EXHIBIT 4.10
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SHAREHOLDERS' AGREEMENT
dated as of
May 22, 1997
among
XXX XXXXXXXX CORPORATION
DLJ MERCHANT BANKING PARTNERS II, L.P.,
DLJ OFFSHORE PARTNERS II, X.X.,
XXX XXXXXXXXXXX XXXXXXXX, X.X.,
XXX EAB PARTNERS, L.P.,
DLJMB FUNDING II, INC.,
DLJ FIRST ESC L.L.C., UK INVESTMENT
PLAN 1997 PARTNERS, ZS XX XX L.P.,
XXXXXX X. XXXXXXXX
and
THE MANAGEMENT SHAREHOLDERS LISTED ON ANNEX A
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TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS
1.1 Definitions ............................................................ 2
ARTICLE 2
CORPORATE GOVERNANCE
2.1 Composition of the Board ............................................... 13
2.2 Removal ................................................................ 15
2.3 Vacancies .............................................................. 15
2.4 Action by the Board .................................................... 16
2.5 Executive Committee .................................................... 16
2.6 Conflicting Charter or Bylaw Provisions ................................ 18
2.7 Subsidiaries ........................................................... 18
2.8 Compensation ........................................................... 18
ARTICLE 3
RESTRICTIONS ON TRANSFER
3.1 General Restrictions ................................................... 19
3.2 Restrictions on Sales to Adverse Persons ............................... 21
3.3 Right of First Offer ................................................... 21
3.4 Drag-Along Rights ...................................................... 23
3.5 Tag-Along Rights ....................................................... 25
3.6 Public Offering Limitations ............................................ 27
3.7 Share Certificates ..................................................... 28
3.8 Termination of Restrictions on Shareholders ............................ 29
3.9 Improper Transfer ...................................................... 29
ARTICLE 4
CERTAIN SALES UPON TERMINATION OF EMPLOYMENT
4.1 Surrender of Shares to the Company ..................................... 29
4.2 Method of Repurchase ................................................... 32
4.3 Determination of Fair Market Value ..................................... 32
ARTICLE 5
REGISTRATION RIGHTS
5.1 Demand Registration .................................................... 34
5.2 Incidental Registration ................................................ 38
5.3 Holdback Agreements .................................................... 40
5.4 Registration Procedures ................................................ 40
Page
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5.5 Indemnification by the Company ......................................... 44
5.6 Indemnification by Participating Shareholders .......................... 45
5.7 Conduct of Indemnification Proceedings ................................. 46
5.8 Contribution ........................................................... 47
5.9 Participation in Public Offering ....................................... 49
ARTICLE 6
PREEMPTIVE RIGHTS
6.1 Preemptive Rights ...................................................... 49
ARTICLE 7
CONFIDENTIALITY
7.1 Confidentiality ........................................................ 50
7.2 Specific Performance ................................................... 51
ARTICLE 8
MISCELLANEOUS
8.1 Entire Agreement; No Inconsistent Agreements ........................... 52
8.2 Binding Effect; Benefit ................................................ 52
8.3 Exclusive Financial Advisor and Investment Banking Advisor ............. 53
8.4 Assignability .......................................................... 53
8.5 Amendment; Waiver; Termination ........................................ 53
8.6 Notices ................................................................ 54
8.7 After-Acquired Shares .................................................. 56
8.8 Headings and References to Sections .................................... 56
8.9 Severability ........................................................... 57
8.10 Counterparts ........................................................... 57
8.11 APPLICABLE LAW ......................................................... 57
8.12 Specific Enforcement ................................................... 57
8.13 Arbitration ............................................................ 57
8.14 Pronouns ............................................................... 58
8.15 Trial by Jury .......................................................... 58
Annex A - List of Management Shareholders and Addresses
Annex B - Form of Financial Advisor Agreement
Schedule 1 - List of Shareholders and Respective Numbers of Shares
Schedule 2 - List of Shares Purchased by and Options Granted to Management
Shareholders
SHAREHOLDERS' AGREEMENT
SHAREHOLDERS' AGREEMENT dated as of May 22, 1997 (this "Agreement")
among Xxx Xxxxxxxx Corporation (the "Company"), DLJ Merchant Banking Partners
II, L.P. ("DLJMB"), DLJ Offshore Partners II, X.X., XXX Xxxxxxxxxxx Xxxxxxxx,
X.X., XXX EAB Partners, L.P., DLJMB Funding II, Inc., DLJ First ESC L.L.C., UK
Investment Plan 1997 Partners (each, a "DLJMB Entity", and collectively, the
"DLJMB Entities"), Xxxxxx X. Xxxxxxxx ("Xxxxxxxx"), the management shareholders
listed on ANNEX A hereto (individually, a "Management Shareholder", and
collectively with Uhlenhop, the "Management Shareholders"), and ZS XX XX L.P.
("ZS"). The DLJMB Entities, the Management Shareholders and ZS are collectively
referred to herein as the "Shareholders" and individually as a "Shareholder".
References to the Shareholders shall include any Permitted Transferee (as
defined in Section 1.1(a) hereof) of the Management Shareholders, ZS and the
DLJMB Entities.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company, the DLJMB Entities, VH Acquisition Corp., ZS and
Uhlenhop are parties to an Agreement and Plan of Merger dated as of April 3,
1997 (the "Merger Agreement"), pursuant to which, among other things, (i) each
DLJMB Entity has acquired (A) the number of shares of Common Stock, par value
$.01 per share, of the Company (the "Common Shares"), set forth opposite its
name on SCHEDULE 1 hereto, and (B) the number of shares of 13.5% Senior
Exchangeable Preferred Stock due 2009 of the Company (the "Preferred Shares")
and the number of warrants (the "Warrants") for the number of Common Shares, in
each case, set forth opposite such DLJMB Entity's name on SCHEDULE 1 hereto,
(ii) the Company has issued to Uhlenhop the number of Common Shares set forth
opposite his name on SCHEDULE 1 hereto (the "Uhlenhop Retained Shares"), and
(iii) the Company has issued to ZS the number of Common Shares set forth
opposite its name on SCHEDULE 1 hereto;
WHEREAS, (i) Uhlenhop has acquired the number of Common Shares set forth
opposite his name on SCHEDULE 2 hereto (such Common Shares together with the
Uhlenhop Retained Shares, the "Uhlenhop Purchased Shares"), (ii) each of the
Management Shareholders (other than Uhlenhop) has acquired the number of Common
Shares set forth opposite his or her name on SCHEDULE 2 hereto (the
"Non-Uhlenhop Management Purchased Shares"), (iii) the Company has granted to
each of the Management
Shareholders the number of stock options (the "Granted Management Options") for
the number of Common Shares set forth opposite such Management Shareholder's
name on SCHEDULE 2 hereto, and (iv) the Company has reserved an aggregate of
4,000,000 Common Shares for issuance upon the exercise of stock options (the
"Future Management Options", and together with the Granted Management Options,
the "Management Options") that may be granted, from time to time, to the
Management Shareholders or other employees of the Company or its subsidiaries;
and
WHEREAS, the Company and the Shareholders desire to enter into certain
agreements with respect to the management of the Company, the transfer of Common
Shares now owned or hereafter acquired, upon the exercise of Warrants or
Management Options or otherwise, by each of the Shareholders and certain other
matters.
NOW, THEREFORE, in consideration of the foregoing covenants and
agreements herein contained, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. (a) The following terms, as used herein, have the
following meanings:
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under common control with such
Person; PROVIDED, HOWEVER, that no Shareholder shall be deemed an Affiliate of
any other Shareholder solely by reason of any investment in the Company. For the
purpose of this definition, the term "control" (including with correlative
meanings, the terms "controlling", "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities
or by contract or otherwise.
"Affiliated Employee Benefit Trust" means any trust that is a successor
to the assets held by a trust established under an employee benefit plan subject
to ERISA or any other trust established directly or indirectly under such plan
or any other such plan having the same sponsor.
"Agreement" has the meaning set forth in the introductory paragraph
hereof.
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"Appointment Date" has the meaning set forth in Section 4.3(b) of this
Agreement.
"Articles of Incorporation" means the Articles of Incorporation of the
Company in effect as of the date hereof, as amended from time to time.
"Board" means the board of directors of the Company.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in
New York City are authorized by law to close.
"Bylaws" means the bylaws of the Company in effect as of the date
hereof, as amended from time to time.
"Cause" means, in the case of Uhlenhop, as such term is defined in the
Uhlenhop Employment Agreement, and, in the case of a Management Shareholder
(other than Uhlenhop), (i) the conviction of such Management Shareholder by a
court of competent jurisdiction of, or entry of a plea of NOLO CONTENDERE with
respect to, a felony or any other crime which involves fraud, dishonesty or
moral turpitude; (ii) fraud, embezzlement or gross insubordination on the part
of such Management Shareholder; (iii) such Management Shareholder's chronic
abuse of or dependence on alcohol or drugs (illicit or otherwise) that
interferes with the performance of such Management Shareholder's duties,
responsibilities or obligations to the Company or any of its subsidiaries; (iv)
the material breach by such Management Shareholder of Section 6.1 hereof; or (v)
any act of moral turpitude or willful misconduct by such Management Shareholder
which (A) is intended to result in substantial personal enrichment of such
Management Shareholder at the expense of the Company or any of its subsidiaries
or (B) may have a material adverse impact on the business or reputation of the
Company or any of its subsidiaries (such determination to be made by the Board
or the board of directors of Xxx Xxxxxxxx Press, in either case, in such board's
reasonable judgment).
"Common Shares" has the meaning set forth in the first recital of this
Agreement.
"Company" has the meaning set forth in the introductory paragraph
hereof.
"Convertible Securities" has the meaning set forth in Section 6.1(a) of
this Agreement.
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"Demand Registration" has the meaning set forth in Section 5.1(a) of
this Agreement.
"Disability" means, in the case of Uhlenhop, "Permanent Disability" as
such term is defined in the Uhlenhop Employment Agreement, and, in the case of
a Management Shareholder (other than Uhlenhop), means such Management
Shareholder's inability to perform substantially his or her duties and
responsibilities to the Company or any of its subsidiaries by reason of physical
or mental illness, injury, infirmity or condition: (i) for a continuous period
for 120 days or one or more periods aggregating 150 days in any twelve-month
period; (ii) at such time as such Management Shareholder is eligible to receive
disability income payments under any long-term disability insurance plan
maintained by the Company or any of its subsidiaries; or (iii) at such earlier
time as such Management Shareholder or the Company or Xxx Xxxxxxxx Press submits
medical evidence, in the form of a physician's certification, that such
Management Shareholder has a physical or mental illness, injury, infirmity or
condition that will likely prevent such Management Shareholder from
substantially performing his duties and responsibilities for 120 days or longer.
"DLJMB" has the meaning set forth in the introductory paragraph of this
Agreement.
"DLJMB Entities" has the meaning set forth in the introductory paragraph
of this Agreement.
"DLJMB Transferee" means (A) any general or limited partner, member or
shareholder of any DLJMB Entity (a "DLJMB Partner"), and any corporation,
partnership, Affiliated Employee Benefit Trust or other entity that is an
Affiliate of any DLJMB Partner (collectively, the "DLJMB Affiliates"); (B) any
managing director, general partner, director, limited partner, officer or
employee of any DLJMB Entity or in any DLJMB Affiliate (collectively, "DLJMB
Associates"); (C) the heirs, executors, administrators, testamentary trustees,
legatees or beneficiaries of any DLJMB Associate; and (D) a trust, the
beneficiaries of which, or a corporation or partnership, the shareholders or
general or limited partners of which, include only DLJMB Entities, DLJMB
Affiliates, DLJMB Associates, their spouses or their lineal descendants.
"DLJSC" means Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation.
4
"Drag-Along Notice" has the meaning set forth in Section 3.4(b) of this
Agreement.
"Drag-Along Rights" has the meaning set forth in Section 3.4(a) of this
Agreement.
"Drag-Along Sale" has the meaning set forth in Section 3.4(a) of this
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any similar federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect from time to time.
"Executive Committee" has the meaning set forth in Section 2.5 of this
Agreement.
"Fully Diluted" means, with respect to Common Shares and without
duplication, all outstanding Shares, together with all Shares issuable in
respect of securities convertible into or exchangeable for Common Shares, share
appreciation rights or options, warrants and other rights to purchase or
subscribe for Common Shares or securities convertible into or exchangeable for
Common Shares, including, without limitation, Warrant Shares and Option Shares.
"Future Management Options" has the meaning set forth in the second
recital of this Agreement.
"Granted Management Options" has the meaning set forth in the second
recital of this Agreement.
"Holders" has the meaning set forth in Section 5.1(a) of this Agreement.
"Incidental Registration" has the meaning set forth in Section 5.2(a) of
this Agreement.
"Incidental Withdrawal Election" has the meaning set forth in Section
5.2(b) of this Agreement.
"Indemnified Party" has the meaning set forth in Section 5.7 of this
Agreement.
"Indemnifying Party" has the meaning set forth in Section 5.7 of this
Agreement.
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"Independent Appraiser" has the meaning set forth in Section 4.3(b) of
this Agreement.
"Initial Ownership" of a Shareholder means the number of Common Shares
(including Option Shares (other than Option Shares issuable under those
Management Options, if any, which hereafter terminate or expire, in the case of
Uhlenhop, in accordance with the terms of the Uhlenhop Employment Agreement, or,
in the case of the Management Shareholders (other than Uhlenhop), in accordance
with the terms of the Management Option Plan)) held by such Shareholder as of
the date hereof (or the corresponding number of Shares resulting from any stock
dividend, stock split, combination of shares, reorganization, reclassification
or other anti-dilutive adjustments thereto).
"Inspectors" has the meaning set forth in Section 5.4(g) of this
Agreement.
"Institutional Shareholders" means the DLJMB Entities and ZS.
"IPO" means the initial Public Offering of Common Shares or any other
class of common stock of the Company.
"Management Note" has the meaning set forth in Section 4.1(f) of this
Agreement.
"Management Option Plan" means the Company's 1997 Management Stock
Option Plan in effect as of the date hereof, as amended from time to time in
accordance with its terms.
"Management Options" has the meaning set forth in the second recital of
this Agreement.
"Management Permitted Transferee" means, with respect to a Management
Shareholder, (A) a Person to whom Shares are transferred from such Management
Shareholder; PROVIDED that such transferee is the issue, adopted issue,
stepchild, issue of a stepchild, spouse of any of the foregoing, or parent or
spouse of such Management Shareholder; (B) a trust that is for the exclusive
benefit of, or a partnership the partners of which are exclusively, such
Management Shareholder or any person described under (A) above; (C) a
corporation or other entity, all of the capital stock or other equity of which
is held by such Management Shareholder or any Person described under (A) above;
or (D) the estate of such Management Shareholder.
6
"Management Purchased Shares" means, collectively, the Uhlenhop
Purchased Shares and the Non-Uhlenhop Management Purchased Shares.
"Management Shareholders" has the meaning set forth in the introductory
paragraph of this Agreement.
"Maximum Offering Size" has the meaning set forth in Section 5.1(d) of
this Agreement.
"Merger Agreement" has the meaning set forth in the first recital of
this Agreement.
"NASD" has the meaning set forth in the definition of "Registration
Expenses" in this Section 1.1.
"Nominee" has the meaning set forth in Section 2.3(a) of this Agreement.
"Non-Uhlenhop Management Purchased Shares" has the meaning set forth in
the second recital of this Agreement.
"Objection Notice" has the meaning set forth in Section 4.3(b) of this
Agreement.
"Offer Notice" has the meaning set forth in Section 3.3(a) of this
Agreement.
"Offer Price" has the meaning set forth in Section 3.3(a) of this
Agreement.
"Offer" has the meaning set forth in Section 3.3 of this Agreement.
"Offered Shares" has the meaning set forth in Section 3.3 of this
Agreement.
"Offerees" has the meaning set forth in Section 3.3 of this Agreement.
"Option Shares" means Shares issued or issuable upon exercise of a
Management Option.
"Participating Shareholder" has the meaning set forth in Section 3.5(b)
of this Agreement.
"Permitted Transferee" means, in the case of a DLJMB Entity, a DLJMB
Transferee, in the case of a Management
7
Shareholder, a Management Permitted Transferee, or, in the case of ZS, a ZS
Permitted Transferee.
"Person" means an individual, corporation, partnership, association,
limited liability company, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Preferred Shares" has the meaning set forth in the first recital of
this Agreement.
"Private Sale" means a sale to a Third Party other than (i) pursuant to
a Public Offering or (ii) under Rule 144 of the Securities Act.
"Public Offering" means an underwritten or best efforts public offering
of Registrable Shares or other shares of the Company pursuant to an effective
registration statement under the Securities Act.
"Public Sale" means a sale (i) pursuant to a Public Offering or (ii)
under Rule 144 of the Securities Act.
"Purchaser" has the meaning set forth in Section 3.4(a) of this
Agreement.
"Records" has the meaning set forth in Section 5.4(g) of this Agreement.
"Registrable Shares" means (a) all Shares (including Warrant Shares but
not Warrants), (b) any other shares of common stock of the Company acquired by
any Shareholder on or after the date hereof, and (c) any shares of capital stock
of the Company issued or issuable with respect to the Shares (including Warrant
Shares but not Warrants) or the securities referred to in the preceding clause
(b) by way of a stock dividend, stock split or in connection with a combination
of shares, recapitalization, merger, consolidation or other reorganization or
anti-dilutive adjustment, but, in the case of the Management Shareholders, shall
only include Management Purchased Shares, until (i) a registration statement
covering such Shares has been declared effective by the SEC and such Shares have
been disposed of pursuant to such effective registration statement, (ii) such
Shares are sold under circumstances in which all of the applicable conditions of
Rule 144 (or any similar provisions then in force) under the Securities Act are
met or such Shares may be sold pursuant to Rule 144(k), or (iii) such Shares are
otherwise transferred, the Company has delivered a new certificate or other
8
evidence of ownership for such Shares not bearing the legend required pursuant
to this Agreement and such Shares may be resold without subsequent registration
under the Securities Act.
"Registration Expenses" means (i) all registration and prospectus filing
fees, (ii) fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel in connection with blue
sky qualifications of the Registrable Shares, if any), (iii) printing expenses,
(iv) internal expenses of the Company (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), (v) reasonable fees and disbursements of counsel for the
Company and customary fees and expenses for independent certified public or
chartered accountants retained by the Company (including the expenses of any
comfort letters or costs associated with the delivery by such accountants of a
comfort letter or comfort letters requested pursuant to Section 5.4(h) hereof),
(vi) the reasonable fees and expenses of any special experts retained by the
Company in connection with such registration, (vii) reasonable fees and expenses
of one counsel for the selling Shareholders selected by DLJMB (on behalf of the
DLJMB Entities), in the case of an offering in which the DLJMB Entities
participate or by the Shareholders holding a majority of the Shares to be sold
in such offering, in any other case; PROVIDED, HOWEVER, that, if such offering
relates to ZS's Demand Registration, ZS shall be entitled to select the counsel
for the selling Shareholders, (viii) fees and expenses in connection with any
review of underwriting arrangements by the National Association of Securities
Dealers, Inc. (the "NASD") including fees and expenses of any "qualified
independent underwriter," (ix) fees and expenses of listing the Registrable
Shares on an exchange or other trading system and (x) fees and disbursements of
underwriters customarily paid by issuers or sellers of securities; but shall not
include any underwriting fees, discounts or commissions attributable to the sale
of Registrable Shares, or any out-of-pocket expenses (except as set forth in
clause (vii) above) of the Selling Shareholders (or the agents who manage their
accounts), or any fees and expenses of underwriter's counsel.
"Remaining Shareholders" has the meaning set forth in Section 3.5(a) of
this Agreement.
"Representatives" has the meaning set forth in Section 7.1(b) of this
Agreement.
9
"Repurchase Date" has the meaning set forth in Section 4.2 of this
Agreement.
"Repurchase Notice" has the meaning set forth in Section 4.1(d) of this
Agreement.
"Repurchase Right" has the meaning set forth in Section 4.1(a) of this
Agreement.
"Rule 144" means Rule 144 and Rule 144A (or any successor provisions)
under the Securities Act, as such rules may be amended from time to time.
"SEC" means the Securities and Exchange Commission or any successor
thereto performing similar regulatory functions.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the SEC thereunder,
all as the same shall be in effect from time to time.
"Seller" has the meaning set forth in Section 4.2 of this Agreement.
"Selling Shareholder" has the meaning set forth in Section 5.1(a) of
this Agreement.
"Selling Holder" has the meaning set forth in Section 3.3(a) of this
Agreement.
"Shareholder" means each Person (other than the Company) who shall be
a party to this Agreement, whether in connection with the execution and delivery
hereof as of the date hereof, pursuant to Section 8.4 hereof, or otherwise, so
long as such Person shall beneficially own any Shares.
"Shares" means all Common Shares (including Warrant Shares (other than
Warrant Shares issuable under those Warrants, if any, which hereafter are
transferred in connection with a sale of Preferred Shares) and Option Shares
(other than Option Shares issuable under those Management Options, if any, which
hereafter terminate or expire, in the case of Uhlenhop, in accordance with the
terms of the Uhlenhop Employment Agreement, or, in the case of the Management
Shareholders (other than Uhlenhop), in accordance with the terms of the
Management Option Plan)) now or hereafter held by the Shareholders.
10
"Subject Shares" has the meaning set forth in Section 3.4(a) of this
Agreement.
"Surrendered Shares" has the meaning set forth in Section 4.2 of this
Agreement.
"Tag-Along Notice" has the meaning set forth in Section 3.5(b) of this
Agreement.
"Tag-Along Purchaser" has the meaning set forth in Section 3.5(a) of
this Agreement.
"Tag-Along Rights" has the meaning set forth in Section 3.5(a) of this
Agreement.
"Tag-Along Sale" has the meaning set forth in Section 3.5(a) of this
Agreement.
"Tag-Along Sellers" has the meaning set forth in Section 3.5(a) of this
Agreement.
"Tag-Along Shares" has the meaning set forth in Section 3.5(a) of this
Agreement.
"Termination Event" has the meaning set forth in Section 4.1(a) of this
Agreement.
"Third Party" means a prospective purchaser of Shares in an arm's-length
transaction from a Shareholder where such purchaser is not an Affiliate or
Permitted Transferee of such Shareholder.
"Transfer" has the meaning set forth in Section 3.1(a) hereof.
"Uhlenhop" has the meaning set forth in the introductory paragraph of
this Agreement.
"Uhlenhop Employment Agreement" means the Employment Agreement dated as
of April 3, 1997 among Uhlenhop, the Company (as successor to VH Acquisition
Corp.) and Xxx Xxxxxxxx Press, Inc.
"Uhlenhop Purchased Shares" has the meaning set forth in the second
recital of this Agreement.
"Uhlenhop Retained Shares" has the meaning set forth in the first
recital of this Agreement.
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"Vested Option Shares" means, at the time a determination thereof is
being made, Option Shares that would be otherwise issuable upon the exercise of
Management Options that have vested as of the time of such determination, in the
case of Uhlenhop, in accordance with the terms of the Uhlenhop Employment
Agreement or, in the case of a Management Shareholder (other than Uhlenhop), in
accordance with the terms of the Management Option Plan.
"Xxx Xxxxxxxx Press" means Xxx Xxxxxxxx Press, Inc., a wholly-owned
subsidiary of the Company.
"Warrants" has the meaning set forth in the first recital of this
Agreement.
"Warrant Shares" means Shares issued or issuable upon exercise of a
Warrant.
"Withdrawal Election" has the meaning set forth in Section 5.1(d) of
this Agreement.
"ZS" has the meaning set forth in the introductory paragraph of this
Agreement.
"ZS Permitted Transferee" means (A) any general or limited partner of ZS
(a "ZS Partner"), and any corporation, partnership, limited liability company or
other entity that is an Affiliate of ZS or a ZS Partner (collectively with the
ZS Partners, the "ZS Affiliates"); (B) any managing director, general partner,
director, limited partner, member, officer or employee of ZS or in any ZS
Affiliate (collectively, "ZS Associates"); (C) the heirs, executors,
administrators, testamentary trustees, legatees or beneficiaries of any ZS
Associate; and (D) a trust, the beneficiaries of which, or a corporation,
partnership or limited liability company, the shareholders, general or limited
partners or members of which, include only ZS Affiliates, ZS Associates, their
spouses or their lineal descendants.
(b) The term "DLJMB Entities" (including in any case where such term
is included in another defined term hereunder), to the extent that a DLJMB
Entity shall have transferred any of its Shares to the DLJMB Transferees, shall
mean the DLJMB Entities and the DLJMB Transferees, and any right or action that
may be taken at the election of the DLJMB Entities may be taken at the election
of DLJMB on behalf of the DLJMB Entities and the DLJMB Transferees, as the case
may be.
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(c) The term "ZS" (including in any case where such term is included
in another defined term hereunder), to the extent ZS shall have transferred any
of its Shares to ZS Permitted Transferees, shall mean ZS and its ZS Permitted
Transferees, and any right or action that may be taken at the election of ZS may
be taken at the election of ZS and its ZS Permitted Transferees, as the case may
be.
(d) The term "Management Shareholders" (including in any case where
such term is included in another defined term hereunder), to the extent any
such Management Shareholder shall have transferred any of its Shares to
Management Permitted Transferees, shall mean the Management Shareholder and his
or her Management Permitted Transferees, and any right or action that may be
taken at the election of a Management Shareholder may be taken at the election
of such Management Shareholder and his or her Management Permitted Transferees,
as the case may be.
(e) The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole, including the schedules and
exhibits hereto, as the same may from time to time be amended or supplemented,
and not to any particular section, subsection or clause contained in this
Agreement.
ARTICLE 2
CORPORATE GOVERNANCE
2.1 COMPOSITION OF THE BOARD. (a) Subject to subsections (c), (d)
and (e) below and Section 8(b) of the Certificate of Designations, Preferences
and Rights of the Preferred Shares, the Board shall consist of nine (9)
directors (or such smaller number as may be mutually agreed to by DLJMB, ZS, so
long as it owns beneficially 25% of its Initial Ownership, and Uhlenhop, so long
as he is the Chief Executive Officer of the Company), seven (7) of whom
(including the Chairman of the Board) shall be nominated by the DLJMB Entities,
one (1) of whom shall be nominated by ZS, and one (1) of whom shall be Uhlenhop
so long as he is the Chief Executive Officer of the Company and he owns
beneficially Common Shares and Vested Option Shares in an aggregate amount equal
to at least 2% of the Fully Diluted Common Shares; PROVIDED, HOWEVER, that, if
Uhlenhop is no longer serving as the Chief Executive Officer of the Company
(other than as a result of his termination for "Cause" (as defined in the
Uhlenhop Employment Agreement)) but he owns beneficially Common Shares and
Vested Option Shares in an amount equal to at least 2% of the Fully Diluted
Common Shares, the Board shall continue to consist
13
of nine (9) directors (or such smaller number as may be mutually agreed to by
DLJMB, ZS, so long as it owns beneficially 25% of its Initial Ownership, and
Uhlenhop, so long as he is the Chief Executive Officer of the Company), six (6)
of whom (including the Chairman of the Board) shall be nominated by the DLJMB
Entities, one (1) of whom shall be nominated by ZS, one (1) of whom shall be
Uhlenhop so long as he owns beneficially Common Shares and Vested Option Shares
in an amount equal to at least 2% of the Fully Diluted Common Shares, and one
(1) of whom shall be the new Chief Executive Officer of the Company who is duly
appointed by the Board; PROVIDED FURTHER, that, notwithstanding his Share
ownership, if Uhlenhop is no longer serving as the Chief Executive Officer of
the Company or Xxx Xxxxxxxx Press as a result of his being terminated for
"Cause" in accordance with the Uhlenhop Employment Agreement, Uhlenhop will no
longer be entitled to serve as a director of either the Company or Xxx Xxxxxxxx
Press.
(b) Upon execution of this Agreement, the parties shall take all
necessary action so that, effective on the day immediately after the day on
which the "Closing" under the Merger Agreement is consummated, the Board shall
consist of Xxxxxxxx Xxxx, Xxxx Xxxx, Xxxx Xxxxxxx and four other individuals
nominated by DLJMB, as the nominees of the DLJMB Entities, Xxxxxx Xxxxx, as the
nominee of ZS, and Xxxxxx X. Xxxxxxxx, and each such director shall serve until
resignation, removal or replacement in accordance with the terms of this
Agreement or, in the case of Uhlenhop, in accordance with the terms of the
Uhlenhop Employment Agreement, and the Bylaws.
(c) Subject to subsections (d) and (e) below, the DLJMB Entities, ZS
and the Management Shareholders hereby agree to amend the provisions of
subsection (a) as may be necessary to change the composition of the Board as may
be required by law or by any applicable listing standards or as may be
reasonably requested by any underwriter, in each case in connection with the
IPO.
(d) Each Shareholder entitled to vote for the election of directors
to the Board agrees that he or it shall vote his or its Shares or execute
consents, as the case may be, and take all other necessary action (including in
order to satisfy any quorum requirement) in order to ensure that the composition
of the Board is as set forth in this Section 2.1; PROVIDED, HOWEVER, that none
of the DLJMB Entities, ZS or the Management Shareholders shall be required to
vote for the nominees of any Shareholder or group of Shareholders under this
Agreement if the ownership of Shares by such Shareholders or group at the time
of any such vote is less
14
than 25% of such Shareholder's or group's Initial Ownership. No Shareholder
shall give any proxy or power of attorney to any Person that permits the holder
thereof to vote in his, her or its discretion on any matter that may be
submitted to the Company's shareholders for their consideration and approval,
unless such proxy or power of attorney is made subject to and is exercised in
accordance with the provisions of this Agreement.
(e) Notwithstanding any other provision of this Agreement, the
number of directors on the Board shall not be reduced below nine (9) at any time
prior to the second anniversary of the date of this Agreement, including,
without limitation, by the operation of subsection (a) or (c) above, without the
consent of ZS, so long as it owns beneficially 25% of its Initial Ownership, or
Uhlenhop, so long as he is the Chief Executive Officer of the Company; PROVIDED
that, in the event the number of directors comprising the Board is so reduced,
then (i) any director nominated by ZS then on the Board shall be removed, (ii)
ZS's rights under this Agreement to designate or nominate a director to the
Board shall automatically terminate and any rights granted to a ZS director
under this Agreement shall automatically terminate and be of no further force or
effect, and (iii) the DLJMB Entities shall succeed to ZS's right to nominate a
director under this Section 2.1.
2.2 REMOVAL. Each Shareholder agrees that if, at any time, it is
then entitled to vote for the removal of directors of the Company, it shall not
vote any of his, her or its Shares in favor of the removal of any director who
shall have been designated or nominated pursuant to Section 2.1 unless the
Person(s) entitled to designate or nominate such director shall have consented
to such removal in writing, or the right of any Shareholder to nominate such
director shall no longer exist pursuant to Section 2.1(a), (d) or (e) hereof.
2.3 VACANCIES. (a) If, as a result of death, disability, retirement,
resignation, removal (for any or no reason) or otherwise, there shall exist or
occur any vacancy of the Board:
(i) the Person or Persons entitled under Section 2.1 to
designate or nominate such director whose death, disability, retirement,
resignation or removal resulted in such vacancy shall, as promptly as reasonably
possible, designate another individual (the "Nominee") to fill such capacity and
serve as a director of the Company; and
15
(ii) each Shareholder then entitled to vote for the election
of the Nominee as a director of the Company shall vote his, her or its Shares,
or execute a written consent, as the case may be, in order to ensure that the
Nominee will be elected to the Board. Any vacancy that occurs shall be filled as
promptly as possible upon the designation of a nominee by the Shareholder or
Shareholders having the right to nominate a Nominee to fill such vacancy.
(b) Notwithstanding the foregoing, in the event of any vacancy in
the Board (i) following the reduction in the ownership of Shares by one or more
Shareholders resulting in the termination of the right of any such Shareholder
to nominate a director to the Board, or (ii), in the case of Uhlenhop, as a
result of Uhlenhop no longer serving as the Chief Executive Officer of the
Company and him not owning beneficially Common Shares and Vested Option Shares
in an amount equal to at least 2% of the Fully Diluted Common Shares, any such
vacancy shall be filled by vote of a majority of the remaining directors,
whether or not such remaining directors would constitute a quorum of the Board.
2.4 ACTION BY THE BOARD. A quorum of the Board shall consist of five
(5) directors (or such smaller number as may be mutually agreed). All actions
of the Board shall require the affirmative vote of at least a majority of the
directors at a duly convened meeting of the Board at which a quorum is present
or participating by telephone or the unanimous written consent of the Board;
PROVIDED that, in the event there is a vacancy on the Board and an individual
has been nominated to fill such vacancy, the first order of business shall be to
fill such vacancy; PROVIDED, HOWEVER, that, in the event an equal number of
directors are in favor and against a specific action, the chairman of the
meeting shall not have a second or casting vote. Written notice of all meetings
of the Board, stating the place, date, time and the purpose(s) of such meeting,
shall be given to each director at least five (5) Business Days before such
meeting by telephone, mail, facsimile or personal delivery; PROVIDED that such
five-Business Day prior notice requirement may be reduced to not less than one
Business Day if the Chairman of the Board, in good faith and in his reasonable
judgment, deems such reduction as necessary to effect business of the Company
requiring more immediate attention.
2.5 EXECUTIVE COMMITTEE. The Board, by resolution adopted by a
majority of directors constituting the full Board, may, in accordance with the
terms of the Bylaws, appoint an executive committee (the "Executive Committee"),
one of the
16
members of which shall be Uhlenhop so long as he is the Chief Executive Officer
of the Company. If an Executive Committee is so appointed, except if ZS is no
longer entitled to nominate a director to the Board pursuant to Section 2.l(e)
hereof or except if ZS owns beneficially less than 25% of its Initial Ownership,
ZS shall be entitled to have one representative as an observer (with no right to
vote) at each meeting of the Executive Committee, and the Executive Committee
shall furnish ZS, to the attention of such person as ZS may designate as its
observer in writing to the Executive Committee from time to time, and at the
same time and in the same manner furnished to members of the Executive
Committee, notice of each such meeting and any other materials relevant to such
meeting so provided to the members of the Executive Committee. Such
representative shall treat all information received by such representative
pursuant to this Section 2.5 as confidential in accordance with Article 7 hereof
and in accordance with applicable law and such duties regarding confidentiality
as would be generally applicable to a director receiving such information.
Subject to the terms of the Bylaws, the Executive Committee may exercise all the
authority of the Board; PROVIDED, HOWEVER, that neither the Executive Committee
nor any other committee of the Board shall have the authority to: (i) approve or
recommend to shareholders of the Company actions or proposals required by law to
be approved by shareholders of the Company; (ii) adopt, amend or repeal the
Bylaws or Articles of Incorporation; (iii) authorize or approve the
reacquisition of shares of the Company's capital stock unless pursuant to a
general formula or method specified by the Board; (iv) adopt an agreement of
merger or consolidation or sale of all or substantially all of the Company's
assets or capital stock; or (v) authorize or approve the issuance or sale of, or
any contract to issue or sell, shares of the Company's capital stock or
designate the terms of a series of a class of shares of the Company's capital
stock, except that the Board, having acted regarding general authorization for
the issuance or sale of shares of capital stock, or any contract therefor, and,
in the case of a series, the designation thereof, may, pursuant to a general
formula or method specified by the Board, by resolution or by adoption of a
stock option or other plan, authorize the Executive Committee or any other
committee to fix the terms of any contract for the sale of such shares of
capital stock and to fix the terms upon which such shares of capital stock may
be issued or sold, including the price, the rate or manner of payment of
dividends, provisions for redemption, sinking fund, conversion, voting or
preferential rights, and provisions for other features of a class of shares of
the Company's capital stock, with full power in the Executive Committee or any
such other committee of the Board to adopt any final resolution
17
setting forth all the terms thereof and to authorize the statement of the terms
of a series for filing with the office of the Secretary of State of the state in
which the Company is incorporated.
2.6 CONFLICTING CHARTER OR BYLAW PROVISIONS. Each Shareholder shall
vote his or its Shares, and shall take all other actions necessary, to ensure
that the Articles of Incorporation and Bylaws facilitate and do not at any time
conflict with any provision of this Agreement.
2.7 SUBSIDIARIES. Unless otherwise agreed to by the DLJMB Entities,
ZS, so long as it owns beneficially 25% of its Initial Ownership, and Uhlenhop,
so long as he is the Chief Executive Officer of the Company, each Shareholder
shall vote his or its Shares, and shall take all other actions necessary, to
ensure that each of the boards of directors of Xxx Xxxxxxxx Press and the other
subsidiaries of the Company and Xxx Xxxxxxxx Press will consist of three (3)
members, two (2) of whom shall be nominated by the DLJMB Entities and one (1) of
whom (including the Chairman of the Board of Directors of each such board of
directors) shall be Uhlenhop so long as Uhlenhop is the Chief Executive Officer
of the Company. Except if ZS is no longer entitled to nominate a director to the
Board pursuant to Section 2.1(e) hereof or except if ZS owns beneficially less
than 25% of its Initial Ownership, ZS shall be entitled to have one
representative as an observer (with no right to vote) at each meeting of the
board of directors of Xxx Xxxxxxxx Press, and the board of directors of Xxx
Xxxxxxxx Press shall furnish (or cause to be furnished) ZS, to the attention of
such person as ZS may designate as its observer in writing to the board of
directors of Xxx Xxxxxxxx Press from time to time, and at the same time and in
the same manner furnished to directors of Xxx Xxxxxxxx Press, notice of each
such meeting and any other materials relevant to such meeting so provided to the
directors of Xxx Xxxxxxxx Press. Such representative shall treat all information
received by such representative pursuant to this Section 2.7 as confidential in
accordance with Article 7 hereof and in accordance with applicable law and such
duties regarding confidentiality as would be generally applicable to a director
receiving such information.
2.8 COMPENSATION. Each director of the Board shall receive fees or
other compensation as may be determined from time to time by the Board;
PROVIDED, HOWEVER, that directors shall be entitled to reimbursement for all
reasonable out-of-pocket expenses incurred in connection with their services as
directors, including, without limitation, those out-of-pocket expenses incurred
in connection with their travel to and attendance at
18
Board and Board committee meetings; and PROVIDED, FURTHER, that, if the Board
determines that a director of the Board who is nominated by the DLJMB Entities
and who is an employee of any DLJMB Entity is to receive fees or other
compensation as a result of such person serving as a director of the Board, then
the director of the Board nominated by ZS shall be entitled to receive the same
fees or other compensation.
ARTICLE 3
RESTRICTIONS ON TRANSFER
3.1 GENERAL RESTRICTIONS. (a) No Management Shareholder or ZS may,
directly or indirectly, sell, assign, transfer, offer, grant a participation in,
mortgage, pledge, hypothecate, create a security interest in or lien upon,
encumber, donate, contribute, place in trust, or otherwise dispose of
(collectively, "Transfer") any Shares (or solicit any offers to buy or otherwise
acquire, or to take a pledge of any Shares), except in compliance with the
Securities Act and as otherwise required or permitted by this Agreement. No
DLJMB Entity may Transfer any Shares, except in compliance with the Securities
Act and, if applicable, Section 3.5 hereof.
(b) Any Management Shareholder, ZS or any DLJMB Entity may at any
time Transfer any or all of his, her or its Shares to one or more of his, her or
its Permitted Transferees without the consent of the Board or any other
Shareholder or group of Shareholders and without compliance with Sections 3.3,
3.4 or 3.5 hereof so long as (i) such Permitted Transferee shall have executed
and delivered to the Company an agreement, in form and substance acceptable to
the Company, to be bound by all of the terms and conditions of this Agreement,
and (ii) the Transfer to such Permitted Transferee is not in violation of the
Securities Act. To the extent that any Transfer contemplated or permitted in
this Article 3 requires the approval of the Shareholders pursuant to any law or
any provisions of the Articles of Incorporation or Bylaws, the Shareholders
shall, forthwith upon request therefor, provide the necessary consent and shall
sign or vote in favor of any Shareholders resolutions in connection therewith.
(c) At any time after the second anniversary of the date of this
Agreement, ZS may Transfer any or all of its Shares in a Private Sale to a Third
Party; PROVIDED, HOWEVER, that (i) any such Transfer of Shares shall be subject
to the provisions of (A) Section 3.2 hereof until the consummation of an IPO and
unless otherwise permitted pursuant to a Public Sale, and
19
(B) Section 3.3 hereof until the consummation of an IPO, (ii) ZS shall not be
permitted to sell its Shares to more than two Third Parties pursuant to this
provision and (iii) the Third Party acquiring the Shares being transferred shall
have executed and delivered to the Company an agreement, in form and substance
reasonably acceptable to the Company, to be bound by all of the terms and
conditions of this Agreement.
(d) At any time after the consummation of an IPO, ZS may Transfer
any or all of its Shares pursuant to a sale under Rule 144.
(e) If Uhlenhop is no longer employed by the Company or any of its
subsidiaries at any time after the second anniversary of the date of this
Agreement, Uhlenhop may Transfer any or all of his Shares in a Private Sale to a
Third Party; PROVIDED, HOWEVER, that (i) any such Transfer of Shares shall be
subject to the provisions of (A) Section 3.2 hereof until the consummation of an
IPO and unless otherwise pursuant to a Public Sale, and (B) Section 3.3 hereof
until the consummation of an IPO, (ii) Uhlenhop shall not be permitted to sell
his Shares to more than two Third Parties pursuant to this provision and (iii)
the Third Party receiving the Shares being transferred shall have executed and
delivered to the Company an agreement, in form and substance reasonably
acceptable to the Company, to be bound by all of the terms and conditions of
this Agreement.
(f) If any Management Shareholder (other than Uhlenhop) is no longer
employed by the Company or any of its subsidiaries at any time after the second
anniversary of the date of this Agreement, such Management Shareholder may
Transfer any or all of his or her Shares in a Private Sale to another Management
Shareholder; PROVIDED, HOWEVER, that any such Transfer of Shares shall be
subject to the provisions of Section 3.3 hereof.
(g) At any time after the later of (i) 180 days following the
consummation of an IPO or (ii) such longer period following the consummation of
an IPO that is required by the managing underwriter of the IPO so long as such
period is not longer than any similar "lock-up" period required by such managing
underwriter for any DLJMB Entity or ZS, a Management Shareholder may Transfer
any or all of his or her Management Purchased Shares pursuant to a sale under
Rule 144.
(h) At any time after the first anniversary of the consummation of
an IPO, a Management Shareholder may Transfer any
20
or all of his or her Vested Option Shares pursuant to a sale under Rule 144.
3.2 RESTRICTIONS ON SALES TO ADVERSE PERSONS. Notwithstanding
anything in this Agreement to the contrary, prior to an IPO and otherwise except
in connection with a Public Sale permitted hereunder, neither ZS nor any
Management Shareholder shall Transfer any Shares to a Third Party who or which
is determined by the Board of Directors in good faith to be an adverse person,
including, without limitation, any Person considered by the Board in good faith
to be a competitor or a potential competitor of the Company or any of its
subsidiaries, or a Person otherwise adverse to the interest of DLJMB or any of
its Affiliates; PROVIDED, HOWEVER, that, if the Board is determining whether a
Person is adverse in connection with a Transfer pursuant to Section 3.1(c)
hereof, the director of the Board designated by ZS shall have participated in
such determination, unless, after receiving notice of the meeting of the Board
at which such determination is to be made in accordance with Section 2.4 hereof,
such director elected not to attend or participate in such meeting of the Board.
3.3 RIGHT OF FIRST OFFER. (a) From and after the second anniversary
of the date hereof until the consummation of an IPO, (i) if ZS desires to
Transfer any or all of the Shares owned or held by ZS in a Private Sale to a
Third Party pursuant to Section 3.1(c) hereof, (ii) Uhlenhop desires to Transfer
any or all of the Shares owned or held by him pursuant to Section 3.1(e) hereof
or (iii) a Management Shareholder (other than Uhlenhop) desires to Transfer any
or all of the Shares owned by him or her pursuant to Section 3.1(f) hereof, ZS,
Uhlenhop or such Management Shareholder (each, as applicable, a "Selling
Holder"), as the case may be, shall provide written notice (an "Offer Notice"),
of such intention to Transfer (an "Offer") to the Company and the DLJMB Entities
(the "Offerees"). The Offer Notice shall identify the number of Shares subject
to the Offer (the "Offered Shares"), the cash price per Share at which a sale is
proposed to be made (the "Offer Price") and all other material terms and
conditions of the Offer; PROVIDED, HOWEVER, that, to the extent ZS is the
Selling Holder, ZS shall not be required to include the identity of the proposed
offeror. ZS and Uhlenhop each agrees that it or he will not enter into any
discussions or negotiations with any Third Party concerning a Transfer except in
full compliance with Sections 3.1(c), in the case of ZS only, 3.1(e), in the
case of Uhlenhop only, 3.2 and 7.1 hereof and any other provision of this
Agreement applicable thereto. Each Management Shareholder (other than Uhlenhop)
agrees that he or she will not enter into any discussion or negotiations with
21
another Management Shareholder concerning a Transfer except in full compliance
with Section 3.1(f) hereof and any other provision of this Agreement applicable
thereto.
(b) The receipt of an Offer Notice by the Offerees shall constitute
an Offer by the Selling Holder to sell to the Offerees, for cash, the Offered
Shares at the Offer Price. For a period of 35 days after receipt of the Offer
Notice, the Offerees shall have the right, but not the obligation, to accept
such Offer as to the Offered Shares by giving a written notice of acceptance
(which shall be deemed irrevocable) (an "Acceptance Notice") to the Selling
Holder prior to the expiration of such 35-day period and, if such Offer is so
accepted within such 35-day period, such Offer shall be irrevocable; PROVIDED,
HOWEVER, that such Offer shall be deemed to have been rejected by the Offerees
unless either of the Offerees or both of the Offerees together shall have
accepted such Offer for all but not less than all of the Offered Shares.
Failure to deliver such written notice of acceptance before the expiration of
such 35-day period shall be deemed a rejection of such Offer. The tender by
either or both of the Offerees of an Acceptance Notice to the Selling Holder
shall constitute agreement by the Offeree delivering such Acceptance Notice to
purchase, and by the Selling Holder to sell to the Offeree, the Offered Shares
at the Offer Price and, except as otherwise provided for in this Section 3.3, on
the terms and conditions set forth in the Offer Notice. In accepting such Offer,
the DLJMB Entities shall have priority over the Company and the Company shall
only be entitled to purchase any Offered Shares to the extent such Offered
Shares are not accepted by the DLJMB Entities.
(c) If the Offer Notice is accepted as to the Offered Shares within
the 35-day period prescribed by Section 3.3(b), the Offerees shall purchase and
pay the Offer Price in cash for such Shares within a 60-day period of their
delivery of an Acceptance Notice; PROVIDED that if the purchase and sale of
such Shares is subject to any prior regulatory approval and the Offerees act in
a commercially reasonable manner to obtain such regulatory approval (any such
regulatory approval to be at the sole cost and expense of the Offeree), the time
period during which such purchase and sale may be consummated shall be extended
until the expiration of five (5) Business Days after all such approvals shall
have been received; and PROVIDED FURTHER, that such time period shall not exceed
90 days from the acceptance of such offer without the consent of the Selling
Holder, unless the delay results in whole or in part from the failure of the
Selling Holder to cooperate in a commercially reasonable manner in obtaining
such regulatory approvals.
22
(d) Upon the rejection or waiver of the Offer by the Offerees in
accordance with Section 3.l(b) or the failure of such Offerees to consummate
their purchase of the Offered Shares within the time period prescribed by
Section 3.3(c), the Selling Holder shall have the right for a period of 90 days
following the expiration of such Offer in accordance with Section 3.1(b) or for
a period of 90 days following the expiration of the time period prescribed by
Section 3.3(c), as the case may be, to sell the Offered Shares to a Third Party
or a Management Shareholder, as the case may be, at a price in cash not less
than 95% of the Offer Price and otherwise on such terms and conditions not more
favorable to the Selling Holder than those set forth in the Offer Notice,
PROVIDED that such Third Party, if ZS or Uhlenhop is the Selling Holder, shall
have executed and delivered to the Company an agreement, in form and substance
reasonably acceptable to the Company, to be bound by all of the terms and
conditions of this Agreement, except such Third Party shall have no right to
designate a director pursuant to Section 2.1 and the transfer to such Third
Party is not in violation of the Securities Act, and PROVIDED FURTHER, that if
the purchase and sale of such Shares is subject to any prior regulatory
approval, the time period during which such purchase and sale may be consummated
shall be extended until the expiration of five Business Days after all such
approvals shall have been received but in no event later than 30 days after the
90-day period prescribed above in this Section 3.3(d) without the written
consent of the Company. If any Offered Shares are not sold pursuant to the
provisions of this Section 3.3(d) prior to the expiration of the time period
prescribed by this Section 3.3(d), such Offered Shares shall become subject once
again to the provisions and restrictions of this Agreement.
3.4 DRAG-ALONG RIGHTS. (a) If the DLJMB Entities propose to Transfer
to a Third Party (the "Purchaser") in a Private Sale, including, without
limitation, a Transfer to the Company pursuant to a recapitalization
transaction, (i) Shares constituting not less than 50% of their Initial
Ownership or (ii) Shares which, together with the Subject Shares (as defined
below) constitute not less than 50% of the outstanding Common Shares and such
Transfer has been approved by the Board in accordance with the Articles of
Incorporation, the Bylaws and applicable law, then the DLJMB Entities may, at
their option, require ("Drag-Along Rights") each other Shareholder to Transfer
(a "Drag-Along Sale") pursuant to the provisions of this Section 3.4 a number of
Shares (the "Subject Shares") equal to the number of Shares owned beneficially
by such Shareholder multiplied by a fraction the numerator of which is the
number of Shares to be sold by the DLJMB Entities in the proposed Transfer
triggering
23
the Drag-Along Sale and the denominator of which is the total number of Shares
owned beneficially by the DLJMB Entities; PROVIDED, HOWEVER, that only a
Management Shareholder's Management Purchased Shares and Vested Option Shares
shall be included in determining the number of such Management Shareholder's
Subject Shares; and PROVIDED FURTHER, that for the purpose of determining the
number of Vested Option Shares, any Option Shares vesting as a result of the
proposed Transfer pursuant to the provisions of Section 3.1(c) of the Uhlenhop
Employment Agreement or the "Change of Control" provisions of the Management
Option Plan, as the case may be, shall be deemed Vested Option Shares for the
purpose of this Section 3.4(a). If the DJLMB Entities exercise their Drag-Along
Rights, each of the Shareholders shall receive for its Subject Shares in the
Drag-Along Sale the same consideration per Share that the DLJMB Entities receive
for their Shares from the Purchaser in such proposed Transfer and as set forth
in the Drag-Along Notice (as defined below), including, if the DLJMB Entities
are given an option as to types of consideration for their Shares, such other
Shareholders shall be given the same option as to types of consideration for
their Shares, and such Drag-Along Sale shall otherwise be on the same terms and
conditions upon which the DLJMB Entities are selling their Shares in such
proposed Transfer. In determining the consideration to be received by the DLJMB
Entities under this Section 3.4, any customary compensation for investment
banking or financial advisory services to be paid to DLJSC or any of its
Affiliates (other than the DLJMB Entities) in connection with such Transfer
shall not be included.
(b) DLJMB, on behalf of the DLJMB Entities, shall deliver to each
Shareholder written notice (the "Drag-Along Notice") of any Transfer proposed to
be made pursuant to Section 3.4(a) above not later than the 15th day prior to
the proposed Drag-Along Sale, which notice shall set forth (i) the consideration
to be paid by the Purchaser for each Share, (ii) the number of Subject Shares of
each such Shareholder, and (iii) the other material terms and conditions, if
any, of such transaction. Within 15 days after the date of such Drag-Along
Notice, each such Shareholder shall promptly deliver to DLJMB certificates
representing its Subject Shares duly endorsed, in proper form for transfer,
together with all other documents reasonably required to be executed in
connection with such transaction. In the event that any of such other
Shareholders shall fail to deliver such certificates or such other documents to
DLJMB, the Company shall cause the books and records of the Company to show that
such Subject Shares are bound by the provisions of this Section 3.4 and the such
Subject Shares shall be transferred only to such Purchaser upon any surrender of
such
24
Subject Shares for Transfer by the Holder thereof. If the Subject Shares
represent a portion of the Shares represented by the certificate so held by such
Shareholder, the Company shall, upon the written request of such Shareholder,
issue to such Shareholder new certificates evidencing such Shareholder's Shares
in denominations so requested by such Shareholder, which certificates shall bear
any legend required under Section 3.7 hereof. Pending consummation of the
Drag-Along Sale, DLJMB shall promptly notify the other Shareholders of any
changes in the proposed timing for the Drag-Along Sale and any other material
developments in connection therewith.
(c) If, within 60 days after the date of the Drag-Along Notice, no
Transfer of the Subject Shares in accordance with the provisions of this Section
3.4 shall have been completed, DLJMB shall promptly return to the respective
Shareholders, in proper form, all certificates representing the Subject Shares
that such Shareholders previously delivered to DLJMB, and the limited
powers-of-attorney previously delivered by such Shareholders to DLJMB, and all
the restrictions on Transfer contained in this Agreement with respect to Shares
owned or held by such Shareholders shall again be in effect.
(d) Simultaneously with the consummation of the Transfer of Subject
Shares pursuant to this Section 3.4, DLJMB shall cause the Purchaser to remit
directly to the Shareholders their respective consideration with respect to the
Subject Shares, and shall furnish such other evidence of the completion and time
of completion of such Drag-Along Sale as may be reasonably requested by such
Shareholders.
3.5 TAG-ALONG RIGHTS. (a) Subject to Section 3.5(e) hereof, if any
of the DLJMB Entities or ZS (the "Tag-Along Sellers") proposes to Transfer
Shares to a Third Party (the "Tag-Along Purchaser") in a Private Sale other than
to a Permitted Transferee of such Tag-Along Seller (in the case of ZS, subject
to the provisions of Sections 3.2 and 3.3 hereof) and, prior to or as a result
of such Transfer, if the Tag-Along Seller is a DLJMB Entity, the DLJMB Entities
own beneficially, in the aggregate, less than 70% of their Initial Ownership, or
if the Tag-Along Seller is ZS, ZS owns beneficially less than 70% of its Initial
Ownership, the other Shareholders (the "Remaining Shareholders") shall have the
opportunity to participate ("Tag-Along Rights") in such Transfer (the "Tag-Along
Sale") for the same consideration and on the same terms pursuant to the
provisions of this Section 3.5 to Transfer a number of Shares (the "Tag-Along
Shares") equal to the number of Shares owned beneficially by such Shareholder
multiplied by a fraction the
25
numerator of which is the number of Shares to be sold in the Tag-Along Sale
after giving effect to any Shares being sold therein by the Remaining
Shareholders and the denominator of which is the total number of Shares owned
beneficially by the Tag-Along Sellers; PROVIDED, HOWEVER, that only a Management
Shareholder's Management Purchased Shares and Vested Option Shares (including
those Vested Option Shares that may vest upon the consummation of such Tag-Along
Sale, but only if the Management Options relating to such Vested Option Shares
have been exercised) shall be included in determining the number of such
Management Shareholder's Tag-Along Shares. If any Remaining Shareholder
properly exercises its Tag-Along Rights, such Remaining Shareholder shall
receive for its Tag-Along Shares in the Tag-Along Sale the same consideration
per Share that the Tag-Along Sellers receive for their Shares from the
Tag-Along Purchaser in the Tag-Along Sale and as set forth in the Tag-Along
Notice (as defined below), subject to an increase in the amount of consideration
of up to 10%, and such Tag-Along Sale shall otherwise be on the same terms and
conditions upon which the Tag-Along Sellers are selling their Shares in such
Tag-Along Sale. In determining the consideration to be received by the Tag-Along
Sellers under this Section 3.5, if the Tag-Along Sellers are DLJMB Entities, any
customary compensation for investment banking or financial advisory services to
be paid to DLJSC or any of its Affiliates (other than the DLJMB Entities) in
connection with such Transfer shall not be included.
(b) Not less than 20 days prior to any proposed Tag-Along Sale
pursuant to Section 3.5, the Tag-Along Sellers shall deliver to each Remaining
Shareholder written notice (a "Tag-Along Notice") thereof, which notice shall
set forth the consideration to be paid by the Tag-Along Purchaser and the other
material terms and conditions, if any, of such transaction. If any Remaining
Shareholder elects (each, a "Participating Shareholder") to exercise his, her or
its Tag-Along Rights and Transfer some or all of the Tag-Along Shares that such
Remaining Shareholder is so entitled to Transfer pursuant to Section 3.5(a),
then such Participating Shareholder shall so notify the Tag-Along Sellers within
20 days after the date of the Tag-Along Notice, and, at the Tag-Along Seller's
request not less than two Business Days prior to the proposed Transfer, the
Participating Shareholder shall deliver to the Tag-Along Seller certificates
representing such Tag-Along Shares, duly endorsed, in proper form for transfer,
together with a limited power-of-attorney authorizing the Tag-Along Seller to
dispose of such Tag-Along Shares to the Tag-Along Purchaser and to execute all
other documents required to be executed in connection with such transaction. If
the Tag-Along Shares represent a portion of the
26
Shares represented by the certificate so held by such Participating Shareholder,
the Company shall, upon the written request of such Participating Shareholder,
issue to such Participating Shareholder new certificates evidencing such
Participating Shareholder's Shares so requested by such Participating
Shareholder, which certificates shall bear any legend required under Section 3.7
hereof. Pending consummation of the Tag-Along Sale, the Tag-Along Sellers shall
promptly notify the Participating Shareholders of any changes in the proposed
timing for the Tag-Along Sale and any other material developments in connection
therewith.
(c) If, within 120 days after delivery by the Participating
Shareholder to the Tag-Along Seller of the certificates and related documents
described in Section 3.5(b), such Transfer of the Tag-Along Seller's Shares and
Tag-Along Shares in accordance with the provisions of this Section 3.5 shall not
have been completed, the Tag-Along Seller shall promptly return to the
Participating Shareholder, in proper form, all certificates representing the
Tag-Along Shares that the Participating Shareholder previously delivered to the
Tag-Along Seller, and the limited power-of-attorney previously delivered by the
Participating Shareholder to the Tag-Along Seller, and all the restrictions on
Transfer contained in this Agreement with respect to Shares held or owned by
such Participating Shareholder shall again be in effect.
(d) Simultaneously with the consummation of the Transfer of Shares
by the Tag-Along Seller pursuant to this Section 3.5, the Tag-Along Seller shall
cause the Tag-Along Purchaser to remit directly to the Participating Shareholder
the consideration with respect to the Tag-Along Shares so transferred, and shall
furnish such other evidence of the completion and time of completion of such
Tag-Along Sale as may be reasonably requested by such Participating Shareholder.
(e) Notwithstanding the provisions of Section 3.5(a) hereof, the
provisions of this Section 3.5 shall not apply with respect to any Transfer of
Shares by any of the Institutional Shareholders in the IPO and shall
automatically terminate and be of no force and effect upon the consummation of
the IPO.
3.6 PUBLIC OFFERING LIMITATIONS. The Management Shareholders shall
be permitted to Transfer Shares in a Public Offering; PROVIDED, HOWEVER, that
(i) no Management Shareholder shall sell any Management Purchased Shares or
Option Shares in the IPO, (ii) in any Public Offering effected after such time
that the DLJMB Entities own beneficially less than 70% of their
27
aggregate Initial Ownership, a Management Shareholder may sell a number of
Shares equal to his or her Purchased Shares Pro Rata Portion (as defined below),
and (iii) in any Public Offering effected after such time that the DLJMB
Entities own beneficially less than 70% of their aggregate Initial Ownership, a
Management Shareholder may sell a number of Vested Option Shares not in excess
of 50% of his or her Option Shares Pro Rata Portion (as defined below); PROVIDED
FURTHER, that the rights afforded to the Management Shareholders in clauses (ii)
and (iii) above shall be subject to the priority rights of the Institutional
Shareholders in connection with a Demand Registration as set forth in
Section 5.1(d) hereof and in connection with Incidental Registrations as set
forth in Section 5.2 hereof. As used in clause (ii) of this Section 3.6,
"Purchased Shares Pro Rata Portion" means the number of Management Purchased
Shares owned by a Management Shareholder multiplied by a fraction, the numerator
of which is the number of Shares to be sold by the Institutional Shareholders in
such Public Offering and the denominator of which is the total number of Shares
owned by all of the Institutional Shareholders immediately prior to such Public
Offering. As used in clause (iii) of this Section 3.6, "Option Shares Pro Rata
Portion" means the number of Vested Option Shares owned by a Management
Shareholder multiplied by a faction, the numerator of which is the number of
Shares to be sold by the Institutional Shareholders in such Public Offering and
the denominator of which is the total number of Shares owned by all of the
Institutional Shareholders immediately prior to such Public Offering. The
limitations on the Management Shareholders' ability to Transfer Shares set forth
in clauses (i), (ii) and (iii) above are, collectively, the "Public Offering
Limitations."
3.7 SHARE CERTIFICATES. (a) In addition to any other legend that may
be required, each certificate for Shares that is issued to any Shareholder shall
bear a legend in substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD
EXCEPT IN COMPLIANCE THEREWITH. THIS SECURITY IS ALSO SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER AS SET FORTH IN THE SHAREHOLDERS' AGREEMENT DATED
MAY 22, 1997, COPIES OF WHICH MAY BE OBTAINED UPON REQUEST FROM XXX XXXXXXXX
CORPORATION AND ANY SUCCESSOR THERETO. BY ACCEPTANCE OF THIS CERTIFICATE,
EACH HOLDER HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF THE SHAREHOLDERS'
AGREEMENT."
28
(b) If any Shares shall cease to be Registrable Shares, the Company
shall, upon the written request of the holder thereof, issue to such holder a
new certificate evidencing such Shares without the first sentence of the legend
required by Section 3.7(a) endorsed thereon and without the word "also"
contained in the second sentence of such legend. If any Shares cease to be
subject to any restrictions on Transfer set forth in this Agreement, the Company
shall, upon the written request of the holder thereof, issue to such holder a
new certificate evidencing such Shares without the second or third sentence of
the legend required by Section 3.7(a) endorsed thereon.
(c) Upon receipt of an affidavit, in form and substance reasonably
satisfactory to the Company, of the loss, theft, destruction or mutilation of
any certificate representing Shares issued hereunder and of a bond or other
indemnity reasonably satisfactory to the Company and upon reimbursement to the
Company of all reasonable expenses incident thereto, and upon surrender of such
certificate, if mutilated, the Company will make and deliver a new certificate
of like tenor in lieu of such lost, stolen, destroyed or mutilated certificate.
3.8 TERMINATION OF RESTRICTIONS ON SHAREHOLDERS. Except as otherwise
specifically provided for in this Article 3, the restrictions on the
Shareholders' ability to Transfer Shares set forth in this Article 3 will expire
and be of no force and effect upon the earlier to occur of (i) the eighth
anniversary of the date of this Agreement and (ii) the date on which the Shares
held by the Institutional Shareholders constitute less than 25% of the aggregate
Initial Ownership, unless earlier terminated in accordance with Section 8.5(a)
hereof; PROVIDED, HOWEVER, that this Article 3 shall not be applicable to Shares
purchased by a Shareholder in a Public Sale.
3.9 IMPROPER TRANSFER. Any attempt to Transfer any Shares not in
compliance with this Agreement or the Securities Act shall be null and void and
neither the Company nor any transfer agent shall give any effect in the
Company's share records to such attempted Transfer.
ARTICLE 4
CERTAIN SALES UPON TERMINATION OF EMPLOYMENT
4.1 SURRENDER OF SHARES TO THE COMPANY. (a) Upon the occurrence
during the term of this Agreement of any of the events set forth in clause (i),
(ii), (iii), (iv) or (v) below (each, a "Termination Event"), the Company may
elect, by delivering the
29
notice required under Section 4.1(d), to require (a "Repurchase Right") each
Management Shareholder to sell to the Company or its designee all, but not less
than all, of the Shares owned by such Management Shareholder in accordance with
Section 4.2, subject to the expiration or termination of Management Options
relating to Option Shares upon the occurrence of a Termination Event, in the
case of Uhlenhop, as set forth in the Uhlenhop Employment Agreement, or, in the
case of a Management Shareholder (other than Uhlenhop), as set forth in the
Management Option Plan:
(i) the termination of such Management Shareholder's
employment with the Company or Xxx Xxxxxxxx Press (or any of its subsidiaries)
due to the death or Disability of such Management Shareholder;
(ii) the voluntary termination by such Management Shareholder
of his or her employment with the Company or Xxx Xxxxxxxx Press (or any
subsidiary or Affiliate of the Company or Xxx Xxxxxxxx Press) after the third
anniversary of the date of this Agreement;
(iii) the voluntary termination by such Management Shareholder
of his or her employment with the Company or Xxx Xxxxxxxx Press (or any
subsidiary or Affiliate of the Company or Xxx Xxxxxxxx Press) on or prior to the
third anniversary of the date of this Agreement;
(iv) the termination by the Company or Xxx Xxxxxxxx Press of
such Management Shareholder's employment with the Company or Xxx Xxxxxxxx Press
(or any subsidiary or Affiliate of the Company or Xxx Xxxxxxxx Press) for Cause;
or
(v) the termination by the Company or Xxx Xxxxxxxx Press of
such Management Shareholder's employment with the Company or Xxx Xxxxxxxx Press
(or any subsidiary or Affiliate of the Company or Xxx Xxxxxxxx Press) without
Cause.
(b) The "Repurchase Price" for each Share purchased in connection
with the occurrence of an event specified in Section 4.1 (a) (i), (ii) or (v)
shall be equal to the Fair Market Value (as determined in accordance with
Section 4.3) as of the date of such Termination Event.
(c) The "Repurchase Price" for each Share purchased in connection
with the occurrence of an event specified in Sections 4.1(a) (iii) or (iv) shall
be equal to the lower of (i) the price per Share paid by the Management
Shareholder for such Share, including any accrued and unpaid interest under any
Management
30
Note (as defined below), which, with respect to the Uhlenhop Retained Shares,
shall be based on the value of the consideration Uhlenhop received for those
shares of the Company's capital stock that he exchanged pursuant to the Merger
Agreement and for which he received the Uhlenhop Retained Shares as set forth in
the Merger Agreement, or (ii) the Fair Market Value (as determined in accordance
with Section 4.3) as of the date of such Termination Event.
(d) Upon the occurrence of any Termination Event with respect to any
Management Shareholder, the Company or its designee, as the case may be, shall
deliver written notice (the "Repurchase Notice") to such Management Shareholder
within six (6) months after such occurrence, specifying whether the Company or
its designee, as the case may be, elects to exercise its Repurchase Rights
pursuant to this Article 4. If the Company or its designee elects to exercise
its Repurchase Rights, the Company or its designee, as the case may be, shall
specify the Repurchase Price for each such Share in the Repurchase Notice and
consummate the purchase of such Shares in accordance with Section 4.2.
(e) It is hereby understood and agreed that the termination,
expiration or cancellation of Management Options (including the Option Shares
underlying such Management Options) that have not been exercised, to the extent
permissible, as of the occurrence of any Termination Event shall be determined,
in the case of Uhlenhop, pursuant to the Uhlenhop Employment Agreement, or, in
the case of any Management Shareholder (other than Uhlenhop), the Management
Option Plan.
(f) The aggregate amount of the Repurchase Price paid to a
Management Shareholder for such Management Shareholder's Surrendered Shares (as
defined in Section 4.2) that were pledged to secure any non-recourse secured
promissory note (each a "Management Note") issued by such Management Shareholder
to the Company or any of its subsidiaries, or any promissory note originally
issued by such Management Shareholder to any other Person and subsequently
assigned to or purchased by the Company or any of its subsidiaries, shall be
reduced by an amount equal to the unpaid principal amount PLUS accrued and
unpaid interest due under any such Management Note, and, upon the consummation
of the Company's or its designee's repurchase of any Surrendered Shares that
were pledged to secure such Management Note, the principal amount of such
Management Note shall be reduced by the amount of the Repurchase Price with
respect to the Surrendered Shares that were pledged to secure such Management
Note or, if applicable, the Management Note shall be cancelled.
31
4.2 METHOD OF REPURCHASE. If the Company or its designee elects to
exercise the Company's Repurchase Rights pursuant to Section 4.1, the Shares
subject to repurchase (collectively, the "Surrendered Shares") shall be
repurchased on a date (the "Repurchase Date") not later than 60 days after the
date of the Repurchase Notice. On the Repurchase Date, the Management
Shareholder selling such Surrendered Shares (a "Seller") shall deliver to the
Company or its designee the certificate or certificates representing the Shares
owned by such Seller on such date against delivery by the Company to its
designee to such Seller of the Repurchase Price. All certificates for
Surrendered Shares shall be duly endorsed in favor of the Company or its
designee by the Seller in whose name such certificate or certificates is
registered or accompanied by (i) a duly executed stock or security assignment in
favor of the Company or its designee with the signature(s) thereon guaranteed by
a commercial bank or trust company or a member of a national securities exchange
or the National Association of Securities Dealers, Inc., and (ii) a written
certification, in form and substance satisfactory to the Company or its
designee, pursuant to which such Seller represents and warrants that such Seller
is the record and beneficial owner of such Surrendered Shares and has good and
valid title to such Surrendered Shares, free and clear of any and all liens,
claims, charges, assessments, pledges, options and other legal and equitable
encumbrances of any kind whatsoever (other than pursuant to this Agreement or
any pledge and security agreement, if in existence, between such Seller and Xxx
Xxxxxxxx Press that was entered into in connection with any issuance of a
Management Note). If any Seller shall fail to deliver such certificate or
certificates and such written certification to the Company or its designee
within the time required, the Company shall cause its books and records to show
that the Surrendered Shares are bound by the provisions of this Section 4.2 and
that the Surrendered Shares, until transferred to the Company, shall not be
entitled to any proxy, dividend or other rights from the date by which such
certificate or certificates should have been delivered to the Company or its
designee, as the case may be.
4.3 DETERMINATION OF FAIR MARKET VALUE. (a) After the date of this
Agreement and prior to the first anniversary thereof, the Fair Market Value per
Surrendered Share shall be $1.00, as such amount shall be adjusted to reflect
any subsequent subdivision, combination or reclassification of the Shares.
(b) Except as provided in Section 4.3(c) hereof, from and after the
first anniversary of the date of this Agreement and prior to the consummation of
the IPO, if any Seller is entitled
32
to receive the Fair Market Value for the Surrendered Shares held by such Seller
in connection with a Termination Event, the Board shall determine in good faith
the fair market value of each Surrendered Share and the fair market value as so
determined shall be the "Fair Market Value" for each Surrendered Share for
purposes of Section 4.1. If a Seller notifies the Company in writing (an
"Objection Notice") that he or she objects in good faith to the Board's
determination of the Fair Market Value for such Seller's Surrendered Shares
pursuant to this Section 4.3(b), which Objection Notice must be received by the
Company within five (5) Business Days after receipt by the Seller of
notification of the Board's determination of such Fair Market Value, within ten
(10) days of the Company's receipt of such Objection Notice (the "Appointment
Date"), an independent "Big Six" accounting firm will be retained by the Company
and such objecting Selling Shareholder (the "Independent Appraiser"), which
Independent Appraiser will be chosen randomly by lot among the "Big Six"
accounting firms other than any such firm that is engaged by the Company, to
determine, independently, the Fair Market Value of such objecting Seller's
Surrendered Shares within 20 days of the Appointment Date. Any determination of
the Fair Market Value of such objecting Seller's Surrendered Shares by the
Independent Appraiser under this Section 4.3(b) shall be made on basis that the
Surrendered Shares represent a minority interest in the Company. The Fair Market
Value of such objecting Seller's Surrendered Shares determined by the
Independent Appraiser in accordance with this Section 4.3(b) shall be the
Repurchase Price for the Surrendered Shares and shall be binding on the Company
and such objecting Seller. The initial $50,000 of the costs and expenses of the
Independent Appraiser shall be borne equally by the Company and such objecting
Seller, and all costs and expenses of the Independent Appraiser in excess of
$50,000 shall be borne solely by the Company.
(c) Following the consummation of the IPO, (i) if the Common Shares
are listed on a national securities exchange on any date on which the Fair
Market Value per Surrendered Share is to be determined, the Fair Market Value
per Common Share shall be deemed to be the average of the last sales price for
Common Shares for the twenty (20) trading days immediately preceding the date of
repurchase of the Surrendered Shares, and (ii) if a public market exists for
the Common Shares on any date on which the Fair Market Value per Share is to be
determined, but the Common Shares are not listed on a national securities
exchange on such date, the Fair Market Value per Surrendered Share shall be
deemed to be the average of the mean between the closing bid and asked
quotations in the national quotation system or over-the-
33
counter market for the twenty (20) trading days immediately preceding the date
of repurchase of the Surrendered Shares.
ARTICLE 5
REGISTRATION RIGHTS
5.1 DEMAND REGISTRATION. (a) Upon the written request of (i) ZS or
(ii) DLJMB on behalf of the DLJMB Entities (a "Selling Shareholder"), requesting
that the Company effect the registration under the Securities Act of any or all
such Selling Shareholder's Registrable Shares and specifying the intended method
of disposition thereof, the Company will promptly give written notice of such
requested registration (a "Demand Registration") at least 20 days prior to the
anticipated filing date of the registration statement relating to such Demand
Registration to all other Shareholders, and thereupon will use its best efforts
to effect, as expeditiously as possible, the registration under the Securities
Act of:
(i) the Registrable Shares that the Company has been so
requested to register by the Selling Shareholder, then held by the Selling
Shareholder, but, in the case of the Management Shareholders, subject to the
provisions of Article 3 hereof; and
(ii) all other Registrable Shares that any other Shareholder
or their Permitted Transferees (all such Shareholders, together with the
Selling Shareholder, the "Holders") has requested the Company to register,
subject to Article 3 hereof (in the case of the Management Shareholders
only) and Section 5.2 hereof, by written request received by the Company
within ten (10) days after the receipt by such Holders of such written
notice given by the Company,
all to the extent necessary to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Shares so to be
registered; PROVIDED, HOWEVER, that (i) the Company shall not be obligated to
effect more than one Demand Registration in any four-month period, (ii) the
Company shall not be obligated to effect (A) more than five Demand Registrations
for the DLJMB Entities (taken as a group) or (B) more than one Demand
Registration for ZS pursuant to this Section 5.1, (iii) ZS will not be permitted
to exercise a Demand Registration until after the consummation of the IPO, (iv)
the Company shall not be obligated to effect a Demand Registration unless, in
the reasonable judgment of DLJMB exercised in good faith, the aggregate
Registrable Shares requested to be included
34
in such Demand Registration by the Holders would have a fair market value of at
least $20,000,000, or, in the case of ZS's Demand Registration, in the
reasonable judgment of the Board exercised in good faith, the aggregate
Registrable Shares requested to be included in such Demand Registration would
have a fair market value of at least $5,000,000 and represent not less than 50%
of ZS's Initial Ownership, (v) the Company may delay the filing of a
registration statement pursuant to a Demand Registration for a reasonable period
(not to exceed 90 days), if, in the good faith judgment of the Company, the
Company would be required to include in such registration statement material
business information which at that time cannot be publicly disclosed without
material disruption of a significant corporate development or transaction then
pending or in progress and without material adverse consequences, and (vi) if
the effective date of the registration statement would otherwise be 45 calendar
days after, but prior to 90 calendar days after, the end of the Company's fiscal
year, and the Securities Act requires the Company to include audited financials
(as of the end of such fiscal year) or the Securities Act permits the use of,
and DLJMB or ZS, pursuant to their demand request, has requested that the
registration statement include audited financials (as of the end for such fiscal
year), the Company may delay the filing of a registration statement for such
period as is reasonably necessary (not to exceed a date 90 calendar days after
the end of the Company's fiscal year) to include therein its audited financial
statements for such fiscal year.
Promptly after the expiration of the ten-day period referred to in
Section 5.1(a)(ii) hereof, the Company will notify all the Holders to be
included in the Demand Registration of the other Holders and the number of
shares of Registrable Shares requested to be included therein in accordance with
Section 5.2. The Selling Shareholder requesting a registration under this
Section 5.1(a) may, at any time prior to the effective date of the registration
statement relating to such Demand Registration, revoke such request, without
liability to any of the other Holders, by providing a written notice to the
Company and such other Holders irrevocably revoking such request, in which case
such request, so revoked, shall not be considered a Demand Registration if any
Registration Expenses incurred by the Company as a result of such revoked
request are paid by such Selling Shareholder; PROVIDED, HOWEVER, that any other
Shareholder entitled to request a Demand Registration under this Section 5.1(a)
may request the Company to continue such registration by providing written
notice within five days of receipt of the notice revoking the original request,
in which case such
35
registration shall constitute a Demand Registration of such other Shareholder.
(b) The Company will pay all Registration Expenses in connection
with any Demand Registration, except as otherwise provided in the last paragraph
of Section 5.1(a) hereof.
(c) A Demand Registration requested pursuant to Section 5.1(a) shall
not be deemed to have been effected unless the registration statement relating
thereto (i) has become effective under the Securities Act and (ii) has remained
effective for a period of at least 120 days (or such shorter period in which all
Registrable Shares of the Holders included in such Demand Registration has
actually been sold thereunder); PROVIDED, HOWEVER, that, if after any
registration statement requested pursuant to this Section 5.1 becomes
effective, such registration statement is interfered with by any stop order,
cease trade order, injunction or other order or requirement of the SEC, or other
governmental agency or court solely due to the actions or omissions to act of
the Company, such registration statement shall be at the sole expense of the
Company and shall not be considered a Demand Registration.
(d) If a Demand Registration involves a Public Offering and the
managing underwriter thereof shall advise the Company and the Selling
Shareholder that, in its view, (i) the number of Common Shares or other shares
of common stock of the Company requested to be included in such registration
(including Common Shares or other shares of common stock of the Company which
the Company proposes to be included that are not Registrable Shares) or (ii) the
inclusion of some or all of the Registrable Shares owned by the Holders, in
either case, exceeds the largest number of Shares (including any other shares of
common stock of the Company) that can be sold without having an adverse effect
on such Public Offering, including the price at which such shares can be sold
(the "Maximum Offering Size"), the Company will include in such registration, in
accordance with the priority listed below, up to and not in excess of the
Maximum Offering Size:
(A) if such Demand Registration is being effected pursuant
to DLJMB's initial Demand Registration request, FIRST, all Registrable
Shares requested to be included in such Demand Registration by the DLJMB
Entities; SECOND, subject, in the case of the Management Shareholders, to
Article 3 hereof, including, without limitation, the Public Offering
Limitations, all Registrable Shares requested to be included in such Demand
Registration by ZS and the
36
Management Shareholders pro rata on the basis of the relative number of
Registrable Shares offered for sale under such registration by ZS and each
of the Management Shareholders; and THIRD, any Common Shares (or other
shares of common stock of the Company) proposed to be included in such
Demand Registration by the Company;
(B) if such Demand Registration is being effected pursuant
to any of DLJMB's Demand Registration requests other than its initial Demand
Registration request, FIRST, all Registrable Shares requested to be included
in such Demand Registration by the DLJMB Entities and ZS pro rata on the
basis of the relative number of Registrable Shares offered for sale under
such registration by each of the DLJMB Entities and ZS; SECOND, subject to
Article 3, including, without limitation, the Public Offering Limitations,
all Registrable Shares requested to be included in such Demand Registration
by the Management Shareholders pro rata on the basis of the relative number
of Registrable Shares offered for sale under such registration by each of
the Management Shareholders; and THIRD, any Common Shares (or other shares
of common stock of the Company) proposed to be included in such Demand
Registration by the Company; and
(C) if such Demand Registration is being effected pursuant
to ZS's Demand Registration request, FIRST, all Registrable Shares requested
to be included in such Demand Registration by ZS; SECOND, all Registrable
Securities to be included in such Demand Registration by the DLJMB Entities
and, subject to Article 3, including, without limitation, the Public
Offering Limitations, the Management Shareholders pro rata on the basis of
the relative number of Registrable Shares offered for sale under such
registration by each of the DLJMB Entities and each of the Management
Shareholders; and THIRD, any Common Shares (or other shares of common stock
of the Company) proposed to be included in such Demand Registration by the
Company.
If as a result of the proration provisions of this Section 5.1{d), any Holder of
Registrable Shares is not entitled to include all such Registrable Shares in
such Demand Registration, such Holder may elect to withdraw his, her or its
request to include any Registrable Shares in such Demand Registration (a
"Withdrawal Election"); PROVIDED, HOWEVER, that a Withdrawal Election shall be
irrevocable and any Holder of Registrable Shares who has made a Withdrawal
Election shall no longer have any right to include any Registrable Shares in
such Demand Registration as to which such Withdrawal Election was made.
37
The number of securities required to satisfy any underwriters' over-allotment
option shall be allocated pro rata among all Holders of Registrable Shares and
the Company on the basis of the relative number of securities otherwise to be
included by each of them in the registration with respect to which such
over-allotment option relates.
5.2 INCIDENTAL REGISTRATION. (a) If the Company proposes to register
any of its Common Shares or any other shares of common stock of the Company
under the Securities Act (other than a registration (i) on Form S-8 or S-4 or
any successor or similar forms, (ii) relating to Common Shares or any other
shares of common stock of the Company issuable upon exercise of employee share
options or in connection with any employee benefit or similar plan of the
Company or (iii) in connection with a direct or indirect acquisition by the
Company of another Person or any transaction with respect to which Rule 145 (or
any successor provision) under the Securities Act applies), whether or not for
sale for its own account, it will each such time, subject to the provisions of
Article 3 (including, without limitation, in the case of the Management
Shareholders, the Public Offering Limitations) and 5.2(b) hereof, give prompt
written notice at least 20 days prior to the anticipated filing date of the
registration statement relating to such registration to each Shareholder, which
notice shall set forth such Shareholders' rights under this Section 5.2 and
shall offer all Shareholders the opportunity to include in such registration
statement such number of Registrable Shares as each such Shareholder may request
(an "Incidental Registration"); PROVIDED, HOWEVER, that the provisions of
Section 5.1 hereof and not this Section 5.2 shall apply to the ability of any
Shareholder to participate in any registration being effected pursuant to a
Demand Registration contemplated by Section 5.1 hereof. Upon the written request
of any such Shareholder made within ten (10) days after the receipt of notice
from the Company (which request shall specify the number of Registrable Shares
intended to be disposed of by such Shareholder), the Company will use its best
efforts to effect the registration under the Securities Laws of all Registrable
Shares that the Company has been so requested to register by such Shareholders,
to the extent requisite to permit the disposition of the Registrable Shares so
to be registered; PROVIDED, HOWEVER, that (A) if such registration involves a
Public Offering, all such Shareholders requesting to be included in the
Company's registration must sell their Registrable Shares to the underwriters
selected as provided in Section 5.4(f) hereof on the same terms and conditions
as apply to the Company or the Selling Shareholders, in the case of Demand
Registrations pursuant to Section 5.1 hereof, and (B) if, at any time after
giving written
38
notice of its intention to register any shares pursuant to this Section 5.2(a)
and prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine for any reason
not to register such shares, the Company shall give written notice to all such
Shareholders and, thereupon, shall be relieved of its obligation to register any
Registrable Shares in connection with such registration (without prejudice,
however, to rights of any of the Shareholders under Section 5.1 hereof). No
registration effected under this Section 5.2 shall relieve the Company of its
obligations to effect a Demand Registration to the extent required by Section
5.1 hereof. The Company will pay all Registration Expenses in connection with
each registration of Registrable Shares requested pursuant to this Section 5.2.
(b) If a registration pursuant to this Section 5.2 involves a Public
Offering (other than in the case of a Public Offering requested by DLJMB or ZS
in a Demand Registration, in which case the provisions with respect to priority
of inclusion in such Public Offering set forth in Section 5.1(d) hereof shall
apply) and the managing underwriter thereof advises the Company that, in its
view, the number of Common Shares or other shares of common stock of the Company
that the Company and such Shareholders intend to include in such registration
exceeds the Maximum Offering Size, the Company will include in such
registration, in the following priority, only that number of Shares such that
the number of Registrable Shares registered does not exceed the Maximum Offering
Size:
(i) FIRST, all of the Common Shares or other shares of
common stock of the Company proposed to be registered by the Company as
would not cause the offering to exceed the Maximum Offering Size; and
(ii) SECOND, all Registrable Shares requested to be included
in such registration by any Shareholder pursuant to this Section 5.2,
allocated, if necessary for the offering not to exceed the Maximum Offering
Size, FIRST, among the DLJMB Entities and ZS pro rata on the basis of the
relative number of Registrable Shares offered for sale under such
registration by each of the DLJMB Entities and ZS, and SECOND, subject to
the provisions of Article 3, including, without limitation, the Public
Offering Limitations, among the Management Shareholders pro rata on the
basis of the relative number of Registrable Shares offered for sale under
such registration by each of the Management Shareholders; PROVIDED, HOWEVER,
that, if such Public Offering is the IPO, then no Shareholder shall have the
right under this Section
39
5.2 to be included in the registration relating thereto unless any of the
DLJMB Entities' Shares are to be included therein, and then only subject to
the priority set forth in this clause (ii), except to the extent the IPO is
being effected pursuant to the DLJMB Entities' initial Demand Registration,
in which case, the provisions of Section 5.1(d)(A) hereof shall apply.
If as a result of the proration provisions of this Section 5.2(b), any Holder of
Registrable Shares is not entitled to include all such Registrable Shares in
such registration, such Holder may elect to withdraw his, her or its request to
include any Registrable Shares in such registration {an "Incidental Withdrawal
Election"); PROVIDED, HOWEVER, that an Incidental Withdrawal Election shall be
irrevocable and any Holder of Registrable Shares who has made an Incidental
Withdrawal Election shall no longer have any right to include any Registrable
Shares in such registration as to which such Incidental Withdrawal Election was
made. With respect to registrations pursuant to this Section 5.2, the number of
securities required to satisfy any underwriters' over-allotment option shall be
allocated pro rata among the Company and all Holders of Registrable Shares on
the basis of the relative number of securities otherwise to be included by each
of them in the registration with respect to which such over-allotment option
relates.
5.3 HOLDBACK AGREEMENTS. If any registration of Registrable Shares
shall be in connection with a Public Offering, each Shareholder agrees not to
effect any Public Sale of any Registrable Shares, and not to effect any such
Public Sale of any other Common Shares of the Company or of any shares
convertible into or exchangeable or exercisable for any Common Shares of the
Company (in each case, other than as part of such Public Offering) during the 14
days prior to the effective date of such registration statement (except as part
of such registration) or during the period after such effective date equal to
the lesser of (i) 180 days or (ii) such shorter period as the Company and the
managing underwriter agree (but not less than 90 days).
5.4 REGISTRATION PROCEDURES. Whenever Shareholders request that any
Registrable Shares be registered pursuant to Section 5.1 or 5.2 hereof, the
Company will, subject to the provisions of such Sections, use its best efforts
to effect the registration and the sale of such Registrable Shares in accordance
with the intended method of disposition thereof and the applicable provisions of
Section 5.1 or 5.2, as appropriate, as promptly as practicable, and in
connection with any such request:
40
(a) The Company will as expeditiously as possible prepare and file
with the SEC a registration statement on any form for which the Company then
qualifies or which counsel for the Company shall deem appropriate and which form
shall be available for the sale of the Registrable Shares to be registered
thereunder in accordance with the intended method of distribution thereof, and
use its best efforts to cause such filed registration statement to become and
remain effective for a period of not less than 120 days.
(b) The Company will, if requested, prior to filing a registration
statement or prospectus or any amendment or supplement thereto, furnish to each
Shareholder and each underwriter, if any, of the Registrable Shares covered by
such registration statement copies of such registration statement as proposed to
be filed, and thereafter the Company will furnish to such Shareholder and
underwriter, if any, such number of copies of such registration statement, each
amendment and supplement thereto (in each case including all exhibits thereto
and documents incorporated by reference therein), the prospectus included in
such registration statement (including each preliminary prospectus) and such
other documents as such Shareholder or underwriter may reasonably request in
order to facilitate the disposition of the Registrable Shares owned by such
Shareholder.
(c) After the filing of the registration statement, the Company will
promptly notify each Shareholder holding Registrable Shares covered by such
registration statement of any stop order or cease trade order issued or
threatened by the SEC and take all reasonable actions required to prevent the
entry of such stop order or cease trade order or to remove or revoke it if
entered.
(d) The Company will use its best efforts to (i) register or qualify
the Registrable Shares covered by such registration statement under such other
securities or blue sky laws of such jurisdictions in the United States as any
Shareholder holding such Registrable Shares reasonably (in light of such
Shareholder's intended plan of distribution) requests and (ii) cause such
Registrable Shares to be registered with or approved by such other governmental
agencies or authorities as may be necessary by virtue of the business and
operations of the Company and do any and all other acts and things that may be
reasonably necessary or advisable to enable such Shareholder to consummate the
disposition of the Registrable Shares owned by such Shareholder; PROVIDED that
the Company will not be required to (A) qualify generally to do business in any
jurisdiction where
41
it would not otherwise be required to qualify but for this paragraph (d),
(B) subject itself to taxation in any such jurisdiction or (C) consent to
general service of process in any such jurisdiction.
(e) The Company will immediately notify each Shareholder holding
such Registrable Shares, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the occurrence of an event
requiring the preparation of a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable Shares, such
prospectus will contain full, true and plain disclosure of all material facts
relating to the securities covered thereby and will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances in which they were made and promptly prepare and make
available to each such Shareholder any such supplement or amendment.
(f) DLJSC will have the exclusive right to act as lead managing
underwriter in connection with any Public Offering, which may include any
Affiliate of DLJSC, on arm's-length terms, including with respect to the
compensation of DLJSC; PROVIDED, HOWEVER, that, if such Public Offering relates
to ZS's Demand Registration, such arm's-length terms shall be no more favorable,
on an aggregate basis, to DLJSC than those that could be obtained from another
nationally recognized investment banking firm for such proposed Public Offering.
The Company will enter into customary agreements (including an underwriting
agreement in customary form) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of shares in any
such Public Offering, including the engagement of a "qualified independent
underwriter" in connection with the qualification of the underwriting
arrangements with the NASD.
(g) Upon the execution of confidentiality agreements in form and
substance satisfactory to the Company, the Company will make available for
inspection by any Shareholder and any underwriter participating in any
disposition pursuant to a registration statement being filed by the Company
pursuant to this Section 5.4 and any attorney, accountant or other professional
retained by any such Shareholder or underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate documents
and properties of the Company (collectively, the "Records") as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and
42
employees to supply all information reasonably requested by any Inspectors in
connection with such registration statement. Records that the Company
determines, in good faith, to be confidential and that it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless (i)
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in such registration statement or (ii) the release of such Records
is ordered pursuant to a subpoena or other order from a court of competent
jurisdiction. Each Shareholder agrees that information obtained by it as a
result of such inspections shall be deemed confidential and shall not be used by
it as the basis for any market transactions in the securities of the Company
unless and until such is made generally available to the public. Each
Shareholder further agrees that it will, upon learning that disclosure of such
Records is sought in a court of competent jurisdiction, give notice to the
Company and allow the Company, at its own expense, to undertake appropriate
action to prevent disclosure of the Records deemed confidential.
(h) The Company will furnish to each such Shareholder and to each
such underwriter, if any, a signed counterpart, addressed to such underwriter,
of (i) an opinion or opinions of counsel to the Company and (ii) a comfort
letter or comfort letters from the Company's independent public or chartered
accountants, each in customary form and covering such matters of the type
customarily covered by opinions or comfort letters, as the case may be, as the
holders of a majority of the Shares being sold for the account of the DLJMB
Entities, ZS or of the Management Shareholders, or the managing underwriter
therefor reasonably requests.
(i) The Company shall use its best efforts to cause all the
Registrable Shares in any registration under this Article 5 to be listed on the
principal securities exchange or included in the over-the-counter market on
which similar securities issued by the Company are then listed or quoted, as the
case may be, or eligible for listing or quotation, or on The Nasdaq Stock Market
or such other national securities exchange as the Board may designate.
(j) The Company will otherwise use its best efforts to comply with
all applicable rules and regulations of the SEC including, without limitation,
making available to its security holders, as soon as reasonably practicable, an
earnings statement covering a period of 12 months, beginning within three months
after the effective date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act.
43
(k) The Company may require, as a condition to including any
Holder's Registrable Shares in any registration under this Article 5, each such
Shareholder to promptly furnish in writing to the Company such information
regarding such Shareholder, the distribution of the Registrable Shares and such
other information as the Company may from time to time reasonably request in
connection with such registration. The Company shall permit any holder of
Registrable Shares, which holder, in its sole judgment, exercised in good faith,
and upon advice of counsel, might be deemed to be an underwriter or a
controlling person of the Company, to participate in the preparation of such
registration or comparable statement and to require the insertion therein of
material, furnished to the Company in writing, which in the reasonable judgment
of such holder and its counsel should be included.
(1) Each such Shareholder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
5.4(e) hereof, such Shareholder will forthwith discontinue disposition of
Registrable Shares pursuant to the registration statement covering such
Registrable Shares until such Shareholder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 5.4(e) hereof, and,
if so directed by the Company, such Shareholder will deliver to the Company all
copies, other than any permanent file copies then in such Shareholder's
possession, of the most recent prospectus covering such Registrable Shares at
the time of receipt of such notice. In the event that the Company shall give
such notice, the Company shall extend the period during which such registration
statement shall be maintained effective (including the period referred to in
Section 5.4(a) hereof) by the number of days during the period from and
including the date of the giving of notice pursuant to Section 5.4(e) hereof to
the date when the Company shall make available to such Shareholder a prospectus
supplemented or amended to conform with the requirements of Section 5.4(e)
hereof.
5.5 INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless each Shareholder holding Registrable Shares covered by a
registration statement, its officers, directors and agents, and each Person, if
any, who controls such Shareholder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages and liabilities (including those resulting from any
order made or any inquiry, investigation or proceeding commenced or threatened
by any securities regulatory authority, stock exchange or by any other competent
authority) caused by any untrue statement or alleged untrue
44
statement of a material fact contained in any registration statement or
prospectus relating to the Registrable Shares (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which they
were made, except insofar as such losses, claims, damages or liabilities are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information furnished in writing to the Company by such
Shareholder or on such Shareholder's behalf expressly for use therein; PROVIDED
that if such Shareholder is a DLJMB Entity, the exception shall extend to all
DLJMB Entities; and PROVIDED FURTHER, that the Company shall not be liable
for any untrue statement or omission contained in a preliminary prospectus,
which untrue statement or omission was corrected in a final prospectus or
supplement that was furnished to such Shareholder. The Company also agrees to
indemnify any underwriters of the Registrable Shares, their officers, directors,
employees and agents, and each Person, if any, who controls such underwriters
(other than in respect of loss of profit or information relating solely to the
underwriters) on substantially the same basis as that of the indemnification of
the Shareholders provided in this Section 5.5 and which indemnification shall
provide, in addition, an indemnity in respect of any breach of representation or
warranty of the Company contained in any underwriting agreement in respect of
Registrable Shares.
5.6 INDEMNIFICATION BY PARTICIPATING SHAREHOLDERS. Each Shareholder
holding Registrable Shares included in any registration statement agrees,
severally but not jointly, to indemnify and hold harmless the Company, its
officers, directors and agents and each Person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from the Company
to such Shareholder, but only with respect to information furnished in writing
by such Shareholder or on such Shareholder's behalf expressly for use in any
registration statement or prospectus relating to the Registrable Shares, or any
amendment or supplement thereto, or any preliminary prospectus, and only up to
an amount equal to the aggregate purchase price received by such Shareholder
from the sale of such Shareholder's Registrable Shares in such registration.
Each such Shareholder also agrees to indemnify and hold harmless underwriters
(other than in respect of loss of profit or information relating to the
underwriters) of the
45
Registrable Shares, their officers, directors, employees and agents and each
person who controls such underwriters on substantially the same basis as that of
the indemnification of the Company provided in this Section 5.6. As a condition
to including Registrable Shares in any registration statement filed in
accordance with Article 5 hereof, the Company may require that it shall have
received an undertaking reasonably satisfactory to it from any underwriter to
indemnify and hold it harmless to the extent customarily provided by
underwriters with respect to similar securities.
5.7 CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case any proceeding
(including any governmental investigation) shall be instituted involving any
Person in respect of which indemnity may be sought pursuant to this Article 5,
such Person (an "Indemnified Party") shall promptly notify the Person against
whom such indemnity may be sought (the "Indemnifying Party") in writing and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Indemnified Party, and shall assume the
payment of all fees and expenses; PROVIDED, HOWEVER, that the failure of any
Indemnified Party so to notify the Indemnifying Party shall not relieve the
Indemnifying Party of his or its obligations hereunder except to the extent that
the Indemnifying Party is materially prejudiced by such failure to notify. In
any such proceeding, any Indemnified Party shall have the right to retain his or
its own counsel, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such counsel,
(ii) the Indemnifying Party shall have failed to assume the defense and employ
counsel or (iii) in the reasonable judgment of such Indemnified Party
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them or differing legal defenses
available to them. It is understood that the Indemnifying Party shall not, in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the reasonable fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) at any time for all such
Indemnified Parties, and that all such fees and expenses shall be reimbursed as
they are incurred. In the case of any such separate firm for the Indemnified
Parties, such firm shall be designated in writing by the Indemnified Parties.
The Indemnifying Party shall not be liable for any settlement of any proceeding
effected without his or its written consent (not to be unreasonably withheld),
but if settled with such consent, or if there be a final judgment for the
plaintiff, the Indemnifying
46
Party shall indemnify and hold harmless such Indemnified Parties from and
against any loss or liability (to the extent stated above) by reason of such
settlement or judgment; PROVIDED, HOWEVER, that, if any case where the fees and
expenses of counsel are at the expense of the Indemnifying Party in accordance
with this Article 5 and an Indemnified Party shall have requested the
Indemnifying Party to reimburse the Indemnified Party for such fees and expenses
of counsel as incurred, such Indemnifying Party agrees that it shall be liable
for any settlement of any action effected without its written consent if (i)
such settlement is entered into more than ten (10) Business Days after the
receipt by such Indemnifying Party of the aforesaid request and (ii) such
Indemnifying Party shall have failed to reimburse the Indemnified Party in
accordance with such request for reimbursement prior to the date of such
settlement. No Indemnifying Party shall, without the prior written consent of
the Indemnified Party (not to be unreasonably withheld), effect any settlement
of any pending or threatened proceeding in respect of which any Indemnified
Party is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability arising out
of such proceeding.
5.8 CONTRIBUTION. If the indemnification provided for in this
Article 5 is unavailable to the Indemnified Parties in respect of any losses,
claims, damages or liabilities referred to herein, then each such Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such losses,
claims, damages or liabilities (i) as between the Company and the Shareholders
holding Registrable Shares covered by a registration statement on the one hand
and the underwriters on the other, in such proportion as is appropriate to
reflect the relative benefits received by the Company and such Shareholders on
the one hand and the underwriters on the other, from the offering of the
Registrable Shares, or if such allocation is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits but
also the relative fault of the Company and such Shareholders on the one hand and
of such underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations and (ii) as between the Company on the
one hand and each such Shareholder on the other, in such proportion as is
appropriate to reflect the relative fault of the Company and of each such
Shareholder in connection with such statements or omissions, as well as any
other relevant equitable
47
considerations. The relative benefits received by the Company and such
Shareholders on the one hand and such underwriters on the other shall be deemed
to be in the same proportion as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company and such Shareholders bear to the total underwriting discounts
and commissions received by such underwriters, in each case as set forth in the
table on the cover page of the prospectus. The relative fault of the Company and
such Shareholders on the one hand and of such underwriters on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company and such
Shareholders or by such underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The relative fault of the Company on the one hand and of
each such Shareholder on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied in writing by such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Shareholders agree that it would not be just and
equitable if contribution pursuant to this Section 5.8 were determined by pro
rata allocation (even if the underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 5.8, no underwriter shall be
required to contribute any amount in excess of the amount of the total fees,
discounts and commissions received by it, and no Shareholder shall be required
to contribute any amount in excess of the amount of the proceeds received by
such Shareholder in respect of a sale of its Registrable Shares. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. Each
48
such Shareholder's obligation to contribute pursuant to this Section 5.8 is
several in the proportion that the proceeds of the offering received by such
Shareholder bears to the total proceeds of the offering received by all such
Shareholders and not joint.
5.9 PARTICIPATION IN PUBLIC OFFERING. No Person may participate in
any Public Offering hereunder unless such Person (a) agrees to sell such
Person's securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and not
inconsistent with this Agreement and (b) completes and executes all
questionnaires, powers of attorney, indemnities (which indemnities shall not be
inconsistent with the indemnification provisions contained in this Article 5),
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements and the provisions of this Agreement in
respect of registration rights.
ARTICLE 6
PREEMPTIVE RIGHTS
6.1 PREEMPTIVE RIGHTS. (a) In the event the Company proposes to
issue Common Shares or shares of any other class of common stock of the Company
(any such securities and the Common Shares are for the purposes of this
Section 6.1 referred to as "Shares of Common Equity"), or any securities
convertible into or exercisable or exchangeable for Shares of Common Equity
("Convertible Securities"), to the DLJMB Entities (or any Affiliate of a DLJMB
Entity) other than the issuance of Warrant Shares, the Company shall give ZS and
Uhlenhop written notice of such proposed issuance and ZS and Uhlenhop shall have
the right, but not the obligation, exercisable within 35 days after receipt of
such notice, to require the Company to, and in the event such right is
exercised, the Company shall offer ZS and Uhlenhop the opportunity to, acquire
such Shares of Common Equity or Convertible Securities on the same basis so that
the proportionate interest of each party who actually acquires Shares of Common
Equity or Convertible Securities as contemplated in this Section 6.1(a)
(including any issuance that gives rise to the applicability of this Section
6.1(a)) in the Fully Diluted Shares of Common Equity relative to each other
party who actually acquires Shares of Common Equity or Convertible Securities as
contemplated in this Section 6.1(a) (including any issuance that gives rise to
the applicability of this Section 6.1(a)) would remain the same after giving
effect to the issuance of such Shares or Convertible Securities; PROVIDED,
HOWEVER, that, to the extent applicable, the calculation of Uhlenhop's
proportionate
49
interest shall be based solely on the sum of the Common Shares he owns and the
Vested Option Shares he is otherwise entitled to as of the date of the
determination of such proportionate interest. Such issuance shall be at the same
price per share and on terms no less favorable to ZS and Uhlenhop than those of
the proposed issuance to the DLJMB Entities (or any Affiliate of a DLJMB
entity). Notwithstanding the foregoing, neither ZS nor Uhlenhop shall have any
preemptive right with respect to any Shares of Common Equity or Convertible
Securities issued to or on behalf of directors, officers or employees of the
Company or any of its subsidiaries pursuant to duly adopted stock bonus, stock
option or other employee compensation plans or agreements. The rights granted to
ZS and Uhlenhop pursuant to this Section 6.1(a) shall be available to such party
only so long as such party owns beneficially at least 25% of its or his, as the
case may be, Initial Ownership.
(b) Each of the Shareholders agree to take all such actions,
including, without limitations, amending the Articles of Incorporation and
Bylaws, as are reasonably required to give effect to the provisions of Section
6.1(a).
ARTICLE 7
CONFIDENTIALITY
7.1 CONFIDENTIALITY. (a) Each Shareholder hereby agrees that
Confidential Information (as defined below) was furnished to it and will be
furnished to it in connection with such Shareholder's direct or indirect
investment in the Company. Each Shareholder agrees that he, she or it will not
use the Confidential Information for any purpose other than the Company's
purpose. Each Shareholder further acknowledges and agrees that he, she or it
will not disclose any Confidential Information to any Person; PROVIDED, HOWEVER,
that Confidential Information may be disclosed (i) to such Shareholder's
Representatives (as defined below) in the normal course of the performance of
their duties who have been advised of the confidential nature of the
Confidential Information and have agreed to be bound by the restrictions set
forth herein, (ii) to the extent required by applicable law, rule or regulation
(including complying with any oral or written questions, interrogatories,
requests for information or documents, subpoena, civil investigative demand or
similar process to which a Shareholder is subject), PROVIDED that the disclosing
party shall give notice of such disclosure requirement to the appropriate party
at the earliest practicable time so that such party may seek an appropriate
protective order for such Confidential Information, (iii) to any Person to whom
50
such Shareholder is contemplating a Transfer of his, her or its Shares (directly
or indirectly), PROVIDED that such Transfer would not be in violation of the
provisions of this Agreement and as long as such Person is advised of the
confidential nature of such information and agrees to be bound by a
confidentiality agreement in form and substance satisfactory to the Company and
the provisions hereof, or (iv) if the prior written consent of the Board shall
have been obtained. Nothing contained herein shall prevent the use of
Confidential Information in connection with the assertion or defense of any
claim by or against the Company or any Shareholder.
(b) "Confidential Information" means all information or material
relating to the Company not generally known by non-Company personnel which (i)
is marked "Confidential Information", "Proprietary Information" or other similar
marking, including, without limitation, the information contained in the
preliminary Offering Memorandum dated May 2, 1997 and the final Offering
Memorandum dated May 15, 1997, each of which relate to the offering of 10-3/8%
Senior Subordinated Notes due 2007 of Xxx Xxxxxxxx Press, Inc., (ii) is known by
such Shareholder to be considered confidential and proprietary by the Company or
(iii) derives value by virtue of the fact that it is not generally known;
PROVIDED, HOWEVER, that the term "Confidential Information" does not include
information that (A) was or becomes generally available publicly other than
through disclosure by a Shareholder or his, her or its Permitted Transferees,
employees, officers, agents, partners, Affiliates, advisors, counsel or
representatives (all such Persons being collectively referred to as
"Representatives") in violation of this Agreement or any other confidentiality
agreement to which such Shareholder is a party, (B) was available to such
Shareholder on a non-confidential basis prior to disclosure hereunder, excepting
any such information provided to a Shareholder by the Company in connection with
the execution of this Agreement, or (C) becomes available to a Shareholder from
a source not known to such Shareholder to have a duty of confidentiality with
regard to such information.
(c) Notwithstanding the foregoing, the provisions of Section 7.1(a)
and 7.1(b) shall not apply to Uhlenhop, whose obligation to maintain the
confidentiality of certain information relating to the Company is set forth in
the Uhlenhop Employment Agreement.
7.2 SPECIFIC PERFORMANCE. Each Shareholder recognizes that the
possible restrictions on each Shareholder's activities which may occur as a
result of such Shareholder's performance of such Shareholder's obligations under
Section 7.1 hereof are
51
required for the reasonable protection of the Company and its subsidiaries and
Affiliates and their investments against irreparable harm, and each such
Shareholder expressly acknowledges, based upon independent legal advice, that
such restrictions are fair and reasonable for that purpose. Subject to Section
8.10 hereof, each Shareholder acknowledges and agrees that the Company's
remedies at law for a breach or threatened breach of any of the provisions of
Section 7.1 hereof would be inadequate to prevent irreparable harm and, in
recognition of this fact, each such Shareholder agrees that in the event of such
a breach or threatened breach, in addition to any remedies at law, the Company
and its subsidiaries and Affiliates, without posting any bond, shall be entitled
to obtain equitable relief in the form of specific performance, temporary
restraining order, temporary or permanent injunction or any other equitable
remedy which may then be available.
ARTICLE 8
MISCELLANEOUS
8.1 ENTIRE AGREEMENT; NO INCONSISTENT AGREEMENTS. (a) This
Agreement, the Merger Agreement, each of the Management Stock Purchase
Agreements dated May 22, 1997 between a Management Shareholder and VH
Acquisition Corp., the Securities Purchase Agreement dated May 22, 1997 among
the DLJMB Entities and VH Acquisition Corp., and the financial advisor agreement
referred to in Section 8.3 hereof constitute the entire agreement among the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral and written, among the parties hereto with
respect to the subject matter hereof.
(b) The Company will not hereafter enter into any agreement with
respect to its securities which is inconsistent with the rights granted to the
holders of Registrable Shares in this Agreements, including, without limitation,
any agreement which shall grant any registration rights in respect of the Shares
on a parity with or with priority over those granted herein. The Company has not
previously entered into any agreement with respect to any of its securities
granting any registration rights to any Person, other than registration rights
granted pursuant to the Preferred Shares Registration Rights Agreement dated as
of May 22, 1997 by and among the Company and the DLJMB Entities or pursuant to
agreements that have been heretofore terminated.
52
8.2 BINDING EFFECTS; BENEFIT. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
successors, legal representatives and permitted assigns, including any Permitted
Transferee to whom Shares are transferred unless transferred, in accordance with
the terms of this Agreement pursuant to a Public Sale, in which event, this
Agreement shall not inure to the benefit of any such transferee. Nothing in this
Agreement, expressed or implied, is intended to confer on any Person other than
the parties hereto, and their respective heirs, successors, legal
representatives and permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
8.3 EXCLUSIVE FINANCIAL ADVISOR AND INVESTMENT BANKING ADVISOR.
During the five-year period beginning on the date hereof, DLJSC, or any
Affiliate of DLJSC that DLJMB or DLJSC may choose in their sole discretion,
shall be engaged as the exclusive financial and investment banking advisor for
the Company and its subsidiaries pursuant to the terms of an agreement
substantially in the form of the agreement attached hereto as ANNEX B.
8.4 ASSIGNABILITY. This Agreement shall not be assignable by any
party hereto, except that any Person acquiring Shares who is required by the
terms of this Agreement to become a party hereto shall execute and deliver to
the Company an agreement to be bound by this Agreement and shall thenceforth be
a "Shareholder", and any Shareholder who ceases to beneficially own any Shares
shall cease to be bound by the terms hereof (other than Article 7 and the
provisions of Sections 5.6, 5.7 and 5.8 applicable to such Shareholder with
respect to any offering of Registerable Shares completed before the date such
Shareholder ceased to own any Shares).
8.5 AMENDMENT; WAIVER; TERMINATION. (a) No provision of this
Agreement may be waived except by an instrument in writing executed by the party
against whom the waiver is to be effective. No provision of this Agreement may
be amended or otherwise modified except by an instrument in writing executed by
the Company, with the approval of (i) the Board, (ii) the DLJMB Entities holding
at least a majority of the Shares held by all DLJMB Entities, (iii) ZS and (iv)
the Management Shareholders holding at least a majority of the Shares held by
all Management Shareholders; PROVIDED, HOWEVER, that upon the approval of the
Board of Directors of the Company, Schedule 2 shall be deemed modified to add as
signatories to this Agreement other employees of or consultants to the Company
or its subsidiaries who may acquire Management Options or Common Shares from the
Company, or
53
to otherwise reflect the grant of Management Options to any Management
Shareholder signatory hereto.
(b) Unless otherwise specifically provided herein, this Agreement
shall expire and be of no force and effect upon the earlier to occur of (i) the
tenth anniversary of the consummation of the IPO and (ii) the date on which the
Shares owned beneficially by the DLJMB Entities, in the aggregate, constitute
less than 10% of their Initial Ownership, unless earlier terminated by written
agreement of each party hereto. Notwithstanding the foregoing, the provisions of
Articles 5, 7 and 8 hereof shall survive until the tenth anniversary of the date
hereof.
8.6 NOTICES. All notices, requests and other communications to any
party hereunder shall be in writing (including facsimile transmissions) and
shall be given,
if to the Company, to:
Xxx Xxxxxxxx Corporation
0000 Xxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Chairman of the Board
Chief Executive Officer
Fax: 000-000-0000
with a copy to (which shall not constitute notice to the Company):
DLJ Merchant Banking Partners II, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxx
Fax: 000-000-0000
if to the DLJMB Entities, to:
DLJ Merchant Banking Partners II, L.P.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxx
Fax: 000-000-0000
with copies to (which shall not constitute notice to the DLJMB
Entities):
Xxxxxxxxx, Xxxxxx & Xxxxxxxx
54
Securities Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx Xxxxx, Esq.
Fax: 000-000-0000
and to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Xxxxxxx X. Xxxxx, Esq.
Fax: 000-000-0000
if to ZS, to:
ZS XX XX L.P.
c/o ZS Fund, L.P.
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxxxx
Xxxxxx Xxxxxxxx
Fax: 000-000-0000
with a copy to (which shall not constitute notice to ZS):
Xxxxxxxx & Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxx, Esq.
Fax: 000-000-0000
if to Uhlenhop, to:
Xxxxxx X. Xxxxxxxx
00000 Xxxxxxxx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000
with a copy to (which shall not constitute notice to Uhlenhop):
Xxxxx Xxxx LLP
Xxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Fax: 000-000-0000
55
if to any Management Shareholder (other than Uhlenhop), to such Management
Shareholder's address under such Management Shareholder's name on ANNEX A hereto
or otherwise as it appears on the stock record books of the Company, or such
other address as may be designated in writing by such Management Shareholder to
the Company, with a copy to (which shall not constitute notice to any such
Management Shareholder):
Xxxxx Xxxx LLP
Xxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Fax: 000-000-0000
All notices, requests and other communications delivered in connection
with or pursuant to this Agreement shall be deemed given and received on the
date of receipt by the recipient thereof (or upon refusal if properly delivered)
if received prior to 5 p.m. in the place of receipt and such day is a Business
Day in the place of receipt. Otherwise, any such notice, request or
communication shall be deemed not to have been received until the next
succeeding Business Day in the place of receipt. Any notice, request or other
written communication sent by facsimile transmission shall be confirmed by
certified mail, return receipt requested, posted within one Business Day, or by
personal delivery, whether courier or otherwise, made within two (2) Business
Days after the date of such facsimile transmission. Failure or delay in
delivering copies of any notice, request or other written communication to the
Person specified above to receive a copy thereof shall in no way adversely
affect the effectiveness of such notice, request or other written communication.
Any Person who becomes a Shareholder shall provide his or its address
and fax number to the Company, which shall promptly provide such information to
each other Shareholder.
8.7 AFTER-ACQUIRED SHARES. All of the provisions of this Agreement
shall apply to all of the Shares now owned or hereafter issued or transferred to
a Shareholder or to his, her or its Permitted Transferees in consequence of any
additional issuance, purchase, exchange, exercise of conversion rights or
reclassification of Shares, corporate reorganization, or any other form of
recapitalization, or consolidation, or merger, or share split, or share
dividend, or which are acquired by a Shareholder in any other manner, other than
Shares purchased in a Public Sale.
56
8.8 HEADINGS AND REFERENCES TO SECTIONS. The headings contained in
this Agreement are for convenience only and shall not affect the meaning or
interpretation of this Agreement. Sections referenced by numbers only are to the
respective sections of this Agreement.
8.9 SEVERABILITY. If any provision of this Agreement shall be
determined to be illegal and unenforceable by any court of law, the remaining
provisions shall be severable and enforceable in accordance with their terms.
8.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
8.11 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
8.12 SPECIFIC ENFORCEMENT. Each party hereto acknowledges that the
remedies at law of the other parties for a breach or threatened breach of this
Agreement would be inadequate and, in recognition of this fact, any party to
this Agreement, without posting any bond, and in addition to all other remedies
which may be available, shall be entitled to obtain equitable relief in the form
of specific performance, a temporary restraining order, a temporary or permanent
injunction or any other equitable remedy which may then be available.
8.13 ARBITRATION. Subject to Section 8.11 herein, any dispute,
controversy or claim arising out of or relating to this Agreement or to the
breach or alleged breach of this Agreement, whether arising during the term of
this Agreement or after its termination, shall be settled by arbitration, with
respect to any matter relating to a Management Shareholder, in Chicago, Illinois
and, with respect to any other matter, in
New York City in accordance with the
rules and practices, then obtaining, of the American Arbitration Association,
and any judgment upon any such arbitration or an award rendered may be confirmed
in the Supreme Court of the State of
New York or any other court having
jurisdiction thereof, and enforced in any court having jurisdiction thereof. If
the parties are unable to agree upon an arbitrator or arbitrators, then three
arbitrators or two arbitrators and one umpire shall be appointed by the American
Arbitration Association (in the case of a matter with respect to a Management
Shareholder, of Chicago, Illinois, or, in the case of any other matter, of
New
York City), as it may determine, in
57
accordance with the rules and practices, then obtaining, of such association.
8.14 PRONOUNS. Any masculine personal pronoun shall be considered to
mean the corresponding feminine or neuter personal pronoun, and VICE VERSA, as
the context requires.
8.15 TRIAL BY JURY. Each party to this Agreement hereby waives any
right to trial by jury in any action, matter or proceeding regarding this
Agreement or any provision hereof.
[The remainder of this page has been intentionally left blank.]
58
IN WITNESS WHEREOF, the parties hereto have caused this Shareholders'
Agreement to be duly executed as of the day and year first above written.
XXX XXXXXXXX CORPORATION
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: President
DLJ MERCHANT BANKING PARTNERS II, L.P.
By: DLJ MERCHANT-BANKING II, INC.,
Managing General Partner
By: /s/ Xxxx Xxxxxxx
--------------------------------------
Name: Xxxx Xxxxxxx
Title: Attorney-in-Fact
DLJ DIVERSIFIED PARTNERS, L.P.
By: DLJ DIVERSIFIED PARTNERS, INC.
By: /s/ Xxxx Xxxxxxx
--------------------------------------
Name: Xxxx Xxxxxxx
Title: Attorney-in-Fact
DLJ OFFSHORE PARTNERS II, C.V.
By: DLJ MERCHANT BANKING II, INC.,
Managing General Partner
By: /s/ Xxxx Xxxxxxx
--------------------------------------
Name: Xxxx Xxxxxxx
Title: Attorney-in-Fact
[Signature page to Shareholders' Agreement dated as of May 22, 1997 among
Xxx Xxxxxxxx Corporation and its stockholders.]
DLJ EAB PARTNERS, L.P.
By: DLJ MERCHANT BANKING II, INC.
By: /s/ Xxxx Xxxxxxx
--------------------------------------
Name: Xxxx Xxxxxxx
Title: Attorney-in-Fact
DLJMB FUNDING II, INC.
By: /s/ Xxxx Xxxxxxx
--------------------------------------
Name: Xxxx Xxxxxxx
Title: Attorney-in-Fact
DLJ FIRST ESC L.L.C.
BY: DLJ LBO Plans Management Corporation,
Manager
By: /s/ Xxxx Xxxxxxx
--------------------------------------
Name: Xxxx Xxxxxxx
Title: Attorney-in-Fact
UK INVESTMENT PLAN 1997 PARTNERS
By: Xxxxxxxxx, Lufkin & Xxxxxxxx, Inc.
By: /s/ Xxxx Xxxxxxx
--------------------------------------
Name: Xxxx Xxxxxxx
Title: Attorney-in-Fact
ZS XX XX L.P.
By: ZS XX XX, L.L.C.
General Partner
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Manager
[Signature page to Shareholders' Agreement dated as of May 22, 1997 among
Xxx Xxxxxxxx Corporation and its stockholders.]
/s/ Xxxxxx X. Xxxxxxxx
------------------------------------------
Xxxxxx X. Xxxxxxxx
/s/ Xxxxxxx X. Xxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxx
------------------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxxx X. XxXxxx
------------------------------------------
Xxxxxx X. XxXxxx
/s/ Xxx X. Xxxxxxxx
------------------------------------------
Xxx X. Xxxxxxxx
/s/ Xxxx X. Xxxxx
------------------------------------------
Xxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxx
------------------------------------------
Xxxxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxx X. Xxxxxxxxx
------------------------------------------
Xxxxx X. Xxxxxxxxx
[Signature page to Shareholders' Agreement dated as of May 22, 1997 among
Xxx Xxxxxxxx Corporation and its stockholders.]
ANNEX A
LIST OF MANAGEMENT SHAREHOLDERS AND ADDRESSES
Xxxxxxx X. Xxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx Xxxx, Xxxxxxxx 00000
Xxxxx X. Xxxxxx
000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx Xxxx, Xxxxxxxx 00000
Xxxxxx X. XxXxxx
0000 Xxxxxx Xxxx
Xxxxxxxxx Xxxx, Xxxxxxxx 00000
Xxx X. Xxxxxxxx
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Xxxx X. Xxxxx
000 Xxxxxxx XX
Xxxxx Xxxxx, Xxxxxxxx 00000
Xxxxxxx X. Xxxxx
18 Roubound
X.X. Xxx 000
Xxxxxxx, Xxxxxxxxxxxxx 00000
Xxxxxx X. Xxxxxxx
0000 Xxxxxxxxx
Xxxxxx, Xxxxxxxx 00000
Xxxxx X. Xxxxxxxxx
0000 Xxxxxxx 00
Xxxxxx, Xxxxxxxx 00000
ANNEX B
FORM OF FINANCIAL ADVISOR AGREEMENT
(See attached).
SCHEDULE 1
Number of Number of Number
Common Preferred of
Shareholders Shares Shares Warrants
-------------------------------------- ---------- --------- ---------
DLJ Merchant Banking Partners II, L.P. 27,598,266 655,012 3,275,060
DLJ Offshore Partners II, C.V. 1,305,161 30,976 154,880
DLJ Diversified Partners, L.P. 2,127,980 50,505 252,525
DLJ EAB Partners, L.P. 119,167 2,828 14,140
DLJMB Funding II, Inc. 5,646,453 134,012 670,060
DLJ First ESC L.L.C 4,634,740 110,000 550,000
UK Investment Plan 1997 Partners 702,233 16,667 83,335
ZS XX XX L.P. 5,000,000 0 0
Xxxxxx X. Xxxxxxxx 1,228,566 0 0
SCHEDULE 2
Management Number of Number of Granted
Shareholder Common Shares Management Options
------------------ ------------- ------------------
Xxxxxx X. Xxxxxxxx 771,434 2,000,000
Xxxxxxx X. Xxxxxx 100,000 -
Xxxxx X. Xxxxxx 200,000 -
Xxxxxx X. XxXxxx 200,000 -
Xxx X. Xxxxxxxx 150,000 -
Xxxx X. Xxxxx 90,000 -
Xxxx X. Xxxxx 60,000 -
Xxxxxx X. Xxxxxxx 30,000 -
Xxxxx X. Xxxxxxxxx 36,000 -
