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EXHIBIT 2
STOCKHOLDERS AGREEMENT
THIS AGREEMENT (this "AGREEMENT") is made as of October 1,
1998, between Xxxxxx Xxxxxxx, Inc., a Delaware corporation (the "COMPANY"), New
River Capital Partners, a Delaware limited partnership ("NEW RIVER"), the
Persons listed as "Co-Investors" on Exhibit A attached hereto (the
"CO-INVESTORS") and the stockholders (each, a "FOUNDING COMPANY STOCKHOLDER") of
each company (each a "FOUNDING COMPANY") being acquired by the Company on the
date hereof, whether by purchase of stock or assets. New River, the Co-Investors
and the Founding Company Stockholders are sometimes referred to herein
collectively as "STOCKHOLDERS" and individually as a "STOCKHOLDER." Stockholders
shall also include Persons who become parties to this Agreement after the date
hereof in accordance with the terms hereof. Certain capitalized terms used
herein are defined in paragraph 7 hereof.
WHEREAS, New River and the Co-Investors currently own all of
the issued and outstanding shares of the Company's Common Stock, par value $.01
per share (the "COMMON STOCK").
WHEREAS, the Company has agreed to issue the Founding Company
Stockholders shares of the Common Stock pursuant to acquisition agreements by
and among the Company and each of the Founding Companies, the purchase of which
was a condition to and a part of, the transaction whereby the Founding Company
Stockholders are acquiring such shares of Common Stock.
WHEREAS, the Company and the Stockholders desire to enter into
this Agreement for the purposes, among others, of (i) establishing the
composition of the Company's Board of Directors (the "BOARD"), (ii) assuring
continuity in the management and ownership of the Company and (iii) limiting the
manner and terms by which the Common Stock may be transferred.
NOW, THEREFORE, the parties to this Agreement hereby agree as
follows:
1. BOARD OF DIRECTORS.
(a) From and after the date hereof and until the provisions of
this paragraph 1 cease to be effective, each holder of Stockholder Shares shall
vote all of his or its Stockholder Shares which are voting shares and any other
voting securities of the Company over which such Person has voting control and
shall take all other reasonably necessary or desirable actions within his or its
control (whether in his or its capacity as a stockholder, director, member of a
board committee or officer of the Company or otherwise, and including, without
limitation, attendance at meetings in person or by proxy for purposes of
obtaining a quorum and execution of written consents in lieu of meetings), and
the Company shall take all reasonably necessary or desirable
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actions within its control (including, without limitation, calling special board
and stockholder meetings), so that:
(i) the size of the Board, which shall initially be
established at five (5), is increased or decreased
(but not below five (5)) from time to time as
directed by New River;
(ii) a number of individuals designated by New River (the
"NEW RIVER DIRECTORS") equal to the total number of
directorships on the Board less the number of
directors required to be elected to the Board
pursuant to subparagraph 1(a)(iii) below are elected
to the Board at each election of directors; provided
that Xxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxx shall be
New River Directors as long as such Persons are (x)
Affiliates of New River and (y) able to serve in such
capacity;
(iii) one (1) individual (or two (2) if the Board is
comprised of nine (9) or more members) designated by
the holders of a majority of the Retail Stockholder
Shares (the "RETAIL DIRECTOR") is elected to the
Board at each election of directors; provided that
Xxxxxxx Xxxxx shall serve as the Retail Director for
a term of one year beginning on the date hereof;
(iv) a New River Director or a Retail Director is removed
if, but only if, directed by New River or the holders
of a majority of the Retail Stockholder Shares,
respectively; and
(v) in the event that any New River Director or a Retail
Director ceases to serve as a member of the Board
during his term of office, the resulting vacancy on
the Board is filled by New River or the holders of a
majority of the Retail Stockholder Shares,
respectively.
(b) If any party fails within thirty (30) days of written
notice to designate a representative to fill a directorship pursuant to the
terms of this paragraph 1, the election of an individual to such directorship
shall be accomplished in accordance with the Company's bylaws and applicable
law.
(c) The Board shall not, without the affirmative vote of the
Retail Director(s):
(i) make any acquisition or engage in any business such
that the Company could reasonably be expected to
generate less than 50% of its revenue from sales of
cut flowers, floral products and other merchandise at
retail floral shops in any fiscal quarter, other than
a merger of other business combination with a public
company in the floral industry; or
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(ii) engage, in any material respects, in any business
outside of the floral or gift industry which is not
ancillary or related to the sale of floral products
or related merchandise or gifts to customers; or
(iii) enter into any transaction with New River or any
Affiliate of New River, except as contemplated by the
Service Agreement, dated as of May 7, 1998, by and
among the Company and an Affiliate of New River.
(d) The provisions of this Section 1 shall terminate upon the
consummation by the Company of a Public Offering.
2. REPRESENTATIONS AND WARRANTIES. Each Stockholder represents
and warrants that (i) such Stockholder is the record owner of the number of
Stockholder Shares set forth opposite its name on the Capitalization Schedule
attached hereto, (ii) this Agreement has been duly authorized, executed and
delivered by such Stockholder and constitutes the valid and binding obligation
of such Stockholder, enforceable in accordance with its terms, and (iii) such
Stockholder has not granted and is not a party to any proxy, voting trust or
other agreement which is inconsistent with, conflicts with or violates any
provision of this Agreement. No holder of Stockholder Shares shall grant any
proxy or become party to any voting trust or other agreement which is
inconsistent with, conflicts with or violates any provision of this Agreement.
3. TRANSFER OF STOCKHOLDER SHARES.
(a) RESTRICTION ON TRANSFER OF STOCKHOLDER SHARES. From the
date hereof through the earlier to occur of (x) a Public Offering and (y)
October 1, 2000 (the "TRANSFER PROHIBITION PERIOD"), no holder of Stockholder
Shares shall sell, transfer, assign or otherwise dispose of (whether with or
without consideration and whether voluntarily or involuntarily or by operation
of law) any interest in his or its Stockholder Shares (a "TRANSFER"), except (i)
to an Affiliate of such Person, (ii) in the case of New River, to an employee of
the Company in connection with the commencement of such person's employment with
the Company (each of such Transfers being referred to herein as a "PERMITTED
TRANSFER"), or (iii) with the prior written consent of the Company. After the
Transfer Prohibition Period, all Transfers of Stockholder Shares (other than
Permitted Transfers) shall be subject to the right of first offer set forth in
paragraph 3(b) below. After a Public Offering, nothing herein shall prevent any
holder of Stockholder Shares from mortgaging, pledging, collaterally assigning
or granting a security interest in any Stochkolder Shares without the consent of
the Company; provided any such pledge by its terms will be released in the event
of any transfer required hereunder.
(b) FIRST OFFER RIGHT. If the Transfer Prohibition Period
terminates prior to October 1, 2000, then after the end of the Transfer
Prohibition Period and prior to October 1, 2000, no holder of Stockholder Shares
shall Transfer Stockholder Shares, in a single transaction or in multiple
transactions occurring through a broker/dealer on the same trading day, having a
market
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value (based on the price at which the Common Stock is then being traded on a
national exchange or in the NASDAQ system) of more than $500,000 until 48 hours
(during business days) after the delivery of an Offer Notice by the transferor
of such Stockholder Shares (the "TRANSFEROR") of a written notice (an "OFFER
NOTICE") to the Chief Financial Officer of the Company setting forth the
proposed number of Stockholder Shares to be transferred and the proposed price
or prices thereof (which may be stated as "market price" or a percentage thereof
if the shares are publicly traded). The Company may elect (on behalf of itself
or a third party) to purchase all or any portion of the Stockholders Shares
specified in the Offer Notice at 95% of the price or prices specified therein by
delivering written notice of such election to the Transferor as soon as
practical but in any event within 48 hours (during business days) after its
receipt of the Offer Notice. If the Company has elected to purchase Stockholder
Shares from the Transferor pursuant to the preceding sentence, the transfer of
such shares shall be consummated as soon as practical after the delivery of the
election notice(s) to the Transferor, but in any event within 10 business days
after its receipt of the Offer Notice. If the Company does not elect to purchase
all of the Stockholder Shares being offered, the Transferor may, within 30
business days after the expiration of the Election Period and subject to the
provisions of subparagraph (c) below, transfer such Stockholder Shares in one or
more transactions to one or more third parties, in each case at a price or
prices no less than 95% of the price or prices per share specified in the Offer
Notice and on other terms no more favorable, in the aggregate, to the
transferees thereof than set forth in the Offer Notice. Any Stockholder Shares
not transferred within such period shall be reoffered pursuant to this paragraph
3(b) prior to any subsequent Transfer which falls within the provisions of this
paragraph 3(b).
Any Stockholder Shares Transferred to a third party pursuant
to the provisions of this paragraph 3(b) shall no longer be subject to the
provisions of this paragraph 3(b).
(c) EXCLUSION OF CERTAIN TRANSFERS. This paragraph 3 shall not
apply to any Transfer of Stockholder Shares (i) pursuant to the provisions of
paragraph 6 below, (ii) to the Company in accordance with a written employment
or stock option agreement by and between the Company and such Person, or (iii)
in connection with any reorganization, recapitalization, merger or sale of all
of the issued and outstanding capital stock of the Company to one or more third
parties, in each case which is approved by the Board.
4. LEGEND. Each certificate evidencing Stockholder Shares and
each certificate issued in exchange for or upon the transfer of any Stockholder
Shares (if such shares remain Stockholder Shares after such transfer) shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
A STOCKHOLDERS AGREEMENT DATED AS OF OCTOBER 1, 1998, AMONG
THE ISSUER OF SUCH SECURITIES (THE "COMPANY") AND THE
COMPANY'S STOCKHOLDERS, AS SUCH AGREEMENT MAY BE
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AMENDED AND MODIFIED FROM TIME TO TIME, WHICH INCLUDES, AMONG
OTHER THINGS, A VOTING AGREEMENT AND RESTRICTIONS ON TRANSFER.
A COPY OF SUCH STOCKHOLDERS AGREEMENT SHALL BE FURNISHED
WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON
WRITTEN REQUEST."
The Company shall imprint such legend on certificates
evidencing Stockholder Shares outstanding as of the date hereof. At the request
of a Stockholder following a Public Offering, the legend set forth above shall
be removed from each certificate held by such Stockholder upon presentation of
the certificate by the holder thereof to the Company and replaced by a legend
which does not reference the voting agreement. At the request of a Stockholder
following October 1, 2000, the legend set forth above (or the legend modified in
accordance with the preceding sentence) shall be removed from each certificate
held by such Stockholder upon presentation of the certificate by the holder
thereof to the Company.
5. TRANSFER. Prior to transferring any Stockholder Shares
(other than pursuant to a Sale of the Company) to any Person other than the
Company, the transferor shall cause the prospective transferee, if such
transferee is not already a party to this Agreement, to execute and deliver to
the Company a counterpart signature page to this Agreement in his or its
capacity as a Stockholder and a holder of Stockholder Shares (and Retail
Stockholder Shares, if applicable). Prior to issuing any shares of Common Stock
to any Person, the Company shall use commercially reasonable efforts to cause
the proposed transferee of such shares of Common Stock to execute and deliver to
the Company a counterpart signature page to this Agreement in his or its
capacity as a Stockholder and a holder of Stockholder Shares (and Retail
Stockholder Shares, if applicable).
6. REGISTRATION RIGHTS.
(a) At any time following the date hereof, whenever the
Company proposes to register any Common Stock for its own or others account
under the Securities Act for a public offering, other than (i) any shelf
registration of shares to be used as consideration for acquisitions of addition
businesses by the Company, (ii) registrations relating to employee benefit plans
and (iii) registrations constituting secondary offerings of shares issued in
connection with any acquisitions of businesses or assets, the Company shall give
each of the Stockholders written notice of its intent to do so at least 15 days
prior to the date of filing of a registration statement with the Commission with
respect to such registration. Upon the written request of any of the
Stochkolders given within 15 days after receipt of such notice, the Company
shall cause to be included in such registration all of the Stockholders Shares
which any such Stockholders request be included in such registration; provided
that if the proposed offering is a firm commitment underwritten offering and the
Company is advised in writing in good faith by any managing underwriter of the
securities being offered that the number of shares to be included in such
registration is greater than the number of such shares which can be offered
without adversely
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affecting the offering, the Company may reduce pro rata the number of shares
offered for the accounts of selling stockholders (except the Company) (based
upon the number of shares held by each such person) to a number deemed
satisfactory by such managing underwriter.
(b) REGISTRATION EXPENSES. All expenses incurred in connection
with the registrations under Section 6(a) (including all registration, filing,
qualification, blue sky, legal printer and accounting fees, but excluding
underwriting commissions and discounts), shall be borne by the Company. In
connection with registrations under Section 6(a), the Company shall (i) use its
best efforts to prepare and file with the Commission as soon as reasonably
practicable, a registration statement and all necessary amendments thereto and
use its best efforts to cause such registration to promptly become and remain
effective until the earlier of (a) such time as all of the shares covered by the
registration statement have been disposed of and (b) 120 days after the
effective date of the registration statement; provided, that if the Company or
the managing underwriter for such offering reasonably and in good faith requires
that any participating Stockholder refrain from selling shares at any time
during the offering, then such 120-day period shall be extended for the period
of time equal to the period for which such Stockholder was required to refrain
from selling shares; (ii) use its best efforts to (x) register and qualify the
Stockholder Shares covered by the registration statement under applicable state
securities laws as the holders and the managing underwriter(s) shall reasonably
request for the distribution of the Stockholder Shares and (y) cause the shares
to be listed on the exchange (or in the NASDAQ system) on which the Common Stock
are traded; and (iii) take such other actions as are reasonably and necessary to
comply with the requirements of the Securities Act and the regulations
thereunder.
(c) UNDERWRITING AGREEMENT. In connection with each
registration pursuant to Section 6(a) covering a underwritten registered public
offering, the Company and each participating Stockholder agree to enter into a
written agreement with the managing underwriters in such form and containing
such provisions as are customary in the securities business for such an
arrangement between such managing underwriters and companies of the Company's
size and investment stature, including reasonable and customary indemnification
provisions.
(d) RULE 144(k). Notwithstanding any other provision of this
Section 6, the Company shall not be obligated to register Stockholders Shares
held by any Stockholder at any time when the resale provisions of Rule 144(k)
(or any successor provision) promulgated under the Securities Act are available
to such Stockholders for such shares.
(e) HOLDBACK AGREEMENT. In consideration of the granting of
each Stockholder of the registration rights under this Section 6 and if
requested by the managing underwriter, each Stockholder agrees that, until
October 1, 2000, he, she, or it will not sell, transfer or otherwise dispose of,
including without limitation through put or short sale arrangements, any
Stockholder Shares (other than Stockholder Shares included in such underwritten
registration pursuant to the terms of this Section 6) during the period from the
effective date of the registration statement
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through the 90th day following the effective date of such registration,
provided, that: (i) all directors, executive officers and holders of more than
five percent of the outstanding Stockholder Shares agree to the same or more
restrictive restrictions; and (ii) with respect to the first public offering of
Stockholders Shares following the IPO, the Stockholder shall have been afforded
a meaningful opportunity to include shares in such registration after giving
effect to any reduction by reason of underwriters' advice.
7. DEFINITIONS.
"AFFILIATE" means, with respect to any Person, directly or
indirectly controlling, controlled by or under common control with such Person
and (i) in the case of any Person that is a partnership, any general or limited
partner of such partnership, and (ii) in the case of any Person that is an
individual, such individual's Family Group.
"COMMISSION" means the Securities Exchange Commission (and any
successor regulatory body thereto).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FAMILY GROUP" means, with respect to any individual, such
individual's spouse, parents, siblings, grandparents and descendants of such
individuals (whether natural or adopted) and any trust solely for the benefit of
the individual and/or the individual's spouse and/or descendants or limited
partnership or limited liability company as to which the individual and/or the
individual's spouse and/or descendants are the sole partners or members or
siblings.
"PERSON" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"PUBLIC OFFERING" means (x) means an offering of the Common
Stock underwritten by one or more investment banks and sold pursuant to a
registration statement filed by the Company pursuant to the Securities Act (an
"IPO"), or (y) the merger of the Company with and into any Person whose equity
securities are registered with the Commission under the Exchange Act (a "PUBLIC
COMPANY") where the Public Company is the surviving corporation of such merger.
"RETAIL STOCKHOLDER SHARES" means the Stockholders Shares
issued to all Persons in connection with the sale by such Persons of one or more
Retail Stores to the Company (whether by merger, sale of stock or sale of
assets).
"RETAIL STORES" means any retail store, the principal business
of which is to sell cut
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flowers to the public.
"SALE OF THE COMPANY" means the sale of the Company pursuant
to which one or more Persons acquire (i) capital stock of the Company possessing
the voting power under normal circumstances to elect a majority of the Company's
board of directors (whether by merger, consolidation or sale or transfer of the
Company's capital stock) or (ii) all or substantially all of the Company's
assets determined on a consolidated basis.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time.
"STOCKHOLDER SHARES" means (i) any Common Stock purchased or
otherwise acquired by any Stockholder (whether or not subsequently Transferred),
(ii) any Common Stock issued or issuable with respect to the securities referred
to in clauses (i) and (ii) above by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization.
8. DISTRIBUTIONS UPON SALE OF THE COMPANY. In the event of a
Sale of the Company, each holder of Common Stock shall receive in exchange for
the shares of Common Stock held by such Person the same portion of the aggregate
consideration from such sale or exchange that such Person would have received if
such aggregate consideration had been distributed by the Company in complete
liquidation pursuant to the rights and preferences set forth in the Company's
Certificate of Information as in effect immediately prior to such sale or
exchange. Each holder of Stockholder Shares shall take all necessary or
desirable actions in connection with the distribution of the aggregate
consideration from such sale or exchange as requested by the Company.
9. INITIAL PUBLIC OFFERING. In the event that the Board
approves an IPO, each holder of Stockholder Shares shall (subject to any
agreement between the Company and such holder of Stockholder Shares) take all
necessary or desirable actions reasonably requested by the Company (and, if the
Public Offering is an underwritten public offering of the Common Stock pursuant
to a registration statement filed by the Company with the Commission in
accordance with the Securities Act, the managing underwriters) in connection
with the consummation of the Public Offering.
10. TRANSFERS IN VIOLATION OF AGREEMENT. Any Transfer or
attempted Transfer of any Stockholder Shares in violation of any provision of
this Agreement shall be void, and the Company shall not record such Transfer on
its books or treat any purported transferee of such Stockholder Shares as the
owner of such shares for any purpose.
11. AMENDMENT AND WAIVER. This Agreement may only be amended
or modified, and compliance with any provision hereof by any Person may only be
waived, with the prior written consent of the Company, the holders of a majority
of the Stockholder Shares and
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the holders of a majority of the Retail Stockholders Shares. The failure of any
party to enforce any of the provisions of this Agreement shall in no way be
construed as a waiver of such provisions and shall not affect the right of such
party thereafter to enforce each and every provision of this Agreement in
accordance with its terms.
12. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
13. ENTIRE AGREEMENT. Except as otherwise expressly set forth
herein, this Agreement embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
14. SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by the Company and its successors and assigns and the Stockholders and any
subsequent holders of Stockholder Shares and the respective successors and
assigns of each of them.
15. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
16. REMEDIES. The Company and the Stockholders shall be
entitled to enforce their rights under this Agreement specifically, to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights existing in their favor. The parties hereto agree and
acknowledge that money damages would not be an adequate remedy for any breach of
the provisions of this Agreement and that the Company and any Stockholder may in
its sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief (without posting
a bond or other security) in order to enforce or prevent any violation of the
provisions of this Agreement.
17. NOTICES. Any notice provided for in this Agreement shall
be in writing and shall be either personally delivered, or mailed first class
mail (postage prepaid) or sent by reputable overnight courier service (charges
prepaid) to the Company at the address set forth below and to any other
recipient at the address indicated on the schedules hereto and to any
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subsequent holder of Stockholder Shares subject to this Agreement at such
address as indicated by the Company's records, or at such address or to the
attention of such other person as the recipient party has specified by prior
written notice to the sending party. Notices shall be deemed to have been given
hereunder when delivered personally, three days after deposit in the U.S. mail
and one day after deposit with a reputable overnight courier service. The
Company's address is:
Xxxxxx Xxxxxxx, Inc.
Xxx Xxxxxxxxx Xxxxx, 00xx Xxxxx
Xx. Xxxxxxxxxx, XX 00000
Attn: President
18. GOVERNING LAW. THE CORPORATE LAW OF THE STATE OF DELAWARE
SHALL GOVERN ALL ISSUES AND QUESTIONS CONCERNING THE RELATIVE RIGHTS OF THE
COMPANY AND ITS STOCKHOLDERS. ALL OTHER ISSUES AND QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF FLORIDA,
WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION (WHETHER
OF THE STATE OF FLORIDA OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF FLORIDA.
19. DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
XXXXXX XXXXXXX, INC.
/s/ Xxxxxx X. Xxxxxx
--------------------------
By: Xxxxxx X. Xxxxxx
Its: President
NEW RIVER CAPITAL PARTNERS
By: B&B Management Partners, L.P.
Its: General Partner
By: Greyhawk Investments, Inc.
Its: Administrative General Partner
/s/ Xxxxxx X. Xxxxx
------------------------
By: Xxxxxx X. Xxxxx
Its: President
/s/ Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx
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