STOCKHOLDERS AGREEMENT
Dated as of October 23, 1998
Among
MLC HOLDINGS, INC.
AND CERTAIN OF ITS STOCKHOLDERS
-iii-
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TABLE OF CONTENTS
Page
Section 1. Definitions.......................................-1-
Section 2. Voting Arrangements...............................-7-
(a) Election of Directors.............................-7-
(b) Additional Directors..............................-7-
(c) Removal of Directors..............................-8-
(d) Vacancies.........................................-8-
(e) Rights Unimpaired.................................-8-
(f) APPOINTMENT OF PROXY..............................-8-
(g) Committees........................................-9-
(h) Stock Purchase Warrant............................-9-
(i) Initial ▇▇▇▇▇▇ Directors..........................-9-
(j) Fiduciary Duties Unchanged........................-9-
(k) Election of Subsidiaries' Directors...............-9-
Section 3. Restrictions on Transfer..........................-9-
(a) Restrictions on Transfer..........................-9-
(b) Certain Permitted Transfers......................-10-
(c) Tag-Along Rights.................................-12-
(d) Public ▇▇▇▇▇▇ Offer..............................-14-
(e) Transfers in Violation of this Agreement.........-14-
Section 4. Legends..........................................-14-
(a) Stockholders Agreement Legend....................-14-
(b) Removal of Legends...............................-15-
Section 5. Preemptive Rights................................-15-
(a) Restrictions.....................................-15-
(b) ▇▇▇▇▇▇ Offer.....................................-15-
(c) Stock Offer......................................-15-
(d) Refused Securities...............................-16-
(e) Exclusions.......................................-16-
(f) Excluded Securities..............................-16-
(g) 33.3% Limitation.................................-16-
Section 6. Qualified Sale of the Company....................-17-
(a) Approved Sale....................................-17-
(b) Management Offer.................................-17-
Section 7. Registration Rights..............................-19-
(a) Shelf Registration...............................-19-
(b) Demand Registration..............................-19-
(c) Incidental Registration..........................-19-
(d) Holdback Agreements..............................-20-
(e) Registration and Maintenance Procedures..........-21-
(f) Registration Expenses............................-24-
(g) Indemnification; Contribution....................-25-
(h) Rule 144 Sales...................................-28-
(i) Underwritten Registrations.......................-28-
(j) No Inconsistent Agreements.......................-28-
(k) S-3 Demands......................................-28-
Section 8. Operating Budget.................................-29-
Section 9. Redemption.......................................-29-
Section 10. Rights of First Refusal or First Offer...........-30-
(a) Assignment.......................................-30-
(b) Irrevocable Proxy and Stock Rights Agreement.....-30-
Section 11. Amendment and Waiver.............................-30-
Section 12. Severability.....................................-31-
Section 13. Entire Agreement.................................-31-
Section 14. Successors and Assigns...........................-31-
Section 15. Counterparts.....................................-31-
Section 16. Remedies.........................................-31-
Section 17. Notices..........................................-31-
Section 18. Governing Law....................................-32-
Section 19. Descriptive Headings.............................-33-
Section 20. Survival; Termination............................-33-
Section 21. Other Registration Rights........................-33-
Schedules and Exhibits:
Schedule I --.......Other Management Stockholders
Exhibit A --.......Form of Joinder Agreement to Stockholders Agreement
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STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT (this "Agreement") is dated as of
October 23, 1998 among (i) MLC HOLDINGS, INC., a Delaware corporation (the
"Company"), (ii) TC Leasing, LLC, a Delaware limited liability company
("▇▇▇▇▇▇"), (iii) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇"), ▇▇▇▇▇ ▇. ▇▇▇▇▇ and the other
Persons listed on Schedule I hereto (collectively, the "Management
Stockholders") and (iv) each Person who hereafter executes a counterpart of this
Agreement (or otherwise agrees to be bound by the provisions hereof). ▇▇▇▇▇▇,
the Management Stockholders and the other Persons that are or may become parties
to this Agreement are sometimes referred to herein collectively as the
"Stockholders").
The parties hereby agree as follows:
Section 1.......Definitions. For purposes of this Agreement,
the following terms have the indicated meanings:
"Affiliate" of a Person means any other Person controlling,
controlled by or under common control with such Person, whether by ownership of
voting securities, by contract or otherwise, and in the case of ▇▇▇▇▇▇ shall
include ▇▇▇▇▇▇ Equity Investors III, L.P. and any of its partners or Affiliates,
and in the case of a natural Person shall include any member of such Person's
Family Group.
"Agreement" is defined in the preface.
"Allocable Shares" is defined in Section 3(c)(ii).
"Approved Sale" is defined in Section 6(a).
"Block of Shares" means ▇▇▇▇▇▇ Shares which constitute 5% or
more of the Common Shares of the Company, and includes all ▇▇▇▇▇▇ Shares which
are transferred pursuant to Section 3(b)(vi) or 3(b)(xiii) in a single
transaction or in a series of related transactions.
"Board" means the Company's Board of Directors.
"Buyers" is defined in Section 6(b).
"Common Shares" means shares of the Company's Common Stock.
"Common Stock" means, collectively, the Company's common
stock, par value $.01 per share, and any other class or series of authorized
capital stock of the Company which is not limited to a fixed sum or percentage
of par or stated value in respect to the rights of the holders thereof to
participate in dividends or in the distribution of assets upon any liquidation,
dissolution or winding up of the Company.
▇▇▇▇▇▇▇▇▇
"Common Stock Purchase Agreement" means the Common Stock
Purchase Agreement, dated as of the date hereof, by and between the Company and
▇▇▇▇▇▇.
"Company" is defined in the preface.
"Co-Redemption Notice" is defined in Section 9.
"Demand Registration" is defined in Section 7(b)(i).
"Demand Right" is defined in Section 7(b)(i).
"Exchange Act" means the Securities Exchange Act of 1934, .
as amended
"Excluded Securities" is defined in Section 5(f).
"Family Group" means such Person's spouse and lineal
descendants (whether natural or adopted) and any trust formed and maintained
solely for the benefit of such Person, such Person's spouse or such Person's
lineal descendants.
"Incidental Registration" is defined in Section 7(c)(i).
"Incidental Registration Statement" is defined in Section 7(c)
(i).
"Indemnified Company" is defined in Section 7(g)(ii).
"Indemnified Parties" is defined in Section 7(g)(ii).
"Indemnified Stockholder" is defined in Section 7(g)(i).
"Indemnifying Party" is defined in Section 7(g)(iii).
"Independent Directors" is defined in Section 2(a).
"Irrevocable Proxy and Stock Rights Agreement" means the
Irrevocable Proxy and Stock Rights Agreement, made as of September 1, 19
Group, Inc.
"Joinder Agreement" is defined in Section 3(b)(i).
"Losses" is defined in Section 7(g)(i).
"Management Directors" is defined in Section 2(a).
"Management Offer Notice" is defined in Section 6(b).
"Management Reply" is defined in Section 6(b).
"Management Shares" means Stockholder Shares held by the
Management Stockholders and their permitted transferees. Management Shares shall
cease to be such when they cease to be Stockholder Shares.
"Management Stockholders" is defined in the preface.
"Market Value" means, with respect to any security on any
date, (x) if such security is quoted on NASDAQ or listed on a national
securities exchange, the average daily closing sales price of such security on
NASDAQ or a national securities exchange, as applicable, for the 20 trading days
prior to such date, and (y) if such security is not quoted on NASDAQ or listed
on a national securities exchange, the fair value per share determined jointly
by the Company and ▇▇▇▇▇▇, provided that if the Company and ▇▇▇▇▇▇ are unable to
reach an agreement within a reasonable period of time, such fair value shall be
determined by a recognized investment banking firm jointly selected by the
Company and ▇▇▇▇▇▇, whose determination shall be final and binding upon the
Company and ▇▇▇▇▇▇ (and the fees and expenses of such recognized investment
banking firm shall be paid by the Company).
"NASDAQ" means National Association of Securities Dealers
Automated Quotations National Market System.
"New Securities" is defined in Section 5(a).
"Norton" is defined in the preface.
"Norton Family Stockholder" means each of J.A.P. Investment
Group, Inc., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
"Offered Securities" is defined in Section 3(c)(i).
"Options" means any options to purchase Common Stock granted
by the Company.
"Other Holder" is defined in Section 3(c)(i).
"Other Redeemers" is defined in Section 9.
"Other Stockholders" is defined in Section 6(a).
"Ownership Percentage" means, with respect to any Stockholder,
a percentage equal to the product of (a) a fraction, the numerator of which is
the sum of (i) the number of Common Shares owned by such Stockholder, and (ii)
the number of Common Shares issuable upon the exercise of any Stock Purchase
Warrant or Option owned by such Stockholder, and the denominator of which is the
sum of (x) the number of shares of the Company's outstanding Common Shares, and
(y) the number of Common Shares issuable upon the exercise of all Stock Purchase
Warrants or Options owned by any of the Stockholders, multiplied by (b) 100.
"Permitted Transfers" is defined in Section 3(b).
"Person" means any individual, corporation, partnership, firm,
joint venture, association, limited liability company, joint-stock company,
trust, unincorporated organization, governmental or regulatory body or other
legal entity.
"Proceeding" is defined in Section 7(g)(iii).
"Public Offering" means a sale of Common Stock to the public
in an offering pursuant to an effective registration statement filed with the
SEC pursuant to the Securities Act, as then in effect, provided that a Public
Offering shall not include an offering made in connection with a business
acquisition or combination or an employee benefit plan.
"Public Sale" means a sale of Common Stock pursuant to a
Public Offering or a Rule 144 Sale.
"Qualified Sale of the Company" means a Sale of the Company
pursuant to which the effective price per Common Share for the holders of
Stockholder Shares would be as follows: (i) if the Sale of the Company occurs
before the first anniversary of the date hereof, (x) 75% greater than the
average daily closing sales price of the Common Shares on NASDAQ for the 3
months prior to the date of the public announcement of the proposed Sale of the
Company and (y) greater than $20.00 (as such amount is proportionately adjusted
for stock splits, stock combinations, stock dividends and recapitalizations
affecting the Common Shares after the date hereof); (ii) if the Sale of the
Company occurs on or after the first anniversary of the date hereof and before
the second anniversary of the date hereof, (x) 60% greater than the average
daily closing sales price of the Common Shares on NASDAQ for the 3 months prior
to the date of the public announcement of the proposed Sale of the Company and
(y) greater than $18.00 (as such amount is proportionately adjusted for stock
splits, stock combinations, stock dividends and recapitalizations affecting the
Common Shares after the date hereof); (iii) if the Sale of the Company occurs on
or after the second anniversary of the date hereof and before the third
anniversary of the date hereof, (x) 45% greater than the average daily closing
sales price of the Common Shares on NASDAQ for the 3 months prior to the date of
the public announcement of the proposed Sale of the Company and (y) greater than
$16.00 (as such amount is proportionately adjusted for stock splits, stock
combinations, stock dividends and recapitalizations affecting the Common Shares
after the date hereof); and (iv) if the Sale of the Company occurs on or after
the third anniversary of the date hereof, (x) 30% greater than the average daily
closing sales price of the Common Shares on NASDAQ for the 3 months prior to the
date of the public announcement of the proposed Sale of the Company and (y)
greater than $14.00 (as such amount is proportionately adjusted for stock
splits, stock combinations, stock dividends and recapitalizations affecting the
Common Shares after the date hereof), provided that if the Common Shares are not
then traded on NASDAQ, then the average price per Common Shares for the 3 months
prior to the date of the public announcement of the proposed Sale of the Company
as determined in good faith by the Board.
"Redeemable Shares" is defined in Section 9.
"Redemption Notice" is defined in Section 9.
"Refused Securities" is defined in Section 5(d).
"Registrable Securities" means any Common Shares, except
Common Shares which have been Transferred in a Public Sale.
"Registration Notice" is defined in Section 7(b)(i).
"Registration Request" is defined in Section 7(b)(i).
"Registration Statement" means any registration statement of
the Company under which any of the Registrable Securities are included therein
pursuant to the provisions of this Agreement, including the prospectus,
amendments and supplements to such registration statement, including
post-effective amendments, all exhibits, and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement. The Shelf shall be deemed a Registration Statement.
"Requesting Holders" is defined in Section 7(b)(i).
"Rule 144 Sale" means a sale of Common Stock to the public
through a broker, dealer or market-maker pursuant to the provisions of Rule 144
adopted under the Securities Act (or any successor rule or regulation).
"S-3 Demand Registration" is defined in Section 7(k)(i).
"S-3 Registration Notice" is defined in Section 7(k)(i).
"S-3 Registration Request" is defined in Section 7(k)(i).
"S-3 Requesting Holders" is defined in Section 7(k)(i).
"Sale Notice" is defined in Section 3(c)(i).
"Sale of the Company" means, whether in a single transaction
or in a series of related transactions, (i) a sale of all or substantially all
of the assets of the Company and its Subsidiaries on a consolidated basis, or
(ii) the Transfer or other disposition of more than 50% of the outstanding
Common Stock or the outstanding common equity securities of any of the Company's
Subsidiaries (in each case whether accomplished by stock purchase, asset
purchase, merger, recapitalization, reorganization or other transaction).
"SEC" means the United States Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Holder" is defined in Section 3(c)(i).
"Shelf" is defined in Section 7(a).
"Stockholders" is defined in the preface.
"Stock Notice of Acceptance" is defined in Section 5(c).
"Stock Offer" is defined in Section 5(c).
"Stock Offer Period" is defined in Section 5(c).
"Stock Option Plans" means the 1998 Long-Term Incentive Plan,
the Employee Share Purchase Plan and any other plan of the Company pursuant to
which the Company issues options, stock appreciation rights, restricted stock or
other stock based compensation to officers, employees, directors or consultants
of the Company or any of its Subsidiaries.
"Stock Purchase Warrant" means, collectively, the Stock
Purchase Warrant, dated as of the date hereof, by the Company in favor of
▇▇▇▇▇▇, and any subsequent stock purchase warrant or stock purchase warrants in
favor of ▇▇▇▇▇▇ or any of its Affiliates issued pursuant to or in connection
with the Stock Purchase Warrant, dated as of the date hereof, by the Company in
favor of ▇▇▇▇▇▇.
"Stockholder Shares" means (i) all shares of Common Stock now
owned or in the future acquired by the Stockholders, including all shares of
Common Stock acquired pursuant to the exercise of Options or the Stock Purchase
Warrant, and (ii) all shares of Common Stock or other securities issued or
issuable directly or indirectly with respect to the securities referred to in
clause (i) by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. Stockholder Shares shall cease to be such as provided in the
last sentence of Section 3(b).
"Subsidiary" means, with respect to any Person, any other
Person of which at least a majority of the outstanding shares or other equity
interests having ordinary voting power for the election of directors or
comparable managers of such Person are owned, directly or indirectly, by the
first Person or one or more Subsidiaries of such first Person.
"Tag-Along Notice" is defined in Section 3(c)(i).
"▇▇▇▇▇▇" is defined in the preface.
"▇▇▇▇▇▇ Directors" is defined in Section 2(a) and 2(b).
"▇▇▇▇▇▇ Notice of Acceptance" is defined in Section 5(b).
"▇▇▇▇▇▇ Offer" is defined in Section 5(b).
"▇▇▇▇▇▇ Offer Period" is defined in Section 5(b).
"▇▇▇▇▇▇ Shares" means Stockholder Shares held by the ▇▇▇▇▇▇
and its permitted transferees. ▇▇▇▇▇▇ Shares shall cease to be such when they
cease to be Stockholder Shares.
"Transfer" means, with respect to any Stockholder Shares, the
gift, sale, assignment, transfer, pledge, hypothecation or other disposition
(whether for or without consideration and whether voluntary, involuntary or by
operation of law) of such Stockholder Shares or any interest therein.
"Warrant Shares" means the Common Shares issued in connection
with the exercise of the Stock Purchase Warrant, so long as such Common Shares
continue to be Stockholder Shares.
Section 2. Voting Arrangements.
(a) Election of Directors. Except as set for in Section 2(b),
each Stockholder agrees that such Person will vote, or cause to be voted, all
voting securities of the Company over which such Person has the power to vote or
direct the voting, and will take all other necessary or desirable action within
such Person's control, and the Company will take all necessary and desirable
actions within its control, to cause the authorized number of directors for the
Company to be established at six directors, and to elect or cause to be elected
to the Board and cause to be continued in such offices as follows: (i) two
individuals designated by ▇▇▇▇▇▇ (the "▇▇▇▇▇▇ Directors"), (ii) two individuals
designated by the Management Stockholders (the "Management Directors") and (iii)
two individuals who are not employees of the Company or its Subsidiaries or
Affiliates, designated by a nominating committee comprised of one individual
designated by the Management Stockholders and one individual designated by
▇▇▇▇▇▇ (the "Independent Directors"); provided that for so long as the Board is
divided into three classes, the "Class I" directors shall consist of one ▇▇▇▇▇▇
Director and one Independent Director, the "Class II" directors shall consist of
one ▇▇▇▇▇▇ Director and one Independent Director and the "Class III" directors
shall consist of two Management Directors.
(b) Additional Directors. Notwithstanding anything herein to
the contrary, in the event that (x) the Board does not approve an Approved Sale
and the ▇▇▇▇▇▇ Directors voted in favor of such Approved Sale or (y) the Board
does not vote on whether to approve an Approved Sale within a reasonable period
of time after ▇▇▇▇▇▇ requests the Board to approve an Approved Sale, each
Stockholder agrees that such Person will vote, or cause to be voted, all voting
securities of the Company over which such Person has the power to vote or direct
the voting, and will take all other necessary or desirable action within such
Person's control, and the Company will take all necessary and desirable actions
within its control, to cause the authorized number of directors for the Company
and each of its Subsidiaries to be increased from six directors to nine
directors, and to elect or cause to be elected to the Board, and cause to be
continued in such office (for so long as reasonably necessary for the Board to
approve and the Company to consummate such Approved Sale), the three additional
directors of the Board designated by ▇▇▇▇▇▇ (also, the "▇▇▇▇▇▇ Directors");
provided, however, that if the Board is then divided into classes, each
Stockholder agrees that such Person will vote, or cause to be voted, all voting
securities of the Company over which such Person has the power to vote or direct
the voting, and will take all other necessary or desirable action within such
Person's control, and the Company will take all necessary and desirable actions
within its control, including if necessary abolishing the three classes of
directors and establishing only one class of directors, to cause the majority of
the directors on the then current Board to consist of ▇▇▇▇▇▇ Directors.
(c) Removal of Directors. If at any time ▇▇▇▇▇▇ shall notify
the other Stockholders of its desire to remove, with or without cause, any
individual designated by ▇▇▇▇▇▇ pursuant to Section 2(a), 2(b) or 2(k) from a
directorship, or if at any time the Management Stockholders shall notify the
other Stockholders of their desire to remove, with or without cause, any
individual designated by the Management Stockholders pursuant to Section 2(a)
above from a directorship, all such Persons so notified will vote, or cause to
be voted, all voting securities of the Company or any Subsidiary of the Company,
as applicable, over which they have the power to vote or direct the voting, and
will take all other necessary or desirable action within such Person's control,
and the Company will take all necessary and desirable actions within its
control, to cause the removal of such director.
(d) Vacancies. If at any time any director ceases to serve on
the board of directors of the Company or any Subsidiary of the Company (whether
due to resignation, removal or otherwise), then ▇▇▇▇▇▇ or the Management
Stockholders, as applicable, shall be entitled to designate a successor director
to fill the vacancy created thereby on the terms and subject to the conditions
of Section 2(a), 2(b) or 2(k), as applicable. Each Stockholder agrees that he,
she or it will vote, or cause to be voted, all voting securities of the Company
or any Subsidiary of the Company over which such Person has the power to vote or
direct the voting, and shall take all such other actions promptly as shall be
necessary or desirable to cause the successor designated by ▇▇▇▇▇▇ or the
Management Stockholders, as applicable, to be elected to fill such vacancy.
(e) Rights Unimpaired. Nothing in this Agreement shall be
construed to impair any rights that the stockholders of the Company or any
Subsidiary of the Company may have to remove any director for cause. No removal
for cause of an individual designated pursuant to this Section 2 shall affect
the right of ▇▇▇▇▇▇ or the Management Stockholders, as applicable, to designate
a different individual pursuant to this Section 2 to fill the directorship from
which such individual was removed.
(f) APPOINTMENT OF PROXY. IN ORDER TO SECURE THE OBLIGATIONS
OF EACH AND EVERY MANAGEMENT STOCKHOLDER TO VOTE ALL COMMON SHARES HELD BY SUCH
MANAGEMENT STOCKHOLDER IN ACCORDANCE WITH ALL OF THE PROVISIONS OF SECTION 2(b)
OF THIS AGREEMENT, EACH MANAGEMENT STOCKHOLDER HEREBY IRREVOCABLY CONSTITUTES
AND APPOINTS ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ AS SUCH MANAGEMENT STOCKHOLDER'S TRUE AND LAWFUL
ATTORNEY, AGENT AND PROXY, WITH FULL POWER OF SUBSTITUTION, TO ATTEND MEETINGS
OF STOCKHOLDERS OF THE COMPANY HELD FROM TIME TO TIME, AND TO VOTE ON SUCH
MANAGEMENT STOCKHOLDER'S BEHALF AND IN SUCH STOCKHOLDER'S NAME, PLACE, AND
STEAD, OR TO EXECUTE WRITTEN CONSENTS IN LIEU OF SUCH MEETINGS, THE NUMBER OF
VOTES THAT SUCH MANAGEMENT STOCKHOLDER WOULD BE ENTITLED TO CAST IF ACTUALLY
PRESENT OR WITH RESPECT TO WHICH SUCH MANAGEMENT STOCKHOLDER WOULD BE ENTITLED
TO EXECUTE A WRITTEN CONSENT, IN CONNECTION WITH ANY ELECTION OF DIRECTORS (IN
ACCORDANCE WITH SECTION 2(b)) OR ANY APPROVED SALE (IN ACCORDANCE WITH SECTION
6). THE POWERS GRANTED HEREIN WILL BE DEEMED TO BE COUPLED WITH AN INTEREST,
WILL BE IRREVOCABLE AND WILL SURVIVE THE DEATH, INCOMPETENCY, DISABILITY OR
DISSOLUTION OF ANY MANAGEMENT STOCKHOLDER.
(g) Committees. The Compensation Committee of the Board shall
at all times grant all awards under the Stock Option Plans. The Compensation
Committee shall consist of four members, two of which shall be Independent
Directors and two of which shall be ▇▇▇▇▇▇ Directors. All other committees of
the Board shall at all times consist of at least one ▇▇▇▇▇▇ Director.
(h) Stock Purchase Warrant. Each Stockholder agrees that such
Person will vote, or cause to be voted, all voting securities of the Company
over which such Person has the power to vote or direct the voting, and will take
all other necessary or desirable action within such Person's control, and the
Company will take all necessary and desirable actions within its control, so
that ▇▇▇▇▇▇ (or any Person designated by ▇▇▇▇▇▇) may exercise its rights under
the Stock Purchase Warrant pursuant to the terms thereof.
(i) Initial ▇▇▇▇▇▇ Directors. ▇▇▇▇▇▇ hereby designates ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇ as the initial "Class II" ▇▇▇▇▇▇ Director and ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇ as
the initial "Class I" ▇▇▇▇▇▇ Director.
(j) Fiduciary Duties Unchanged. Nothing in this Agreement
shall be construed to limit, change or eliminate any fiduciary duties a director
of the Company or any Subsidiary of the Company may have to the stockholders of
the Company or any Subsidiary of the Company under Delaware law.
(k) Election of Subsidiaries' Directors. The Company will take
all necessary and desirable actions within its control to elect or cause to be
elected to the respective boards of directors of each of the Company's domestic
Subsidiaries, and cause to be continued in such offices, at least one ▇▇▇▇▇▇
Director. ▇▇▇▇▇▇ hereby designates ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ as the initial ▇▇▇▇▇▇
Director for the purposes of this Section 2(k).
Section 3.........Restrictions on Transfer.
(a) Restrictions on Transfer. No holder of Stockholder
Shares may Transfer such Stockholder Shares except in a Permitted Transfer.
(b) Certain Permitted Transfers. Section 3(a) shall
not apply to Transfers ("Permitted Transfers") of Stockholder Shares:
(i) to any Affiliate of the holder of such
Stockholder Shares, provided that (x) such Transfers do not violate
federal or state securities laws, and (y) the transferees (other than
partners of ▇▇▇▇▇▇ Equity Investors III, L.P.) execute a Joinder
Agreement substantially in the form attached hereto as Exhibit A (a
"Joinder Agreement") and thereby become a party to this Agreement;
(ii) from a Norton Family Stockholder to Norton
pursuant to the Irrevocable Proxy and Stock Rights Agreement;
(iii) to the Company, subject to the provisions of
Section 9, provided that in no event shall such Transfers occur without
the prior written consent of ▇▇▇▇▇▇ if such Transfers (after taking
into account all Transfers in connection with related Co-Redemption
Notices as provided in Section 9) would result in the Management Shares
and ▇▇▇▇▇▇ Shares, collectively, constituting less than 51% of the
outstanding Common Shares of the Company;
(iv) to ▇▇▇▇▇▇ or any Affiliate thereof pursuant to
Section 10(a), provided that in no event shall such Transfers occur
without the prior written consent of the holders of at least a majority
of the then outstanding Management Shares if such Transfers would
result in the ▇▇▇▇▇▇ Shares and Common Shares issuable in connection
with the exercise of a Stock Purchase Warrant in the aggregate
constituting more than 33.3% of the Common Shares of the Company on a
fully diluted basis, provided further that if such Transfers are to any
Affiliate of ▇▇▇▇▇▇, (x) such Transfers do not violate federal or state
securities laws, and (y) such Affiliate executes a Joinder Agreement;
(v) to ▇▇▇▇▇▇ or any Affiliate thereof pursuant to
Section 10(b), provided that if such Transfers are to an Affiliate of
▇▇▇▇▇▇, (x) such Transfers do not violate federal or state securities
laws, and (y) such Affiliate executes a Joinder Agreement;
(vi) pursuant to Section 6(b), provided that (x) such
Transfers do not violate federal or state securities laws, and (y) the
transferees execute a Joinder Agreement and thereby become a party to
this Agreement (unless the applicable Block of Shares constituted 85%
or more of the Common Shares then owned by ▇▇▇▇▇▇ and its Affiliates
(provided that the limited partners of ▇▇▇▇▇▇ Equity Investors III,
L.P. shall not be treated as Affiliates of ▇▇▇▇▇▇ for the purposes of
this Section 3(b)(vi)) and ▇▇▇▇▇▇ elected in the applicable Management
Offer Notice for the transferees not to execute a Joinder Agreement);
(vii) in a Public Sale, subject to the provisions of
Section 3(d), provided that in no event shall such Transfers occur
without the prior written consent of ▇▇▇▇▇▇ if such Transfers would
result in the Management Shares and ▇▇▇▇▇▇ Shares, collectively,
constituting less than 51% of the outstanding Common Shares of the
Company;
(viii) in a Public Sale, subject to the provisions of
Section 3(d), provided that in no event shall such Transfers occur
without the prior written consent of ▇▇▇▇▇▇ if (w) such transferor is
▇▇▇▇▇ ▇. ▇▇▇▇▇ or any of his Affiliates, and such Transfers (combined
with all other Transfers pursuant to this Section 3(b)(viii)(w)) are
for more than 20,000 Common Shares in any 3 month period or for more
than 80,000 Common Shares, (x) such transferor is JAP Investment Group,
Inc. or any of its Affiliates, and such Transfers (combined with all
other Transfers pursuant to this Section 3(b)(viii)(x)) are for more
than 25,000 Common Shares in any 3 month period or for more than
100,000 Common Shares, (y) such transferor is ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or any of
his Affiliates, and such Transfers (combined with all other Transfers
pursuant to this Section 3(b)(viii)(y)) are for more than 12,500 Common
Shares in any 3 month period or for more than 50,000 Common Shares or
(z) such transferor is ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. or any of his Affiliates,
and such Transfers (combined with all other Transfers pursuant to this
Section 3(b)(viii)(z)) are for more than 12,500 Common Shares in any 3
month period or for more than 50,000 Common Shares;
(ix) pursuant to an Approved Sale, subject to the
provisions of Sections 3(c) and 6(b);
(x) incidental to the exercise, conversion or
exchange thereof in accordance with their terms, any combination of
shares (including any reverse stock split) or any recapitalization,
reorganization or reclassification of, or any merger or consolidation
involving, the Company;
(xi) from a Management Stockholder to ▇▇▇▇▇▇, any
Affiliate thereof or any Person designated by ▇▇▇▇▇▇, provided that in
no event shall such Transfers occur without the prior written consent
of the holders of at least a majority of the then outstanding
Management Shares if such Transfers would result in the ▇▇▇▇▇▇ Shares
and Common Shares issuable in connection with the exercise of a Stock
Purchase Warrant in the aggregate constituting more than 33.3% of the
Common Shares of the Company on a fully diluted basis (except to the
extent permitted under Section 3(d)), provided further that if such
Transfers are to an Affiliate of ▇▇▇▇▇▇ or any Person designated by
▇▇▇▇▇▇, (x) such Transfers do not violate federal or state securities
laws, and (y) such Affiliate or any Person designated by ▇▇▇▇▇▇, as
applicable, executes a Joinder Agreement;
(xii) pursuant to Section 3(c), provided that (x)
such Transfers do not violate federal or state securities laws, and (y)
if the transferees in the Transfers to which the tag-along right under
Section 3(c) is related execute a Joinder Agreement, the transferees
pursuant to the Transfer pursuant to this clause (xi) execute a Joinder
Agreement and thereby become a party to this Agreement; and
(xiii) to any Person other than pursuant to a
Transfer described above, subject to the provisions of Sections 3(c)
and 6(b), provided that (x) such Transfers do not violate federal or
state securities laws, and (y) the transferees execute a Joinder
Agreement and thereby become a party to this Agreement (unless such
Transfers are by ▇▇▇▇▇▇ or any Affiliate thereof of 85% or more of the
Common Shares then owned by ▇▇▇▇▇▇ and its Affiliates (provided that
the limited partners of ▇▇▇▇▇▇ Equity Investors III, L.P. shall not be
treated as Affiliates of ▇▇▇▇▇▇ for the purposes of this Section
3(b)(xiii)) ▇▇▇▇▇▇ Shares, in which case such transferees shall only
execute a Joinder Agreement if ▇▇▇▇▇▇ so elects).
Any Stockholder Shares transferred pursuant to clause (i), (ii), (iv), (v),
(vi), (x), (xi) or (xiii) above shall continue to be Stockholder Shares for
purposes of this Agreement, any Stockholder Shares transferred pursuant to
clause (iii), (vii), (viii) or (ix) above shall no longer be Stockholder Shares
and hence no longer subject to any of the restrictions set forth herein, and any
Stockholder Shares transferred pursuant to clause (xii) above (x) shall continue
to be Stockholder Shares if the Stockholder Shares transferred in the Transfer
to which the tag-along right under Section 3(c) is related continue to be
Stockholder Shares, and (y) shall no longer be Stockholder Shares if the
Stockholder Shares transferred in the Transfer to which the tag-along right
under Section 3(c) is related cease to be Stockholder Shares.
(c) Tag-Along Rights.
(i)... Prior to making any Transfer of Stockholder Shares pursuant to
Section 3(b)(ix) or 3(b)(xiii), any holder of Stockholder Shares proposing to
make such a Transfer (for purposes of this Section 3(c), a "Selling Holder")
shall give at least thirty (30) days prior written notice to each other holder
of Stockholder Shares (for purposes of this Section 3(c) each, an "Other
Holder") and the Company, which notice (for purposes of this Section 3(c), the
"Sale Notice") shall identify the type and amount of Stockholder Shares to be
sold (for purposes of this Section 3(c), the "Offered Securities"), describe the
terms and conditions of such proposed Transfer, and identify each prospective
transferee. Any of the Other Holders may, within fifteen (15) days after the
receipt of the Sale Notice, give written notice (each, a "Tag-Along Notice") to
the Selling Holder that such Other Holder wishes to participate in such proposed
Transfer upon the terms and conditions set forth in the Sale Notice, which
Tag-Along Notice shall specify the Common Shares such Other Holder desires to
include in such proposed Transfer; provided, however, that (1) each Other Holder
shall be required, to the extent applicable, as a condition to being permitted
to sell Common Shares pursuant to Section 3(b)(xiii) and this Section 3(c) in
connection with a Transfer of Offered Securities, to elect to sell Common Shares
of the same type and class and in the same relative proportions as the Common
Shares which comprise the Offered Securities; and (2) to exercise such Person's
tag-along rights hereunder, each Other Holder must agree to make to the
transferee the same representations, warranties, covenants, indemnities and
agreements as the Selling Holder agrees to make in connection with the Transfer
of the Offered Securities (except that in the case of representations and
warranties pertaining specifically to, or covenants made specifically by, the
Selling Holder, the Other Holders shall make comparable representations and
warranties pertaining specifically to (and, as applicable, covenants by) such
Persons), and must agree to bear such Person's pro rata share (which may be
joint and several but shall be based on the value of Common Shares that are
Transferred) of all liabilities to the transferees arising out of
representations, warranties and covenants (other than those representations,
warranties and covenants that pertain specifically to a given Person, who shall
bear all of the liability related thereto), indemnities or other agreements made
in connection with the Transfer. Each Stockholder will bear (x) such Person's
own costs of any sale of Common Shares pursuant to Section 3(b)(xiii) and this
Section 3(c) and (y) such Person's pro rata share (based upon the relative
amount of Common Shares sold) of the reasonable costs of any sale of Common
Shares pursuant to Section 3(b)(xiii) and this Section 3(c) to the extent such
costs are incurred for the benefit of all selling Stockholders and are not
otherwise paid by the acquiring party.
(ii).....If none of the Other Holders gives the Selling Holder a timely
Tag-Along Notice with respect to the Transfer proposed in the Sale Notice, then
the Selling Holder may Transfer such Offered Securities on the terms and
conditions set forth in the Sale Notice to or among any of the transferees
identified (or Affiliates of transferees identified) in the Sale Notice at any
time within ninety days after expiration of the fifteen-day period for giving
Tag-Along Notices with respect to such Transfer. Any such Offered Securities not
Transferred by the Selling Holder during such ninety-day period will again be
subject to the provisions of this Section 3(c) upon a subsequent Transfer. If
one or more Other Holders give the Selling Holder a timely Tag-Along Notice,
then the Selling Holder shall use all reasonable efforts to obtain the agreement
of the prospective transferee(s) to the participation of the Other Holders in
any contemplated Transfer, on the same terms and conditions as are applicable to
the Offered Securities, and no Selling Holder shall Transfer any of such
Person's shares to any prospective transferee if such prospective transferee(s)
declines to allow the participation of the Other Holders. If the prospective
transferee(s) is unwilling or unable to acquire all of the Offered Securities
and all of the Common Shares to be Transferred by the Other Holders specified in
a timely Tag-Along Notice upon such terms, then the Selling Holder may elect
either to cancel such proposed Transfer or to allocate the maximum number of
each class of Common Shares that the prospective transferees are willing to
purchase (the "Allocable Shares") among the Selling Holder and the Other Holders
giving timely Tag-Along Notices as follows (it being understood that the
prospective transferees shall be required to purchase Common Shares of the same
class on the same terms and conditions taking into account the provisions of
clause (1) of Section 3(c)(i), and to consummate such Transfer on those terms
and conditions):
(x) each participating Stockholder
(including the Selling Holder) shall be entitled to sell a
number of shares of Common Shares (not to exceed, for any
Other Holder, the number of shares of such Common Shares
identified in such Other Holder's Tag-Along Notice) equal to
the product of (A) the number of Allocable Shares of such
class of Common Shares and (B) a fraction, the numerator of
which is such Stockholder's Ownership Percentage of such class
of Common Shares and the denominator of which is the aggregate
Ownership Percentage for all participating Stockholders of
such class of Common Shares; and
(y) if after allocating the Allocable Shares
of any class of Common Shares to such Stockholders in
accordance with clause (x) above, there are any Allocable
Shares of such class that remain unallocated, then they shall
be allocated (in one or more successive allocations on the
basis of the allocation method specified in clause (x) above)
among the Selling Holder and each such Other Holder that has
elected in its Tag-Along Notice to sell a greater number of
shares of such class of Common Shares than previously has been
allocated to such Person pursuant to clause (x) and this
clause (y) (all of whom (but no others) shall, for purposes of
clause (x) above, be deemed to be the participating
Stockholders) until all such Allocable Shares have been
allocated in accordance with this clause (y).
(d) Public ▇▇▇▇▇▇ Offer. Notwithstanding anything herein to
the contrary, prior to any holder of Management Shares transferring such
Management Shares pursuant to Section 3(b)(vii) or 3(b)(viii), such holder shall
give at least three business days prior written notice to ▇▇▇▇▇▇, which notice
shall identify the type, amount and price per share of the Management Shares to
be sold. ▇▇▇▇▇▇ may, within such three business day period, give written notice
to such holder that ▇▇▇▇▇▇ and/or any Person designated by ▇▇▇▇▇▇ wishes to
purchase all or a portion of such Management Shares at such price. If ▇▇▇▇▇▇ (or
any Person designated by ▇▇▇▇▇▇) elects to purchase all or a portion of such
Management Shares by giving a timely notice to such holder, such Transfer to
▇▇▇▇▇▇ or any Person designated by ▇▇▇▇▇▇, applicable, shall occur within 15
business days after the date the applicable notice was sent to ▇▇▇▇▇▇ pursuant
to the terms and conditions set forth in Section 3(b)(xi), provided that if the
holder of Management Shares sent the notice pursuant to Section 3(b)(viii), the
33.3% limitation regarding ▇▇▇▇▇▇ Shares and Common Shares issuable upon the
exercise of a Stock Purchase Warrant shall be waived. If ▇▇▇▇▇▇ does not elect
to purchase all of such Management Shares (or a Transfer of such Management
Shares pursuant to Section 3(b)(xi) does not occur within the applicable 15
business day period despite the reasonable best efforts of such holder of
Management Shares), then such holder of Management Shares may Transfer such
remaining Management Shares at a price per share no less than 95% of the price
per share set forth in the applicable notice at any time within ninety days
after such holder sent the notice of such proposed Transfer to ▇▇▇▇▇▇. Any
Management Shares not transferred by such holder during such ninety-day period
shall again be subject to the provisions of this Section 3(d) upon a subsequent
Transfer pursuant to Section 3(b)(vii) or 3(b)(viii).
(e) Transfers in Violation of this Agreement. Any Transfer or
attempted Transfer of any Stockholder Shares in violation of this Agreement
shall be void, and the Company shall not be obligated to record such Transfer on
its books or treat any purported transferee of such Common Shares as the owner
of such Common Shares for any purpose.
Section 4.........Legends.
(a) Stockholders Agreement Legend. The certificates
representing Stockholder Shares shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS AGREEMENT DATED AS OF OCTOBER 23, 1998 AMONG MLC HOLDINGS,
INC. AND CERTAIN OF ITS STOCKHOLDERS, A COPY OF WHICH MAY BE OBTAINED
WITHOUT CHARGE BY THE HOLDER HEREOF AT THE PRINCIPAL PLACE OF BUSINESS
OF MLC HOLDINGS, INC. DISPOSITION OF THIS CERTIFICATE OR THE SECURITIES
REPRESENTED HEREBY OR ANY RIGHTS OR INTERESTS THEREIN IN VIOLATION OF
SUCH STOCKHOLDERS AGREEMENT SHALL BE NULL AND VOID.
Each holder of Stockholder Shares shall provide the Company promptly after the
date hereof (and in no event later than 14 days after the date hereof) with his
or her certificates representing Stockholder Shares so that such legend can be
placed thereon.
(b) Removal of Legends. Whenever the restrictions described
above cease to be applicable to any Stockholder Shares, the holder thereof shall
be entitled to receive from the Company, without expense to the holder, a new
certificate not bearing a legend stating such restriction.
Section 5.........Preemptive Rights. The Company may
authorize, issue, sell or enter into any agreement providing for the issuance or
sale (contingent or otherwise) of equity securities (including, without
limitation, the Common Stock) only in accordance with the provisions of this
Section 5.
(a) Restrictions. On or prior to the six month anniversary of
the date hereof, except in the case of Excluded Securities, without ▇▇▇▇▇▇'▇
prior written consent, the Company shall not issue, sell or exchange, agree to
issue, sell or exchange, or reserve or set aside for issuance, sale or exchange,
any (i) Common Shares, (ii) any debt security of the Company which by its terms
is convertible into or exchangeable for any equity security of the Company or
has an equity kicker or other participation rights, (iii) any security of the
Company that is a combination of debt and equity or (iv) any option, warrant or
other right to subscribe for, purchase or otherwise acquire any equity security
or any such debt security of the Company (subsections (i) through (iv),
collectively, the "New Securities").
(b) ▇▇▇▇▇▇ Offer. After the six month anniversary of the date
hereof, but on or prior to the second anniversary of the date hereof, except in
the case of Excluded Securities or as set forth in Section 5(g), without
▇▇▇▇▇▇'▇ prior written consent, the Company shall not issue, sell or exchange,
agree to issue, sell or exchange, or reserve or set aside for issuance, sale or
exchange, any New Securities unless in each case, the Company shall have first
offered to sell all of such New Securities to ▇▇▇▇▇▇, at a price and on such
other terms as shall have been specified by the Company in writing delivered to
▇▇▇▇▇▇ at least 15 business days prior to the proposed consummation of the sale
of the New Securities (the "▇▇▇▇▇▇ Offer"), which ▇▇▇▇▇▇ Offer by its terms
shall remain open and irrevocable for a period of 10 business days from the date
it is delivered by the Company (the "▇▇▇▇▇▇ Offer Period"). Notice of ▇▇▇▇▇▇'▇
intention to accept, in whole or in part, the ▇▇▇▇▇▇ Offer shall be in writing
signed and delivered to the Company prior to the end of the ▇▇▇▇▇▇ Offer Period,
setting forth such portion of the New Securities as ▇▇▇▇▇▇ elects to purchase
(the "▇▇▇▇▇▇ Notice of Acceptance").
(c) Stock Offer. After the second anniversary of the date
hereof, except in the case of Excluded Securities or as set forth in Section
5(g), without ▇▇▇▇▇▇'▇ prior written consent, the Company shall not issue, sell
or exchange, agree to issue, sell or exchange, or reserve or set aside for
issuance, sale or exchange, any New Securities unless in each case, the Company
shall have first offered to sell to ▇▇▇▇▇▇ a portion of such New Securities
equal to ▇▇▇▇▇▇'▇ Ownership Percentage, at a price and on such other terms as
shall have been specified by the Company in writing delivered to ▇▇▇▇▇▇ at least
15 business days prior to the proposed consummation of the sale of the New
Securities (the "Stock Offer"), which Stock Offer by its terms shall remain open
and irrevocable for a period of 10 business days from the date it is delivered
by the Company (the "Stock Offer Period"). Notice of ▇▇▇▇▇▇'▇ intention to
accept, in whole or in part, the Stock Offer shall be in writing and delivered
to the Company prior to the end of the Stock Offer Period, setting forth such
portion of the New Securities as ▇▇▇▇▇▇ elects to purchase (the "Stock Notice of
Acceptance").
(d) Refused Securities. The Company shall have three months
from the expiration of the ▇▇▇▇▇▇ Offer Period or the Stock Offer Period, as
applicable, to sell all or any of such New Securities which ▇▇▇▇▇▇ has not
purchased pursuant to Section 5(b) or 5(c), as applicable (the "Refused
Securities"), to any other Person(s), but only at a price no less than 95% of
the price per share set forth in the ▇▇▇▇▇▇ Offer or the Stock Offer, as
applicable, and upon such other terms and conditions, which are no more
favorable to such other Person(s) or less favorable to the Company than those
set forth in the ▇▇▇▇▇▇ Offer or the Stock Offer, as applicable. Upon the
closing, which shall include full payment to the Company, of the sale to such
other Person(s) of all the Refused Securities, ▇▇▇▇▇▇ shall purchase from the
Company, and the Company shall sell to ▇▇▇▇▇▇, the New Securities in respect of
which a ▇▇▇▇▇▇ Notice of Acceptance or Stock Notice of Acceptance, as
applicable, was delivered to the Company by ▇▇▇▇▇▇ at the terms specified in the
▇▇▇▇▇▇ Offer or the Stock Offer, as applicable.
(e) Exclusions. In each case, any New Securities not purchased
by ▇▇▇▇▇▇ or any other Person(s) within three months after the expiration of the
▇▇▇▇▇▇ Offer Period or the Stock Offer Period, as applicable, in accordance with
Section 5 may not be sold or otherwise disposed of until they are again offered
to ▇▇▇▇▇▇ under the procedures specified in this Section 5.
(f)Excluded Securities.The rights of ▇▇▇▇▇▇ under this Section
5 shall not apply to the following securities (the "Excluded Securities"):
(i) Common Shares issued in connection
with, or upon exercise of, Options or the Stock Purchase
Warrant; and
(ii) Common Shares issued incidental to the
exercise, conversion or exchange thereof in accordance with
their terms, any combination of shares (including any reverse
stock split) or any recapitalization, reorganization or
reclassification of, or any merger, acquisition or
consolidation involving, the Company.
(g) 33.3% Limitation. Notwithstanding anything herein to the
contrary, without the prior written consent of the holders of at least a
majority of the then outstanding Management Shares, ▇▇▇▇▇▇ shall not purchase
from the Company pursuant to this Section 5 (and the Company need not sell or
offer to sell to ▇▇▇▇▇▇ pursuant to this Section 5) any shares of New Securities
which would result in the ▇▇▇▇▇▇ Shares and Common Shares issuable in connection
with the exercise of a Stock Purchase Warrant in the aggregate constituting more
than 33.3% of the Common Shares of the Company on a fully diluted basis;
provided, however if both (x) the proposed sale, issuance or exchange of such
New Securities shall occur before the first anniversary of the date hereof, and
(y) the price per share of the New Securities in such proposed sale, issuance or
exchange is equal to or less than $9.00 (as such amount is proportionately
adjusted for stock splits, stock combinations, stock dividends and
recapitalizations affecting the Common Stock after the date hereof), then ▇▇▇▇▇▇
shall retain all rights granted in this Section 5 as if this Section 5(g) were
not included in this Agreement.
Section 6.........Qualified Sale of the Company.
(a) Approved Sale. Subject to Section 6(b), if ▇▇▇▇▇▇ approves
a Qualified Sale of the Company (an "Approved Sale"), ▇▇▇▇▇▇ may notify the
Company and the Stockholders of ▇▇▇▇▇▇'▇ election to exercise its rights under
this Section 6, and the other holders of Stockholder Shares (the "Other
Stockholders") shall consent to and raise no objections against such Approved
Sale (and shall waive any rights of appraisal arising in connection therewith)
and shall fully cooperate with and take all necessary and desirable actions in
connection with the consummation of such Approved Sale, including without
limitation (i) executing a purchase and sale agreement and any other agreement
reasonably necessary to effectuate such Approved Sale in the form to be entered
into by ▇▇▇▇▇▇, (ii) amending the Company's or any of its Subsidiaries'
Certificate of Incorporation or by-laws, (iii) merging, combining or
consolidating the Company with any other Person, (iv) reorganizing or
recapitalizing the Company, (v) exchanging or splitting stock of the Company,
(vi) selling, leasing or exchanging all or substantially all of the property and
assets of the Company and its Subsidiaries on a consolidated basis or (vii) if
such Stockholder is not an "accredited investor" (within the meaning of Rule
501(a) of the Securities Act), at the request of ▇▇▇▇▇▇, appoint a purchaser
representative (as such term is defined in Rule 501 under the Securities Act)
approved by ▇▇▇▇▇▇. If the Approved Sale is structured as a sale of stock, the
Other Stockholders shall agree to sell all of their shares of Common Stock and
rights to acquire shares of Common Stock on the terms and conditions approved by
▇▇▇▇▇▇. The obligations of the Other Stockholders with respect to any Approved
Sale are subject to the conditions that (x) the Approved Sale is not to an
Affiliate of ▇▇▇▇▇▇, and (y) upon the consummation of such Approved Sale, each
Stockholder shall receive the same form and amount of consideration per Common
Share, or if any Stockholders are given an option as to the form and amount of
consideration to be received, each Stockholder shall be given the same option;
provided, however if ▇▇▇▇▇▇ then owns a Stock Purchase Warrant, ▇▇▇▇▇▇ shall
elect, in its sole discretion, to either (A) exercise the Stock Purchase Warrant
prior to the consummation of the Approved Sale and participate in such sale as a
holder of such class of Common Stock, or (B) upon the consummation of the
Approved Sale, receive in exchange for such Stock Warrant Purchase consideration
equal to the amount determined by multiplying (1) the same amount of
consideration per share of a class of Common Stock received by holders of such
class of Common Stock in connection with the Approved Sale less the exercise
price per share of such class of Common Stock of the Stock Purchase Warrant to
acquire such class of Common Stock by (2) the number of shares of such class of
Common Stock represented by the Stock Purchase Warrant. Notwithstanding anything
herein to the contrary, no Approved Sale shall be consummated until the Company
receives, at the Company's expense, a "fairness opinion" from an investment
banking firm reasonably acceptable to the Company.
(b) Management Offer. Notwithstanding anything in Section
3(b)(ix), 3(b)(xiii) or 6(a) to the contrary, at least 20 days prior to ▇▇▇▇▇▇
transferring a Block of Shares pursuant to Section 3(b)(xiii) or approving a
Qualified Sale of the Company, ▇▇▇▇▇▇ shall deliver a written notice (a
"Management Offer Notice") to all Management Stockholders. The Management Offer
Notice shall disclose in reasonable detail the proposed Transfer of a Block of
Shares pursuant to Section 3(b)(xiii) or Qualified Sale of the Company, as
applicable, and the prospective transferee(s) (if known). The Management
Stockholders, may elect for any of them and/or any other Person(s) (including
the Company) chosen by the Management Stockholders in their sole discretion
(collectively, the "Buyers") to purchase all (but not less than all) of the
▇▇▇▇▇▇ Shares at the price and on the terms specified in the Management Offer
Notice by delivering written notice of such election (a "Management Reply") to
▇▇▇▇▇▇ as soon as practical but in any event within 20 days after delivery of
the Management Offer Notice. The Management Reply shall be signed by each
Management Stockholder (including those who elect not to purchase ▇▇▇▇▇▇
Shares), and shall include (x) evidence reasonably satisfactory to ▇▇▇▇▇▇ that
the Buyers shall have within 60 days after the delivery of the Management Offer
Notice sufficient funds to purchase such ▇▇▇▇▇▇ Shares, and (y) representations
and warranties from each Management Stockholder that (X) the Buyers shall use
reasonable best efforts to consummate such purchase within 60 days after the
delivery of the Management Offer Notice, and (Y) the Buyers shall have within 60
days after the delivery of the Management Offer Notice sufficient funds to
purchase such ▇▇▇▇▇▇ Shares. If the Management Stockholders elect to purchase
the ▇▇▇▇▇▇ Shares, such purchase shall be consummated as soon as practical after
the delivery of the Management Reply, but in any event within 60 days after the
delivery of the Management Offer Notice. If either:
(A) ▇▇▇▇▇▇ does receive a Management Reply signed by
each Management Stockholder within 20 days after delivery of the
Management Offer Notice;
(B) ▇▇▇▇▇▇ is not reasonably satisfied within 20 days
after delivery of the Management Offer Notice that the Buyers will have
within 60 days after the delivery of the Management Offer Notice
sufficient funds to purchase such ▇▇▇▇▇▇ Shares;
(C) the purchase of the ▇▇▇▇▇▇ Shares pursuant to the
Management Reply is not consummated within 60 days after the delivery
of the Management Offer Notice; or
(D) after 20 days after delivery of the Management
Offer Notice but before 60 days after delivery of the Management Offer
Notice, ▇▇▇▇▇▇ gives written notice to the Management Stockholders that
▇▇▇▇▇▇ reasonably believes that despite reasonable best efforts by
▇▇▇▇▇▇ to consummate the purchase the Buyers will not be unable to
consummate the purchase within 60 days after the delivery of the
Management Offer Notice and the Management Stockholders are unable to
provide ▇▇▇▇▇▇ reasonable assurance to the contrary within 5 business
days after receiving such notice by ▇▇▇▇▇▇,
then ▇▇▇▇▇▇ may, within 210 days after the delivery of the Management Offer
Notice, Transfer such Block of Shares pursuant to Section 3(b)(xiii) or approve
a Qualified Sale of the Company pursuant to Section 6(a), as applicable, at a
price no less than 95% of the price per share specified in the Management Offer
Notice and on other terms no more favorable to the transferees thereof than
offered to the Management Stockholders in the Management Offer Notice. If such
Transfer of such Block of Shares or Qualified Sale of the Company, as
applicable, is not consummated within 210 days after the delivery of the
Management Offer, ▇▇▇▇▇▇ shall have to deliver another Management Offer Notice
under this Section 6(b) prior to any subsequent Transfer of a Block of Shares
pursuant to Section 3(b)(xiii) or Qualified Sale of the Company, as applicable.
The Management Stockholders shall be jointly and severally liable to ▇▇▇▇▇▇ for
the breach of any representation or warranty set forth in the Management Reply.
Section 7.........REGISTRATION RIGHTS.
(a) Shelf Registration. ▇▇▇▇▇▇ shall have the right at any
time to demand that the Company include any and all Stockholder Shares owned by
▇▇▇▇▇▇ or its Affiliates in the Company's shelf registration statement in effect
as of the date hereof (the "Shelf").
(b) DEMAND REGISTRATION.
(i)......So long as any ▇▇▇▇▇▇ Shares are not included in the Shelf and/or
the Shelf is not then effective, ▇▇▇▇▇▇ shall have the right (the "Demand
Right") to request registration under the Securities Act of all or any portion
of the Registrable Securities held by ▇▇▇▇▇▇ and its Affiliates (in each case,
referred to herein as the "Requesting Holders") by delivering a written notice
to the Company, which notice identifies the Requesting Holders and specifies the
number of Registrable Securities to be included in such registration (the
"Registration Request"). The Company will give prompt written notice of such
Registration Request (the "Registration Notice") to all other Stockholders and
will thereupon use its reasonable best efforts to effect the registration (a
"Demand Registration") under the Securities Act on any form available to the
Company of:
(x) the Registrable Securities requested to be registered by the
Requesting Holders; and
(y) all other Registrable Securities which the Company has received a
written request from another Stockholder to register within 30 days after
the Registration Notice is given.
The Company shall be obligated to effect three Demand Registrations.
(ii).....A registration undertaken by the Company a the request of the
Requesting Holders will not count as a Demand Registration if, pursuant to the
applicable Demand Right, the Requesting Holders fail to register and sell at
least 50% of the Registrable Securities requested to be included in such
registration by the Requesting Holders.
(iii)....If the sole or managing underwriter of a Demand Registration
advises the Company in writing that in its opinion the number of Registrable
Securities and other securities requested to be included exceeds the number of
Registrable Securities and other securities which can be sold in such offering
without adversely affecting the distribution of the securities being offered,
the price that will be paid in such offering or the marketability thereof, the
Company will include in such registration the greatest number of Registrable
Securities proposed to be registered by the Stockholders which in the opinion of
such underwriter can be sold in such offering without adversely affecting the
distribution of the securities being offered, the price that will be paid in
such offering or the marketability thereof, ratably among the Stockholders
proposing to register based on each such Stockholder's Ownership Percentage;
provided, however, that the Requesting Holders shall have the right to receive
priority over all other Stockholders in the third Demand Registration.
(c) INCIDENTAL REGISTRATION.
(i) .....At any time the Company proposes to register any Common Shares
under the Securities Act (other than pursuant to Section 7(b) or in connection
with a business acquisition or combination or an employee benefit plan), whether
in connection with a primary or secondary offering, the Company will give
written notice to each Stockholder at least thirty (30) days prior to the
initial filing of such Registration Statement with the SEC of its intent to file
such Registration Statement and of such Stockholder's rights under this Section
7(c). Upon the written request of any Stockholder made within twenty (20) days
after any such notice is given (which request shall specify the Registrable
Securities intended to be disposed of by such Stockholder), the Company will use
its reasonable best efforts to effect the registration (an "Incidental
Registration") under the Securities Act of all Registrable Securities which the
Company has been so requested to register by the holders thereof; provided,
however, that if, at any time after giving written notice of its intention to
register any securities and prior to the effective date of the Registration
Statement filed in connection with such Incidental Registration (each an
"Incidental Registration Statement"), the Company shall determine for any reason
not to register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination to each Stockholder and,
thereupon, (x) in the case of a determination not to register, the Company shall
be relieved of its obligation to register any Registrable Securities under this
Section 7(c) in connection with such registration (but not from its obligation
to pay the expenses incurred in connection therewith), and (y) in the case of a
determination to delay registration, the Company shall be permitted to delay
registering any Registrable Securities under this Section 7(c) during the period
that the registration of such other securities is delayed.
(ii).....If the sole or managing underwriter of a registration advises the
Company in writing that in its opinion the number of Registrable Securities and
other securities requested to be included exceeds the number of Registrable
Securities and other securities which can be sold in such offering without
adversely affecting the distribution of the securities being offered, the price
that will be paid in such offering or the marketability thereof, the Company
will include in such registration the Registrable Securities and other
securities of the Company in the following order of priority:
(x) first, the greatest number of securities of the Company proposed
to be included in such registration by the Company for its own account
which in the opinion of such underwriter can be so sold; and
(y) second, after all securities that the Company proposes to register
for its own account have been included, the greatest amount of Registrable
Securities requested to be registered by the Stockholders of which in the
opinion of such underwriter can be sold in such offering without adversely
affecting the distribution of the securities being offered, the price that
will be paid in such offering or the marketability thereof, ratably among
the Stockholders proposing to register based on each such Stockholder's
Ownership Percentage.
(d) Holdback Agreements.
(i) .....Each Stockholder agrees that if requested in connection with an
underwritten offering made pursuant to this Section 7 by the managing
underwriter or underwriters of such underwritten offering, such Stockholder will
not effect any Public Sale or distribution of any of the securities being
registered or any securities convertible or exchangeable or exercisable for such
securities (except as part of such underwritten offering), during the period
beginning 10 days prior to, and ending 180 days after, the closing date of each
underwritten offering made pursuant to such Registration Statement (or for such
shorter period as to which the managing underwriter or underwriters may agree).
(ii).....The Company agrees not to effect any Public Sale or distribution
of its Common Stock, or any securities convertible into or exchangeable or
exercisable for such Common Stock, during the seven days prior to and during the
180-day period beginning on the effective date of any underwritten Demand
Registration (or for such shorter period as to which the managing underwriter or
underwriters may agree), except as part of such Demand Registration or in
connection with any employee benefit or similar plan, any dividend reinvestment
plan, or a business acquisition or combination.
(e) Registration and Maintenance Procedures. In connection
with the registration of any Registrable Securities and/or the maintenance of
the Shelf and/or any other Registration Statement, the Company shall, to the
extent applicable, at its own expense, as promptly as reasonably possible:
(i) Prepare and file with the SEC a
Registration Statement or Registration Statements on a form
available for the sale of the Registrable Securities by the
holders thereof in accordance with the intended method of
distribution thereof, and use its reasonable best efforts to
cause each such Registration Statement to become effective;
(ii) Prepare and file with the SEC such
amendments and post-effective amendments to each Registration
Statement as may be necessary to keep such Registration
Statement continuously effective for a period ending on the
earlier of (x) 90 days from the effective date and (y) such
time as all of such securities have been disposed of in
accordance with the intended method of disposition thereof;
and cause the related prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in
force) under the Securities Act; and comply with the
provisions of the Securities Act, the Exchange Act and the
rules and regulations of the SEC promulgated thereunder
applicable to it with respect to the disposition of all
securities covered by such Registration Statement as so
amended or in such prospectus as so supplemented;
(iii) Notify the selling Stockholders
promptly (but in any event within two business days), and
confirm such notice in writing, (A) when a prospectus or any
prospectus supplement or post-effective amendment has been
filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective,
(B) of the issuance by the SEC of any stop order suspending
the effectiveness of a Registration Statement or of any order
preventing or suspending the use of any preliminary
prospectus, (C) if at any time when a prospectus is required
by the Securities Act to be delivered in connection with sales
of Registrable Securities the Company becomes aware that the
representations and warranties of the Company contained in any
agreement (including any underwriting agreement) contemplated
by Section 7(e)(viii) cease to be true and correct in all
material respects, (D) of the receipt by the Company of any
notification with respect to the suspension of the
qualification or exemption from qualification of a
Registration Statement or any of the Registrable Securities
for offer or sale in any jurisdiction, (E) if the Company
becomes aware of the happening of any event that makes any
statement made in such Registration Statement or related
prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material
respect or that requires the making of any changes in such
Registration Statement, prospectus or documents so that, in
the case of such Registration Statement, it will not contain
any 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, and that in the
case of the prospectus, it will not contain any 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, in light of the circumstances under which
they were made, not misleading;
(iv) Use its reasonable best efforts to
prevent the issuance of any order suspending the effectiveness
of a Registration Statement or of any order preventing or
suspending the use of a prospectus or suspending the
qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction, and, if
any such order is issued, to obtain the withdrawal of any such
order at the earliest possible moment;
(v) Deliver to each selling Stockholder and
the underwriters, if any, without charge, as many copies of
the prospectus or prospectuses (including each form of
prospectus) and each amendment or supplement thereto as such
Persons may reasonably request; and, the Company hereby
consents to the use of such prospectus and each amendment or
supplement thereto by each of the selling Stockholders and the
underwriters or agents, if any, in connection with the
offering and sale of the Registrable Securities covered by
such prospectus and any amendment or supplement thereto;
(vi) Prior to any public offering of
Registrable Securities, to use its reasonable best efforts to
register or qualify, and cooperate with the selling
Stockholders, the underwriters, if any, the sales agents and
their respective counsel in connection with the registration
or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and
sale under the securities or "blue sky" laws of such
jurisdictions within the United States as necessary;
(vii) Upon the occurrence of any event
contemplated by Section 7(e)(iii)(E), as promptly as
practicable prepare a supplement or post-effective amendment
to the Registration Statement or a supplement to the related
prospectus or any document incorporated or deemed to be
incorporated therein by reference, or file any other required
document so that, as thereafter delivered to the purchasers of
the Registrable Securities being sold thereunder, such
prospectus will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not
misleading;
(viii) Enter into an underwriting agreement
in form, scope and substance as is customary in underwritten
offerings and take all such other actions as are reasonably
requested by the managing or sole underwriter in order to
expedite or facilitate the registration or the disposition of
such Registrable Securities, and in such connection, (A) make
such representations and warranties to the underwriters, with
respect to the business of the Company and its Subsidiaries,
and the Registration Statement, prospectus and documents, if
any, incorporated or deemed to be incorporated by reference
therein, in each case, in form, substance and scope as are
customarily made by issuers to underwriters in underwritten
offerings, and confirm the same if and when requested; (B)
obtain opinions of counsel to the Company and updates thereof
(which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing
underwriters), addressed to the underwriters covering the
matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be
reasonably requested by underwriters; (C) obtain "cold
comfort" letters and updates thereof from the independent
certified public accountants of the Company (and, if
necessary, any other independent certified public accountants
of any Subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial
data are, or are required to be, included in the Registration
Statement), addressed to each of the underwriters, such
letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters in
connection with underwritten offerings; and (D) if an
underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures no less favorable to
the Stockholders than those set forth in Section 7(g) (or such
other provisions and procedures acceptable to holders of a
majority of the Registrable Securities covered by such
Registration Statement and the managing underwriters or
agents) with respect to all parties to be indemnified pursuant
to Section 7(g). The above shall be done at each closing under
such underwriting agreement, or as and to the extent required
thereunder;
(ix) Comply with all applicable rules and
regulations of the SEC and make generally available to its
Stockholders earnings statements satisfying the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act) no
later than 45 days after the end of any 12-month period (or 90
days after the end of any 12-month period if such period is a
fiscal year) (x) commencing at the end of any fiscal quarter
in which Registrable Securities are sold to underwriters in a
firm commitment or best efforts underwritten offering and (y)
if not sold to underwriters in such an offering, commencing on
the first day of the first fiscal quarter of the Company after
the effectiveness of a Registration Statement, which
statements shall cover said 12-month periods; and
(x) Use its reasonable best efforts to cause
all such Registrable Securities covered by such Registration
Statement to be designated as a NASDAQ "national market system
security" within the meaning of Rule 11Aa2-1 or listed on the
principal securities exchange on which Common Stock is then
listed (if any).
The Company may require each Stockholder as to which any registration is being
effected to furnish to the Company such information regarding such Stockholder
and the distribution of such Registrable Securities as the Company may, from
time to time, reasonably request in writing; provided that such information
shall be used only in connection with such registration. The Company may exclude
from such registration the Registrable Securities of any Stockholder who
unreasonably fails to furnish such information promptly after receiving such
request. Each Stockholder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section
7(e)(iii)(B), 7(e)(iii)(D) or 7(e)(iii)(E), such Stockholder will forthwith
discontinue disposition of such Registrable Securities covered by such
Registration Statement or prospectus until such Stockholder's receipt of the
copies of the supplemented or amended prospectus contemplated by Section 7(e),
or until such Stockholder is advised in writing by the Company that the use of
the applicable prospectus may be resumed, and has received copies of any
amendments or supplements thereto.
(f) Registration Expenses. All fees and expenses incident to the
performance of or compliance the Company with the provisions of Section 7 shall
be borne by the Company, whether or not any Registration Statement is filed or
becomes effective, including, without limitation, (i) all registration and
filing fees (including, without limitation, fees and expenses of compliance with
state securities or "blue sky" laws), (ii) reasonable messenger, telephone and
delivery expenses, (iii) fees and disbursements of counsel for the Company, (iv)
fees and disbursements of all independent certified public accountants referred
to in Section 7(e)(viii), (v) underwriters' fees and expenses (excluding
discounts, commissions, or fees of underwriters, selling brokers, dealer
managers or similar securities industry professionals relating to the
distribution of the Registrable Securities, which shall be paid by the selling
stockholders), (vi) Securities Act liability insurance, if the Company so
desires such insurance, (vii) internal expenses of the Company, (viii) the
expense of any annual audit, (ix) the fees and expenses incurred in connection
with the listing of the securities to be registered on any securities exchange,
and (x) the fees and expenses of any Person, including special experts, retained
by the Company. In connection with any Demand Registration or Incidental
Registration hereunder, the Company shall reimburse the holders of the
Registrable Securities being registered in such registration for the reasonable
fees and disbursements of not more than one counsel (together with appropriate
local counsel) chosen by ▇▇▇▇▇▇, if pursuant to a Demand Registration, or the
Company, in all other cases, and other reasonable out-of-pocket expenses of the
Stockholders incurred in connection with the registration of the Registrable
Securities.
(g) Indemnification; Contribution.
(i)......The Company shall, without limitation as to time, indemnify and
hold harmless, to the full extent permitted by law, each Stockholder, the
officers, directors, members, agents and employees of each of them, each Person
who controls each such Person (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act), the officers, directors,
agents and employees of each such controlling person and any financial or
investment adviser (each, an "Indemnified Stockholder"), to the fullest extent
lawful, from and against any and all losses, claims, damages, liabilities,
actions or proceedings (whether commenced or threatened) reasonable costs
(including, without limitation, reasonable costs of preparation and reasonable
attorneys' fees) and reasonable expenses (including reasonable expenses of
investigation) (collectively, "Losses"), as incurred, arising out of or based
upon any untrue or alleged untrue statement of a material fact contained in any
Registration Statement, prospectus or form of prospectus or in any amendment or
supplements thereto or in any preliminary prospectus, or arising out of or based
upon any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, except to
the extent, but only to the extent, that such untrue or alleged untrue statement
is contained in, or such omission or alleged omission is required to be
contained in, any information so furnished in writing by the Company to such
Stockholder expressly for use in such Registration Statement or prospectus and
that such statement or omission was reasonably relied upon by such Stockholder
in preparation of such Registration Statement, prospectus or form of prospectus;
provided, however, that the Company shall not be liable in any such case to the
extent that the Company has furnished in writing to such Stockholder within a
reasonable period of time prior to the filing of any such Registration Statement
or prospectus or amendment or supplement thereto information expressly for use
in such Registration Statement or prospectus or any amendment or supplement
thereto which corrected or made not misleading, information previously furnished
to such Stockholder, and such Stockholder failed to include such information
therein; provided, further, however, that the Company shall not be liable to any
Person who participates as an underwriter in the offering or sale of Registrable
Securities or any other Person, if any, who controls such underwriter(s) within
the meaning of the Securities Act to the extent that any such Losses arise out
of or are based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in any preliminary prospectus if (A) such Person failed
to send or deliver a copy of the prospectus with or prior to the delivery of
written confirmation of the sale by such Person to the Person asserting the
claim from which such Losses arise, (B) the prospectus would have corrected such
untrue statement or alleged untrue statement or such omission or alleged
omission, and (C) the Company has complied with its obligations under Section
7(e)(iii). Each indemnity and reimbursement of costs and expenses shall remain
in full force and effect regardless of any investigation made by or on behalf of
such Indemnified Stockholder.
(ii).....In connection with any Registration Statement in which a
Stockholder is participating, such Stockholder, or an authorized officer of such
Stockholder, shall furnish to the Company in writing such information as the
Company reasonably requests for use in connection with any Registration
Statement or prospectus and agrees, severally and not jointly, to indemnify, to
the full extent permitted by law, the Company, its directors, officers, agents
and employees, each Person who controls the Company (within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling persons (each, an
"Indemnified Company", and together with the Indemnified Stockholders, the
"Indemnified Parties"), from and against all Losses, as incurred, arising out of
or based upon any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, prospectus or form of prospectus or in
any amendment or supplements thereto or in any preliminary prospectus, or
arising out of or based upon any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except to the extent, but only to the extent, that such untrue or
alleged untrue statement is contained in, or such omission or alleged omission
is required to be contained in, any information so furnished in writing by such
Stockholder to the Company expressly for use in such Registration Statement or
prospectus and that such statement or omission was reasonably relied upon by the
Company in preparation of such Registration Statement, prospectus or form of
prospectus; provided, however, that such Stockholder shall not be liable in any
such case to the extent that such Stockholder has furnished in writing to the
Company within a reasonable period of time prior to the filing of any such
Registration Statement or prospectus or amendment or supplement thereto
information expressly for use in such Registration Statement or prospectus or
any amendment or supplement thereto which corrected or made not misleading,
information previously furnished to the Company, and the Company failed to
include such information therein. In no event shall the liability of any selling
Stockholder hereunder be greater in amount than the after-tax dollar amount of
the proceeds (net of payment of all expenses) received by such Stockholder upon
the sale of the Registrable Securities giving rise to such indemnification
obligation. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Company.
(iii)....Any Indemnified Party shall give prompt notice to the party or
parties from which such indemnity is sought (the "Indemnifying Parties") of the
commencement of any action, suit, proceeding or investigation or written threat
thereof (a "Proceeding") with respect to which such Indemnified Party seeks
indemnification or contribution pursuant hereto; provided, however, that the
failure to so notify the Indemnifying Parties shall not relieve the Indemnifying
Parties from any obligation or liability except to the extent that the
Indemnifying Parties have been prejudiced by such failure. The Indemnifying
Parties shall have the right, exercisable by giving written notice to an
Indemnified Party promptly after the receipt of written notice from such
Indemnified Party of such Proceeding, to assume, at the Indemnifying Parties'
expense, the defense of any such Proceeding, with counsel reasonably
satisfactory to such Indemnified Party; provided, however, that an Indemnified
Party or Indemnified Parties (if more than one such Indemnified Party is named
in any Proceeding) shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Indemnified
Parties unless: (x) the Indemnifying Parties agree to pay such fees and
expenses; (y) the Indemnifying Parties fail promptly to assume the defense of
such Proceeding or fail to employ counsel reasonably satisfactory to such
Indemnified Party or Indemnified Parties; or (z) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
or Indemnified Parties and the Indemnifying Parties, and there may be one or
more defenses available to such Indemnified Party or Indemnified Parties that
are different from or additional to those available to the Indemnifying Parties,
in which case, if such Indemnified Party or Indemnified Parties notifies the
Indemnifying Parties in writing that it elects to employ separate counsel at the
expense of the Indemnifying Parties, the Indemnifying Parties shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Parties, it being understood, however, that, unless there
exists a conflict among Indemnified Parties, the Indemnifying Parties shall not,
in connection with any one such Proceeding or separate but substantially similar
or related Proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (together with appropriate local counsel) at any
time for such Indemnified Party or Indemnified Parties. Whether or not such
defense is assumed by the Indemnifying Parties, such Indemnifying Parties or
Indemnified Party or Indemnified Parties will not be subject to any liability
for any settlement made without its or their consent (but such consent will not
be unreasonably withheld). The Indemnifying Parties shall not consent to entry
of any judgment or enter into any settlement which (A) provides for other than
monetary damages without the consent of the Indemnified Party or Indemnified
Parties (which consent shall not be unreasonably withheld or delayed) or (B)
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party or Indemnified Parties of a release, in form
and substance satisfactory to the Indemnified Party or Indemnified Parties, from
all liability in respect of such Proceeding for which such Indemnified Party
would be entitled to indemnification hereunder.
(iv).....If the indemnification provided for in this Section 7(g) is
unavailable to an Indemnified Party or is insufficient to hold such Indemnified
Party harmless for any Losses in respect of which this Section 7(g) would
otherwise apply by its terms, then each applicable Indemnifying Party, in lieu
of indemnifying such Indemnified Party, shall have a joint and several
obligation to contribute to the amount paid or payable by such Indemnified Party
as a result of such Losses, in such proportion as is appropriate to reflect the
relative fault of and relative benefit to the Indemnifying Party, on the one
hand, and such Indemnified Party, on the other hand, in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party, on the one hand, and Indemnified Party, on the other hand, shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been taken by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent any such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include any
legal or other fees or expenses incurred by such party in connection with any
Proceeding, to the extent such party would have been indemnified for such
expenses if the indemnification provided for in Section 7(g)(i) or 7(g)(ii) was
available to such party. The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7(g)(iv) were determined by
pro-rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in this Section 7(g)(iv).
Notwithstanding the provisions of this Section 7(g)(iv), an Indemnifying Party
that is a selling Stockholder shall not be required to contribute any amount in
excess of the amount by which the net after-tax proceeds received by such
Indemnifying Party exceeds the amount of any damages that such Indemnifying
Party has otherwise been required to pay by reasons of such untrue or alleged
untrue statement or omission or alleged omission. 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.
(h) Rule 144 Sales. The Company shall file the reports required to be filed
by it under the Securities Act and the Exchange Act and the rules and
regulations promulgated thereunder, and will take such further action as any
Stockholder may reasonably request, all to the extent required from time to time
to enable such Stockholder to sell Registrable Securities (subject to Section
3(b)(vii) or 3(b)(viii)) without registration under the Securities Act within
the limitation of the exemptions provided by Rule 144. Upon the request of any
Stockholder, the Company shall deliver to such Stockholder a written statement
as to whether it has complied with such requirements.
(i) Underwritten Registrations. No Stockholder may participate in any
underwritten registration hereunder unless such Stockholder (x) agrees to sell
such Stockholder's Registrable Securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (y) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
(j) No Inconsistent Agreements. The Company has not and will not, enter
into any agreement with respect to the Company's securities that is inconsistent
with the rights granted to the Stockholders in this Section 7 or otherwise
conflicts with the provisions hereof.
(k) S-3 Demands.
(i)......So long as (A) any ▇▇▇▇▇▇ Shares are not included in the Shelf
and/or the Shelf is not then effective and (B) the Company is permitted under
Securities Act to register securities on Form S-3, ▇▇▇▇▇▇ shall have the right
to request registration on Form S-3 of all or any portion of the Registrable
Securities held by ▇▇▇▇▇▇ and its Affiliates (in each case, referred to herein
as the "S-3 Requesting Holders") by delivering a written notice to the Company,
which notice identifies the S-3 Requesting Holders and specifies the number of
Registrable Securities to be included in such registration (the "S-3
Registration Request"). The Company will give prompt written notice of such S-3
Registration Request (the "S-3 Registration Notice") to all other Stockholders
and will thereupon use its reasonable best efforts to effect the registration (a
"S-3 Demand Registration") on Form S-3 of:
(x) the Registrable Securities requested to be registered by the S-3
Requesting Holders; and
(y) all other Registrable Securities which the Company has received a
written request from another Stockholder to register within 30 days after
the S-3 Registration Notice is given.
The Company shall be obligated to effect an unlimited number of S-3 Demand
Registrations. S-3 Demand Registrations shall not constitute Demand
Registrations.
(ii).....If the sole or managing underwriter of a S-3 Demand Registration
advises the Company in writing that in its opinion the number of Registrable
Securities and other securities requested to be included exceeds the number of
Registrable Securities and other securities which can be sold in such offering
without adversely affecting the distribution of the securities being offered,
the price that will be paid in such offering or the marketability thereof, the
Company will include in such registration the greatest number of Registrable
Securities proposed to be registered by the Stockholders which in the opinion of
such underwriter can be sold in such offering without adversely affecting the
distribution of the securities being offered, the price that will be paid in
such offering or the marketability thereof, ratably among the Stockholders
proposing to register based on each such Stockholder's Ownership Percentage.
Section 8.........Operating Budget. Norton hereby agrees that
he shall not accept or attempt to collect from the Company or any of its
Subsidiaries any bonus otherwise do to him under any employment, consulting or
other similar agreement between the Company and any Subsidiary and him if the
Company is at the time or had been within the preceding two years in default of
its obligations under Section 4A(i)(c), 4A(i)(d) or 4A(i)(e) of the Common Stock
Purchase Agreement and such default in the case of Section 4A(i)(c) or 4A(i)(d)
of the Common Stock Purchase Agreement remains or remained uncured for 20
business days and in the case of Section 4A(i)(e) of the Common Stock Purchase
Agreement remains or remained uncured for 5 business days.
Section 9.........Redemption. Subject to the limitations on
transferring Common Shares to the Company set forth in Section 3(b)(iii), prior
to redeeming, purchasing or otherwise acquiring (contingent or otherwise),
directly or indirectly, or entering into any agreement for the redemption,
purchase or acquisition (contingent or otherwise), directly or indirectly, of
any Common Shares from any holder of Management Shares, the Company shall give
at least thirty (30) days prior written notice to ▇▇▇▇▇▇, which notice (for
purposes of this Section 9, the "Redemption Notice") shall identify the type and
amount of Common Shares to be redeemed, describe the terms and conditions of
such proposed redemption, and identify each prospective transferor of the Common
Shares to be redeemed (the "Other Redeemers"). ▇▇▇▇▇▇ or any of its Affiliates
may, within fifteen (15) days after the receipt of the Redemption Notice, give
written notice (each, a "Co-Redemption Notice") to the Company that such Person
wishes to participate in such proposed redemption upon the terms and conditions
set forth in the Redemption Notice, which Co-Redemption Notice shall specify the
type and amount of Common Shares such Person desires to redeem. If none of
▇▇▇▇▇▇ and its Affiliates give the Company a timely Co-Redemption Notice, then
the Company may redeem such Common Shares on the terms and conditions set forth
in the Redemption Notice of the Other Redeemers at any time within ninety days
after expiration of the fifteen-day period for giving Co-Redemption Notices with
respect to such redemption. Any such Common Shares not redeemed by the Company
during such ninety-day period will again be subject to the provisions of this
Section 9 upon a subsequent redemption. If ▇▇▇▇▇▇ and/or its Affiliates give the
Company a timely Co-Redemption Notice, then the Company, at its option, shall
(a) redeem all Common Shares which ▇▇▇▇▇▇, its Affiliates and the Other
Redeemers desire to redeem, or (b) allocate the maximum number of each class of
Common Shares that the Company is willing to redeem (the "Redeemable Shares")
among ▇▇▇▇▇▇, its Affiliates and the Other Redeemers as follows:
(i) each Stockholder holding ▇▇▇▇▇▇ Shares shall be
entitled to redeem a number of Common Shares (not to exceed, for any
such Stockholder, the number of shares of such Common Shares identified
in such Stockholder's Co-Redemption Notice) equal to the product of (A)
the number of Redeemable Shares of such class of Common Shares and (B)
such Stockholder's Ownership Percentage of such class of Common Shares;
and
(ii) the Other Redeemers shall be entitled to redeem
all Redeemable Shares remaining after taking into account clause (i)
above (with the allocation among the Other Redeemers as decided by the
Company in its sole discretion).
Section 10........Rights of First Refusal or First Offer.
(a) Assignment. Except with respect to the Irrevocable Proxy
and Stock Rights Agreement, each of the Management Stockholders hereby agrees to
assign, or cause to be assigned, to ▇▇▇▇▇▇ or any Affiliate of ▇▇▇▇▇▇ designated
by ▇▇▇▇▇▇ any right of first refusal or first offer or any preemptive right of
any kind with respect to any Common Shares granted to or otherwise controlled by
such Management Stockholder or any Affiliate of such Management Stockholder,
including any such right hereafter created, under any agreement other than this
Agreement, the Common Stock Purchase Agreement or the Stock Purchase Warrant;
provided, however that (i) if such right is not assignable for any reason and
(ii) there is no prohibition under such right or by law against the Transfer to
▇▇▇▇▇▇ or any Affiliate of ▇▇▇▇▇▇ designated by ▇▇▇▇▇▇ of the Common Shares
underlying such right immediately after the exercise thereof, then at ▇▇▇▇▇▇'▇
request and expense, such Management Stockholder shall, or shall cause such
Management Stockholder's Affiliate to, exercise such right and immediately
thereafter Transfer to ▇▇▇▇▇▇ or any Affiliate of ▇▇▇▇▇▇ designated by ▇▇▇▇▇▇
the Common Shares purchased under such right. Each of the Management
Stockholders hereby agrees to notify ▇▇▇▇▇▇ as soon as practical upon receiving
notice from any Person or otherwise becoming aware that such Management
Stockholder or any Affiliate of such Management Stockholder has any exercisable
or soon to be exercisable right of first refusal or first offer or any
preemptive right of any kind with respect to any Common Shares.
(b) Irrevocable Proxy and Stock Rights Agreement. Norton
hereby agrees that if Norton elects not to exercise his "right to purchase"
pursuant to Article 3 of the Irrevocable Proxy and Stock Rights Agreement, then
Norton shall assign such right to purchase to ▇▇▇▇▇▇ or any Affiliate of ▇▇▇▇▇▇
designated by ▇▇▇▇▇▇; provided, however that notwithstanding anything in the
Irrevocable Proxy and Stock Rights Agreement to the contrary, the purchase price
per share with respect to such assigned right to purchase shall be Market Value.
Norton hereby agrees to notify ▇▇▇▇▇▇ as soon as practical upon receiving notice
from any Person or otherwise becoming aware that Norton has any exercisable or
soon to be exercisable right to purchase under the Irrevocable Proxy and Stock
Rights Agreement.
Section 11........Amendment and Waiver. Except as otherwise
provided herein, no amendment or waiver of any provision of this Agreement shall
be effective against the Company or Stockholders unless such amendment or waiver
is approved in writing by the Company, ▇▇▇▇▇▇ and the holders of at least a
majority of the then-outstanding Management Shares. The failure of any party to
enforce any provision of this Agreement shall not be construed as a waiver of
such provision and shall not affect the right of such party thereafter to
enforce each provision of this Agreement in accordance with its terms.
Section 12........Severability. If any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision or any other jurisdiction,
but this Agreement shall be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never
been contained herein.
Section 13........Entire Agreement. Except as otherwise
expressly set forth herein, this document embodies the complete agreement and
understanding among the parties hereto with respect to the subject matter hereof
and supersedes and preempts any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
Section 14........Successors and Assigns. This Agreement shall
bind and inure to the benefit of and be enforceable by the Company and the
Stockholders and their respective permitted successors and assigns so long as
such Stockholders and their respective permitted successors and assigns hold
Stockholder Shares, provided, however that ▇▇▇▇▇▇ shall not assign this
Agreement or any of the rights or interests hereunder (except any right or
interest directly related to the ownership of the Common Shares) to any Person
other than an Affiliate of Purchaser within two years of the date hereof.
Section 15........Counterparts. his Agreement may be executed
in separate counterparts each of which shall be an original and all of which
taken together shall constitute one and the same agreement.
Section 16........Remedies. The Company and the Stockholders
shall be entitled to enforce their rights under this Agreement specifically to
recover damages by reason of any breach of any provision of this Agreement and
to exercise all other rights existing in their favor. The parties hereto agree
and acknowledge that money damages may not be an adequate remedy for any breach
of the provisions of this Agreement and that the Company or any Stockholder may
in its sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief (without posting
a bond or other security) in order to enforce or prevent any violation of the
provisions of this Agreement.
Section 17........Notices. Any notice provided for in this
Agreement shall be in writing and shall be either personally delivered, or sent
via facsimile, or mailed first class mail (postage prepaid) or sent by reputable
overnight courier service (charges prepaid) to such Person as follows:
if to the Company:
MLC Holdings, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
FAX:..... ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & Bird, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX:..... ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III, Esq.
if to ▇▇▇▇▇▇:
c/▇ ▇▇▇▇▇▇ Equity Investors III, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX:..... ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
FAX: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
if to a Management Stockholder:
at the address set forth below such Management
Stockholder's signature on the signature page hereto
if to any Person who becomes a Party hereto after the date hereof:
at the address set forth below such Person's signature
on the signature page to such Person's Joinder
Agreement;
or at such address or to the attention of such other Person as the recipient
party has specified by prior written notice to the sending party. Notices will
be deemed to have been given hereunder when delivered personally or sent via
facsimile (against receipt therefor), five business days after deposit in the
U.S. mail and one business day after deposit with a reputable overnight courier
service.
Section 18........Governing Law. The corporate law of Delaware shall govern
all issues concerning the relative rights of the Company and its stockholders.
All other questions concerning the construction, validity and interpretation of
this Agreement shall be governed by the internal law, and not the law of
conflicts, of Delaware.
Section 19........Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
Section 20........Survival; Termination. Common Shares acquired by the
Stockholders after the date hereof shall be Stockholder Shares and hence fully
subject to the provisions of this Agreement. Stockholder Shares shall cease to
be such as provided in the last sentence of Section 3(b). Sections 2, 5, 6, 7, 8
and 9 hereof shall terminate upon ▇▇▇▇▇▇ Shares constituting less than 5% of the
issued and outstanding Common Shares, and such sections shall remain terminated
even if ▇▇▇▇▇▇, its Affiliates and any holders of ▇▇▇▇▇▇ Shares later own in the
aggregate 5% or more of the issued and outstanding Common Shares; provided that
the limited partners of ▇▇▇▇▇▇ Equity Investors III, L.P. shall not be treated
as Affiliates of ▇▇▇▇▇▇ or the holders of ▇▇▇▇▇▇ Shares for the purposes of this
Section 20. Any prohibition against Transfers without the prior written consent
of ▇▇▇▇▇▇ if such Transfers would result in Management Shares and ▇▇▇▇▇▇ Shares,
collectively, constituting less than 51% of the outstanding Common Shares of the
Company shall terminate upon Management Shares and ▇▇▇▇▇▇ Shares, collectively,
constituting less than 35% of the outstanding Common Shares of the Company. All
rights and obligations of the Stockholders and the Company shall terminate upon
the first to occur of (i) there being no ▇▇▇▇▇▇ Shares, and (ii) the
consummation of an Approved Sale.
Section 21........Other Registration Rights. Each of the Management
Stockholders hereby agrees to waive any right to demand that the Company
register any Common Shares under the Securities Act or include any Common Shares
in the Shelf or other registration statement and any other registration right of
any kind granted by the Company to such Management Stockholder under any
agreement other this Agreement.
[END OF PAGE]
[SIGNATURE PAGES FOLLOW]
▇▇▇▇▇▇▇▇▇
IN WITNESS WHEREOF, the parties have executed this
Stockholders Agreement as of the date first above written.
MLC HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive Officer
TC LEASING, LLC
By: ▇▇▇▇▇▇ EQUITY INVESTORS III, L.P.,
its managing member
By: TC EQUITY PARTNERS, L.L.C., its general partner
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. Goetmann
Title:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address: ___________________________
___________________________
FAX: ___________________________
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
Address: ___________________________
___________________________
FAX: ___________________________
JAP INVESTMENT GROUP, L.P.
By: J.A.P., Inc., its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
_________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address: ___________________________
___________________________
FAX: ___________________________
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Address: ___________________________
___________________________
FAX: ___________________________
SCHEDULE I
OTHER MANAGEMENT STOCKHOLDERS
JAP Investment Group, L.P.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
FORM OF JOINDER
TO
STOCKHOLDERS AGREEMENT
This Joinder (this "Agreement") is made as of the date written
below by the undersigned (the "Joining Party") in favor of and for the benefit
of MLC Holdings, Inc., TC Leasing, LLC, the Management Stockholders and the
other parties to the Stockholders Agreement, dated as of October 23, 1998 (the
"Stockholders Agreement"). Capitalized terms used but not defined herein shall
have the meanings given such terms in the Stockholders Agreement.
The Joining Party hereby acknowledges, agrees and confirms
that, by his or her execution of this Agreement, the Joining Party will be
deemed to be a party to the Stockholders Agreement and shall have all of the
obligations of a Stockholder thereunder as if he or she had executed the
Stockholders Agreement. The Joining Party hereby ratifies, as of the date
hereof, and agrees to be bound by, all of the terms, provisions and conditions
contained in the Stockholders Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Joinder
as of the date written below.
------------------------------------------
Name: _________________________________
Date: _________________________________
Address: _________________________________
_________________________________
FAX: _________________________________