apply, as set forth
in the most recent Appraisal prior to such date plus interest at 9% simple
interest per annum to the date of termination or deemed termination, or
(iii) if the selling Shareholder so chooses by notice to the Company within
30 days of the date of termination of his employment, and if the most
recent Appraisal was more than six (6) months prior to the termination of
employment, the Fair Market Value of any shares of Common Stock to be
purchased by the Company pursuant to this Agreement shall be determined as
of the next Appraisal Date following the applicable date of termination or
deemed termination, which shall be not more than six months after the date
of termination of employment. Any payments due on a delayed basis because
a Shareholder chooses the method in clause (iii) to determine Fair Market
Value shall be due fifteen days after the Company receives the second
Appraisal and shall bear interest only from such fifteenth day.
(c) Notice to Shareholders. After receipt of
any Appraisal, or any other event resulting in a determination of Fair
Market Value, the Company shall provide notice of such Fair Market Value to
each Shareholder.
4.2 Carrying Value. For the purposes of Sections
3.1 and 6.5, the "Carrying Value" of any share of Common Stock shall be
equal to the price paid by the selling Management Shareholder for all
shares sold plus simple interest at a rate per annum equal to 9% which
shall be deemed to be the carrying cost, from the date of the Merger
through the date of such purchase, less the amount of dividends paid to
such Management Shareholder in respect of such share (to the extent that
the amount of such dividends does not exceed such interest).
5. Prohibited Purchases. Notwithstanding anything to
the contrary herein, the Company shall not be permitted or obligated to
purchase any shares of Common Stock from a Shareholder hereunder to the
extent (i) the Company is prohibited from purchasing such shares by any
debt instruments or agreements (the "Financing Documents") entered into by
the Company or any of its Affiliates or by applicable law, (ii) a default
has occurred under any Financing Document and is continuing, (iii) the
purchase of such shares would, or in the reasonable opinion of the Board
might, result in the occurrence of an event of default under any Financing
Document or create a condition which would or might, with notice or lapse
of time or both, result in such an event of default or (iv) the purchase of
such shares would, in the reasonable opinion of the Board, be imprudent in
view of the financial condition (present or projected) of the Company or
the anticipated impact of the purchase of such shares on the Company's
ability to meet its obligations under any Financing Document. If the total
number of shares of Common Stock which the Company has the right or
obligation to purchase on any date exceeds the total amount permitted to be
purchased on such date pursuant to the preceding sentence (the "Maximum
Amount"), the Company shall purchase on such date only that number of
shares of Common Stock up to the Maximum Amount (and shall not be required
to purchase more than the Maximum Amount) in such amounts as the Board
shall in good faith determine, applying such amounts in the following order
of priority:
(a) First, the shares of Common Stock of all
Management Shareholders whose shares of Common Stock are being purchased by
the Company by reason of termination of employment due to death or
Disability and, to the extent that the number of shares of Common Stock
that the Company is obligated to purchase from such Management Shareholders
exceeds the Maximum Amount, such shares of Common Stock pro rata among such
Management Shareholders on the basis of the number of shares of Common
Stock held by each of such Management Shareholders that the Company is
obligated or has the right to purchase; and
(b) Second, to the extent that the Maximum
Amount is in excess of the amount the Company purchases pursuant to clause
(a) above, the shares of Common Stock of all Management Shareholders whose
shares of Common Stock are being purchased by the Company by reason of
termination of employment without Cause or due to Retirement or resignation
for Good Reason up to the Maximum Amount and, to the extent that the number
of shares of Common Stock that the Company is obligated to purchase from
such Management Shareholders exceeds the Maximum Amount, such shares of
Common Stock pro rata among such Management Shareholders on the basis of
the number of shares of Common Stock held by each of such Management
Shareholders that the Company is obligated or has the right to purchase;
and
(c) Third, to the extent the Maximum Amount is
in excess of the amounts the Company purchases pursuant to clauses (a) and
(b) above, the shares of Common Stock of all other Management Shareholders
whose shares of Common Stock are being purchased by the Company up to the
Maximum Amount and, to the extent that the number of shares of Common Stock
that the Company is obligated to purchase from such Management Shareholders
exceeds the Maximum Amount, the shares of Common Stock of such Management
Shareholders in such order of priority and in such amounts as the Board in
its sole discretion shall in good faith determine to be appropriate under
the circumstances; and
Notwithstanding anything to the contrary contained in this Agreement, if
the Company is unable to make any payment when due to any Management
Shareholder under this Agreement by reason of this Section 5, the Company
shall make such payment at the earliest practicable date permitted under
this Section 5 and any such payment shall accrue simple interest (or if
such payment is accruing interest at such time, shall continue to accrue
interest) at 9% per annum from the date such payment is due and owing to
the date such payment is made. Interest shall cease to accrue during, and
shall not be paid for, any period of delay caused solely by a failure to
deliver certificates representing purchased shares. All payments of
interest accrued hereunder shall be paid only at the date of payment by the
Company for the shares of Common Stock being purchased.
6. Sales to Third Parties.
6.1 General; Co-Sales in Certain Instances; Right to
Require a Sale.
(a) No Management Shareholder or Founder shall,
prior to the earliest to occur of (i) the closing of an IPO or (ii) the
fifth anniversary of the Merger (the "Restricted Period"), sell any of his
or its shares of Common Stock to a third party except Permitted Transferees
or pursuant to Sections 6.1(b) or 6.1(c). After the termination of the
Restricted Period, a Management Shareholder or Founder may sell shares of
Common Stock to a third party only in compliance with the provisions of
Sections 6.2 and 6.3 or pursuant to Sections 6.1(b) and (c).
(b) Institutional Investors may sell shares of
Common Stock to a third party eligible to purchase under Rule 144A at any
time after the date of the Merger, subject to the right of first offer and
co-sale provisions of Section 6.2.
(c) If GMIP, ASCP and Xxxxxxx decide to sell to
a third party or parties unaffiliated with GMIP, ASCP and Xxxxxxx all (but
not less than all) of the aggregate shares of Common Stock owned by GMIP,
ASCP and Xxxxxxx, then, first offer rights under Section 6.2 shall not
apply and if requested by such third party or parties, each other
Shareholder and Chase shall join GMIP, ASCP and Xxxxxxx in such sale for a
purchase price per share of Common Stock and on other terms and conditions
not less favorable to the other Shareholders and Chase than those offered
to GMIP, ASCP and Xxxxxxx. If GMIP, ASCP, and Xxxxxxx do not require all
Stockholders and Chase to join in a sale as permitted by this Section
6.1(c) then co-sale rights under Section 6.2 shall apply.
(d) For purposes of Sections 6.1(b) and 6.1(c)
only, a "sale" shall include a merger or sale of all or substantially all
the assets of the Company or its subsidiaries.
6.2 Right of First Offer, Co-Sale Provisions. If an
Institutional Investor wishes to sell shares of Common Stock to third
parties but such sale is not a joint decision of GMIP, ASCP and Xxxxxxx
which is subject to Section 6.1(c), then the following provisions shall
apply.
(a) If an Institutional Investor (the "Selling
Investor") desires to sell shares of Common Stock to a third party or
parties, then prior to offering or selling such shares of Common Stock the
Selling Investor shall deliver to the Company and each other Institutional
Investor a letter signed by the Selling Investor setting forth:
(i) the number of shares of Common Stock
which the Selling Investor desires to sell (the "ROFO
Shares");
(ii) the minimum cash purchase price per
share of Common Stock (the "ROFO Price") to be accepted by
the Selling Investor; and
(iii) the Selling Investor's offer
(irrevocable by its terms for 30 days following receipt)
to sell to the other Institutional Investors all (but not
less than all) of the ROFO Shares at the ROFO Price (the
"ROFO Offer").
The other Institutional Investors shall have the option, exercisable within
25 days following delivery of the ROFO Offer, to elect to purchase up to
their respective pro rata portion of the ROFO Shares based on the number of
shares of Common Stock (determined on a fully diluted basis) then owned by
each of them. If any Institutional Investor does not elect to purchase the
ROFO Shares pursuant to the preceding sentence, then those Institutional
Investors that do so elect shall have the right within five days after such
25-day period to elect to purchase the remaining ROFO Shares on a pro rata
basis or on such other basis as they may agree. If one or more
Institutional Investors elect to purchase all (but not less than all) ROFO
Shares, the closing of the purchase and sale pursuant to such election
shall take place within 10 days after expiration of the 25-day exercise
period.
(b) If, upon the expiration of 35 days
following delivery of the ROFO Offer, all ROFO Shares have not been
purchased by the other Institutional Investors then, (i) the Company shall
notify each Shareholder that co-sale rights pursuant to clauses (c) through
(g) of this Section 6.2 apply, and each Shareholder shall have the rights
granted under clauses (c) through (g) of this Section 6.2 with respect to
such proposed sale, and (ii) the Selling Investor may, subject to the co-
sale provisions of clauses (c) through (g) of this Section 6.2, sell to one
or more parties all (but not less than all) of the ROFO Shares for a cash
purchase price not less than the ROFO Price and not inconsistent with any
other terms in the ROFO Offer, provided that any such sale of ROFO Shares
shall be consummated within 120 days following delivery of the ROFO Offer.
(c) Should the Selling Investor receive one or
more bona fide offers (collectively, the "Purchase Offer") to purchase the
ROFO Shares, and should the Selling Investor accept or determine to accept
such Purchase Offer, then the Selling Investor promptly shall give written
notice (the "Purchase Notice") to the Company and the other Shareholders of
the terms and conditions of such Purchase Offer.
(d) Each Shareholder shall have the right,
exercisable upon written notice to the Selling Investor within five (5)
business days after receipt of the notice of the Purchase Offer, to
participate in the Selling Investor's sale of the ROFO Shares pursuant to
the specified terms and conditions of such Purchase Offer. To the extent
one or more Shareholders exercises such right of participation in
accordance with the terms and conditions set forth below, the number of
shares of Common Stock which the Selling Investor may sell pursuant to the
Purchase Offer correspondingly shall be reduced. The right of
participation of the Shareholders shall be subject to the following terms
and conditions:
(i) Each Shareholder may sell all or any
part of that number of shares of Common Stock of the
Company equal to the product obtained by multiplying (x)
the aggregate number of shares of Common Stock covered by
the Purchase Offer by (y) a fraction, the numerator of
which is the number of shares of Common Stock of the
Company owned by such Shareholder (determined on a fully
diluted basis), and the denominator of which is the sum of
shares of Common Stock of the Company at the time owned by
such Shareholder, the Selling Investor and all others
exercising rights of co-sale in connection with such
Purchase Offer (in each case, determined on a fully
diluted basis).
(ii) A Shareholder may effect participation
in the sale by delivering to the Selling Investor for
transfer one or more certificates, properly endorsed for
transfer, which represent: the number of shares of Common
Stock which such Shareholder elects to sell pursuant to
this Section 6.2.
(e) The delivery of the stock certificate by
each participating Shareholder to the purchase offeror in consummation of
the sale of the Common Stock pursuant to the terms and conditions specified
in the Purchase Notice, and the payment by the purchase offeror to each
participating Shareholder of that portion of the sale proceeds to which
such Shareholder is entitled by reason of participation in such sale shall
occur simultaneously at a closing at the principal office of the Company,
or such place as the selling and purchasing parties may agree, at a time
and at a date mutually agreeable to all of the selling and purchasing
parties.
(f) The exercise or nonexercise of the rights
of the Shareholders hereunder to participate in one or more sales of Common
Stock made by a Selling Investor shall not affect adversely the rights of
any Shareholder to participate in subsequent Common Stock sales by the
Institutional Investors.
(g) The provisions of this Section 6.2 shall
not apply to any transactions with a Permitted Transferee.
6.3 Right of First Refusal.
(a) Procedure. If a Management Shareholder, or
Founder (the "Offering Shareholder") who is entitled to sell shares of
Common Stock to third parties pursuant to Section 6.1 (a) receives a bona
fide offer or offers from a third party or parties to purchase any shares
of Common Stock (the "Outside Offer"), then prior to selling such shares of
Common Stock to such third party or parties such Offering Shareholder shall
deliver to the Company a letter signed by such Offering Shareholder setting
forth:
(i) the name of the third party or
parties;
(ii) the prospective purchase price per
share of Common Stock;
(iii) all material terms and conditions
contained in the Outside Offer;
(iv) the Offering Shareholder's offer
(irrevocable by its terms for 30 days following receipt)
to sell to the Company all (but not less than all) of the
shares of Common Stock covered by the Outside Offer for a
purchase price per share of Common Stock, and on other
terms and conditions, not less favorable to the Company
than those contained in the offer of the third party or
parties (a "ROFR Offer"); and
(v) closing arrangements and a closing
date (not less than 45 nor more than 60 days following the
date of such letter) for any purchase and sale that may be
effected by the Company or any of its assignees pursuant
to this Section 6.
The Company shall, within 10 days following receipt of such letter, choose
either to purchase the shares of Common Stock subject to the ROFR Offer or
assign its rights pursuant to Section 6.4. If the Company chooses to
assign such rights pursuant to Section 6.4, it shall deliver written notice
of such assignment, on or prior to the end of such 10-day period, to the
Founders, the Institutional Investors and each Management Shareholder (the
"Management Offerees") owning not less than 10,000 shares of the Common
Stock or such greater (or, if approved by the Board of Directors, lesser)
number of shares that will assure the Company that the number and status of
the Management Offerees are such that such offer can be made without (x)
registration under the Act or (y) reliance on Regulation D promulgated
under the Act, provided that no Management Shareholder shall be given such
notice if the offer to such Management Shareholder would require
registration or qualification of the shares under federal or state
securities laws.
(b) Application of Co-Sale Rights. If, within
twenty-five (25) days of receipt by the Company of a ROFR Offer from a
Founder, any shares subject to the ROFR Offer have not been accepted for
purchase, the Company shall notify each Shareholder that co-sale rights
pursuant to subsections 9(c) through (g) of Section 6.2 apply, and each
Shareholder shall have the rights granted under subsections (c) through (g)
of Section 6.2 with respect to such proposed sale, provided that the
Founder shall be deemed to be the "Selling Investor" and the shares subject
to the Offer shall be deemed to be "ROFO Shares", in Section 6.2 for this
purpose.
(c) Effecting Sales. Unless 30 days following
receipt by the Company of the ROFR Offer described in Section 6.3(a), the
Company and any persons to whom the Company has assigned, pursuant to
Section 6.5, the right to accept the ROFR Offer has agreed to purchase all
the ROFR Shares, the Offering Shareholder may sell to such third party or
parties all the shares of Common Stock covered by the Outside Offer, for
the purchase price and on the other terms and conditions contained in the
Outside Offer but the Offering Shareholder may not sell less than the
number of shares of Common Stock covered by the Outside Offer unless the
exercise of co-sale rights is the reason. If the Company or its assignee
or assignees shall accept such ROFR Offer, the closing of the purchase and
sale pursuant to such acceptance shall take place as set forth in the ROFR
Offer of the Offering Shareholder to the Company pursuant to subparagraph
(v) of Section 6.3(a).
6.4 Assignment. Subject to Section 6.3, each
Founder, each Institutional Investor, and each Management Offeree shall
have the right, if the Company has elected not to exercise its right to
purchase Common Stock pursuant to Section 6.3, to require the Company to
assign to it the Company's right of first refusal with respect to an
Outside Offer on a pro rata basis based on the number of shares of Common
Stock held by each Founder, each Institutional Investor and each such
Management Offeree.
6.5 Agreements to Be Bound. Notwithstanding
anything contained in this Section 6, any sale to a third party or any
Involuntary Transfer (as defined in Section 6.6) to an Involuntary
Transferee (as defined in Section 6.6) shall be permitted under the terms
of this Agreement only if such third party or Involuntary Transferee, as
the case may be, shall agree in writing to be bound by the terms and
conditions of this Agreement pursuant to an instrument of assumption
reasonably satisfactory in substance and form to the Company.
6.6 Involuntary Transfers. In the case of any
transfer of title or beneficial ownership of shares of Common Stock upon
default, foreclosure, forfeiture, divorce, court order, or otherwise than
by a voluntary decision on the part of a Shareholder (an "Involuntary
Transfer"), the Company shall have the right to purchase such shares
pursuant to this Section 6.6. Upon the Involuntary Transfer of any shares
of Common Stock, such Shareholder shall promptly (but in no event later
than two days after such Involuntary Transfer) furnish written notice (the
"Notice") to the Company indicating that the Involuntary Transfer has
occurred, specifying the name of the person to whom such shares have been
transferred (the "Involuntary Transferee"), giving a detailed description
of the circumstances giving rise to, and stating the legal basis for, the
Involuntary Transfer. Upon the receipt of the Notice, and for 30 days
thereafter, the Company shall have the right to purchase, and the
Involuntary Transferee shall have the obligation to sell, all (but not less
than all) of the shares of Common Stock acquired by the Involuntary
Transferee for a purchase price equal to the lesser of (a) the Fair Market
Value of such shares of Common Stock on the date of transfer to the
Involuntary Transferee (determined with reference to the most recent
Appraisal prepared and delivered pursuant to Section 4.1) and (b) the
amount of the indebtedness or other liability that gave rise to the
Involuntary Transfer plus the excess, if any, of the Carrying Value of such
shares of Common Stock over the amount of such indebtedness or other
liability that gave rise to the Involuntary Transfer.
Notwithstanding the foregoing, the Board may,
for good cause shown by the Shareholder who made the Involuntary Transfer,
determine that payment of a purchase price equal to the Fair Market Value
of such shares of Common Stock on the date of transfer to the Involuntary
Transferee would be appropriate under the circumstances, and direct that
payment be made in such amount.
The Company's right to purchase pursuant to this
Section 6.6 shall be assignable in accordance with Section 6.4 as if such
right to purchase were a "right to accept an Offer."
6.7 Termination of Right of First Refusal. All
rights and obligations pursuant to this Section 6 shall terminate upon the
earlier of the tenth anniversary of the Merger and the closing of an IPO.
7. Election of Directors.
7.1 Board Makeup. Until the earlier of (a) an IPO,
(b) the date upon which GMIP and its Affiliates own in the aggregate less
than 25% of the number of shares of Common Stock owned by GMIP immediately
after the Merger or (c) the tenth anniversary of the Merger, each of the
Shareholders agrees that from and after the Merger such Shareholder will
use his best efforts to nominate and elect and will vote all of the shares
of Common Stock owned or held of record by him to elect and, thereafter
from such period, to continue in office a Board consisting of eight
members, three of whom shall be designated by the Founders and shall be
reasonably acceptable to GMIP; one of whom shall be designated by Xxxxxxx;
one of whom shall be selected jointly by Xxxxxxx and GMIP, and three of
whom shall be designated by GMIP. The persons designated pursuant to this
Section 7.1 by the Founders, Xxxxxxx and GMIP may be changed from time to
time by the Founders, Xxxxxxx and GMIP, respectively, provided, however,
that during the term they are employed by the Company or any Affiliate,
Xxxxxx X. Xxx, Xxxxxx X. Xxx and Xxxxxx X. Xxxxxxxxx shall each be one of
the directors named by the Founders if he is willing to serve. Following
an acquisition or merger, the Board may increase the number of directors to
not more than twelve, in which case GMIP shall name five directors, the
Founders shall name three directors (subject to the same proviso as in the
preceding sentence), Xxxxxxx shall name one director, and the balance shall
be allocated as the Board directs in the new merger agreement. If both
Xxxxxxx X. Xxxxxx and Xxxx X. Xxxxxx are no longer principals of the
manager of GMIP, then Xxxxxxx shall have the right to name one of the
directors GMIP would otherwise have the right to name, provided that
Xxxxxxx is, at such time, the beneficial owner of at least ten percent
(10%) of the Company's Common Stock. If Xxxxxxx no longer holds any Common
Stock, its rights to name a director shall terminate. On each date that
any one of Xxxxxx Xxx, Xxxxxx Xxx and Xxxxxx Xxxxxxxxx ceases to own Common
Stock, the number of directors to be named by the Founders shall decrease
by one, and when all three of such Founders cease to own Common Stock, the
Founders shall no longer have the right to name any directors. The
positions as directors formerly held by directors named by GMIP, Xxxxxxx or
Founders shall, once the other provisions of this Section 7.1 no longer
govern, be elected under the laws of Delaware without regard to this
Section 7.1.
7.2 Irrevocable Proxy. To effectuate Section 7.1
and Section 6.1 and in addition to and not in lieu of Section 7.1, each
Shareholder hereby grants to the Secretary of the Company an irrevocable
proxy solely for the purpose of voting all of the shares of Common Stock of
the Company owned by the grantor of the proxy for the election of directors
nominated in accordance with Section 7.1 or voting shares in favor of a
merger or sale of assets required by Section 6.1.
8. Stock Certificate Legend. A copy of this Agreement
shall be filed with the Secretary of the Company and kept with the records
of the Company. Each certificate representing shares of Common Stock
owned by the Shareholders shall bear upon its face the following legends in
addition to any legends required by applicable state law:
(a) "THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND MAY NOT BE OFFERED, SOLD, ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS
AND UNTIL REGISTERED UNDER THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR UNLESS, IN THE OPINION OF
COUNSEL TO THE STOCKHOLDER, WHICH COUNSEL MUST BE,
AND THE FORM AND SUBSTANCE OF WHICH OPINION ARE,
SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION, TRANSFER OR OTHER
DISPOSITION IS EXEMPT FROM REGISTRATION OR IS
OTHERWISE IN COMPLIANCE WITH THE ACT, SUCH LAWS AND
THE STOCKHOLDER AGREEMENT, DATED AS OF _______ __,
1997.
(b) THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO RESTRICTIONS ON TRANSFER AND OTHER
CONDITIONS, AS SPECIFIED IN A STOCKHOLDER AGREEMENT
ENTERED INTO AS OF THE TH DAY OF_____, 1997, COPIES
OF WHICH ARE ON FILE AT THE OFFICE OF THE ISSUER AND
WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER OF
SUCH SHARES UPON WRITTEN REQUEST."
All Shareholders shall be bound by the
requirements of such legends to the extent that such legends are
applicable. Upon a Registration of any shares of Common Stock, the
certificates representing such shares shall be replaced, at the expense of
the Company, with certificates not bearing the legend required by Section
8(a).
9. Change of Control. Each of the Shareholders agrees
that from and after the date hereof, if a transaction or series of related
transactions is proposed whereby 50% or more, in the aggregate, of the
voting power of the Company is to be transferred to one or more third
parties, then each of the Shareholders (a) shall vote all of the shares of
Common Stock beneficially owned or held of record by it or him against such
proposed transaction, and (b) shall not transfer the shares of Common Stock
beneficially owned or held of record by it or him to such third party or
parties, unless in each case the Institutional Investors by a Required Vote
have consented to such transaction and all of the Shareholders have an
opportunity to participate in such transaction pro rata giving effect to
the respective economic interest of their respective shares of Common
Stock.
10. Covenants; Representations and Warranties.
10.1 New Management Shareholders. Each of the
parties hereto hereby agrees that any director or employee of the Company
or any of its Affiliates who after the date of this Agreement is offered
shares of Common Stock shall, as a condition precedent to the acquisition
of such shares of Common Stock, become a party to this Agreement by
executing the same and delivering it to the Company at its address
specified in Section 18 hereof. Upon such execution and delivery, such
employee shall be a Management Shareholder for all purposes of this
Agreement unless such employee is the principal shareholder of a company
acquired by the Company and is designated a Founder by the Board.
10.2 No Other Arrangements or Agreements. Each
Shareholder and Chase hereby represents and warrants to each of the other
parties hereto that, except for the stockholder agreements superseded
hereby, and subscription agreements or stock purchase agreements or warrant
agreements entered into on or prior to the date hereof, he or it has not
entered into or agreed to be bound by any other arrangements or agreements
of any kind with any other party with respect to the shares of Common
Stock, including, but not limited to, arrangements or agreements with
respect to the acquisition, disposition or voting of shares of Common Stock
(whether or not such agreements and arrangements are with the Company,
other Shareholders or holders of Common Stock that are not parties to this
Agreement) except for stock pledge agreements with lenders approved by the
Board. Each Shareholder and Chase agrees that, except as disclosed above,
he or it will not enter into any such other arrangements or agreements as
he or it has represented and warranted to above with any other party as
long as any of the terms of this Agreement remain in effect, except in
connection with this Agreement or in connection stock options or other
similar fringe benefit programs of the Company or any of its Affiliates.
10.3 Restrictions on Fundamental Changes. Without a
Required Vote, the Company shall not:
(a) Issue any additional shares of Common
Stock, except for up to 200,000 shares which the Company may issue and sell
(directly or upon the exercise of stock options) to persons who are, or
effective on purchasing shares become, employees of or substantially full-
time consultants to the Company and become Management Shareholders;
(b) Issue or sell any additional shares of
preferred stock or any securities convertible into or exchangeable for
Common Stock or any class of security ranking prior to Common Stock;
(c) Reorganize, consolidate or merge with or
into another corporation, or sell all or substantially all its assets to
another entity;
(d) Amend its Certificate of Incorporation;
(e) Amend its by-laws in any manner which is
inconsistent with the terms of this Stockholder Agreement or which provides
for, permits or requires, for the taking of any corporate action, a
different vote than is specified therein on the date hereof unless such
amendment is for the purpose of conforming the bylaws to this Agreement;
(f) Declare any dividend on the shares of
Common Stock; or
(g) Take any action as sole shareholder of
Piedmont or ASC to cause, or otherwise permit, (i) Piedmont or ASC to cease
to be a wholly owned subsidiary of the Company, or (ii) Piedmont or ASC to
reorganize, consolidate or merge with or into another corporation, or sell
all or substantially all of its assets to another entity.
10.4 Management Incentive Plan. The Company agrees
that after the effective date of the Merger it will continue in effect,
with appropriate modifications (including an extension for at least five
years after the Merger and the inclusion of both the ASC and Piedmont
Management Shareholders), a Management Incentive Plan having substantially
the terms and conditions set forth on Exhibit _ to this Agreement.
11. Amendment and Modification. This Agreement may be
amended, modified or supplemented only by written agreement of the Company,
the Institutional Investors by a Required Vote and the Founders and
Management Shareholders owning a majority of the shares of Common Stock
that are owned by all the Founders and Management Shareholders. If the
Company, the Institutional Investors by a Required Vote and the requisite
number of Founders and Management Shareholders shall have so agreed, the
Company shall notify all other Shareholders promptly after such amendment,
modification or supplement shall take effect. However, no amendment shall
adversely affect a Management Shareholder's rights under Section 2 without
such Management Shareholder's consent.
12. Parties.
12.1 Assignment. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and
their respective heirs, legal representatives, successors and assigns,
provided that neither the Company nor any Founder or Management Shareholder
shall assign any of its rights or obligations pursuant to this Agreement
without the prior written agreement of the Institutional Investors by a
Required Vote. In the case of Permitted Transferees, third parties and
Involuntary Transferees, such Permitted Transferees, third parties or
Involuntary Transferees, as the case may be, shall be deemed the
Shareholder hereunder for purposes of obtaining the benefits or enforcing
the rights of such Shareholder hereunder, provided that no Permitted
Transferee, third party or Involuntary Transferee, as the case may be,
shall derive any rights under this Agreement unless and until such
Permitted Transferee, third party or Involuntary Transferee, as the case
may be, has delivered to the Company a valid undertaking to become, and
becomes, bound by the terms of this Agreement to which the transferring
Shareholder is subject.
12.2 Termination. Any party to, or person who is
subject to, this Agreement which ceases to own shares of Common Stock or
any interest therein shall cease to be a party to, or person who is subject
to, this Agreement and thereafter shall have no rights or obligations
hereunder. This Agreement shall likewise terminate on earlier of ten years
or from the date of the Merger or the completion of an IPO but such
termination shall not alter rights pursuant to notices validly given under
Sections 2 and 3.
13. Recapitalizations, Exchanges, etc. Affecting the
Common Stock. Except as otherwise provided herein, the provisions of this
Agreement shall apply to the full extent set forth herein with respect to
(a) the shares of Common Stock and (b) 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 for the shares of Common
Stock, by reason of any stock dividend, split, reverse split, combination,
recapitalization, reclassification, merger, consolidation or otherwise.
Except as otherwise provided herein, this Agreement is not intended to
confer upon any person, except for the parties hereto, any rights or
remedies hereunder.
14. Transfer of Common Stock. If at any time the Company
purchases any shares of Common Stock pursuant to this Agreement, the
Company may pay the purchase price determined under this Agreement for the
shares of Common Stock it purchases by wire transfer of funds or Company
check in the amount of the purchase price, and upon receipt of payment of
such purchase price or, pursuant to Section 3.3 or Section 5, any portion
thereof, the selling Shareholder shall deliver the certificates
representing the number of shares of Common Stock being purchased in a form
suitable for transfer, duly endorsed in blank, and free and clear of any
lien, claim or encumbrance. Notwithstanding anything in this Agreement to
the contrary, the Company shall not be required to make any payment for
shares of Common Stock purchased hereunder until delivery to it of the
certificates representing such shares. If the Company is purchasing less
than all the shares of Common Stock represented by a single certificate,
the Company shall deliver to the selling Shareholder a certificate for any
unpurchased shares of Common Stock.
15. Further Assurances. Each party hereto or person
subject hereto shall do and perform or cause to be done and performed all
such further acts and things and shall execute and deliver all such other
agreements, certificates, instruments and documents as any other party
hereto or person subject hereto may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
16. Governing Law. This Agreement and the rights and
obligations of the parties hereunder and the persons subject hereto shall
be governed by, and construed and interpreted in accordance with, the law
of the State of Delaware, without giving effect to the choice of law
principles thereof.
17. Invalidity of Provision. The invalidity or
unenforceability of any provision of this Agreement in any jurisdiction
shall not affect the validity or enforceability of the remainder of this
Agreement in that jurisdiction or the validity or enforceability of this
Agreement, including that provision, in any other jurisdiction.
18. Notices. All notices and other communications
hereunder shall be in writing and, unless otherwise provided herein, shall
be deemed duly given if delivered personally or by telecopy or mailed by
registered or certified mail (return receipt requested) or by Federal
Express or other similar courier service to the parties at the following
addresses (or at such other address for the party as shall be specified by
like notice):
(a) If to the Company:
Outsourcing Services Group, Inc.
Attention: Secretary
000 Xx. Xxxxx Xxxxxx
Xxxx xx Xxxxxxxx, Xxxxxxxxxx 00000
with a copy to:
The Xxxxxx + Xxxxxx Group
Attention: President
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
(b) if to a Shareholder or Chase, as listed below
such party's signature or, if not so listed, to it at its address as
reflected in the stock records of the Company, or as such party shall
designate to the Company in writing, with a copy to GMIP at its address
indicated below.
(c) If to GMIP:
Xxxxxx + Xxxxxx Investment Partnership, L.P.
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
with a copy to:
The Xxxxxx + Xxxxxx Group
Attention: President
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
19. Headings; Execution in Counterparts. The headings
and captions contained herein are for convenience and shall not control or
affect the meaning or construction of any provision hereof. This Agreement
may be executed in any number of counterparts, each of which shall be
deemed to be an original and which together shall constitute one and the
same instrument.
20. Expenses. The Company shall pay the fees and
expenses of the Management Shareholders reasonably incurred by them in
connection with the preparation, negotiation and closing of this Agreement,
provided, however, that the Company shall not be obligated to pay pursuant
to this Agreement the fees and expenses of more than one advisor for all of
the Management Shareholders.
21. Entire Agreement. This Agreement and the agreements
referred to herein embody the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There
are no restrictions, promises, representations, warranties, covenants or
undertakings relating to the shares of Common Stock, other than those
expressly set forth or referred to herein or in the agreements referred to
herein. This Agreement supersedes all prior agreements and understandings
among the parties with respect to such subject matter.
22. Injunctive Relief. The shares of Common Stock cannot
readily be purchased or sold in the open market, and for that reason, among
others, the Company, the Shareholders and Chase will be irreparably damaged
in the event this Agreement is not specifically enforced. Each of the
parties therefore agrees that in the event of a breach of any provision of
this Agreement, the aggrieved party may elect to institute and prosecute
proceedings in any court of competent jurisdiction to enforce specific
performance or to enjoin the continuing breach of this Agreement. Such
remedies shall, however, be cumulative and not exclusive, and shall be in
addition to any other remedy which the Company, the Shareholders or Chase
may have. Each Shareholder and Chase hereby irrevocably submits to the
non-exclusive jurisdiction of the state and federal courts in California or
Delaware for the purposes of any suit, action or other proceeding arising
out of or based upon this Agreement or the subject matter hereof. Each
Shareholder and Chase hereby consents to service of process by mail made in
accordance with Section 18.
23. Attorneys' Fees. If any legal action or any
arbitration or other proceeding is brought for the enforcement of this
Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of this
Agreement, the successful or prevailing party or parties shall be entitled
to recover such reasonable attorneys' fees and other costs incurred in that
action or proceeding, in addition to any other relief to which it or they
may be entitled, as may be ordered in connection with such proceeding.
24. Definitions. Terms used in this Agreement shall have
the meanings ascribed to them in this Section 24 unless such terms are
defined elsewhere in this Agreement:
Act: The Securities Act of 1933, as amended.
Affiliate: A person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is
under common control with, any other person. In the case of GMIP, its
affiliates shall also include each of its limited partners and their heirs,
successors and estates. In the case of Xxxxxxx, its affiliates shall also
include each of its limited partners and their heirs, successors and
estates.
Appraisal: As defined in Section 4.1(a).
Appraisal Date: The last day of the Company's most
recently completed fiscal year or, if applicable, the latest date for which
an Appraisal has been obtained.
Appraiser: An independent evaluation consultant or
appraiser of recognized national standing reasonably satisfactory to GMIP
retained for the purpose of appraising the fair market value of the shares
of the common stock.
ASCP: As defined in the first sentence of this
Agreement.
Board: The Board of Directors of the Company.
Carrying Value: As defined in Section 4.2.
Cause: The term "Cause" used in connection with a
termination of employment of a Management Shareholder shall mean the
definition used in such person's written employment agreement, if any, and
otherwise shall mean a termination of such Management Shareholder's
employment by the Company and its Affiliates due to (i) the continued
failure, after written notice, by such Management Shareholder substantially
to perform his duties with the Company or any of its Affiliates (other than
any such failure resulting from incapacity due to reasonably documented
physical or mental illness), or (ii) the engaging by such Management
Shareholder in serious misconduct which is material to the performance by
such Management Shareholder of his duties and obligations for the Company
or any of its Affiliate, including, without limitation, the disclosure of
material secret or confidential information of the Company or any of its
Affiliates.
Common Stock: The $0.001 par value common stock of
Outsourcing Services Group, Inc.
Company: Outsourcing Services Group, Inc., a
Delaware corporation. Persons employed by any subsidiary of the Company
shall be deemed employees of the Company for all purposes of this
Agreement.
Disability: The termination of the employment of any
Management Shareholder by the Company or any of its Affiliates shall be
deemed to be by reason of a "Disability" if, as a result of such Management
Shareholder's incapacity due to reasonably documented physical or mental
illness, such Management Shareholder shall have been unable for more than
six months within any 12 month period to perform his duties with the
Company or any of its Affiliates on a full time basis and within 30 days
after written notice of termination has been given to such Management
Shareholder, such Management Shareholder shall not have returned to the
full time performance of his duties. The date of termination in the case
of a termination for "Disability" shall be the last day of the
aforementioned 30-day period.
Exchange Act: As Defined in Section 1.2.
Fair Market Value: As defined in Section 4.1(b).
Financing Documents: Any debt instrument or
agreement entered into by the Company or any of its subsidiaries.
Founders: As defined in the first sentence of this
Agreement.
Good Reason: A termination of a Management
Shareholder's employment with the Company or its Affiliates shall be for
"Good Reason" if such Management Shareholder voluntarily terminates his
employment with the Company or any of its Affiliates as a result of either
of the following:
(i) without the Management Shareholder's prior
written consent, a reduction in his current salary, other
than any such reduction that is part of a general salary
reduction or other concessionary arrangement affecting all
employees or affecting the group of employees of which the
Management Shareholder is a member;
(ii) the taking of any action by the Company or any
of its Affiliates that substantially diminishes the
aggregate value of the benefits provided him under the
medical, health, accident, disability, life insurance,
thrift and retirement plans in which he was participating
on the date of his execution of this Agreement, other than
any such reduction which is (x) required by law, (y)
implemented in connection with a general concessionary
arrangement affecting all employees or affecting the group
of employees of which the Management Shareholder is a
member or (z) generally applicable to all beneficiaries of
such plans; or
(iii) a relocation, without such Management
Shareholder's consent, of his principal place of
employment to a site more than 50 miles from his place of
employment at the time of signing this Agreement or such
other place to which a relocation has occurred with the
Management Shareholder's consent; or
(iv) any other state of facts or circumstances which
has been determined to be a "constructive termination" by
the Board.
GMIP: As defined in the first sentence of this
Agreement.
Xxxxxxx: As defined in the first sentence of this
Agreement.
Institutional Investor: As defined in the first
sentence of this Agreement, and including Chase to the extent provided in
Section 1.2(d)(i).
Involuntary Transferee: As defined in Section 6.6.
Involuntary Transfer: A transfer of title or
beneficial ownership of shares of Common Stock upon default, foreclosure,
forfeit, divorce, court order, or otherwise than by a voluntary decision on
the part of a Shareholder.
IPO: As defined in Section 1.1.
Management Offerees: Management Shareholders owning
not less than 10,000 shares of the Common Stock or such greater number of
shares that will assure the Company that the number and status of the
Management Offerees are such that an offer by a third party to purchase any
share of common stock can be made without (a) registration under the Act,
or (b) reliance on Regulation D promulgated under the Act.
Management Shareholders: As defined on Page 1 of the
Agreement.
Maximum Amount: As defined in Section 5.
Merger: The consummation of the Merger, as defined
in the Recitals.
Notice: As defined in Section 6.7.
Offer: As defined in Paragraph 6.3(a)(iv).
Offering Shareholder: A Management Shareholder or
Founder who is entitled to sell shares of Common Stock to third parties
pursuant to Section 6.1 and who has received a bona fide offer or offers
from a third party or parties to purchase any shares of Common Stock.
Outside Offer: As defined in Section 6.3(a).
Permitted Transferee: Transferee identified in
Section 1.2.
Purchase Offer: As defined in Section 6.3.
Registration: An effective registration statement
under the Securities Act of 1933, as amended.
Required Vote: The vote or written consent of the
holders of at least two-thirds of the shares then held by the Institutional
Investors.
Restricted Period: The earlier to occur of (a) the
closing of an IPO, or (b) the fifth anniversary of the closing.
Retirement: The retirement of a Management
Shareholder upon or after reaching the age of 65.
ROFO Offer, ROFO Price, ROFO Shares: As defined in
Section 6.2.
ROFR Offer: As defined in Section 6.3.
Selling Investor: As defined in Section 6.2.
Shareholders: As defined on page 1, and including
Chase to the extent provided in Section 1.2(d)(i). However, for purposes
of receiving notices and exercising co-sale rights under Article 6, Chase
shall be deemed a Shareholder
Significant Risk: As defined in Section 1.2(a).
Transfers: The direct or indirect sale, assignment,
mortgage, transfer, pledge, hypothecation or other disposition of shares of
Common Stock now or hereafter owned by any Shareholder or any interest
therein.
IN WITNESS WHEREOF, this Agreement has been signed by
each of the parties hereto on the date opposite such party's signature
hereto, and shall be effective as of the date first above written.
OUTSOURCING SERVICES GROUP, INC.,
Date: By: /s/ Xxxxxx Xxxxxxx
------------------------------
Xxxxxx X. Xxxxxxx,
Chief Financial Officer
By: /s/ Xxxxxx Xxx
------------------------------
Xxxxxx X. Xxx, Chairman
XXXXXX + XXXXXX INVESTMENT
PARTNERSHIP, L.P.
By: Xxxxxx + Xxxxxx Partners, L.P.,
General Partner
Date: 6/26/97 By: /s/ Xxxx X. Xxxxxx
------------------------------
Title: Partner
XXXXXXX VENTURE PARTNERS IV -
DIRECT FUND, L.P.
By: Back Bay Partners XII L.P.
By: Xxxxxxx Venture Partners, Inc.
Date: 6/25/97 By: /s/ Xxxxxx Xxxxxxxxx
--------------------------
Authorized Officer
Address: 0 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
ASC INVESTMENT PARTNERS, L.P.
By: The Xxxxxx + Xxxxxx Group,
as general partner
Date: 6/26/97 By: /s/ Xxxx X. Xxxxxx
------------------------------
Title: President
CHASE MANHATTAN CAPITAL CORPORATION
Date: By: Xxxx M.B. X'Xxxxxx
------------------------------
Title:
Date: 6/26/97
------------------------------
(Signature of Management
Shareholder or Founder)
Name: Xxxxxxxxxxx Xxxxxx
---------------------------
(Please Print)
Address: 0000 Xxxxxxxx Xxxxxxxx
Xxxxxxxxxx, Xxxxxxx X0X0X0
Xxxxxx
Spousal Waiver
___________________________ [Name of spouse] hereby waives and
releases any and all equitable or legal claims and rights, actual, inchoate
or contingent which _____ [he or she] may acquire with respect to the
disposition, voting or control of the shares of Common Stock subject to
this Agreement, except for rights in respect of the proceeds of any
disposition of such Common Stock.
---------------------------------
(Signature of Spouse)
Date: 6/26/97
---------------------------------
(Signature of Management
Shareholder or Founder)
Name: Xxx X. Xxxxxx
---------------------------
(Please Print)
Address: 000 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Spousal Waiver
Xxxxx Xxxxxx [Name of spouse] hereby waives and releases any and all
equitable or legal claims and rights, actual, inchoate or contingent which
_____ [he or she] may acquire with respect to the disposition, voting or
control of the shares of Common Stock subject to this Agreement, except for
rights in respect of the proceeds of any disposition of such Common Stock.
/s/ Xxxxx Xxxxxx
---------------------------------
(Signature of Spouse)
Date: 6/27/97
---------------------------------
(Signature of Management
Shareholder or Founder)
Name: Xxxxxxx X. Xxxxxxxxx
--------------------------------
(Please Print)
Address: 0000 Xxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Spousal Waiver
Xxxxxxxxx X. Xxxxxxxxx [Name of spouse] hereby waives and releases any and
all equitable or legal claims and rights, actual, inchoate or contingent
which _____ [he or she] may acquire with respect to the disposition, voting
or control of the shares of Common Stock subject to this Agreement, except
for rights in respect of the proceeds of any disposition of such Common
Stock.
/s/ Xxxxxxxxx X. Xxxxxxxxx
---------------------------------
(Signature of Spouse)
Date: 6/26/97
---------------------------------
(Signature of Management
Shareholder or Founder)
Name: Xxxxxxx X. Xxxxxxxxx
-------------------------------
(Please Print)
Address: 0000 Xxxxxxx Xx.
Xxxxxxxxxxx, XX 00000
Spousal Waiver
Xxxx Xxxxxxxxx [Name of spouse] hereby waives and releases any and all
equitable or legal claims and rights, actual, inchoate or contingent which
_____ [he or she] may acquire with respect to the disposition, voting or
control of the shares of Common Stock subject to this Agreement, except for
rights in respect of the proceeds of any disposition of such Common Stock.
/s/ Xxxx Xxxxxxxxx
---------------------------------
(Signature of Spouse)
Date:
---------------------------------
(Signature of Management
Shareholder or Founder)
Name: Xxxxxxx X. Xxxxxxxx Xx.
---------------------------------
(Please Print)
Address: 0000 Xxxxxx Xxx.
Xxxx Xxxxxx, XX 00000
Spousal Waiver
Xxxxx X. Xxxxxxxx [Name of spouse] hereby waives and releases any and all
equitable or legal claims and rights, actual, inchoate or contingent which
_____ [he or she] may acquire with respect to the disposition, voting or
control of the shares of Common Stock subject to this Agreement, except for
rights in respect of the proceeds of any disposition of such Common Stock.
/s/ Xxxxx X. Xxxxxxxx
--------------------------
(Signature of Spouse)
Date: 6/26/97
--------------------------
(Signature of Management
Shareholder or Founder)
Name: Xxxxx Xx
--------------------------
(Please Print)
Address: 0000 X. Xxx Xxxxxxx
Xxx Xxxxxxx, XX 00000
Spousal Waiver
Xxx Xx [Name of spouse] hereby waives and releases any and all equitable or
legal claims and rights, actual, inchoate or contingent which _____ [he or
she] may acquire with respect to the disposition, voting or control of the
shares of Common Stock subject to this Agreement, except for rights in
respect of the proceeds of any disposition of such Common Stock.
/s/ Xxx Xx
--------------------------
(Signature of Spouse)
Date: 6/26/97
--------------------------
(Signature of Management
Shareholder or Founder)
Name: Xxxxxx X. Xxxxxxx
--------------------------
(Please Print)
Address: 00000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Spousal Waiver
________________________ [Name of spouse] hereby waives and releases any
and all equitable or legal claims and rights, actual, inchoate or
contingent which _____ [he or she] may acquire with respect to the
disposition, voting or control of the shares of Common Stock subject to
this Agreement, except for rights in respect of the proceeds of any
disposition of such Common Stock.
--------------------------
(Signature of Spouse)
Date: 6/26/97
--------------------------
(Signature of Management
Shareholder or Founder)
Name: Xxxxxx Xxxxxxx
---------------------------
(Please Print)
Address: 0000 X. Xxxxxxxx Xxx.
Xxxxxx, XX 00000
Spousal Waiver
_________________________ [Name of spouse] hereby waives and releases any
and all equitable or legal claims and rights, actual, inchoate or
contingent which [he or she] may acquire with respect to the
disposition, voting or control of the shares of Common Stock subject to
this Agreement, except for rights in respect of the proceeds of any
disposition of such Common Stock.
--------------------------
(Signature of Spouse)
Date: 6/26/97
---------------------------
(Signature of Management
Shareholder or Founder)
Name: Xxxxx X. Xxxxxx
---------------------------
(Please Print)
Address: 0000 Xxxxx Xxxxxx Xx.
Xxxxxx, XX 00000
Spousal Waiver
_________________________ [Name of spouse] hereby waives and releases any
and all equitable or legal claims and rights, actual, inchoate or
contingent which _____ [he or she] may acquire with respect to the
disposition, voting or control of the shares of Common Stock subject to
this Agreement, except for rights in respect of the proceeds of any
disposition of such Common Stock.
---------------------------
(Signature of Spouse)
Date: 6/26/97
---------------------------
(Signature of Management
Shareholder or Founder)
Name: Xxxxxx Xxxxxxx
--------------------------
(Please Print)
Address: 00 Xxxxx Xxxx Xxxx
Xxxxxx, XX 00000
Spousal Waiver
Xxxx Xxx Xxxxxxx [Name of spouse] hereby waives and releases any and all
equitable or legal claims and rights, actual, inchoate or contingent which
_____ [he or she] may acquire with respect to the disposition, voting or
control of the shares of Common Stock subject to this Agreement, except for
rights in respect of the proceeds of any disposition of such Common Stock.
/s/ Xxxx Xxx Xxxxxxx
----------------------------
(Signature of Spouse)
Date: 6/26/97
----------------------------
(Signature of Management
Shareholder or Founder)
Name: Xxxxxx X. Xxx
---------------------------
(Please Print)
Address: 00000 Xxxxxxxxxxxx Xx.
Xxxxxxxx Xxxxxxx, XX
00000
Spousal Waiver
Xxxxxx Xxx [Name of spouse] hereby waives and releases any and all
equitable or legal claims and rights, actual, inchoate or contingent which
________ [he or she] may acquire with respect to the disposition, voting or
control of the shares of Common Stock subject to this Agreement, except for
rights in respect of the proceeds of any disposition of such Common Stock.
/s/ Xxxxxx Xxx
----------------------------
(Signature of Spouse)
Date: 6/26/97
----------------------------
(Signature of Management
Shareholder or Founder)
Name: Xxxxxx X. Xxx
----------------------------
(Please Print)
Address: X.X. Xxx 0000
Xxxx xx Xxxxxxxx, XX
00000-0000
Spousal Waiver
_________________________ [Name of spouse] hereby waives and releases any
and all equitable or legal claims and rights, actual, inchoate or
contingent which _____ [he or she] may acquire with respect to the
disposition, voting or control of the shares of Common Stock subject to
this Agreement, except for rights in respect of the proceeds of any
disposition of such Common Stock.
----------------------------
(Signature of Spouse)
Date: 6/26/97
----------------------------
(Signature of Management
Shareholder or Founder)
Name: Xxxxxx X. Xxxxxxxxx
----------------------------
(Please Print)
Address: 0000 Xxxxxxx Xxx
Xxxxxxx, XX 00000
Spousal Waiver
Xxxxxxxx X. Xxxxxxxxx [Name of spouse] hereby waives and releases any and
all equitable or legal claims and rights, actual, inchoate or contingent
which _____ [he or she] may acquire with respect to the disposition, voting
or control of the shares of Common Stock subject to this Agreement, except
for rights in respect of the proceeds of any disposition of such Common
Stock.
/s/ Xxxxxxxx X. Xxxxxxxxx
----------------------------
(Signature of Spouse)
EXHIBIT A
Management Shareholders
Xxx Xxxxxx
Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx
Xxxxxxx Xxxxxxxx
Xxxxx Xx
Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxx
Xxxxx Xxxxxx
Xxxxxx X. Xxxxxxx
Institutional Investors
Xxxxxxx Venture Partners IV - Direct Fund L.P.
ASC Investment Partners, X.X.
Xxxxxx + Xxxxxx Investment Partnership, L.P.
Warrant Holder
Chase Manhattan Capital, L.P.
EXHIBIT B
A full list is on file with the corporate secretary of the Company. The
amount applicable to the individual stockholder signing this Agreement is
as follows:
Name of
Shareholder Number of Shares
GMIP 316,970
Xxxxxxx 343,916
ASCP 75,648
Xxxxxx X. Xxx 192,974
Xxxxxx X. Xxx 185,609
Xxxxxx X. Xxxxxxxxx 101,187
Xxxxxxx Xxxxxxxxx 12,191
Xxxxxxx Xxxxxxxxx 12,191
Xxx Xxxxxx 8,534
Xxxxxxx Xxxxxxxx 5,295
Xxxxx Xx 1,841
Xxxxxx Xxxxxxx 1,841
Xxxxxx Xxxxxxx 1,841
Xxxxx Xxxxxx 1,841
Xxxxxx X. Xxxxxxx 5,295
Name of Number of Shares
Warrant Holder Subject to Warrants
Chase 80,883
