EXHIBIT 10(4)
EXECUTION COPY
AAH HOLDINGS CORPORATION
STOCKHOLDERS AGREEMENT
Dated as of April 30, 2004
AAH HOLDINGS CORPORATION
STOCKHOLDERS AGREEMENT
TABLE OF CONTENTS
Page
ARTICLE I.
DEFINITIONS............................................................................................... 1
1.1. Certain Matters of Construction................................................................ 1
1.2. Definitions.................................................................................... 1
ARTICLE II.
COVENANTS AND CONDITIONS.................................................................................. 11
2.1. Restrictions on Transfers; Involuntary Transfers............................................... 11
2.2. Call by the Company of Management Stockholders' Equity Interests............................... 13
2.3. Management Stockholder Put..................................................................... 15
2.4. Take Along..................................................................................... 17
2.5. Come Along..................................................................................... 19
2.6. Corporate Governance........................................................................... 21
2.7. Rights of Participation........................................................................ 23
2.8. Financial and Business Information............................................................. 24
2.9. Confidentiality................................................................................ 24
2.10. Approval Rights................................................................................ 25
ARTICLE III.
REGISTRATION RIGHTS....................................................................................... 25
3.1. General........................................................................................ 25
3.2. Demand Registration Initiated by the Berkshire Stockholders or the WP Stockholders............. 25
3.3. Piggyback Registration; Reduction in Registration.............................................. 26
3.4. Obligations of the Company..................................................................... 27
3.5. Furnish Information............................................................................ 29
3.6. Expenses of Registration....................................................................... 29
3.7. Underwriting Requirements...................................................................... 29
3.8. Indemnification................................................................................ 30
3.9. Registration on Form S-3....................................................................... 33
3.10. Reports Under Securities Exchange Act of 1934.................................................. 33
3.11. No Inconsistent Agreements..................................................................... 33
3.12. Stock Split.................................................................................... 33
3.13. Timing and Other Limitations................................................................... 34
3.14. Lock-up........................................................................................ 34
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ARTICLE IV.
MISCELLANEOUS............................................................................................. 35
4.1. Appointment of the Management Proxy............................................................ 35
4.2. Remedies....................................................................................... 35
4.3. Entire Agreement; Amendment; Waiver............................................................ 36
4.4. Severability................................................................................... 36
4.5. Notices........................................................................................ 37
4.6. Binding Effect; Assignment..................................................................... 38
4.7. Governing Law.................................................................................. 38
4.8. Termination.................................................................................... 38
4.9. Recapitalizations, Exchanges, Etc.............................................................. 38
4.10. Action Necessary to Effectuate the Agreement................................................... 39
4.11. Purchase for Investment; Legend on Certificate................................................. 39
4.12. Effectiveness of Transfers..................................................................... 39
4.13. Other Stockholders............................................................................. 40
4.14. No Waiver...................................................................................... 40
4.15. Costs and Expenses............................................................................. 40
4.16. Counterpart.................................................................................... 40
4.17. Headings....................................................................................... 40
4.18. Third Party Beneficiaries...................................................................... 40
4.19. Consent to Jurisdiction........................................................................ 40
4.20. WAIVER OF JURY TRIAL........................................................................... 41
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STOCKHOLDERS AGREEMENT
This Stockholders Agreement (this "Agreement") is entered into as of the
30th day of April, 2004 by and among (i) AAH Holdings Corporation, a Delaware
corporation (together with its successors and permitted assigns, the "Company")
and (ii) the Stockholders (as defined below) party hereto.
WHEREAS, upon consummation of the transactions contemplated by that
certain Agreement and Plan of Merger dated as of March 26, 2004 (the "Merger
Agreement") by and among the Company, AAH Acquisition Corporation and Amscan
Holdings, Inc., the Berkshire Stockholders (as defined below), the WP
Stockholders (as defined below), the Management Stockholders (as defined below)
and the Other Stockholders (as defined below) as of the date of such
consummation will own the number of shares of Common Stock (as defined below)
and options to purchase shares of Common Stock, each as set forth in the books
and records of the Company; and
WHEREAS, each of the Stockholders desires to enter into this Agreement for
the purpose of regulating certain relationships of the Stockholders with regard
to the Company and certain restrictions on the Common Stock and other equity
securities owned by the Stockholders.
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Agreement, and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
DEFINITIONS
Certain Matters of Construction. In addition to the definitions referred
to or set forth below in this Section 1:
The words "hereof," "herein," "hereunder" and words of similar
import shall refer to this Agreement as a whole and not to any particular
Section or provision of this Agreement, and reference to a particular
Section of this Agreement shall include all subsections thereof;
References to Sections and Articles refer to Sections and Articles
of this Agreement;
Definitions shall be equally applicable to both nouns and verbs and
the singular and plural forms of the terms defined; and
The masculine, feminine and neuter genders shall each include the
other.
Definitions. For the purposes of this Agreement, the following terms shall
have the following meanings:
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"1933 Act" shall mean the Securities Act of 1933, as amended, or any
successor act.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended, or
any successor act.
"Acquired Shares" shall have the meaning as set forth in Section
2.2(b)(i).
"Adverse Claim" shall have the meaning set forth in Section 8.102 of the
applicable Uniform Commercial Code.
"Affiliate" shall mean, with respect to any specified Person, any other
Person which, directly or indirectly, through one or more intermediaries
controls, or is controlled by, or is under common control with, such specified
Person (for the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise).
"Agreement" shall have the meaning set forth in the first paragraph of
this Agreement.
"Approved Company Sale" shall mean a sale of the Company (by sale of
securities, merger, consolidation, sale of substantially all of the assets, or
any similar transaction) if (a) it is consummated after the third anniversary
date of this Agreement, or (b) it results in the receipt by the WP Stockholders
of cash or Marketable Securities (valued at Fair Market Value) having a value of
at least equal to 200% of the Investment Price of the Shares held by the WP
Stockholders.
"Associate" (i) when used to indicate a relationship with any Person shall
mean, (a) any corporation or organization of which such Person is an officer or
partner or is, directly or indirectly, the beneficial owner of ten percent (10%)
or more of any class of equity securities, (b) any trust or other estate in
which such Person has a substantial beneficial interest or as to which such
Person serves as a trustee or in a similar fiduciary capacity, and (c) any
relative of such Person who has the same home as such Person, is a parent,
sibling, spouse, in-law, child or grandchild of such Person, or the spouse of
any of them, or (ii) when used to indicate a relationship with the Company,
shall also mean a director or officer of the Company or any Subsidiary. Neither
the Company nor any of its Subsidiaries shall be deemed an Associate of any
Stockholder.
"Berkshire Representatives" shall have the meaning as set forth in Section
2.6(a).
"Berkshire Stockholders" shall mean (i) those Persons listed as the
Berkshire Stockholders on the signature pages hereof, and (ii) their Permitted
Transferees (other than the Company or the WP Stockholders), as evidenced by an
executed counterpart to this Agreement or a joinder to this Agreement, in either
case, indicating that such Permitted Transferee will be a Berkshire Stockholder.
"Board" or "Board of Directors" shall mean the Board of Directors of the
Company as the same shall be constituted from time to time.
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"Board Determination Procedures" shall mean the procedures by which the
Board calculates the Board Participation Determination. Such procedures shall
include, but not be limited to, a good faith estimate by the Board of any
acceleration of vesting of any Time Options and/or Performance Options upon
consummation of the proposed Transfer, the Applicable Percentage (as defined in
the Performance Options), the IRR (as defined in the Performance Options) and
the number of Shares the prospective transferee will ultimately purchase in the
proposed Transfer.
"Board Participation Determination" shall mean for each Management
Stockholder a good faith estimate of the number of Time Options which will vest
upon the consummation of the proposed Transfer and the number of Performance
Options which will vest and be earned upon consummation of the proposed
Transfer, determined in accordance with the Board Determination Procedures.
"Call Event" shall have the meaning as set forth in Section 2.2(a).
"Call Group" shall have the meaning as set forth in Section 2.2(a).
"Call Notice" shall have the meaning as set forth in Section 2.2(a).
"Call Option" shall have the meaning as set forth in Section 2.2(a).
"Call Price" shall have the meaning as set forth in Section 2.2(b).
"Call Securities" shall mean all of (i) the Shares, (ii) vested Time
Options, (iii) Rollover Options, (iv) vested and earned Performance Options and
(v) if the Determination Date has not yet occurred, vested and unearned
Performance Options, in each case which are owned by the members of the Call
Group on the date of a Call Event.
"Cause" shall have the meaning as set forth below, except with respect to
any Management Stockholder who is employed by the Company or one of its
Subsidiaries pursuant to an effective written employment agreement, if any,
between the Company and/or one of its Subsidiaries and such Management
Stockholder in which there is a definition of "Cause," in which event the
definition of "Cause" as set forth in such employment agreement shall be deemed
to be the definition of "Cause" herein solely for such Management Stockholder
and only for so long as such employment agreement remains effective.
In all other events, the term "Cause" shall mean that the Board of
Directors has determined in its reasonable judgment, that any one or more of the
following has occurred:
the Management Stockholder shall have been convicted of, or
shall have pleaded guilty or nolo contendere to, any felony or any
crime involving dishonesty or moral turpitude;
the Management Stockholder shall have breached, any
non-competition agreements with the Company and/or its Affiliates;
or
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the Management Stockholder shall have openly disregarded his
or her responsibilities to the Company and/or its Affiliates and
shall have refused to devote substantial time and energy to the
business and affairs of the Company and/or its Affiliates (other
than due to Disability or temporary disability which, in the
reasonable judgment of the Board of Directors, causes the Management
Stockholder to be incapable of devoting such time and energy) within
30 days after written notification by the Board of Directors that,
in their good faith judgment, the Management Stockholder has
consistently failed to do so.
"Change in Control" shall mean (i) any transaction or series of related
transactions in which any Person other than the Berkshire Stockholders or the WP
Stockholders, shall (A) acquire, whether by purchase, exchange, tender offer,
merger, consolidation, recapitalization or otherwise, or (B) otherwise be the
owner of (as a result of a redemption of Shares or otherwise), Shares (or shares
in a successor corporation by merger, consolidation or otherwise) such that
following such transaction or transactions, such Person or group and their
respective Affiliates beneficially own fifty percent (50%) or more of the voting
power at elections for the board of directors of the Company or any successor
corporation, or (ii) the sale or transfer of all or substantially all of the
Company's assets and following such sale or transfer, there is a liquidation of
the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Come Along Percentage" shall have the meaning set forth in Section
2.5(a).
"Common Stock" shall mean the Company's common stock, par value $.01 per
share, that the Company may be authorized to issue from time to time, any other
securities of the Company into which such Common Stock may hereafter be changed
or for which such Common Stock may be exchanged after giving effect to the terms
of such change or exchange (by way of reorganization, recapitalization, merger,
consolidation or otherwise) and shall also include any common stock of the
Company hereafter authorized and any capital stock of the Company of any other
class hereafter authorized which is not preferred as to dividends or
distribution of assets in liquidation over any other class of capital stock of
the Company and which has ordinary voting power for the election of directors of
the Company.
"Common Stock Equivalents" shall mean all shares of Common Stock (i) owned
by, or (ii) issuable upon exercise of Performance Options (solely to the extent
such Performance Options, on or prior to the time the determination of Common
Stock Equivalents is made, are vested and earned), Time Options (solely to the
extent such Time Options, on or prior to the time the determination of Common
Stock Equivalents is made, are vested) and Rollover Options, held by, each
Stockholder.
"Company" shall have the meaning set forth in the first paragraph of this
Agreement.
"Company Note" shall have the meaning as set forth in Section 2.2(c).
"Company Option Period" shall have the meaning as set forth in Section
2.1(c)(ii).
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"Company Sale" shall mean any transaction or a series of related
transactions through which the holders of Common Stock Equivalents and their
Affiliates immediately prior to the transaction or series of related
transactions shall own less than fifty percent (50%) of all Common Stock
Equivalents (including without limitation, all shares issued in respect of any
such Common Stock Equivalents by way of stock dividend, stock split or
combination of shares) immediately following the transaction or series of
related transactions.
"Default" shall have the meaning as set forth in Section 2.2(c).
"Determination Date" shall have the meaning ascribed it in the relevant
Performance Option certificate.
"Disability" shall mean permanent disability within the meaning of Section
22(e)(3) of the Code, unless otherwise defined in a separate written employment
agreement between the Company and/or one of its Subsidiaries and the person
whose disability is in question in which event the definition of "Disability" as
set forth in such employment agreement shall be deemed to be the definition of
"Disability" herein solely for such person and only for so long as such
employment agreement remains effective.
"earned" shall mean, when used in connection with Performance Options that
such Performance Options have been earned in accordance with the relevant
Incentive Plan and the certificates issued pursuant thereto.
"Executive Put Event" shall have the meaning as set forth in Section
2.3(c).
"Executive Put Notice" shall have the meaning as set forth in Section
2.3(c).
"Executive Put Option" shall have the meaning as set forth in Section
2.3(c).
"Executive Put Price" shall have the meaning as set forth in Section
2.3(c).
"Executive Put Securities" shall mean the number of Rollover Shares and
Rollover Options held by the Executive Stockholder (or the Permitted Transferee
of the Executive Stockholder) exercising the Executive Stockholder Put pursuant
to Section 2.3(c) such that on the date of the Executive Put Event, the value of
the Executive Put Securities (valued at Fair Market Value) does not exceed the
Put Investment Price for such Executive Stockholder.
"Executive Stockholder" shall mean Xxxxxx Xxxxxxxxxx and/or Xxxxx
Xxxxxxxx.
"Fair Market Value" shall mean:
(a) with respect to Shares (other than Marketable Securities), the
fair value per share of the applicable Shares as of the
applicable date on the basis of a sale of such Shares in an
arms length private sale between a willing buyer and a willing
seller, neither acting under compulsion. In determining such
Fair Market Value, no discount shall be taken for constituting
a minority interest or for the illiquidity of such Shares and
no upward adjustment or discount shall be taken relating to
the fact that the Shares in question are subject to the
restrictions and entitled to the
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rights provided hereunder. Such Fair Market Value shall be
determined in good faith by the Board of Directors.
(b) with respect to Marketable Securities, the average of the
daily average of the high and low sales price of such
Marketable Securities for the 10 days preceding the applicable
date.
"Federal Bankruptcy Code" means Title 11 of the United States Code.
"Holder" or "Holders" have the meaning as set forth in Section 3.1.
"Incentive Plan" shall mean AAH Holdings Corporation 2004 Equity Incentive
Plan.
"Investment Price" shall mean with respect to Shares, an amount per Share
equal to the price per Share paid (whether through cash or exchange of existing
securities, or otherwise) for such Share at the time of initial purchase thereof
(subject to appropriate adjustments for stock splits, recapitalizations and the
like).
"Involuntary Transfer" shall have the meaning as set forth in Section
2.1(c)(vi).
"Management Proxy" shall have the meaning as set forth in Section 4.1.
"Management Representatives" shall have the meaning as set forth in
Section 2.6(a).
"Management Stockholders" shall mean (i) those Persons listed as the
Management Stockholders on the signature pages hereof and (ii) their Permitted
Transferees (other than the Company), as evidenced by an executed counterpart to
the Agreement or a joinder to this Agreement, in either case, indicating that
such Permitted Transferee will be a Management Stockholder.
"Marketable Securities" shall mean stocks and bonds of companies that are
immediately and freely tradable on stock exchanges or in over the counter
markets or that can otherwise readily be sold for cash.
"Merger" shall mean the merger contemplated by the Merger Agreement.
"Merger Agreement" shall have the meaning as set forth in the recitals.
"Mid-term Applicable Federal Rate" shall mean the mid-term applicable
federal rate as defined in Section 1274 of the Code.
"New Securities" shall have the meaning as set forth in Section 2.7(b).
"Options" shall mean Performance Options, Time Options and Rollover
Options.
"Other Stockholders" shall mean (i) those Persons listed as the Other
Stockholders on the signature pages hereof, (ii) their Permitted Transferees
(other than the Company) as evidenced by an executed counterpart to the
Agreement or a joinder to this Agreement, in either case,
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indicating that such Permitted Transferee will be an Other Stockholder and (iii)
those Persons described in Section 4.13(iii).
"Participating Offeree" shall have the meaning as set forth in Section
2.5(a).
"Participation Notice" shall have the meaning as set forth in Section
2.5(a).
"Participation Securities" shall have the meaning as set forth in Section
2.5(a).
"Performance Options" shall mean, collectively, the options granted to
certain Management Stockholders under the Incentive Plan to purchase shares of
Common Stock, the number of vested and earned options of which is subject to the
attainment of certain targets set forth in the Incentive Plan and the option
certificates issued pursuant thereto.
"Performance Option Note" shall mean, for purposes of Sections 2.2(b)(iii)
and 2.3(a)(iv), a note with a face amount equal to the difference between (i)
the Fair Market Value as of the date of such call or put, as the case may be, of
the Shares underlying Performance Options which have been called or put, and
(ii) the exercise price of such Performance Options. To the extent that the
Shares underlying such Performance Options vest and are earned in accordance
with their terms, the Performance Option Note will be payable by the Company at
the lesser of (x) its face amount, or (y) the difference between (A) the Fair
Market Value of the underlying Shares as of the Determination Date and (B) the
exercise price of such Performance Options.
"Permitted Transfer" shall mean:
a Transfer of Shares by any Stockholder who is a natural
person to (a) such Stockholder's spouse, children (including legally
adopted children and stepchildren), spouses of children,
grandchildren, spouses of grandchildren, parents or siblings; (b) a
trust for the benefit of the Stockholder and/or any of the Persons
described in clause (a); or (c) a corporation, limited partnership
or limited liability company whose sole shareholders, partners or
members, as the case may be, are the Stockholder and/or any of the
Persons described in clause (a) or clause (b); provided, that in any
of clauses (a), (b) or (c), the Stockholder transferring such Shares
retains exclusive power to exercise all rights under this Agreement.
a Transfer of Shares by any Stockholder to the Company
(including, without limitation, any pledge of Shares or Options to
the Company);
a Transfer of Shares by a Stockholder upon death or incapacity
to such Stockholder's estate, executors, administrators and personal
representatives, and then to such Stockholder's legal
representatives, heirs or legatees (whether or not such recipients
are a spouse, children, spouses of children, grandchildren, spouses
of grandchildren, parents or siblings of such Stockholder);
provided, that, in the case of a Management Stockholder whose Shares
were subject to the provisions of Section 2.2 immediately prior to
such Management Stockholder's death, the Company has not exercised
its Call Option with respect to such Shares under Section 2.2;
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a Transfer of Shares (a) by the Berkshire Stockholders to any
Affiliate of Berkshire Partners LLC or any of the employees,
partners, members or Affiliates of such Berkshire Stockholder or any
such Affiliate, (b) between any Berkshire Stockholders; (c) by the
WP Stockholders to any Affiliate of Weston Presidio Service Company
LLC or any of the employees, partners, members or Affiliates of such
WP Stockholder or any such Affiliate, (d) between any WP
Stockholders or (e) between any WP Stockholders and any Berkshire
Stockholders;
a Transfer of Shares by any Other Stockholder who is not a
natural person to any Affiliate of such Other Stockholder;
provided, however, that Performance Options, Time Options and Rollover Options
may only be transferred in accordance with the terms of the Incentive Plan; and
provided, further, that a Permitted Transfer from a Management Stockholder
(other than an Executive Stockholder) to any Permitted Transferee must be
approved by the Management Proxy; and provided, further, that no Permitted
Transfer shall be effective unless and until the transferee of the Shares,
Performance Options, Time Options or Rollover Options so transferred complies
with Section 4.13 including without limitation, executing and delivering to the
Company a counterpart of this Agreement and agreeing to be bound hereunder in
the same manner and to the same extent as the Stockholder from whom the Shares,
Performance Options, Time Options or Rollover Options were transferred. Except
in the case of a Permitted Transfer pursuant to clause (ii) above, from and
after the date on which a Permitted Transfer becomes effective, the Permitted
Transferee of the Shares, Performance Options, Time Options or Rollover Options
so transferred shall have the same rights, and shall be bound by the same
obligations, under this Agreement as the transferor of such Shares, Performance
Options, Time Options or Rollover Options and shall be deemed for all purposes
hereunder (i) a "Berkshire Stockholder" in the case of a Permitted Transfer from
a Berkshire Stockholder (other than pursuant to clause (iv)(e) in which case
such Permitted Transferee shall be a WP Stockholder), (ii) a "WP Stockholder" in
the case of a Permitted Transfer from a WP Stockholder (other than pursuant to
clause (iv)(e) in which case such Permitted Transferee shall be a Berkshire
Stockholder), (iii) a "Management Stockholder" in the case of a Permitted
Transfer from a Management Stockholder or (iv) an "Other Stockholder" in the
case of a Permitted Transfer from an Other Stockholder. No Permitted Transfer
shall conflict with or result in any violation of a judgment, order, decree,
statute, law, ordinance, rule or regulation.
"Permitted Transferee" shall mean any Person who shall have acquired and
who shall hold Shares, Performance Options, Time Options or Rollover Options
pursuant to a Permitted Transfer.
"Person" shall mean any individual, partnership, corporation, association,
limited liability company, trust, joint venture, unincorporated organization or
entity, or any government, governmental department or agency or political
subdivision thereof.
"Proportionate Share" shall have the meaning as set forth in Section
2.1(c)(iii)
"Proprietary Information" shall have the meaning as set forth in Section
2.9.
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"Public Offering" shall mean the completion of a sale of Common Stock
pursuant to a registration statement which has become effective under the 1933
Act (excluding registration statements on Form X-0, X-0 or similar limited
purpose forms), in which the Common Stock shall be listed and traded on a
national exchange or on the NASDAQ National Market System.
"Put Event" shall have the meaning as set forth in Section 2.3(a).
"Put Investment Price" shall mean, for each Executive Stockholder, the
amount set forth opposite the name of such Executive Stockholder on Exhibit A
hereof.
"Put Notice" shall have the meaning as set forth in Section 2.3(a).
"Put Option" shall have the meaning as set forth in Section 2.3(a).
"Put Price" shall have the meaning as set forth in Section 2.3(b).
"Put Securities" shall mean all of (i) the Shares, (ii) vested Time
Options, (iii) Rollover Options, (iv) vested and earned Performance Options and
(v) if the Determination Date has not yet occurred, vested and unearned
Performance Options, in each case which are owned by the Management Stockholder
on the date of a Put Event.
"Qualified Initial Public Offering" shall mean an underwritten initial
pubic offering of shares (i) resulting in proceeds to the Company and, if
applicable, to any selling Stockholders, of not less than $25 million, (ii)
unless otherwise waived by the WP Stockholders, at an offering price which, when
multiplied by the number of Shares then held by the WP Stockholders (and their
Permitted Transferees) and adding the amount of all cash and/or Marketable
Securities therefore received by the WP Stockholders (and their Permitted
Transferees), is at least equal to the Investment Price initially paid by the WP
Stockholders for their Shares at closing; and (iii) following which the Shares
are listed for trading on the New York Stock Exchange or the NASDAQ National
Market.
"register," "registered" and "registration" shall have the meaning as set
forth in Section 3.1.
"Registrable Securities" shall mean (i) all shares of Common Stock held by
any Stockholder, (ii) all shares of Common Stock issuable upon the exercise of
Performance Options, Time Options and Rollover Options, in each case, to the
extent exercisable, held by any Stockholder, and (iii) any other common equity
securities of the Company issued in exchange for, upon a reclassification of, or
in a distribution with respect to, such Common Stock. As to any particular
Registrable Securities, such securities shall cease to be Registrable Securities
when (a) a registration statement (other than a registration statement on Form
S-8) with respect to the sale of such securities shall have become effective
under the 1933 Act and such securities shall have been disposed of in accordance
with such registration statement, (b) a registration statement on Form S-8 with
respect to such securities shall have become effective under the 1933 Act, or
(c) such securities shall have been sold under Rule 144 (or any successor
provision) under the 1933 Act and such securities may be resold by the Holder
thereof without registration under the 1933 Act.
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"Rollover Options" shall mean, collectively, the vested options retained
by certain Management Stockholders under the Incentive Plan, to purchase shares
of Common Stock on the terms set forth therein and in the Stock Option
Agreements issued pursuant thereto.
"Rollover Shares" shall mean, collectively, the Shares received by the
Executive Stockholders immediately prior to the consummation of the Merger in
exchange for shares of common stock of Amscan Holdings, Inc.
"Sale Request" shall have the meaning as set forth in Section 2.4(a).
"Schedule" shall refer to the Schedule of Stockholders attached hereto as
Exhibit B, as amended from time to time.
"SEC" shall mean the United States Securities and Exchange Commission.
"Seller" shall have the meaning as set forth in Section 2.4(a).
"Shares" shall mean (i) shares of Common Stock held by Stockholders from
time to time, or (ii) securities of the Company issued in exchange for, upon
reclassification of, or as a distribution in respect of, the foregoing.
"Stockholders" shall mean, collectively, the Berkshire Stockholders, the
WP Stockholders, the Management Stockholders and the Other Stockholders.
"Subsidiary" with respect to any entity (the "parent") shall mean any
corporation, company, firm, association or trust of which such parent, at the
time in respect of which such term is used, (i) owns directly or indirectly more
than fifty percent (50%) of the equity or beneficial interest, on a consolidated
basis, or (ii) owns directly or controls with power to vote, directly or
indirectly through one or more Subsidiaries, shares of the equity or beneficial
interest having the power to elect more than fifty percent (50%) of the
directors, trustees, managers or other officials having powers analogous to that
of directors of a corporation. Unless otherwise specifically indicated, when
used herein the term Subsidiary shall refer to a direct or indirect Subsidiary
of the Company.
"Take Along Group" shall have the meaning as set forth in Section 2.4(a).
"Third Party" shall mean any Person other than the Company.
"Time Options" shall mean, collectively, the time vested options, granted
to certain Management Stockholders under the Incentive Plan, to purchase shares
of Common Stock on the terms set forth therein and in the certificates and
agreements issued pursuant thereto.
"Transfer" shall mean to transfer, sell, assign, pledge, hypothecate,
give, create a security interest in or lien on, place in trust (voting or
otherwise), assign or in any other way encumber or dispose of, directly or
indirectly and whether or not by operation of law or for value, any Shares,
Performance Options, Time Options or Rollover Options.
"Transfer Date" shall have the meaning as set forth in Section 2.1(c)(i).
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"Transferor" shall have the meaning as set forth in Section 2.5(a).
"Transferring Stockholder" shall have the meaning as set forth in Section
2.1(c)(i).
"Voluntary Termination" shall mean any voluntary termination of employment
with the Company or a Subsidiary of the Company by a Management Stockholder,
except as otherwise specified in an effective written agreement, if any, between
the Company and/or one of its Subsidiaries and such Management Stockholder. The
term Voluntary Termination shall not include termination of employment due to
death, Disability or retirement in accordance with Company policy.
"WP Representatives" shall have the meaning as set forth in Section
2.6(a).
"WP Stockholders" shall mean (i) those Persons listed as the WP
Stockholders on the signature pages hereof, and (ii) their Permitted Transferees
(other than the Company or the Berkshire Stockholders), as evidenced by an
executed counterpart to this Agreement or a joinder to this Agreement, in either
case, indicating that such Permitted Transferee will be a WP Stockholder.
COVENANTS AND CONDITIONS
Subject to the provisions of Section 4.8 hereof relating to the
termination of certain provisions of this Agreement, the following covenants and
conditions shall apply.
Restrictions on Transfers; Involuntary Transfers.
No Management Stockholder or Other Stockholder may Transfer all or
any of the Shares owned by such Management Stockholder or Other
Stockholder to any Person other than (i) a Permitted Transferee, (ii)
pursuant to Section 2.2, (iii) pursuant to the exercise of the Put Option
set forth in Section 2.3, (iv) pursuant to Section 2.4 in accordance with
a Sales Request, or (v) pursuant to Section 2.5 as a Participating
Offeree. Any attempted Transfer of Shares not permitted by this Section
2.1 shall be null and void, and the Company shall not in any way give
effect to such nonpermissible Transfer. Any attempted Transfer of
Performance Options, Time Options or Rollover Options not permitted by the
Incentive Plan shall be null and void, and the Company shall not in any
way give effect to such nonpermissible Transfer.
Transferred Shares Subject to Transfer Restrictions. Except for
transfers to the Company, any Shares Transferred pursuant to this Section
2.1 shall remain subject to the Transfer restrictions of this Agreement
and each intended transferee pursuant to this Section shall execute and
deliver to the Company a counterpart of this Agreement, which shall
evidence such transferee's agreement that the Shares intended to be
transferred shall continue to be subject to this Agreement and that as to
such Shares the transferee shall be bound by the restrictions of this
Agreement as a Stockholder hereunder.
11
Involuntary Transfers.
Any Stockholder who is the subject of an Involuntary Transfer
(as defined below) (the "Transferring Stockholder"), shall notify
the Company and the other Stockholders in writing within ten (10)
days of such Involuntary Transfer (but the failure to give such
notice shall not affect the rights of the parties hereunder). For
purposes of this Section 2.1(c), the later of receipt of such notice
by the Company and the other Stockholders and the date of such
Involuntary Transfer shall be the "Transfer Date".
For a period of twenty (20) days after the Transfer Date (the
"Company Option Period"), the Company may, by notice in writing to
the Transferring Stockholder, elect in writing to purchase any or
all of the Shares subject to the Involuntary Transfer at the Fair
Market Value of such Shares.
If the Company does not elect to purchase any of the Shares
subject to the Involuntary Transfer, or exercises such right only
with respect to a portion of such Shares, then for a period of
twenty (20) days commencing on the earlier of (a) the date, if any,
that the Transferring Stockholder notifies the other Stockholders in
writing that the Company has determined either not to exercise such
right of purchase or to exercise such right only with respect to a
portion of the Shares subject to the Involuntary Transfer, and (b)
the expiration of the Company Option Period, the other Stockholders
shall have the right to purchase all or any portion of such Shares
subject to the Involuntary Transfer not so elected to be purchased
by the Company, at the Fair Market Value of such Shares. The
specific number of such Shares subject to the Involuntary Transfer
remaining after the Company has exercised its right pursuant to
clause (ii) to which each other Stockholder shall be entitled to
purchase shall be determined on a pro rata basis in proportion to
the respective number of shares of Common Stock owned beneficially
by each such Stockholder as of the Transfer Date in relation to the
total number of shares of Common Stock owned beneficially by all
such Stockholder (for each such Stockholder, its "Proportionate
Share"). Each such Stockholder shall also be entitled to indicate a
desire to purchase all or a portion of any Shares subject to the
Involuntary Transfer remaining after such pro rata allocation. Each
such Stockholder shall be allocated the maximum amount of Shares
subject to the Involuntary Transfer set forth in such Stockholder's
offer to purchase, unless such allocation would result in the
allocation of more securities in the aggregate than are available
for purchase by the other Stockholders, in which case such Shares
subject to the Involuntary Transfer shall be allocated among the
Stockholders pro rata in accordance with each such Stockholder's
Proportionate Share; provided, however, that if the foregoing
results in any Stockholder being allocated more than the maximum
amount of Shares subject to the Involuntary Transfer specified in
such Stockholder's offer to purchase, such Stockholder will be
allocated such maximum amount and the excess will be allocated as
provided in this sentence (including this proviso).
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Any Shares subject to the Involuntary Transfer not accepted
pursuant to clauses (ii) and (iii) above shall be Transferred in
accordance with the terms and conditions of the Involuntary
Transfer.
The closing of the purchase and sale of any Shares subject to
the Involuntary Transfer hereunder shall be held at the offices of
the Company on such dates and times as the parties may agree but in
all events within twenty (20) days following termination of the
offer period granted to the other Stockholders.
For purposes of this Agreement, the term "Involuntary
Transfer" shall mean any involuntary sale, transfer, encumbrance or
other disposition (other than as a result of the death of the
Stockholder) by or in which any Stockholder shall be deprived or
divested of any right, title or interest in or to any Shares,
including without limitation (I) any levy of execution, transfer in
connection with bankruptcy, reorganization, insolvency or similar
proceedings, (II) any transfer to a public officer or agency
pursuant to any abandoned property or escheat law, or (III) any
transfer to the spouse of an individual or change in the record
holder made pursuant to divorce proceedings. A Transfer pursuant to
Section 2.2 shall not be deemed to be an Involuntary Transfer.
Call by the Company of Management Stockholders' Equity Interests.
Upon the termination of the employment of any Management Stockholder
by the Company or any of its Subsidiaries (a "Call Event") for any reason,
the Company or its designee shall have the right to purchase (the "Call
Option"), by delivery of a written notice (the "Call Notice") to such
terminated Management Stockholder no later than ninety (90) days after the
date of such Call Event, and such Management Stockholder and such
Management Stockholder's Permitted Transferees (collectively, the "Call
Group") shall be required to sell all (but not less than all) of the Call
Securities at a price per share (or per option) equal to the Call Price
(as defined below) of such Call Securities determined as of the date of
repurchase pursuant to the Call Notice.
For purposes of this Section 2.2, the term "Call Price" shall mean:
With respect to Rollover Shares and other Shares acquired on or
after the date hereof (whether by purchase, upon exercise of Options or
otherwise (the "Acquired Shares")):
in the event of a termination of a Management Stockholder's
employment (A) by the Company without Cause, (B) by virtue of death
or Disability, (C) upon retirement in accordance with Company
policy, or (D) by Voluntary Termination on or after the third
anniversary of the date hereof, the Fair Market Value of such
Management Stockholder's Rollover Shares and Acquired Shares;
in the event of a termination of a Management Stockholder's
employment by Voluntary Termination prior to the third anniversary
of the date hereof (A) the Fair Market Value of any Rollover
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Shares and Acquired Shares (including Shares acquired upon the
exercise of Rollover Options, but not including Shares acquired upon
the exercise of Time Options or Performance Options), or (B) the
lower of (x) the Investment Price or (y) the Fair Market Value of
any Acquired Shares acquired upon the exercise of Time Options or
Performance Options;
in the event of a termination of a Management
Stockholder's employment by the Company for Cause, the lower of (x)
the Investment Price or (y) the Fair Market Value of such Management
Stockholder's Rollover Shares and Acquired Shares;
With respect to any vested Time Options, vested and earned
Performance Options or Rollover Options, the difference between (x) the
Call Price for the Shares underlying such Time Options, Performance
Options or Rollover Options, as the case may be (calculated as if the
Shares underlying such Time Options, Performance Options or Rollover
Options, as the case may be, were outstanding and had been called pursuant
to this Section 2.2 and therefore calculated in accordance with the
procedures set forth in clauses 2.2(b)(i) above) minus (y) the exercise
price of such vested Time Options, vested and earned Performance Options
or Rollover Options, as the case may be; provided, that such difference
shall not be less than zero;
with respect to vested Performance Options which have been called
pursuant to this Section prior to a Determination Date (so it is not then
known how many, if any, of such Performance Options will be earned), the
Company will issue, in exchange for such securities, a Performance Option
Note to the Management Stockholder.
with respect to any unvested Time Options or unvested or unearned
Performance Options, such Options shall automatically expire as set forth
in the Option Certificates pursuant to which they were granted.
The closing of any purchase of Call Securities by the Company
pursuant to Section 2.2(a) shall take place at the principal office of the
Company no later than 185 days after the Call Event. At such closing, the
Company shall deliver to the Call Group consideration in an amount equal
to the aggregate Call Price payable in respect of such Call Securities
against delivery of (i) original stock certificates and stock powers duly
endorsed in favor of the Company representing the Call Securities, and
(ii) an executed agreement, in form reasonably satisfactory to the
Company, evidencing the cancellation of any Time Options, Rollover Options
and Performance Options purchased at such closing. The Company shall pay
the Call Price by paying the Call Group in cash and, if applicable, a
Performance Option Note, as described in clause (b)(iii) above); provided,
however, that in the event that any such cash payment could, in the
reasonable judgment of the Board, cause the Company or any Subsidiary to
be in violation of applicable law or in default under or otherwise in
violation of the terms of any senior secured or other material loan or
credit agreement to which the Company or any of its Subsidiaries is a
party (a "Default"), the Company shall pay such cash portion of the Call
Price by issuing
14
a subordinated promissory note in a principal amount equal to the cash
portion of the purchase price (the "Company Note"). The principal of such
note will be due and payable in five equal annual installments, the first
such installment becoming due and payable on the first anniversary of the
issuance of such note, and interest will accrue thereon at a rate equal to
the Mid-term Applicable Federal Rate plus three percent (3%) from the date
of issuance of the Company Note and will be payable quarterly in arrears.
Such Company Note may be prepaid by the Company in whole at any time or in
part from time to time without premium or penalty and shall otherwise be
in the form acceptable to the Board; provided, however, that if at any
time after a Company Note has been issued, the Board determines that
prepaying such Company Note in whole would not reasonably be likely to
cause a Default, the Company Note shall then be prepaid in full at such
time. Notwithstanding anything to the contrary in this Agreement, the
Company shall not be obligated to make any cash payment pursuant to this
Section 2.2(c) or any cash payment of principal or interest due under a
Company Note if such payment would cause a Default. In the event the
Company cannot make any cash payment under this Section 2.2(c) or the cash
payments of principal and interest due under a Company Note because it is
in Default or would be in Default by virtue of such payments, the Company
will undertake to make such payments at such time as the Company is no
longer in, or would no longer be by virtue of such payments in, Default.
Management Stockholder Put.
Upon the termination of the employment of any Management Stockholder
with the Company or any of its Subsidiaries (a "Put Event") by virtue of
death or Disability, then such Management Stockholder (and each Permitted
Transferee of such Management Stockholder who has been transferred Shares
pursuant to this Agreement from such Management Stockholder) shall have
the right to sell (the "Put Option"), by delivery of a written notice (the
"Put Notice") to the Company no later than sixty (60) days after the date
of such Put Event, and the Company shall be required to purchase all (but
not less than all) of the Put Securities at a price per share equal to the
Put Price (as defined below) of such Put Securities as of the date the Put
Notice is delivered. For purposes of this Section 2.3(a), the term "Put
Price" shall mean:
with respect to any Shares held by a Management Stockholder or
his Permitted Transferees, the Fair Market Value of such Shares;
with respect to any vested Time Options, the difference
between (x) the Put Price for the Shares underlying such Time
Options (calculated as if the Shares underlying such Time Options
were outstanding and had been put pursuant to this Section 2.3(a)
and therefore calculated in accordance with the procedures set forth
in clause (i) above) minus (y) the exercise price of such vested
Time Options; provided, that such difference shall not be less than
zero;
with respect to any vested and earned Performance Options, the
difference between (x) the Put Price for the Shares underlying such
Performance Options (calculated as if the Shares underlying such
Performance Options were outstanding and had been put pursuant to
this Section 2.3(a) and therefore
15
calculated in accordance with the procedures set forth in clause (i)
above) minus (y) the exercise price of such vested and earned
Performance Options; provided, that such difference shall not be
less than zero; and
with respect to any vested Performance Options which have been
put pursuant to this section prior to a Determination Date (so it is
not known how many, if any, of such Performance Options will be
earned), a Performance Option Note.
The closing of any purchase of Put Securities by the Company
pursuant to Section 2.3(a) shall take place at the principal office of the
Company no later than the 60th day after the Put Event. At such closing,
the Company shall deliver to the Management Stockholder (and his Permitted
Transferees, as the case may be) exercising the Put Option consideration
in an amount equal to the aggregate Put Price payable in respect of such
Put Securities against delivery of (i) original stock certificates and
stock powers duly endorsed in favor of the Company representing the Put
Securities, and (ii) an executed agreement, in form reasonably
satisfactory to the Company, evidencing the cancellation of any Options
purchased at such Closing. The Company shall pay the Put Price by paying
the Management Stockholder (and his or her Permitted Transferees, as the
case may be) in cash; provided, however, that in the event that any such
cash payment would cause the Company or any Subsidiary to be in Default,
the Company shall pay such cash portion of the Put Price by issuing a
Company Note. The principal of such Company Note will be due and payable
in five equal annual installments, the first such installment becoming due
and payable on the first anniversary of the issuance of such note, and
interest will accrue thereon at a rate equal to the Mid-term Applicable
Federal Rate plus three percent (3%) from the date of issuance of the
Company Note and will be payable in quarterly arrears. Such Company Note
may be prepaid by the Company in whole at any time or in part from time to
time without premium or penalty and shall otherwise be in the form
acceptable to the Board; provided, however, that if at any time after a
Company Note has been issued, the Board determines that prepaying such
Company Note in whole would not reasonably be likely to cause a Default,
the Company Note shall then be prepaid in full at such time.
Notwithstanding anything to the contrary in this Agreement, the Company
shall not be obligated to make any cash payment pursuant to this Section
2.3(b) or any cash payment of principal or interest due under a Company
Note if such cash payment would cause a Default. In the event the Company
cannot make any cash payment under this Section 2.3(b) or the cash
payments of principal and interest due under a Company Note because it is
in Default or would be in Default by virtue of such payments, the Company
will undertake to make such payment at such time as the Company is not
longer in, or would no longer be by virtue of such payments in, Default.
Without duplication of clause (a), upon the termination of the
employment of either Executive Stockholder with the Company (a "Executive
Put Event") by virtue of (i) death or Disability, (ii) by the Company
without Cause, or (iii) by virtue of retirement in accordance with Company
policy at or after age 62, then such Executive Stockholder (and each
Permitted Transferee of such Executive Stockholder who has been
transferred Shares pursuant to this Agreement from such Executive
Stockholder) shall have the right
16
to sell (the "Executive Put Option"), by delivery of a written notice (the
"Executive Put Notice") to the Company no later than sixty (60) days after
the date of such Executive Put Event, and the Company shall be required to
purchase the Executive Put Securities at a price per share equal to the
Executive Put Price (as defined below) of such Executive Put Securities as
of the date the Executive Put Notice is delivered. For purposes of this
Section 2.3(c), the term "Executive Put Price" shall mean
with respect to Rollover Options held by such Executive
Stockholder, the difference between (x) the Fair Market Value of the
Shares underlying such Rollover Option and (y) the exercise price of
such Rollover Option; and
with respect to Rollover Shares held by such Executive
Stockholder, the Fair Market Value of such Rollover Shares.
The closing of any purchase of Executive Put Securities by the
Company pursuant to Section 2.3(c) shall take place at the principal
office of the Company no later than the 60th day after the Executive Put
Event. At such closing, the Company shall deliver to the Executive
Stockholder (and his Permitted Transferees, as the case may be) exercising
the Executive Put Option consideration in an amount equal to the aggregate
Executive Put Price payable in respect of such Executive Put Securities
against delivery of (i) original stock certificates and stock powers duly
endorsed in favor of the Company representing the Executive Put
Securities, and (ii) an executed agreement, in form reasonably
satisfactory to the Company, evidencing the cancellation of any Rollover
Options purchased at such Closing. The Company shall pay the Executive Put
Price by paying the Executive Stockholder (and his or her Permitted
Transferees, as the case may be) in cash; provided, however, that in the
event that any such cash payment would cause the Company or any Subsidiary
to be in Default, the Company shall pay such cash portion of the Executive
Put Price by issuing a Company Note. The principal of such Company Note
will be due and payable in five equal annual installment, the first such
installment becoming due and payable on the first anniversary of the
issuance of such note, and interest will accrue thereon at a rate equal to
the Mid-term Applicable Federal Rate plus three percent (3%) from the date
of issuance of the Company Note and will be payable in quarterly arrears.
Such Company Note may be prepaid by the Company in whole at any time or in
part from time to time without premium or penalty and shall otherwise be
in the form acceptable to the Board; provided, however, that if at any
time after a Company Note has been issued, the Board determines that
prepaying such Company Note in whole would not reasonably be likely to
cause a Default, the Company Note shall then be prepaid in full at such
time. Notwithstanding anything to the contrary in this Agreement, the
Company shall not be obligated to make any cash payment pursuant to this
Section 2.3(d) or any cash payment of principal or interest due under a
Company Note if such cash payment would cause a Default. In the event the
Company cannot make any cash payment under this Section 2.3(d) or the cash
payments of principal and interest due under a Company Note because it is
in Default or would be in Default by virtue of such payments, the Company
will undertake to make such payment at such time as the Company is not
longer in, or would no longer be by virtue of such payments in, Default.
Take Along.
17
If at any time, any of the Stockholders constituting more than fifty
(50%) of the Common Stock Equivalents, individually or acting as a group
(such Stockholders, as applicable, being referred to herein as the "Take
Along Group") elect to consummate, or cause the Company to consummate, a
Company Sale to a Third Party which is not an Affiliate of any Stockholder
included in the Take Along Group, then upon twenty (20) days' written
notice by the Take Along Group to each other Stockholder, which notice
shall set forth the terms and conditions of such proposed Company Sale,
including the name of the prospective transferee, the number of shares of
Common Stock and Common Stock Equivalents proposed to be sold by the Take
Along Group in the Company Sale, the consideration to be received by the
Take Along Group and the proposed time and place of closing (such notice
being referred to as the "Sale Request"), each other Stockholder (each, a
"Seller"), in the event the Company Sale is consummated, shall be
obligated to consummate, consent to and raise no objection to the proposed
Company Sale and take all other actions reasonably necessary or desirable
to consummate the proposed Company Sale on the terms proposed by the Take
Along Group as set forth in the Sale Request. Without limiting the
generality of the foregoing, (i) if the Company Sale is structured as a
merger, consolidation or similar business transaction, each Seller will
vote or cause to be voted all Shares that he holds or with respect to
which he has the power to direct the voting and which he is entitled to
vote on such proposed Company Sale in favor of such proposed Company Sale
and will waive all appraisal and dissenters rights and hereby grants a
proxy in favor of the Take Along Group to vote the Seller's Shares in
accordance with this Section 2.4(a) and (ii) if the Company Sale is
structured as a sale or redemption of Common Stock, each Seller will agree
to sell his pro rata portion of Common Stock Equivalents (including his
pro rata portion of Time Options, Rollover Options and Performance Options
which would become Common Stock Equivalents by reason of the Company Sale)
being sold in the Company Sale on the same terms and conditions as the
Take Along Group. A Stockholder's pro rata portion, for purposes of this
Section 2.4(a), is the product of (i) a fraction, the numerator of which
is the number of outstanding Common Stock Equivalents which such
Stockholder then owns and the denominator of which is the total number of
such Common Stock Equivalents then actually outstanding and (ii) the total
number of Common Stock Equivalents being sold in the Company Sale. Each
proxy granted above in this Section 2.4(a) is irrevocable, coupled with an
interest and shall survive until the expiration of the provisions of this
Section 2.4(a). If required, each Seller shall (i) deliver certificates
for all of its Shares being Transferred pursuant to this Section 2.4(a) at
the closing of the proposed Transfer, free and clear of all claims, liens
and encumbrances. The terms and conditions of any sale pursuant to this
Section 2.4(a) shall be the same as set forth in the Sale Request;
provided, however, that in the case of Performance Options, Time Options
and Rollover Options, the holders of such securities shall have the
opportunity to either (i) exercise such Performance Options, Time Options
and Rollover Options (if such Performance Options, Time Options or
Rollover Options are exercisable or would be exercisable upon consummation
of the Company Sale) and participate in such sale as holders of Common
Stock issuable upon such exercise, or (ii) upon the consummation of the
sale, receive in exchange for such Performance Options, Time Options and
Rollover Options the amount determined by multiplying (1) the same amount
of consideration per share received by the Stockholders for which the
Performance Option, Time Option or Rollover Option is exercisable less the
exercise price or conversion price per share of such Performance
18
Option, Time Option or Rollover Option by (2) the number of shares of
Common Stock represented by such Performance Options, Time Options and
Rollover Options.
Each Stockholder, whether in his capacity as a Seller, Stockholder,
officer or director of the Company, or otherwise, shall take or cause to
be taken all commercially reasonable actions in order expeditiously to
consummate any Company Sale and any related transactions, including,
without limitation, executing, acknowledging and delivering consents,
assignments, waivers and other documents or instruments as may be
reasonably requested and otherwise cooperating with the Take Along Group
and any prospective buyer; provided, however, that Stockholders shall be
obligated to become liable in respect of any representations, warranties,
covenants, indemnities or otherwise to the Third Party solely to the
extent provided in the immediately following sentence. Without limiting
the generality of the foregoing, each Stockholder agrees to execute and
deliver such agreements as may be reasonably specified by the Take Along
Group to which such Take Along Group will also be party, including,
without limitation, agreements to (i) (1) make individual representations,
warranties, covenants and other agreements as to the unencumbered title to
its Shares and the power, authority and legal right to Transfer such
Shares and the absence of any Adverse Claim with respect to such Shares
and (2) be liable without limitation as to such representations,
warranties, covenants (including without limitation, covenants not to
compete, as appropriate) and other agreements and (ii) be liable (whether
by purchase price adjustment, indemnity payments or otherwise) in respect
of representations, warranties, covenants and agreements in respect of the
Company and its subsidiaries; provided, however, that the aggregate amount
of liability described in this clause (ii) in connection with any Company
Sale shall not exceed the lesser of (I) such Stockholder's pro rata
portion of any such liability, to be determined in accordance with such
Stockholder's portion of the total value for his, her or its Shares
included in such Company Sale or (II) the proceeds to such Stockholder in
connection with such Company Sale.
The provisions of this Section 2.4 shall only apply to the WP
Stockholders in the event that either the Company Sale is an Approved
Company Sale or the WP Stockholders otherwise consent to such Company
Sale.
Come Along. No Stockholder may Transfer Shares to a Third Party who
is not a Permitted Transferee without complying with the terms and
conditions set forth in this Section 2.5.
Any Stockholder or group of Stockholders when desiring to Transfer
Shares (the "Transferor") shall give not less than fifteen (15) days prior
written notice of such intended Transfer to each other Stockholder and the
Company. Such notice (the "Participation Notice") shall set forth the
terms and conditions of such proposed Transfer, including the name of the
prospective transferee, the number of Shares proposed to be transferred
(the "Participation Securities") by the Transferor, the percentage of the
total number of shares of Common Stock held by the Transferor that the
Participation Securities constitutes of such class (the "Come Along
Percentage"), the purchase price per share of Common Stock proposed to be
paid therefor, the payment terms and type of transfer to be effectuated
and the proposed time and place of closing. Within fifteen (15)
19
days following the delivery of the Participation Notice by the Transferor
to each other Stockholder and to the Company, each other Stockholder
desiring to participate in such proposed Transfer (each, a "Participating
Offeree") shall, by notice in writing to the Transferor and to the
Company, have the opportunity and right to sell to the purchasers in such
proposed Transfer (upon the same terms and conditions as the Transferor)
up to that number of shares of Common Stock, as the case may be, subject
to the last sentence of Section 2.5(c) below, as shall equal the product
of (i) the Come Along Percentage for the Common Stock, as the case may be,
and (ii) the number of shares of Common Stock which will be owned by such
Participating Offeree as of the proposed date of closing set forth in the
Participation Notice without giving effect to the transfer contemplated
hereby; provided, however, that for purposes of determining whether
Options owned by a Management Stockholder will be vested (in the case of
Time Options) or vested and earned (in the case of Performance Options),
such determination will be made after giving effect to the transfer
contemplated hereby and the Board, in its reasonable judgment, within five
(5) business days after the Participation Notice is delivered to the
Company, will make a Board Participation Determination for each Management
Stockholder and notify such Management Stockholder of such Board
Participation Determination. No Management Stockholder may participate in
the proposed Transfer with respect to any Options which may vest in the
case of Time Options or vest and be earned in the case of Performance
Options upon consummation of the Transfer in excess of the Board
Participation Determination and notwithstanding the Board Participation
Determination, no Management Stockholder may sell or transfer in the
proposed Transfer any unvested Time Options or any unvested or unearned
Performance Options if such options do not become vested (in the case of
Time Options) or vested and earned (in the case of Performance Options)
upon consummation of the proposed Transfer. The Transferor shall attempt
to obtain inclusion in the proposed Transfer of the entire number of
Shares which the Transferor and the Participating Offerees desire to have
included in the proposed Transfer. In the event the Transferor shall be
unable to obtain the inclusion of such entire number of shares of Common
Stock in the proposed Transfer, the number of shares of Common Stock to be
sold in the Proposed Transfer by each Participating Offeree and the
Transferor shall be determined in accordance with Section 2.5(c) below.
The terms and conditions of any sale pursuant to this Section 2.5(a) shall
be the same as set forth in the Participation Notice, except as is
provided in Section 2.5(c) below and except that the actual date of the
closing of any proposed Transfer may change.
At the closing of any proposed Transfer in respect of which a
Participation Notice has been delivered, the Transferor, together with all
Participating Offerees, shall deliver to the proposed transferee
certificates evidencing the Shares to be sold thereto duly endorsed with
stock powers and shall receive in exchange therefor the consideration to
be paid or delivered by the proposed transferee in respect of such Shares
as described in the Participation Notice.
The acceptance of each Participating Offeree shall be irrevocable
except as hereinafter provided, and each such Participating Offeree shall
be bound and obligated to sell, on the same terms and conditions specified
in the Participation Notice as the Transferor (subject to all of the
provisions of this Agreement), such number of Shares as specified in such
Participating Offeree's written commitment; provided, however, that in
20
the case of Performance Options, Time Options and Rollover Options (for
which the exercise price is less than the price per share of Common Stock
being paid in the Transfer), the holders of such securities shall have the
opportunity to either (i) exercise such Performance Options, Time Options
and Rollover Options (if then exercisable) and participate in such sale as
holders of Common Stock issuable upon such exercise or conversion, or (ii)
upon the consummation of the sale, receive in exchange for such Options
the amount determined by multiplying (1) the same amount of consideration
per share of Common Stock received by the other Stockholders less the
exercise price per share of such Performance Option, Time Option and
Rollover Option by (2) the number of shares of Common Stock of such class
represented by such Performance Option, Time Option or Rollover Option. In
the event the Transferor shall be unable to obtain the inclusion in the
sale of all Shares which the Transferor and each Participating Offeree
desires to have included in the sale, the number of Shares to be sold in
the sale by the Transferor and each Participating Offeree shall be reduced
on a pro rata basis according to the proportion which the number of Shares
which each such party desires to have included in the sale bears to the
total number of Shares desired by all such parties to have included in the
sale.
The provisions of this Section 2.5 shall not in any way limit or
affect the restrictions placed on the Stockholders by Section 2.1 and
shall not apply to (i) any Transfer to the Company or other Stockholders
pursuant to Section 2.1, (ii) any Transfer pursuant to Section 2.2, (iii)
any Transfer pursuant to Section 2.3, (iv) any Transfer pursuant to
Section 2.4 or (v) any Permitted Transfer.
Corporate Governance.
Board of Directors. At each annual meeting of the Stockholders and
at each special meeting of the Stockholders called for the purpose of
electing directors of the Company, and at any time at which stockholders
of the Company shall have the right to, or shall, vote for directors of
the Company, then, and in each event, the Stockholders hereby agree to
attend each meeting in person or by proxy and hereby agree to vote stock
of the Company and shares of the Company now owned or hereafter acquired
by him, her or it (whether at a meeting or by written consent in lieu
thereof) (i) to fix the number of members of the Board at up to nine (9)
(unless the Board is expanded pursuant to Section 2.6(b) hereto, in which
case to fix the number of members of the Board in accordance with Section
2.6(b) hereto), and (ii) to elect and thereafter to continue in office as
a director of the Company the following: (a) two (2) directors nominated
by the Berkshire Stockholders (who shall initially be Xxxxxxx Xxxxx and
Xxxxxx Xxxxx) (collectively the "Berkshire Representatives"); (b) two (2)
directors nominated by the WP Stockholders (who shall initially be Xxxxxxx
Xxxxxx and Xxxxx Xxxxx) (collectively, the "WP Representatives"); (c) two
(2) directors nominated by the Management Stockholders (who shall
initially be Xxxxxx Xxxxxxxxxx and Xxxxx Xxxxxxxx) (collectively, the
"Management Representatives"), and (d) up to three (3) directors who are
not officers or employees of the Company, who shall be nominated by mutual
consent of the Berkshire Stockholders (as a group), the WP Stockholders
(as a group) and the Management Stockholders (as a group) (the "Outside
Representatives"). As to the directors elected to the Board pursuant to
this Section 2.6(a) or Section 2.6(b), the following provisions shall
21
apply: (i) no Berkshire Representative may be removed without the consent
of a majority in interest of the Berkshire Stockholders, except for cause
as determined in good faith by unanimous decision of all directors other
than the Berkshire Representatives, (ii) no WP Representative may be
removed without the consent of a majority in interest of the WP
Stockholders, except for cause as determined in good faith by unanimous
decision of all directors other than the WP Representatives, (iii) no
Management Representative may be removed without the consent of a majority
in interest of the Management Stockholders, except for cause as determined
in good faith by unanimous decision of all directors other than the
Management Representatives, provided, that in the event of a determination
by the Board pursuant to clause (i), (ii) or (iii) of this sentence to
remove a director, each Stockholder shall take all action as may be
necessary or appropriate, including without limitation, the voting of all
Shares owned by such Stockholder, to effect the removal of such director.
Any vacancy on the Board shall be filled by the designee of the
Stockholders who would be entitled to designate such director pursuant to
this Section 2.6(a), Section 2.6(b) or Section 2.6(c), as the case may be,
and if there shall be no such designation right, such vacancy may be
filled by the remaining directors. Each Stockholder shall, upon receipt of
notice identifying such designee, take all action as may be necessary or
appropriate, including without limitation, the voting of all Shares owned
by such Stockholder, to elect the director so designated.
Proportional Representation. Upon a majority vote of the holders of
Common Stock, the composition of the directors constituting the Board of
Directors shall be changed so that after designating directors in
accordance with this Section 2.6(b), each of the Berkshire Stockholders,
the WP Stockholders and the Management Stockholders shall have represented
on the Board that number of directors (rounded up to the nearest whole
number) represented by the percentage equal to (x) the number of shares of
Common Stock held by such stockholder group over (y) the total number of
shares of Common Stock held by all Stockholders. In the event that the
size of the Board of Directors needs to be increased in order to establish
the foregoing representation, each Stockholder shall take all action as
may be necessary or appropriate, including without limitation, the voting
of all Shares owned by such Stockholder, to effect the increase in the
size of the Board. Each Stockholder agrees that such Stockholder shall
take all action as may be necessary or appropriate, including without
limitation, the voting of all Shares owned by them, to elect the directors
so designated by the Stockholders as set forth in this Section 2.6(b).
Subsidiaries; Committees. Unless the Board unanimously determines
otherwise, the board of directors of each Subsidiary of the Company and
the audit committee, the compensation committee and all other authorized
committees of the Board and of each Subsidiary's board of directors shall
be composed so that the representation thereon shall be in the same
proportion, as nearly as may be possible (subject to any foreign law
requirements, where applicable), as the representation of such directors
on the Board; provided, however, that no Management Representative shall
sit on the audit committee or the compensation committee.
Expenses. In the discretion of the Board, each director may be paid
such fees for his services as director and be reimbursed for his
reasonable expenses incurred in the
22
performance of his duties as director as the Board from time to time may
determine. Nothing contained in this section shall be construed to
preclude any director from serving the corporation in any other capacity
and receiving reasonable compensation therefor.
Rights of Participation.
Rights of Participation. The Company hereby grants to each
Stockholder so long as it shall own any Shares, the right to purchase up
to a pro rata portion of New Securities (as defined in paragraph (b)
below) which the Company, from time to time, proposes to sell or issue
following the date hereof. A Stockholder's pro rata portion, for purposes
of this Section 2.7, is the product of (i) a fraction, the numerator of
which is the number of outstanding Shares which such Stockholder then owns
(on a fully diluted basis after giving effect to the exercise of all
Rollover Options, if any and the conversion of all securities convertible
into or exchangeable for Common Stock) and the denominator of which is the
total number of such Shares then actually outstanding (on a fully diluted
basis after giving effect to the exercise of all Rollover Options, if any
and the conversion of all securities convertible into or exchangeable for
Common Stock), multiplied by (ii) the number of New Securities the Company
proposes to sell or issue.
Definition of New Securities. "New Securities" shall mean any Common
Stock or other equity securities of the Company whether now authorized or
not, any rights, options or warrants to purchase Common Stock or other
equity securities and any indebtedness or preferred stock of the Company
which is convertible into Common Stock or other equity securities (or
which is convertible into a security which is, in turn, convertible into
Common Stock or other equity securities); provided, that the term "New
Securities" does not include (i) indebtedness of the Company which is not
by its terms convertible into Common Stock; (ii) Common Stock issued as a
stock dividend to all holders of Common Stock pro rata or upon any
subdivision or combination of shares of Common Stock; (iii) Common Stock
issued to any employee or director and approved by the Board of Directors
and any employee or director stock options approved by the Board of
Directors; (iv) Common Stock issued in exchange for the cancellation or
retirement of any debt securities of the Company or in connection with any
restructuring or other financial workout of the Company; (v) Common Stock
or warrants to purchase Common Stock issued to non-Affiliates of the
Company as part of a bona fide debt offering of units comprised of such
Common Stock or warrants and a debt security of the Company; (vi) Common
Stock issued in connection with the acquisition of another corporation or
other entity by the Company by merger, purchase of substantially all
assets or other reorganization; (vii) the issuance of Common Stock upon
the exercise or conversion of any rights, options or warrants to purchase
Common Stock; (viii) Common Stock issuable in a Public Offering; or (ix)
Common Stock issued in respect of services provided (other than as an
employee) to the Company or its subsidiaries and approved by the Board of
Directors; and provided, further, that if any "New Securities" include
Common Stock and other equity securities coupled as a package, "New
Securities" shall mean the package of securities and not each class of
securities individually. If and to the extent that either the Berkshire
Stockholders or the WP Stockholders have the right to receive New
Securities in any transaction contemplated by clauses (iv) or (vi) above,
the
23
Company will grant each Stockholder the right to purchase a pro rata
portion of such New Securities determined as set forth in Section 2.7(a).
Notice from the Company. In the event the Company proposes to issue
New Securities, the Company shall give each Stockholder who has a right of
participation under this Section 2.7 written notice of such proposal,
describing the type of New Securities and the price and the terms upon
which the Company proposes to issue the same. For a period of ten (10)
business days following the delivery of such notice by the Company, the
Company shall be deemed to have irrevocably offered to sell to each
Stockholder its pro rata share of such New Securities for the price and
upon the terms specified in the notice. Each Stockholder may exercise its
rights of participation hereunder by giving written notice to the Company
and stating therein the quantity of New Securities to be purchased. Each
Stockholder shall also be entitled to indicate a desire to purchase all or
a portion of any New Securities remaining after such pro rata allocation.
If, as a result of such oversubscription right, such oversubscriptions
exceed the total number of New Securities available in respect of such
oversubscription right, the oversubscribing Stockholders shall be cut back
with respect to their oversubscriptions on a pro rata basis or as they may
otherwise agree among themselves.
Sale by the Company. In the event that the Stockholders who have a
right of participation under this Section 2.7 fail to commit to purchase
all of such New Securities within said ten (10) business day period, the
Company shall have ninety (90) days thereafter to sell the New Securities
with respect to which the right of participation was not exercised, at a
price and upon terms no more favorable to the purchasers thereof than
specified in the Company's notice given pursuant to Section 2.7(c).
Closing. The closing for any such issuance shall take place as
proposed by the Company with respect to the New Securities to be issued,
at which closing the Company shall deliver certificates for the New
Securities in the respective names of the purchasing Stockholders against
receipt of payment therefor.
Financial and Business Information. From and after the date hereof, each
Stockholder holding more than five percent (5%) of the outstanding Shares shall
be entitled to receive from the Company, upon reasonable request, the following
information (i) as soon as practicable following the end of each fiscal quarter
of the Company, unaudited quarterly financial reports; (ii) as soon as
practicable following the end of each fiscal year of the Company, audited annual
financial reports; and (iii) when and as approved by the Board of Directors,
budgets and business plans of the Company. In addition, the Berkshire
Stockholders and the WP Stockholders shall be entitled to receive from the
Company, as soon as practicable following the end of each month, unaudited
financial results.
Confidentiality. Each Stockholder shall maintain the confidentiality of
any confidential and proprietary information of the Company ("Proprietary
Information") using the same standard of care, but in no event less than
reasonable care, as it applies to its own confidential information, except for
any Proprietary Information which is publicly available or a matter of public
knowledge generally. Nothing herein shall prevent any Stockholder from using
Proprietary Information to enforce its rights under this Agreement or from
disclosing a
24
summary of Proprietary Information to the partners of such Stockholder as to the
performance of the Company.
Approval Rights. For so long as (i) the WP Stockholders (and their
Permitted Transferees) continue to hold, in the aggregate, at least 20% of the
Shares initially acquired by the WP Stockholders upon the closing of the Merger,
the Company shall not, without the prior consent of the WP Stockholders (and
their Permitted Transferees), or (ii) the Berkshire Stockholders (and their
Permitted Transferees) continue to hold, in the aggregate, at least 20% of the
Shares initially acquired by the Berkshire Stockholders upon the closing of the
Merger, the Company shall not, without the prior consent of the Berkshire
Stockholders (and their Permitted Transferees), effect any:
public offering other than a Qualified Initial Public Offering;
sale of the Company (by sale of securities, merger, consolidation,
sale of substantially all of the assets, or any similar transaction) other
than an Approved Company Sale; or
transaction in which the WP Stockholders and the Berkshire
Stockholder are not entitled to be treated on a pro rata basis.
REGISTRATION RIGHTS
General. For purposes of Article III: (a) the terms "register,"
"registered" and "registration" refer to a registration effected by preparing
and filing a registration statement in compliance with the 1933 Act and the
declaration or ordering of effectiveness of such registration statement; (b) the
term "Holder" means any Stockholder holding Registrable Securities; and (c) the
shares of Common Stock issuable upon the exercise of vested Time Options,
Rollover Options and vested and earned Performance Options shall be deemed to be
outstanding and held by the holders of such vested Time Options, Rollover
Options and vested and earned Performance Options.
Demand Registration Initiated by the Berkshire Stockholders or the WP
Stockholders.
Subject to paragraph (b) hereof, on or after the date on which the
Company has effected a Public Offering, if the Company shall receive a
written request (specifying that it is being made pursuant to this Section
3.2) by or on behalf of either Berkshire Stockholders or the WP
Stockholders, holding an aggregate of fifty percent (50%) or more of the
Registrable Securities held by the Berkshire Stockholders or the WP
Stockholders, that the Company file a registration statement under the
1933 Act, or a similar document pursuant to any other statute then in
effect corresponding to the 1933 Act, covering the registration of at
least the lesser of (i) $20 million of Registrable Securities (determined
based upon the Fair Market Value of such Registrable Securities on the
date of request), or (ii) eighty-five percent (85%) of the Registrable
Securities then held by the Berkshire Stockholders or the WP Stockholders,
as the case may be, then the Company shall promptly notify all other
Holders of such request and shall use its best
25
efforts to cause all Registrable Securities that the Holders have
requested (within thirty (30) days after such Company notice) be
registered, to be registered under the 0000 Xxx.
If the total amount of Registrable Securities that the Holders
request to be included in such offering exceeds the amount of securities
that the underwriters reasonably believe compatible with the success of
the offering, then the Company will include in such registration only the
number of securities which, in the opinion of such underwriters, can be
sold in accordance with the procedures set forth in Section 3.3(b);
The Company shall be obligated to effect for each of the Berkshire
Stockholders three (3) registrations of Registrable Securities pursuant to
this Section 3.2, and the WP Stockholders two (2) registrations of
Registrable Securities pursuant to this Section 3.2; provided, that in the
event that, at the request of the underwriters, the amount of Registrable
Securities that the Berkshire Stockholders or the WP Stockholders
requested to be included in any offering is reduced by more than thirty
percent (30%), such offering shall be deemed not to be a registration
demanded by the Berkshire Stockholders or the WP Stockholders for purposes
of this Section 3.2.
Piggyback Registration; Reduction in Registration.
If, at any time, the Company determines to register any of its
equity securities for its own account under the 1933 Act in connection
with a Public Offering of such securities, other than the first Public
Offering of its Common Stock, solely for cash on a form that would also
permit the registration of any of the Registrable Securities, the Company
shall, at each such time, promptly give each Holder written notice of such
determination. Upon the written request of any Holder received by the
Company within thirty (30) days after the giving of any such notice by the
Company, the Company shall use its best efforts to cause to be registered
under the 1933 Act all of the Registrable Securities of such Holder that
each Holder has requested be registered. If the total amount of
Registrable Securities that are to be included by the Company for its own
account and at the request of Holders exceeds the amount of securities
that the underwriters reasonably believe compatible with the success of
the offering, then the Company will include in such registration only the
number of securities which in the opinion of such underwriters can be
sold, in the following order:
first, the equity securities to be registered on behalf of the
Company; and
then the Registrable Securities requested to be included by
the Holders, pro rata, based on the number of Registrable Securities
owned by each of them which each of them request be included in such
registration; provided, however, that if an underwriter who is not
an Affiliate or Associate of any Holder, in good faith requests for
the success of the offering, that the number of Registrable
Securities to be sold by any Holder be apportioned or excluded, such
number of Registrable Securities of such Holder shall be reduced or
not included to the extent so requested by said underwriter;
26
provided, however, that if in the first Public Offering of its
Common Stock, solely for cash on a form that would also permit the
registration of any of the Registrable Securities the Company shall
permit any Holder to register its Registrable Securities, then the
provisions of this clause (a) shall apply to such Public Offering as
if it were not the first Public Offering.
If the Company at any time proposes to register any of its
equity securities for the account of any Holder pursuant to Section
3.2 or Section 3.9 of this Agreement, under the 1933 Act in
connection with the public offering of such securities solely for
cash on a form that would also permit the registration of any of the
Registrable Securities, the Company shall, at each such time,
promptly give each Holder written notice of such determination. Upon
the written request of any Holder received by the Company within
thirty (30) days after the giving of any such notice by the Company,
the Company shall use its best efforts to cause to be registered
under the 1933 Act all of the Registrable Securities of such Holder
that such Holder has requested be registered. If the total amount of
Registrable Securities requested to be included by the requesting
Holders under Section 3.2 or 3.9, and at the request of the Company
and the other Holders, exceeds the amount of securities that the
underwriters reasonably believe compatible with the success of the
offering, then the Company will include in such registration only
the number of securities which in the opinion of such underwriters
can be sold, in the following order:
first, the equity securities to be registered on behalf
of Stockholders initiating the demand, pro rata, based on the
number of Registrable Securities owned by each of them which
each of them request be included in such registration;
second, the equity securities to be registered on behalf
of the Company; and
third, the Registrable Securities requested to be
included by the other Holders, pro rata, based on the number
of Registrable Securities owned by each of them which each of
them request be included in such registration;
provided, however, that if an underwriter who is not an Affiliate or
Associate of any Holder or the Company, in good faith, requests for
the success of the underwritten offering that the number of
Registrable Securities to be sold by any Holder or the Company be
apportioned or excluded, such number of Registrable Securities of
such Holder or the Company shall be reduced or not included to the
extent so requested by said underwriter.
Obligations of the Company. Whenever required under Sections 3.2, 3.3 or
3.9 to use its best efforts to effect the registration of any Registrable
Securities, the Company shall:
prepare and file with the SEC a registration statement with respect
to such Registrable Securities, and use its best efforts to cause such
registration statement to become and remain effective;
27
as expeditiously as reasonably possible, prepare and file with the
SEC such amendments and supplements to such registration statement and the
prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the 1933 Act with respect to
the disposition of all securities covered by such registration statement;
as expeditiously as reasonably possible, furnish to the Holders such
numbers of copies of a prospectus, including a preliminary prospectus, in
conformity with requirements of the 1933 Act, and such other documents
they may reasonably request in order to facilitate the disposition of
Registrable Securities owned by them;
as expeditiously as reasonably possible, use its best efforts to
register and qualify the securities covered by such registration statement
under the securities or Blue Sky laws of such jurisdictions as shall be
reasonably appropriate for the distribution of the securities covered by
the registration statement, provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to
do business or to file a general consent to service of process in any such
jurisdiction, and further provided that (anything in this Agreement to the
contrary notwithstanding with respect to the bearing of expenses) if any
jurisdiction in which the securities shall be qualified shall require that
expenses incurred in connection with the qualification of the securities
in that jurisdiction be borne by selling stockholders, then such expenses
shall be payable by selling stockholders pro rata, to the extent required
by such jurisdiction;
use its best efforts to cause all Registrable Securities covered by
such registration statement to be registered with, or approved by, such
other governmental agencies or authorities as may be necessary to enable
the seller or sellers thereof to consummate the disposition of such
Registrable Securities;
notify each seller of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the 1933 Act, upon discovery that, or upon
the happening of any event as a result of which, the prospectus included
in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made,
and at the request of any such seller or Holder, promptly prepare and file
with the SEC and furnish to such seller or Holder a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made; provided, that,
each Holder agrees that it shall not sell any Registrable Securities
covered by such a registration statement upon notice from the Company
until receipt of notice that such statement or omission has been
corrected.
otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC, and make available to its security holders, as
soon as reasonably practicable, an
28
earnings statement covering the period of at least twelve (12) months, but
not more than eighteen (18) months, beginning with the first full calendar
month after the effective date of such registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
1933 Act, and will furnish to each seller at least two (2) business days
prior to the filing thereof a copy of any amendment or supplement to such
registration statement or prospectus and shall not file any amendment or
supplement thereof to which any such seller shall have reasonably
objected, except to the extent required by law, on the grounds that such
amendment or supplement does not comply in all material respects with the
requirements of the 1933 Act or of the rules or regulations thereunder;
provide and cause to be maintained a transfer agent and registrar
for all Registrable Securities covered by such registration statement from
and after a date not later than the effective date of such registration
statement; and
use its best efforts to list all Registrable Securities covered by
such registration statement on a securities exchange or the NASDAQ
National Market on which any class of Registrable Securities is then
listed.
Furnish Information. It shall be a condition precedent to the obligations
of the Company to take any act pursuant to this Article III that the Holders
selling Registrable Securities shall furnish to the Company such information
regarding them, the Registrable Securities held by them and the intended method
of disposition of such securities as the Company shall reasonably request and as
shall be required in connection with the action to be taken by the Company.
Expenses of Registration. All expenses incurred in connection with a
registration pursuant to Sections 3.2, 3.3 or 3.9 (excluding underwriters'
discounts and commissions, which shall be borne by the sellers), including
without limitation all registration and qualification fees, printers' and
accounting fees, fees and disbursements of counsel for the Company (which
counsel shall be reasonably satisfactory to the holders of a majority of the
Registrable Securities then being registered), and the reasonable fees and
disbursements of one counsel for the selling Holders (which counsel shall be
selected by the Holders which own a majority of the Registrable Securities being
sold under the applicable registration) shall be borne by the Company; provided,
however, that all such expenses in connection with any amendment or supplement
to a registration statement or prospectus filed more than nine (9) months after
the effective date of such registration statement because any Holder of
Registrable Securities has not effected the disposition of the securities
requested to be registered shall be paid by such Holder; provided, further,
however, that Holders initiating a demand may withdraw any request made pursuant
to Section 3.2, in which event such first withdrawn request shall be deemed for
all purposes herein not to have been made.
Underwriting Requirements.
The Berkshire Stockholders and WP Stockholders will have the right
to approve the selection of the lead underwriter for the first Public
Offering, which approval will not be unreasonably withheld.
29
Each Holder selling Registrable Securities in any registration
pursuant to Sections 3.2 or 3.3 shall, as a condition for inclusion of
such Registrable Securities in such underwritten registration, execute and
deliver an underwriting agreement acceptable to the Company and consented
to by the Berkshire Stockholders or the WP Stockholders, as the case may
be, in the case of a registration pursuant to Section 3.2, or acceptable
to Holders who own a majority of the Registrable Securities to be included
in such registration, in the case of a registration pursuant to Section
3.3, and the underwriters with respect to such registration. Such
underwriters shall be selected (i) by the Company and consented to by the
Berkshire Stockholders or the WP Stockholders, as the case may be, in the
case of a registration pursuant to Section 3.2, or (ii) by a majority in
interest of the Registrable Securities to be included in such registration
in all other cases and shall be reasonably acceptable to the Company, in
the case of a registration pursuant to Section 3.3. Notwithstanding the
foregoing, each Holder shall take all action reasonably necessary with
respect to executing such underwriting agreement, including being liable
in respect of (i) any representations and warranties being made by each
selling Holder, and (ii) any indemnification agreements and "lock-up"
agreements made by each selling Holder for the benefit of the underwriters
in such underwriting agreement; provided, however, that except with
respect to individual representations and warranties regarding such
matters as legal capacity or due organization of such participating
Holder, authority to participate in the Public Offering, compliance by
such Holder with laws and agreements applicable to it, ownership (free and
clear of liens, charges, encumbrances and adverse claims) of Registrable
Securities to be sold by such Holder and accuracy of information with
respect to such Holder furnished for inclusion in any disclosure document
relating to each Public Offering, the aggregate amount of the liabilities
of such participating Holder pursuant to such underwriting agreement shall
not exceed either (a) such participating Holder's pro rata portion of any
such liability, in accordance with such participating Holder's portion of
the total number of Registrable Securities included in the public
offering, or (b) the net proceeds received by such participating Holder
from the public offering.
Indemnification. In the event any Registrable Securities are included in a
registration statement under this Article III:
To the fullest extent permitted by law, the Company will indemnify
and hold harmless each Holder (which term, for purposes of this Section
3.8, shall include each Stockholder, including the Berkshire Stockholders,
the WP Stockholders, the Management Stockholders and the Other
Stockholders holding Registrable Securities, and shall also include the
directors, officers and employees of the Stockholders and their
Affiliates) requesting or joining in a registration, any underwriter (as
defined in the 0000 Xxx) for a registration, and each Person, if any, who
controls such Holder or such underwriter within the meaning of the 1933
Act, against any and all losses, claims, damages or liabilities, joint or
several, to which any such Holder, underwriter or Person may become
subject under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based on any untrue or
alleged untrue statement of any material fact contained in a registration
statement relating to a registration pursuant to this Article III,
including any preliminary prospectus or final prospectus contained therein
30
or any amendments or supplements thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein
not misleading, or arise out of any violation by the Company of the 1933
Act or any rule or regulation promulgated under the 1933 Act applicable to
the Company and relating to action or inaction required of the Company in
connection with any such registration, and will reimburse each such
Holder, underwriter or control Person for any and all legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, action or proceeding;
provided, however, that the indemnity agreement contained in this Section
3.8(a) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability, action or proceeding if such settlement is
effected without the consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be liable to anyone for any
such loss, claim, damage, liability, action or proceeding to the extent
that it arises out of or is based upon an untrue statement or omission
made in connection with such registration statement, preliminary
prospectus, final prospectus or amendments or supplements thereto in
reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by such Holder,
underwriter or control Person. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of such
Holder, underwriter or control Person and shall survive the transfer of
such securities by such Holder.
To the fullest extent permitted by law, each Holder requesting or
joining in a registration will indemnify and hold harmless the Company,
each of its directors, each of its officers who has signed the
registration statement, each Person, if any, who controls the Company
within the meaning of the 1933 Act, and each agent and any underwriter for
the Company and any Person who controls any such agent or underwriter and
each other Holder and any Person who controls such Holder (within the
meaning of the 0000 Xxx) against any and all losses, claims, damages or
liabilities, joint or several, to which the Company or any such director,
officer, control Person, agent, underwriter or other Holder may become
subject, under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings, whether commenced or
threatened in respect thereto) arise out of or are based upon an untrue
statement of any material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein
or any amendments or supplements thereto, or arise out of or are based
upon the omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue
statement or omission was made in such registration statement, preliminary
or final prospectus, or amendments or supplements thereto, in reliance
upon and in conformity with written information furnished by such Holder
(other than information furnished by such Holder on behalf of the Company
in his or her capacity as an officer or director of the Company) expressly
for use in connection with such registration; and such Holder will
reimburse the Company and each such director, officer, control Person,
agent, underwriter or other Holder for any and all legal or other expenses
reasonably incurred by them in connection with investigating or defending
any such loss, claim, damage, liability, action or proceeding; provided,
however, the indemnity obligation of each such Holder hereunder shall be
limited to and shall not
31
exceed the proceeds actually received by such Holder upon a sale of
Registrable Securities pursuant to a registration statement hereunder; and
provided, further that the indemnity agreement contained in this Section
3.8(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability, action or proceeding if such settlement is
effected without the consent of such Holder (which consent shall not be
unreasonably withheld). Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company
or any such director, officer, Holder, underwriter or control Person and
shall survive the transfer of such securities by such Holder.
Any Person seeking indemnification under this Section 3.8 will (i)
give prompt notice to the indemnifying party of any claim with respect to
which it seeks indemnification (but the failure to give such notice will
not affect the right to indemnification hereunder, unless and to the
extent the indemnifying party is materially prejudiced by such failure)
and (ii) unless in such indemnified party's reasonable judgment a conflict
of interest may exist between such indemnified and indemnifying parties
with respect to such claim, permit such indemnifying party, and other
indemnifying parties similarly situated, jointly to assume the defense of
such claim with counsel reasonably satisfactory to the parties. In the
event that the indemnifying parties cannot mutually agree as to the
selection of counsel, each indemnifying party may retain separate counsel
to act on its behalf and at its expense. The indemnified party shall in
all events be entitled to participate in such defense at its expense
through its own counsel. If such defense is not assumed by the
indemnifying party, the indemnifying party will not be subject to any
liability for any settlement made without its consent (but such consent
will not be unreasonably withheld). No indemnifying party will consent to
entry of any judgment or enter into any settlement which does not include
as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect of
such claim or litigation. An indemnifying party who is not entitled to, or
elects not to, assume the defense of a claim will not be obligated to pay
the fees and expenses of more than one counsel for all parties indemnified
by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may
exist between such indemnified party and any other of such indemnified
parties with respect to such claim, in which event the indemnifying party
shall be obligated to pay the reasonable fees and expenses of such
additional counsel.
If for any reason the foregoing indemnification is unavailable to
any party or insufficient to hold it harmless as and to the extent
contemplated by the preceding paragraphs of this Section 3.8, then each
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative benefits
received by the applicable indemnifying party, on the one hand, and the
applicable indemnified party, as the case may be, on the other hand, and
also the relative fault of the applicable indemnifying party and the
applicable indemnified party, as the case may be, as well as any other
relevant equitable considerations.
32
Registration on Form S-3. After the date on which the Company has
effected a Public Offering, if (i) a Holder or Holders request in writing
(specifying that such request is being made pursuant to this Section 3.9)
that the Company file a registration statement on Form S-3 (or any
successor form to Form S-3 regardless of its designation) for a public
offering of securities having an aggregate value of not less than
$1,000,000 and (ii) the Company is entitled to use such form to register
such securities, then the Company shall file a Form S-3 with respect to
such securities within ninety (90) days from the date of such request, and
shall use its best efforts to cause such registration statement to become
effective; provided, that the Company shall not be required to effect such
registration more frequently than once every six (6) months.
Reports Under Securities Exchange Act of 1934. With a view to making
available to the Holders and their Permitted Transferees the benefits of
Rule 144 promulgated under the 1933 Act and any other rule or regulation
of the SEC that may at any time permit a Holder to sell securities of the
Company to the public without registration, the Company agrees to use its
best efforts to:
make and keep public information available, as those terms are
understood and defined in Rule 144, at all times subsequent to
ninety (90) days after the effective date of the first registration
statement covering a Public Offering filed by the Company;
file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934
Act; and
furnish to any Holder forthwith upon request a written
statement by the Company that it has complied with the reporting
requirements of Rule 144 (at any time after ninety (90) days after
the effective date of said first registration statement filed by the
Company), and of the 1933 Act and the 1934 Act (at any time after it
has become subject to such reporting requirements), a copy of the
most recent annual or quarterly report of the Company, and such
other reports and documents so filed by the Company as may be
reasonably requested in availing any Holder of any rule or
regulation of the SEC permitting the selling of any such securities
without registration.
No Inconsistent Agreements. The Company represents and warrants that
it has not entered into, and covenants that it will not hereafter enter
into, any agreement with respect to the registration of its securities
that is inconsistent with the rights granted to the Holders of Registrable
Securities in this Agreement without the prior written consent of a
majority in interest of the Holders.
Stock Split. If, on or after the receipt by the Company of a request
for registration of a public offering pursuant to Section 3.2, the
proposed managing underwriter or underwriters of such offering reasonably
believes that the number of shares to be registered is less than the
minimum number necessary for the success of such offering, the Company
will promptly prepare and submit to its Board of Directors, use its best
efforts to cause to be adopted by its Board of Directors and stockholders,
and, if so adopted, file and cause to become effective, an amendment to
its certificate of incorporation so as to cause each share of its
outstanding Common Stock to be converted into such number of shares of
such Common Stock so that the
33
number of shares of Registrable Securities to be registered is equal to
the minimum number which such managing underwriter or underwriters
reasonably believes is necessary for the success of such offering. Each
Stockholder, together with his or its Permitted Transferees, hereby agrees
to vote the shares of the Company's Common Stock held by him or it in
favor of adopting such amendment.
Timing and Other Limitations.
No request shall be made with respect to any registration
pursuant to Section 3.2 within one hundred twenty (120) days
immediately following the effective date of any registration
statement filed pursuant to this Article III.
If the Company shall furnish to the Holders of Registrable
Securities requesting a registration pursuant to Section 3.2 a
certificate signed by a majority of the Board of Directors stating
that in the good faith judgment of the Board of Directors, it would
be seriously detrimental to the Company or its stockholders for such
registration statement to be filed on or before the date filing
would be required and it is therefore advisable to defer the filing
of such registration statement, then the Company shall have the
right to defer the filing of the registration statement for a period
of not more than one hundred twenty (120) days and the request
pursuant to Section 3.2 then made shall not be counted for purposes
of determining the number of registrations pursuant to Section 3.2;
provided, however, that the Company may not utilize such right more
than once in any twelve-month period.
Lock-up.
In connection with the first Public Offering of Shares, no
holder of Shares shall Transfer any Shares for a period beginning
seven (7) days immediately preceding the date upon which the Company
in good faith believes that the relevant registration statement
shall become effective, and ending on the one hundred eightieth
(180th) day (or, at the discretion of the underwriter, such lesser
period) following the effectiveness of such registration statement
with respect to such Public Offering without the prior written
consent of the underwriters managing the offering, and at the
request of the underwriter, each holder of Shares shall enter into
an agreement to such effect with the underwriter; provided, however,
that the provisions of this Section 3.14 shall not prohibit any
Permitted Transfers, provided that the Permitted Transferee agrees
to be bound by the terms of this Agreement, including this Section
3.14.
In connection with a Public Offering initiated pursuant to
Section 3.2 hereof, at the request of the initiating Stockholder, no
holder of Shares shall Transfer any Shares without the prior written
consent of the underwriters managing the offering. The request made
by the initiating Stockholder pursuant to this clause (b) shall not
be made within sixty (60) days of the expiration of any other
contractual lock-up period (which 60 day period shall be increased
by the number of days the Company's xxxxxxx xxxxxxx window has been
closed during such 60-day period) and shall expire ninety (90) days
(or such shorter period to which the underwriter shall agree)
following the effectiveness of the registration statement with
respect to such public offering. At the request of the
34
underwriter, such holder of Shares shall enter into an agreement
with the underwriter to the effect of the foregoing. The provisions
of this Section 3.14(b) shall not be applicable to Permitted
Transferees of any Holder who are shareholders, partners or members,
respectively, of such Holder, who in each case, received Shares
after the initial Public Offering and not otherwise during any
lock-up period, (ii) any Holder more than once during any calendar
year, (iii) any Holder (other than the Company's directors and
officers ) that is not provided the opportunity to include Shares in
such Public Offering on a pro rata basis with all holders according
to the total amount of Registrable Securities then owned by such
holder, and (iv) any Holder who holds less than 5% of the Company's
outstanding common stock, other than the Company's directors and
officers.
MISCELLANEOUS
Appointment of the Management Proxy. Each of the Management
Stockholders (other than any Executive Stockholder) hereby appoints Xxxxx
Xxxxxxxx (the "Management Proxy") as the agent, proxy, and
attorney-in-fact for the Management Stockholders (including, without
limitation, full power and authority to act on the Management
Stockholders' behalf) to take any action, should the Management Proxy
elect to do so in his sole discretion: (i) to vote on all matters to be
voted on under this Agreement, (ii) to receive all notices on behalf of
each Management Stockholder, (iii) to execute and deliver on behalf of the
Management Stockholders any amendment to this Agreement so long as such
amendments shall apply to all Management Stockholders and (iv) to take all
other actions to be taken by or on behalf of the Management Stockholders
as a group and exercise any and all rights which the Management
Stockholders are permitted or required to do or exercise under this
Agreement other than exercise any rights with respect to investment
decisions set forth in Sections 2.1(c), 2.3, 2.5, 2.7 or 3.3 hereof. Each
of the Management Stockholders hereby agrees not to assert any claim
against, and agrees to indemnify and hold harmless, the Management Proxy
from and against any and all losses incurred by the Management Proxy or
any of his Affiliates, partners, employees, agents, investment bankers or
representatives, or any Affiliate of any of the foregoing, relating to the
Management Proxy's capacity as the Management Proxy other than such claims
or losses resulting from the Management Proxy's gross negligence or
willful misconduct. By execution hereof, Xxxxx Xxxxxxxx hereby agrees to
act as Management Proxy until such time as a new Management Proxy is
elected by the majority in interest of the Management Stockholders.
Remedies. The parties to this Agreement acknowledge and agree that
the covenants of the Company and the Stockholders set forth in this
Agreement may be enforced in equity by a decree requiring specific
performance. In the event of a breach of any material provision of this
Agreement, the aggrieved party will be entitled to institute and prosecute
a proceeding to enforce specific performance of such provision, as well as
to obtain damages for breach of this Agreement. Without limiting the
foregoing, if any dispute arises concerning the Transfer of any of the
Shares subject to this Agreement or concerning any other provisions hereof
or the obligations of the parties hereunder, the parties to this Agreement
agree that an injunction may be issued in connection therewith (including,
without limitation, restraining the Transfer of
35
such Shares or rescinding any such Transfer). Such remedies shall be
cumulative and non-exclusive and shall be in addition to any other rights
and remedies the parties may have under this Agreement or otherwise.
Entire Agreement; Amendment; Waiver. This Agreement, together with
the Schedule hereto, sets forth the entire understanding of the parties,
and as of the closing contemplated by the Merger Agreement supersedes all
prior agreements and all other arrangements and communications, whether
oral or written, with respect to the subject matter hereof. The Schedule
may be amended to reflect changes in the composition of the Stockholders
as a result of Permitted Transfers or Transfers permitted under Article
II. Amendments to the Schedule reflecting Permitted Transfers or Transfers
permitted under Article II shall become effective when a copy of the
Agreement as executed by any new transferee is filed with the Company,
except as otherwise provided in Section 4.13. Any other amendments to, or
the termination of, this Agreement shall require the prior written consent
of a majority of the Stockholders; provided, that (a) any such amendment
which would have an adverse effect on the Berkshire Stockholders, if such
adverse effect would be borne solely by the Berkshire Stockholders or
would be borne disproportionately by the Berkshire Stockholders relative
to the other Stockholders, shall require the written consent of the
Berkshire Stockholders holding a majority of the Shares held by the
Berkshire Stockholders, (b) any such amendment which would have an adverse
effect on the WP Stockholders, if such adverse effect would be borne
solely by the WP Stockholders or would be borne disproportionately by the
WP Stockholders relative to the Berkshire Stockholders, shall require the
written consent of WP Stockholders holding a majority of the Shares held
by the WP Stockholders, (c) any such amendment which would have an adverse
effect on the Management Stockholders, if such adverse effect would be
borne solely by the Management Stockholders or would be borne
disproportionately by the Management Stockholders relative to the
Berkshire Stockholders, shall require the written consent of Management
Stockholders holding a majority of the Shares held by the Management
Stockholders, and (d) any such amendment which would have an adverse
effect on the Other Stockholders, if such adverse effect would be borne
solely by the Other Stockholders or would be borne disproportionately by
the Other Stockholders relative to the Berkshire Stockholders, shall
require the written consent of Other Stockholders holding a majority of
the Shares held by the Other Stockholders. Without the consent of the
Management Stockholders holding a majority of the Shares held by the
Management Stockholders, no amendment may be made to Section 2.2. Without
the consent of each Executive Stockholder, no amendment may be made to
Section 2.3. Without the consent of the Berkshire Stockholders and the WP
Stockholders, no amendment may be made to Section 2.10 and 3.2.
Notwithstanding any provisions to the contrary contained herein, any party
may waive any rights with respect to which such party is entitled to
benefits under this Agreement. No waiver of or consent to any departure
from any provision of this Agreement shall be effective unless signed in
writing by the party entitled to the benefit thereof.
Severability. It is the desire and intent of the parties that the
provisions of this Agreement be enforced to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, the invalidity or unenforceability of
any particular provision of this Agreement shall not affect the other
provisions hereof, and this Agreement shall be construed in all respects
as if the invalid or unenforceable provision were omitted. Notwithstanding
the foregoing, if such provision could
36
be more narrowly drawn so as not to be invalid or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so more narrowly
drawn, without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Notices. All notices or other communications required or permitted
to be given hereunder shall be in writing and shall be delivered in the
manner specified herein or, in the absence of such specification, shall be
deemed to have been duly given seven (7) days after mailing by certified
mail, when delivered by hand, upon confirmation of receipt by telecopy, or
one (1) business day after sending by overnight delivery service, to the
respective addresses of the parties set forth below:
For notices and communications to the Company to:
AAH Holdings Corporation
c/o Berkshire Partners LLC
Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xx. Xxxxxx X. Small
Facsimile: (000) 000-0000
with a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
for notices and communications to the Berkshire Stockholders,
to their respective addresses set forth in the Schedule, with a copy
to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
for notices and communications to the WP Stockholders, to
their respective address set forth in the Schedule, with a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
37
for notices and communications to any Management Stockholders,
to their respective addresses set forth in the Schedule, with a copy
to:
AAH Holdings Corporation
c/o Berkshire Partners LLC
Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xx. Xxxxxx X. Small
Facsimile: (000) 000-0000
for notices and communications to any Other Stockholders, to
their respective addresses set forth in the Schedule.
By notice complying with the foregoing provisions of this Section 4.5, each
party shall have the right to change the mailing address for future notices and
communications to such party.
Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and to their respective
transferees, successors and assigns; provided, however, that no right or
obligation under this Agreement may be assigned except as expressly
provided herein, it being understood that the Company's rights hereunder
may be assigned by the Company to any corporation which is the surviving
entity in a merger, consolidation or like event involving the Company. No
such assignment shall relieve an assignor of its obligations hereunder.
Governing Law. This Agreement shall be governed by the law of the
State of New York (regardless of the laws that might otherwise govern
under applicable New York principles of conflicts of law) as to all
matters, including but not limited to matters of validity, construction,
effect, performance and remedies.
Termination. Without affecting any other provision of this Agreement
requiring termination of any rights in favor of any Stockholder or any
transferee of Shares, the provisions of Article II shall terminate as to
such Stockholder or transferee, when, pursuant to and in accordance with
this Agreement, such Stockholder or transferee, as the case may be, no
longer owns any Shares (including Rollover Shares or Acquired Shares),
Performance Options, Rollover Options or Time Options; provided, that
termination pursuant to this Section 4.8. shall only occur in respect of a
Stockholder after all Permitted Transferees in respect thereof also no
longer own any Shares. Notwithstanding the foregoing, Article II shall
terminate upon the earlier of a Change in Control or the consummation of a
Public Offering; provided, that the Company shall be obligated to
consummate the purchase of any vested Time Options, Rollover Options and
vested and earned Performance Options which have been called pursuant to
Section 2.2, or put pursuant to Section 2.3, prior to such termination,
but have not otherwise been paid for as of such date.
Recapitalizations, Exchanges, Etc. The provisions of this Agreement
shall apply, to the full extent set forth herein with respect to Shares,
to any and all shares of capital stock of the Company or any successor or
assign of the Company (whether by merger, consolidation, sale
38
of assets or otherwise) which may be issued in respect of, in exchange
for, or in substitution of the Shares, by reason of a stock dividend,
stock split, stock issuance, reverse stock split, combination,
recapitalization, reclassification, merger, consolidation or otherwise.
Action Necessary to Effectuate the Agreement. The parties hereto
agree to take or cause to be taken all such corporate and other action as
may be necessary to effect the intent and purposes of this Agreement.
Purchase for Investment; Legend on Certificate. Each of the parties
acknowledges that all of the Shares held by such party are being (or have
been) acquired for investment and not with a view to the distribution
thereof and that no transfer, hypothecation or assignment of Shares may be
made except in compliance with applicable federal and state securities
laws. All the certificates of Shares which are now or hereafter owned by
the Stockholders and which are subject to the terms of this Agreement
shall have endorsed in writing, stamped or printed, thereon the following
legend:
"The securities represented by this Certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be sold, offered for sale, pledged or hypothecated in
the absence of an effective registration statement as to the
securities under said Act or an opinion of counsel
satisfactory to the Company and its counsel that such
registration is not required."
"The securities represented by this Certificate are subject to
the terms and conditions, including certain restrictions on
transfer, of a Stockholders Agreement dated as of April 30,
2004, as amended from time to time, and none of such
securities, or any interest therein, shall be transferred,
pledged, encumbered or otherwise disposed of except as
provided in that Agreement. A copy of the Stockholders
Agreement is on file with the Clerk of the Company and will be
mailed to any properly interested person without charge within
five (5) business days after receipt of a written request."
All shares shall also bear all legends required by federal and state
securities laws.
Effectiveness of Transfers. All Shares transferred by a Stockholder
(other than pursuant to an effective registration statement under the 1933
Act or pursuant to a Rule 144 transaction) shall, except as otherwise
expressly stated herein, be held by the transferee thereof subject to this
Agreement. Such transferee shall, except as otherwise expressly stated
herein, have all the rights and be subject to all of the obligations of a
Stockholder under this Agreement (as though such party had so agreed
pursuant to Section 4.13) automatically and without requiring any further
act by such transferee or by any parties to this Agreement. Without
affecting the preceding sentence, if such transferee is not a Stockholder
on the date of such transfer, then such transferee, as a condition to such
transfer, shall confirm such transferee's obligations hereunder in
accordance with Section 4.13. No Shares shall be transferred on the
Company's books and records, and no transfer of Shares shall be otherwise
39
effective, unless any such transfer is made in accordance with the terms
and conditions of this Agreement, and the Company is hereby authorized by
all of the Stockholders to enter appropriate stop transfer notations on
its transfer records to give effect to this Agreement.
Other Stockholders. Subject to the restrictions on transfers of
Shares contained herein, any Person who is not already a Stockholder
acquiring Shares, shall, on or before the transfer or issuance to it of
Shares, sign a counterpart or joinder to this Agreement in form reasonably
satisfactory to the Company and shall thereby become a party to this
Agreement to be bound hereunder as (i) a Berkshire Stockholder if a
transferee (other than the Company or a WP Stockholder) of a Berkshire
Stockholder, (ii) a WP Stockholder if a transferee (other than the Company
or a Berkshire Stockholder) of a WP Stockholder, (iii) a Management
Stockholder if a transferee (other than the Company) of a Management
Stockholder or (iv) an Other Stockholder if such transferee (other than
the Company, a Berkshire Stockholder or a WP Stockholder) does not fall
within clause (i), (ii) or (iii) above. Each such additional Stockholder
shall be listed on the Schedule, as amended from time to time.
No Waiver. No course of dealing and no delay on the part of any
party hereto in exercising any right, power or remedy conferred by this
Agreement shall operate as waiver thereof or otherwise prejudice such
party's rights, powers and remedies. No single or partial exercise of any
rights, powers or remedies conferred by this Agreement shall preclude any
other or further exercise thereof or the exercise of any other right,
power or remedy.
Costs and Expenses. Each party shall pay its own costs and expenses
incurred in connection with this Agreement, and any and all other
documents furnished pursuant hereto or in connection herewith.
Counterpart. This Agreement may be executed in two or more
counterparts each of which shall be deemed an original but all of which
together shall constitute one and the same instrument, and all signatures
need not appear on any one counterpart.
Headings. All headings and captions in this Agreement are for
purposes of reference only and shall not be construed to limit or affect
the substance of this Agreement.
Third Party Beneficiaries. Nothing in this Agreement is intended or
shall be construed to entitle any Person other than the Company and the
Stockholders to any claim, cause of action, right or remedy of any kind.
Consent to Jurisdiction. The Company and each of the Stockholders,
by its, his or her execution hereof, (i) hereby irrevocably submit to the
exclusive jurisdiction of the federal courts in the State of New York for
the purposes of any claim or action arising out of or based upon this
Agreement or relating to the subject matter hereof, (ii) hereby waive, to
the extent not prohibited by applicable law, and agree not to assert by
way of motion, as a defense or otherwise, in any such claim or action, any
claim that it or he is not subject personally to the jurisdiction of the
above-named courts, that its, his or her property is exempt or immune from
attachment or execution, that any such proceeding brought in the
above-named court is improper or that this Agreement or the subject matter
hereof may not be enforced in or by such court and (iii) hereby agree not
to commence any claim or action arising out of or based upon
40
this Agreement or relating to the subject matter hereof other than before
the above-named courts nor to make any motion or take any other action
seeking or intending to cause the transfer or removal of any such claim or
action to any court other than the above-named courts whether on the
grounds of inconvenient forum or otherwise. The Company and each of the
Stockholders hereby consent to service of process in any such proceeding,
and agree that service of process by registered or certified mail, return
receipt requested, at its address specified pursuant to Section 4.5 is
reasonably calculated to give actual notice.
WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
WHICH CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES AND COVENANTS THAT
IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY
RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE OR ACTION,
CLAIM, CAUSE OF ACTION OR SUIT (IN CONTRACT, TORT OR OTHERWISE), INQUIRY,
PROCEEDING OR INVESTIGATION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR
THE SUBJECT MATTER HEREOF OR IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING. EACH PARTY HERETO ACKNOWLEDGES THAT IT
HAS BEEN INFORMED BY THE OTHER PARTIES HERETO THAT THIS SECTION 4.20
CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH THEY ARE RELYING AND WILL
RELY IN ENTERING INTO THIS AGREEMENT. ANY PARTY HERETO MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 4.20 WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS
RIGHT TO TRIAL BY JURY.
[The rest of this page has intentionally been left blank]
41
IN WITNESS WHEREOF, each of the stockholders of AAH Holdings Corporation
has duly executed this Stockholders Agreement (or caused this Stockholders
Agreement to be executed on its behalf by its officer or representative
thereunto duly authorized) as of the date first above written.
THE COMPANY:
AAH HOLDINGS CORPORATION
By: /s/ Xxxxxx X. Small
-------------------------------------
Name: Xxxxxx X. Small
Title: President
BERKSHIRE STOCKHOLDERS:
BERKSHIRE FUND V INVESTMENT CORP.
By: /s/ Xxxxxx X. Small
-------------------------------------
Name: Xxxxxx X. Small
Title: Vice President
BERKSHIRE FUND VI INVESTMENT CORP.
By: /s/ Xxxxxx X. Small
-------------------------------------
Name: Xxxxxx X. Small
Title: Vice President
Berkshire Investors LLC
By: /s/ Xxxxxx X. Small
-------------------------------------
Name: Xxxxxx X. Small
Title: Managing Director
WP STOCKHOLDERS:
WESTON PRESIDIO CAPITAL IV, L.P.
By: Weston Presidio Capital
Management IV, LLC, its general
partner
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Name: Xxxxx X. Xxxxx
Title: Member
WPC ENTREPRENEUR FUND II, L.P.
By: Weston Presidio Capital Management IV,
LLC, its general partner
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Name: Xxxxx X. Xxxxx
Title: Member
OTHER STOCKHOLDERS:
SPECIALTY INVESTMENT I, LLC
By: /s/ Xxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: CFO and Manager
SQUAM LAKE INVESTORS VI, LP
By: /s/ Xxxx Xxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxx
Title: Vice President
SUNAPEE SECURITIES, INC.
By: /s/ Xxxx Xxxxx
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Name: Xxxx Xxxxx
Title: Assistant Treasurer
WABAN INVESTORS II, LP
By: /s/ Xxxxxx X. Xxxx
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Name: Xxxxxx X. Xxxx
Title: Assistant Clerk
RGIP, LLC
By: /s/ X. Xxxxxxxx Malt
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Name: X. Xxxxxxxx Malt
Title: Managing Member
MANAGEMENT STOCKHOLDERS:
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Xxxxx Leaf
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