STOCKHOLDERS AGREEMENT
Stockholders Agreement dated as of August 22, 1997 among (i) XXXXXXXX
XXXX RETAIL SERVICES, INC., a Delaware corporation (the "COMPANY"), (ii)
XXXXXXXX XXXX COMPANY, a Texas close corporation ("TCC"), (iii) DOPPELT &
COMPANY, an Ohio corporation ("DOPPELT"), and (iv) XXXXXXX X. XXXXXXX, the
holder of 100% of Doppelt's outstanding common stock. TCC and Doppelt are
referred to collectively as the "STOCKHOLDERS".
The parties hereby agree as follows:
SECTION 1. DEFINITIONS. For purposes of this Agreement, the
following terms have the indicated meanings:
"AFFILIATE" of a person means any other person controlling, controlled
by or under common control with such person, whether by ownership of voting
securities, by contract or otherwise.
"CAUSE" has the meaning set forth in Xxxxxxx Xxxxxxx'x employment
agreement with TCC.
"COMMON STOCK" means the Company's Common Stock, $.01 par value per
share, and any successor security to such Common Stock.
"FAIR MARKET VALUE" as of any date means the value of the Common Stock
determined by dividing (x) five times the Company's trailing 12-month EBITDA
(earnings before interest, taxes, depreciation and amortization determined in
accordance with generally accepted accounting principles consistently applied)
based on the most recent financial information of the Company available as of
such date less the amount of the Company's outstanding indebtedness for borrowed
money as of such date (other than indebtedness incurred to finance the Company's
acquisition of Doppelt and other indebtedness to the extent that the proceeds
thereof are distributed to TCC and not retained by the Company), by (y) the
number of shares of Common Stock on a fully-diluted basis as of such date giving
effect to the exercise of all options, warrants or similar rights to acquire
Common Stock.
"FORCED RESIGNATION" has the meaning set forth in Xxxxxxx Xxxxxxx'x
employment agreement with TCC.
"INDEPENDENT THIRD PARTY" means any person who does not own in excess
of 10% of the Common Stock on a fully-diluted basis, who is not controlling,
controlled by or under
common control with any such 10% owner of Common Stock and who is not the
spouse, ancestor or descendant (by birth or adoption) of any such 10% owner
of Common Stock.
"INVESTOR STOCK" means Common Stock held by TCC, its Affiliates and
their respective transferees.
"HOLDBACK STOCK" means Management Stock with respect to which holdback
restrictions have not lapsed in accordance with the provisions of Section 2
hereof.
"MANAGEMENT STOCK" means Common Stock or TCC common stock now or
hereafter acquired by Doppelt.
"SALE OF THE COMPANY" means the acquisition of beneficial ownership of
a majority or more of the outstanding voting securities of the Company by any
person or "group" (as that term is used in Regulation 13D under the Securities
Exchange Act of 1934) other than TCC and its Affiliates.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"TCC COMMON STOCK" means the common stock of TCC or a newly-formed
Delaware corporation that will serve as a holding company for TCC in connection
with the initial public offering of TCC common stock.
"VOLUNTARY TERMINATION" means the voluntary termination of employment
with the Company by Xxxxxxx Xxxxxxx within five years after the date hereof
other than as a result of a Forced Resignation.
SECTION 2. HOLDBACK RESTRICTIONS.
(a) RESTRICTIONS ON MANAGEMENT STOCK. Except as set forth in Section
2(b), Holdback Stock may not be sold, pledged or otherwise disposed of by
Doppelt without the Company's prior written consent. As of the date hereof, all
Management Stock held by Doppelt constitutes Holdback Stock. The transfer
restrictions set forth in this Section 2 will lapse on a cumulative basis (i)
with respect to 30% of the shares of such Management Stock on each of the first
and second anniversaries of the date hereof, (ii) with respect to 20% of the
Management Stock on the third anniversary of the date hereof, and (iii) with
respect to 10% of the Management Stock on each of the fourth and fifth
anniversaries of the date hereof; provided, however, that such transfer
restrictions shall lapse in full in the event of termination of Xxxxxxx
Xxxxxxx'x employment by the Company without Cause or in the event of either a
Sale of the Company or Xxxxxxx Xxxxxxx'x Forced Resignation, death or permanent
disability during the term of Doppelt's employment. Notwithstanding the
foregoing, Doppelt shall be entitled to receive all dividends declared with
respect to such Holdback Stock, to exercise all voting rights with respect to
such Holdback Stock and to exercise all other rights of ownership with respect
thereto, subject only to the transfer and
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repurchase restrictions set forth in this Agreement. In addition, Xxxxxxx
Xxxxxxx agrees that his shares of Doppelt & Company common stock may not be
sold, pledged or otherwise disposed of during the five-year period beginning
on the date of this Agreement without the Company's prior written consent
other than pursuant to a Permitted Transfer described in clause (i) of
Section 2(b) below.
(b) CERTAIN PERMITTED TRANSFERS. Notwithstanding the provisions of
Section 2(a), (i) Management Stock may be transferred directly or indirectly to
members of Xxxxxxx Xxxxxxx'x family group (including by trust, gift, will or
pursuant to applicable laws of descent and distribution) and (ii) Doppelt may
transfer a beneficial interest in up to $650,000 of the Management Stock to
employees of Doppelt pursuant to a trust arrangement whereby Doppelt retains
ownership of such shares; provided that, in connection with any transfer
pursuant to this Section 2(b) (each, a "PERMITTED TRANSFER"), Xxxxxxx Xxxxxxx
shall retain voting power over such stock and each such transferee shall agree
with the Company and TCC (or TCC's parent corporation) in writing to be bound by
the provisions of this Agreement, in which event such transferee shall be deemed
to be a "Stockholder" hereunder and such shares shall continue to constitute
Management Stock. Xxxxxxx Xxxxxxx'x "FAMILY GROUP" means Xxxxxxx Xxxxxxx'x
spouse and lineal descendants (whether natural or adopted) and any trust formed
and maintained solely for the benefit of Xxxxxxx Xxxxxxx, his spouse and/or
lineal descendants.
SECTION 3. REPURCHASE ON TERMINATION OF EMPLOYMENT.
(a) REPURCHASE OPTION. Upon the termination of Xxxxxxx Xxxxxxx'x
employment with the Company for any reason, the Company may elect to repurchase
all but not less than all of the Management Stock held by Doppelt at a cash
price per share equal to Fair Market Value as of the date of termination.
(b) REPURCHASE PROCEDURE. The Company may exercise its option to
purchase Management Stock pursuant to this Section 3 by delivery to Doppelt,
within 30 days after the termination of Xxxxxxx Xxxxxxx'x employment, of a
written notice specifying the number of shares of Management Stock to be
repurchased. The closing of any repurchase of Management Stock pursuant to this
Section 3 shall take place not later than 90 days following the termination of
Xxxxxxx Xxxxxxx'x employment.
(c) CLAW-BACK RIGHTS. In the event that, within six months after any
repurchase of Management Stock pursuant to Section 3(a), either the Company's
outstanding stock or substantially all of the Company's assets is sold to a
third party that is not an Affiliate of TCC at a price reflecting a valuation
for the Common Stock in excess of the price paid for such Management Stock,
concurrently with such sale the Company shall pay to the Management Stockholder
an amount equal to such excess (determined on a per-share basis) multiplied by
the number of shares of Management Stock purchased from such Management
Stockholder.
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SECTION 4. OTHER RESTRICTIONS ON TRANSFER.
(a) RIGHT OF FIRST REFUSAL.
(i) Not less than 30 days prior to any proposed transfer of
Management Stock (other than a Permitted Transfer), the transferring
Stockholder shall deliver to TCC a written notice (the "OFFER NOTICE")
specifying in reasonable detail the number of shares to be transferred, the
identity of the transferee(s), the price (which shall be payable solely in
cash) and the other terms and conditions of the proposed transfer. TCC may
elect to purchase all but not less than all of the Management Stock
proposed to be transferred upon the terms and conditions specified in the
Offer Notice by delivering to the transferring Stockholder a written notice
of such election within the 20-day period following its receipt of the
Offer Notice (the "ELECTION PERIOD"). Any purchase of such shares by TCC
shall be consummated within 30 days following expiration of the Election
Period.
(ii) In the event that TCC does not elect to purchase the
Management Stock described in the Offer Notice, during the 30-day period
following expiration of the Election Period, the transferring Stockholder
may transfer such Management Stock to the transferee(s) specified in the
Offer Notice on terms no more favorable to such transferee(s) than those
specified in the Offer Notice. Any shares of Management Stock not
transferred within such 30-day period shall again be subject to this
Section 4(a) in connection with any proposed transfer thereof.
(b) STOCK LEGEND. The certificates representing Management Stock
shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY
ISSUED ON _______________, 19__, HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY
STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF ANY EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM
REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER,
CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH
IN A STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 22, 1997 AMONG
XXXXXXXX XXXX RETAIL SERVICES, INC. AND CERTAIN STOCKHOLDERS
THEREOF, A COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE BY THE
HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS.
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(c) OPINION OF COUNSEL. No Stockholder may sell, transfer or dispose
of any shares of Common Stock (other than pursuant to an effective registration
statement under the Securities Act) without first delivering to the Company upon
its request an opinion of counsel reasonably acceptable in form and substance to
the Company that registration under the Securities Act is not required in
connection with such transfer.
SECTION 5. SALE OF THE COMPANY. If the holders of a majority of
the Investor Stock approve a Sale of the Company to an Independent Third Party,
whether by merger, consolidation, sale of all of the outstanding Common Stock or
otherwise (an "APPROVED SALE"), the Stockholders shall consent to and raise no
objections against such Approved Sale (including exercising any rights of
appraisal) and shall take all necessary and desirable actions in their
capacities as stockholders in connection with the consummation of such Approved
Sale. If the Approved Sale is structured as a sale of stock, the Stockholders
shall agree to sell all of their shares of Common Stock and rights to acquire
shares of Common Stock on the terms and conditions approved by the holders of a
majority of the Investor Stock then outstanding. The obligations of the
Stockholders with respect to any Approved Sale are subject to the condition
that, upon the consummation of such Approved Sale, all of the holders of Common
Stock will receive the same form and amount of consideration per share of Common
Stock, or if any holders are given an option as to the form and amount of
consideration to be received, all holders will be given the same option.
SECTION 6. PARTICIPATION RIGHTS. Not less than 30 days prior to
any proposed transfer of Common Stock by TCC or any Affiliate of TCC (whether by
merger, consolidation, sale of Common Stock or otherwise), such transferring
Stockholder shall deliver to the other Stockholders a written notice (the "SALE
NOTICE") specifying in reasonable detail the identity of the proposed
transferee(s) and the terms and conditions of the proposed transfer. Each other
Stockholder may elect to participate in the proposed transfer by delivering to
the transferring Stockholder a written notice of such election within the 20-day
period following delivery of the Sale Notice. If any Stockholders elect to
participate in such transfer, the transferring Stockholder and each such
participating Stockholder will be entitled to sell in such proposed transfer, at
the same price and on the same terms, a number of shares of Common Stock equal
to the product of (i) the quotient determined by dividing the percentage of the
Common Stock then held by the transferring Stockholder or such participating
Stockholder, as the case may be, by the aggregate percentage of the Common Stock
then held by the transferring Stockholder and all participating Stockholders,
multiplied by (ii) the number of shares of Common Stock to be sold in such
proposed transfer. The participating Stockholders shall pay a pro rata portion
of the transaction expenses associated with such transfer. This Section 6 shall
not apply to transfers to Affiliates of TCC (provided that such Affiliates shall
continue to be bound by the terms hereof).
SECTION 7. PREEMPTIVE RIGHTS. If the Company proposes to issue any
shares of Common Stock or other securities exercisable for or convertible into
Common Stock (other than issuances for non-cash consideration, issuances to
directors, officers, employees and consultants of the Company, issuances to
lenders in connection with financing transactions and issuances pursuant to
registered public offerings), each Stockholder shall have the right of first
refusal to purchase a
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portion of such securities equal to such Stockholder's percentage interest in
the Common Stock on a fully-diluted basis immediately prior to such issuance.
The Company shall give each Stockholder at least 20 days' prior written
notice of any such proposed issuance setting forth in reasonable detail the
proposed terms and conditions thereof and shall offer to each Stockholder the
opportunity to purchase such securities at the same price, on the same terms,
and at the same time as the securities are proposed to be issued by the
Company. A Stockholder may exercise its right of first refusal by delivery
of an irrevocable written notice to the Company not more than 10 days after
delivery of the Company's notice. The obligation of the Stockholders
exercising their rights pursuant to this Section 7 to purchase and pay for
securities shall be conditioned upon the consummation of the proposed
issuance by the Company.
SECTION 8. RESERVED.
SECTION 9. REGISTRATION RIGHTS.
(a) PIGGYBACK REGISTRATION. In the event that, following the initial
public offering of TCC common stock (the "TCC IPO"), TCC or its parent
corporation proposes to register any TCC common stock under the Securities Act
in connection with a public offering for the account of TCC or its parent
corporation on any form (other than Form S-4 or Form S-8) that would legally
permit the inclusion of Management Stock, TCC or its parent corporation shall
give each of the holders of Management Stock written notice thereof as soon as
practicable but in no event less than 30 days prior to such registration, and
shall include in such registration all Management Stock requested in writing to
be included therein, subject to the limitations set forth in this Section 9(a).
If in connection with such proposed registration the managing underwriter for
such offering advises TCC or its parent corporation that the amount of
securities requested to be included therein exceeds the number of shares that
can be sold in such offering either (i) at a price reasonably related to the
then-current market value of the TCC common stock or (ii) without materially and
adversely affecting the offering, any shares to be sold by TCC or its parent
corporation in such offering shall have priority over any Management Stock, and
the shares to be included by holders of Management Stock in such registration
shall be reduced pro rata on the basis of the respective numbers of shares of
TCC common stock held by such holders and all other holders of TCC's securities
exercising similar registration rights.
(b) COSTS OF REGISTRATION. TCC or its parent corporation shall bear
the costs of each registration in which Stockholders participate pursuant to
this Section 9, including the reasonable fees and expenses of one counsel for
the selling holders of Management Stock (to be selected by the holders of a
majority of the Management Stock to be included in such registration) but
excluding any underwriting discounts or commissions on the sale of Management
Stock or the fees and expenses of any additional counsel retained by such
holders. As a condition to the inclusion of Management Stock in any
registration, the selling holders and TCC or its parent corporation shall
execute an underwriting agreement or similar agreement in a form reasonably
acceptable to TCC or its parent corporation and the underwriter(s), if any, for
such offering containing customary indemnification and holdback provisions.
Notwithstanding the foregoing, no holder of Management
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Stock shall be required to incur indemnification obligations (whether several
or joint and several) which is in excess of the net proceeds received by such
holder pursuant to such registration or which relates to information not
supplied by such holder for inclusion in the registration statement.
(c) APPLICABILITY OF RIGHTS. The provisions of this Section 9 shall
not apply to any holder of Management Stock whose shares of Management Stock are
freely tradeable under SEC Rule 144 without limitation as to volume.
SECTION 10. LIQUIDITY RIGHTS. In the event that the TCC IPO has
not occurred by the fifth anniversary of the date hereof and Xxxxxxx Xxxxxxx is
no longer employed by TCC or its Affiliates (other than as a result of a
Voluntary Termination or Xxxxxxx Xxxxxxx'x election not to renew his Employment
Agreement pursuant to paragraph 1 thereof), Doppelt shall have the right,
exercisable on one occasion by delivery of written notice to the Company, to
require the Company or TCC to repurchase all or any portion of the then-
outstanding Management Stock at Fair Market Value. The closing of the purchase
of such Management Stock shall take place within 30 days of delivery of such
notice, and the Company shall pay the purchase price for such Management Stock
in cash in five equal installments payable on the date of closing and the
succeeding four anniversaries of such closing date. The portion of such
purchase price not paid on the closing date shall bear interest at the rate of
prime plus 2.0% per annum until paid.
SECTION 11. ASSIGNMENT OF RIGHTS; REPRESENTATIONS ON SALE. The
Company may assign to one or more third parties its right to repurchase shares
of Management Stock pursuant to Section 3, subject only to compliance with
applicable securities laws. The purchasers of Management Stock pursuant to
Sections 3 and 4 shall be entitled to receive customary representations and
warranties from the seller regarding the seller's good title to, and freedom
from liens, encumbrances and restrictions on the sale of, such Management Stock.
SECTION 12. TRANSFERS IN VIOLATION OF AGREEMENT. Any transfer or
attempted transfer of any Common Stock in violation of this Agreement shall be
void, and the Company shall not be obligated to record such transfer on its
books or treat any purported transferee of such Common Stock as the owner of
such shares for any purpose.
SECTION 13. AMENDMENT AND WAIVER. Except as otherwise provided
herein, no amendment or waiver of any provision of this Agreement shall be
effective against the Company or the holders of Investor Stock or Management
Stock unless such amendment or waiver is approved in writing by the Company, TCC
or Doppelt, as the case may be. Once so approved by TCC or Doppelt, such
amendment or waiver shall be binding on all holders of Investor Stock or
Management Stock, as applicable. The failure of any party to enforce any
provision of this Agreement shall not be construed as a waiver of such provision
and shall not affect the right of such party thereafter to enforce each
provision of this Agreement in accordance with its terms.
SECTION 14. SEVERABILITY. If any provision of this Agreement is held
to be invalid, illegal or unenforceable in any respect under any applicable law
or rule in any jurisdiction, such
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invalidity, illegality or unenforceability shall not affect any other
provision or any other jurisdiction, but this Agreement shall be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.
SECTION 15. ENTIRE AGREEMENT. Except as otherwise expressly set
forth herein, this document embodies the complete agreement and understanding
among the parties hereto with respect to the subject matter hereof and
supersedes and preempts any prior understandings, agreements or representations
by or among the parties, written or oral, which may have related to the subject
matter hereof in any way.
SECTION 16. SUCCESSORS AND ASSIGNS. This Agreement shall bind and
inure to the benefit of and be enforceable by the Company, TCC or its parent
corporation and their respective successors and transferees, and by Doppelt and
its Permitted Transferees, in each case so long as such persons hold Common
Stock.
SECTION 17. COUNTERPARTS. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
SECTION 18. REMEDIES. The Company, TCC and Doppelt shall be entitled
to enforce their rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in their favor. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that the Company, TCC or Doppelt may in its
sole discretion apply to any court of law or equity of competent jurisdiction
for specific performance and/or injunctive relief (without posting a bond or
other security) in order to enforce or prevent any violation of the provisions
of this Agreement. In the event of any legal proceedings seeking to enforce any
rights or obligations under this Agreement, the prevailing party shall be
entitled to recover its attorneys fees and costs in connection with such
proceeding from the non-prevailing party.
SECTION 19. NOTICES. Any notice provided for in this Agreement shall
be in writing and shall be either personally delivered, or sent by telecopy
(confirmed in writing) or sent by reputable overnight courier service for next-
day delivery (charges prepaid) to the parties at their respective addresses set
forth below, or at such address or to the attention of such other person as the
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recipient party has specified by prior written notice to the sending party.
Notices will be deemed to have been given hereunder when delivered personally,
on the date of transmission if sent by confirmed telecopy (or on the next
business day if transmission is not made on a business day) or on the next
business day after deposit with a reputable overnight courier service.
The Company's and TCC's address is:
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, XX 00000-0000
Attention: Xxxxxxx Xxxxxxxxx
Xxxxxxx X. Xxxxxx
Xxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
With a copy to:
Xxxxxxxxxx Hyatt Xxxxxx & Xxxxxxxxxx, P.C.
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
Doppelt's address is:
Doppelt & Company
00000 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx Xxxx, XX 00000
Telecopy No.: (000) 000-0000
With a copy to:
Kahn, Kleinman, Xxxxxxxx & Xxxxxx
Tower at Erieview, Suite 2600
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
SECTION 20. GOVERNING LAW. The corporate law of Delaware shall
govern all issues concerning the relative rights of the Company and its
stockholders. All other questions
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concerning the construction, validity and interpretation of this Agreement
shall be governed by the internal law, and not the law of conflicts, of
Colorado.
SECTION 21. TERMINATION; SURVIVAL. This Agreement (other than
Sections 2 and 9 hereof) shall terminate and be of no further force and effect
upon consummation of the TCC IPO. This Agreement shall terminate in its
entirety on the tenth anniversary of the date hereof.
* * * * *
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
XXXXXXXX XXXX RETAIL SERVICES, INC.
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: President
XXXXXXXX XXXX COMPANY
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Executive Vice President
DOPPELT & COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
/s/ Xxxxxxx X. Xxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxx
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