EXHIBIT 10.5
STOCKHOLDERS AGREEMENT
This Stockholders Agreement (the "Agreement") is made as of December 21,
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1998 by and among:
(i) TISM, Inc., a Michigan corporation (the "Company");
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(ii) Domino's, Inc., a Delaware corporation ("Domino's");
(iii) each of ▇▇▇▇ Capital Fund VI, L.P., ▇▇▇▇ Capital VI Coinvestment
Fund, L.P., BCIP, ▇▇▇▇ Capital Pacific Fund I, L.P., Sankaty High
Yield Asset Partners, L.P., and Brookside Capital Partners Fund, L.P.
(collectively, the "Investors");
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(iv) RGIP, LLC, DP Investors I, LLC, DP Investors II, LLC, ▇.▇. ▇▇▇▇▇▇
Capital Corporation, Sixty Wall Street Fund, L.P., DP Transitory
Corporation and such other Persons who from time to time become party
hereto by executing a counterpart signature page hereof and are
designated by the Company as "Other Investors" (the "Other
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Investors");
(v) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, individually and in his capacity as trustee, and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, individually and in her capacity as trustee (the
"Sellers");
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(vi) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and such other
individuals who from time to time become party hereto by executing a
counterpart signature page hereof and are designated by the Company
as "Managers" (the "Managers", and together with the Investors, the
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Other Investors, the Sellers, and the Financers, the "Stockholders").
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Recitals
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1. On or about the date hereof, TM Transitory Merger Corporation, a
Michigan corporation ("Merger Corp"), shall be merged with and into the Company
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pursuant to an Agreement and Plan of Merger dated as of September 25, 1998 by
and between Merger Corp, the Company and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as amended and in
effect on the date hereof (the "Merger Agreement").
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2. Upon the Closing (as defined below), the Company's Class A Common
Stock, par value $.001 per share (the "Class A Stock"), and the Company's Class
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L Common Stock,
par value $.001 per share (the "Class L Stock"), and all Options to purchase
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Common Stock are held as set forth on Schedule I hereto.
3. The parties believe that it is in the best interests of the Company
and the Stockholders to set forth herein their agreements on certain matters.
Agreement
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Therefore, the parties hereto hereby agree as follows:
1. EFFECTIVENESS; DEFINITIONS.
1.1 Closing. This Agreement shall become effective upon consummation of
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the closing (the "Closing") under the Merger Agreement.
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1.2 Definitions. Certain terms are used in this Agreement as specifically
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defined herein. These definitions are set forth or referred to in Section 16
hereof.
2. VOTING AGREEMENT.
2.1 Election of Directors. Each holder of Shares hereby agrees to cast
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all votes to which such holder is entitled in respect of the Shares, whether at
any annual or special meeting, by written consent or otherwise, (a) to fix the
number of members of the board of directors of the Company (the "Board") at two
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or such higher number as may be specified from time to time by the Majority
Investors (the "Number of Directors") and (b) to elect as directors of the
Company such individuals, if any, as shall have been nominated as follows:
(i) such individuals, not to exceed in number one-half (1/2) of the
Number of Directors, as shall have been nominated by the Majority
Investors.
(ii) such individuals, not to exceed in number the excess of the
Number of Directors over the number of individuals nominated pursuant to
clause (i) above, as shall have been nominated by the Majority
Shareholders.
2.2 Section 4.2 Transactions. Each holder of Shares agrees to cast all
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votes to which such holder is entitled in respect of the Shares, whether at any
annual or special meeting, by written consent or otherwise, in the same
proportion as Shares held by members of the Prospective Selling Group are voted
by the holders thereof to approve any sale, recapitalization, merger,
consolidation, reorganization or any other transaction or series of transactions
involving the Company or its subsidiaries (or all or any portion of their
respective assets) in connection with, or in furtherance of, the exercise by any
Prospective Selling Group of their rights under Section 4.2.
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2.3 Consent to Amendment. Each holder of Shares agrees to cast all votes
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to which such holder is entitled in respect of the Shares, whether at any annual
or special meeting, by written consent or otherwise, to increase the number of
authorized shares of Class A Stock to the extent necessary to permit the
conversion of Common Stock as set forth in the Company's Articles of
Incorporation.
2.4 Grant of Proxy. Each holder of Shares other than the Investors hereby
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grants to the Company an irrevocable proxy to vote his Shares in accordance with
his agreements contained in this Section 2, which proxy shall be valid and
remain in effect until the provisions of this Section 2 expire pursuant to
Section 2.6.
2.5 The Company. The Company agrees not to give effect to any action by
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any holder of Shares or any other Person which is in contravention of this
Section 2.
2.6 Period. The foregoing provisions of this Section 2 shall constitute a
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voting agreement executed pursuant to Section 450.1461 of the Michigan Business
Corporation Act and shall expire on the earlier of (a) a Change of Control and
(b) the last date permitted by law.
2.7 Regulated Stockholder. No Regulated Stockholder shall have any rights
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under or to enforce the provisions of this Section 2, and the terms of this
Section 2 may be amended without the consent of any Regulated Stockholder
provided that such amendment does not impose any additional obligations on such
Regulated Stockholder.
3. CERTAIN COVENANTS.
3.1 Initial and Follow-on Public Offerings. The Company covenants and
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agrees that it shall not, without the prior written consent of the Majority
Investors, do any of the following, and each holder of Shares covenants and
agrees that it shall not, without the prior written consent of the Majority
Investors, vote its Shares, either at a stockholder meeting or by written
consent, so as to cause or permit the Company to:
3.1.1. conduct an Initial Public Offering; or
3.1.2. conduct the Public Offering, if any, immediately succeeding
the Company's Initial Public Offering.
3.2 Certain Significant Transactions. The Company, on its own behalf and
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on behalf of each of its present and future subsidiaries, covenants and agrees
that after the date of Closing neither it nor any of such subsidiaries shall,
without the prior written consent of the Majority Investors, do any of the
following, and each holder of Shares covenants and agrees that after the date of
Closing it shall not, without the prior written consent of the Majority
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Investors, vote its Shares, either at a stockholder meeting or by written
consent, so as to cause or permit the Company or any of its subsidiaries to:
3.2.1. authorize or issue any equity security or amend any term or
provision of any equity security;
3.2.2. amend, modify or repeal the Company's or any subsidiary's
certificate of incorporation or by-laws or comparable document;
3.2.3. merge or consolidate with, or sell, assign, lease, license or
otherwise dispose of or voluntarily part with the control of (whether in
one transaction or in a series of transactions), a material portion of its
assets to, any Person, or permit any subsidiary to do any of the foregoing,
except for sales or other dispositions of assets in the ordinary course of
business;
3.2.4. purchase or otherwise acquire a material portion of the
assets of any Person or 10 percent or more of the equity of any Person;
3.2.5. create any subsidiary that is not a wholly-owned subsidiary
or sell or otherwise dispose of any shares of capital stock of any
subsidiary;
3.2.6. declare or pay any dividends or make any distributions on any
class of the Company's or any subsidiary's capital stock now or hereafter
outstanding, other than dividends or distributions to the Company or any
subsidiary;
3.2.7. purchase, redeem or otherwise acquire or retire any of the
Company's or any subsidiary's capital stock of any class now or hereafter
outstanding or otherwise return capital or make distributions of assets to
stockholders as such;
3.2.8. enter into or amend any partnership or joint venture;
3.2.9. elect, appoint or remove the chief executive officer or any
other senior officer of the Company or any subsidiary;
3.2.10. enter into, amend, modify or waive any term or condition of
any existing or future contract, arrangement or transaction with any holder
of Shares or any Affiliate of the Company or its subsidiaries or of any
holder of Shares;
3.2.11. approve its annual budget, capital expenditure budget,
business plans and strategic plans and any amendments thereto, or expend
any amounts not set forth in an annual budget or a capital expenditure
budget approved in accordance with the preceding clause;
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3.2.12. (i) Transfer any of its assets (other than the expenditure of
cash or the sale of cash-equivalents otherwise in accordance with this
Agreement) in a single transaction or a series of related transactions
having a fair market value in excess of $1 million, (ii) enter into any
contract other than in the ordinary course of business, which contract
involves liabilities in excess of $2.5 million or has a term or is
extendible without its consent for an aggregate term in excess of six
months, (iii) incur any expense (or enter into a commitment therefor) in
excess of $1.5 million; or (iv) acquire any capital assets for aggregate
consideration in excess of $1.0 million;
3.2.13. establish, amend, modify or waive any term or condition of
any stock option plan, restricted stock or similar plan or any other
material employee benefit plan of the Company or any Subsidiary;
3.2.14. enter into, amend, modify or waive any material term or
condition of any employment or other contract or agreement concerning
employment with any senior officer of the Company or any subsidiary;
3.2.15. pay any bonus or other compensation to any senior officer of
the Company or any subsidiary, except as provided in the annual budget of
the Company;
3.2.16. grant any stock option or similar right to any employee of
the Company or any subsidiary;
3.2.17. initiate or settle any lawsuit, arbitration or similar
proceeding involving an amount in excess of $1.5 million;
3.2.18. make an assignment for the benefit of creditors, decide to
subject the Company or any subsidiary to any proceedings under any
bankruptcy or insolvency law, decide to avail the Company or any subsidiary
of the benefit of any other legislation for the benefit of debtors, or take
steps to wind up or terminate the Company existence;
3.2.19. select or remove the independent certified public accountant
or counsel for the Company or any subsidiary or adopt, or modify in any
material respect, any significant accounting policy or tax policy;
3.2.20. acquire (i) any interest in any real property (other than as
lessee) or (ii) any investment in another Person other than the Company or
a wholly-owned subsidiary (other than in accordance with a short-term
investment policy adopted by the Board of Directors of the Company);
3.2.21. guarantee any obligation of any Person other than the
Company or any subsidiary;
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3.2.22. authorize any indebtedness of the Company or any subsidiary
for borrowed money other than draws in the ordinary course under the Credit
Agreement or amend any term or provision of any document relating to any
indebtedness; or
3.2.23. make any material change in the nature of its business as
carried on at the date hereof or as described in the Offering Memorandum
dated December 10, 1998 or enter into any new line of business.
Notwithstanding anything to the contrary in this Section 3.2, none of the
actions, agreements, transactions or other events identified in Subsections
3.2.1 through 3.2.23 shall require consent pursuant to the first sentence of
this Section 3.2 where such action, agreement, transaction or other event
involves only the Company and its wholly-owned Subsidiaries and does not involve
making any payment to, entering into any agreement with, issuing any securities
to or otherwise involve any third party.
3.3 Exercise of Drag Along Rights. No holder of Shares shall exercise
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its drag along rights under Section 4.2 of the Stockholders Agreement in
connection with any Transfer of any Shares held by such holder except with the
prior written consent of the Majority Investors.
3.4 The Company; Subsidiaries. The Company agrees not to give effect to
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any action by any holder of Shares or any other Person which is in contravention
of this Section 3. The Company agrees to bind each subsidiary to the covenants
set forth in this Section 3 as though such Subsidiary was a party to this
Agreement.
3.5 Period. The foregoing provisions of this Section 3 shall expire on a
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Change of Control.
3.6 Regulated Stockholders. No Regulated Stockholder shall have any
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rights under or to enforce the provisions of this Section 3, and the terms of
this Section 3 may be amended without the consent of any Regulated Stockholder
provided that such amendment does not impose any additional obligations on such
Regulated Stockholder.
4. "TAG ALONG" AND "DRAG ALONG" RIGHTS.
4.1 Tag Along. No holder of Investor Shares (collectively, for purposes
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of Sales pursuant to this Section 4.1, the "Prospective Selling Group") shall
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Transfer for value (a "Sale") any such Shares to any Person (a "Prospective
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Buyer") except in compliance with this Section 4.1. Any attempted Transfer of
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Investor Shares not in compliance with this Section 4 shall be null and void,
and the Company shall not in any way give effect to any such impermissible
Transfer.
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4.1.1. Notice. A written notice (the "Tag Along Notice") shall be
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furnished by the Prospective Selling Group to each other holder of Shares
other than Investor Shares (each a "Tag Along Holder") at least ten
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business days prior to such Transfer. The Tag Along Notice shall include:
(a) The principal terms of the proposed Sale insofar as it
relates to the Common Stock, including the number of Shares to be
purchased from the Prospective Selling Group, the percentage of the
total number of Investor Shares which such number of Shares
constitutes (the "Tag Along Sale Percentage"), the maximum and minimum
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per share purchase price and the name and address of the Prospective
Buyer; and
(b) An invitation to each Tag Along Holder to make an offer to
include in the proposed Sale to the Prospective Buyer an additional
number of Shares (not in any event to exceed the Tag Along Sale
Percentage of the total number of Shares held by such Tag Along
Holder) owned by such Tag Along Holder, on the same terms and
conditions, subject to Section 4.3.4 in the case of Options, with
respect to each Share Sold, as the Prospective Selling Group shall
Sell each of their Shares.
4.1.2. Exercise. In the event the consideration in the sale includes
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any non-cash consideration, the Prospective Selling Group will use
reasonable commercial efforts during the period of ten business days after
the effectiveness of the Tag Along Notice to respond to reasonable requests
for information to enable the Tag Along Holders to evaluate such non-cash
consideration, but shall have no liability as to the accuracy or
completeness of any information furnished in response to any such request.
Within ten business days after the effectiveness of the Tag Along Notice,
each Tag Along Holder desiring to make an offer to include Shares in the
proposed Sale (each a "Participating Seller" and, together with the
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Prospective Selling Group, collectively, the "Tag Along Sellers") shall
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furnish a written offer (the "Tag Along Offer") to the Prospective Selling
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Group specifying the number of Shares (not in any event to exceed the Tag
Along Sale Percentage of the total number of Shares held by such
Participating Seller) which such Participating Seller desires to have
included in the proposed Sale. Each Tag Along Holder who does not accept
the Prospective Selling Group's invitation to make an offer to include
Shares in the proposed Sale shall be deemed to have waived all of his
rights with respect to such proposed Sale, and the Tag Along Sellers shall
thereafter be free to Sell to the Prospective Buyer, at a per share price
no greater than the maximum per share price set forth in the Tag Along
Notice and on other principal terms which are not materially more favorable
to the Tag Along Sellers than those set forth in the Tag Along Notice,
without any further obligation to such non-accepting Tag Along Holders.
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4.1.3. Irrevocable Offer. The offer of each Participating Seller
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contained in his Tag Along Offer shall be irrevocable, and, to the extent
such offer is accepted, such Participating Seller shall be bound and
obligated to Sell in the proposed Sale on the same terms and conditions,
with respect to each Share Sold (subject to Section 4.3.4 in the case of
Options), as the Prospective Selling Group, up to such number of Shares as
such Participating Seller shall have specified in his Tag Along Offer;
provided, however, that if the principal terms of the proposed Sale change
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with the result that the per share price shall be less than the minimum per
share price set forth in the Tag Along Notice or the other principal terms
shall be materially less favorable to the Tag Along Selle rs than those set
forth in the Tag Along Notice, each Participating Seller shall be permitted
to withdraw the offer contained in his Tag Along Offer and shall be
released from his obligations thereunder.
4.1.4. Reduction of Shares Sold. The Prospective Selling Group shall
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attempt to obtain the inclusion in the proposed Sale of the entire number
of Shares which the Tag Along Sellers requested to have included in the
Sale (as evidenced in the case of the Prospective Selling Group by the Tag
Along Notice and in the case of each Participating Seller by such
Participating Seller's Tag Along Offer). In the event the Prospective
Selling Group shall be unable to obtain the inclusion of such entire number
of Shares in the proposed Sale, the number of Shares to be sold in the
proposed Sale by each Tag Along Seller shall be reduced on a pro rata basis
according to the proportion which the number of Shares which each such Tag
Along Seller desires to have included in the Sale bears to the total number
of Shares which all of the Tag Along Sellers desire to have included in the
Sale.
4.1.5. Additional Compliance. If (a) prior to consummation, the terms
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of the proposed Sale shall change with the result that the per share price
to be paid in such proposed Sale shall be greater than the maximum per
share price set forth in the Tag Along Notice or the other principal terms
of such proposed Sale shall be materially more favorable to the Tag Along
Sellers than those set forth in the Tag Along Notice, the Tag Along Notice
shall be null and void, and it shall be necessary for a separate Tag Along
Notice to be furnished, and the terms and provisions of this Section 4.1
separately complied with, in order to consummate such proposed Sale
pursuant to this Section 4.1; provided, however, that in the case of such a
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separate Tag Along Notice, the applicable period to which reference is made
in Sections 4.1.1 and 4.1.2 shall be five business days and (b) the
Prospective Selling Group have not completed the proposed Sale by the end
of the 180th day following the date of the effectiveness of the Tag Along
Notice, each Participating Seller shall be released from his obligations
under his Tag Along Offer, the Tag Along Notice shall be null and void, and
it shall be necessary for a separate Tag Along Notice to be furnished, and
the terms and provisions of this Section 4.1 separately complied with, in
order to consummate such proposed Sale pursuant to this Section 4.1, unless
the failure to complete such proposed
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Sale resulted from any failure by any Participating Seller to comply with
the terms of this Section 4.1.
4.1.6. Excluded Transactions. Notwithstanding the foregoing, (i)
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holders of Investor Shares shall not be obligated to comply with the
foregoing provisions of this Section 4.1 and (ii) no other holder of Shares
shall have any right of participation pursuant to the provisions of this
Section 4.1 or otherwise, in each case, with respect to any Transfer of
Investor Shares:
(a) subject to the provisions of Section 12.1, to an Investor or
an Affiliated Fund;
(b) subject to the provisions of Section 12.1, by a holder of
Investor Shares to its direct or indirect partners;
(c) to any director, officer or employee of, or consultant or
adviser to, or franchisee (or Affiliate thereof) of, the
Company or its subsidiaries, provided, however, that the
aggregate amount of Investor Shares Transferred pursuant to
this Section 4.1.6(c) shall not exceed ten percent (10%) of
the Shares originally issued to the Investors ;
(d) subject to the provisions of Section 11.4.4, in a Public
Offering or, after the closing of an Initial Public Offering,
pursuant to Rule 144;
(e) with respect to which the Majority Investors exercise their
"drag along" rights pursuant to Section 4.2 of this
Agreement; or
(f) if, after giving effect to such Transfer, the Investors and
the Affiliated Funds will continue to own not less than 80%
of the Shares originally issued to the Investors.
4.2 Drag Along. Each holder of Shares hereby agrees, if requested by the
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Majority Shareholders (collectively, for purposes of Sales pursuant to this
Section 4.2, the "Prospective Selling Group") to Sell a specified percentage
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(the "Drag Along Sale Percentage") of such Shares, directly or indirectly, to a
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Prospective Buyer in the manner and on the terms set forth in this Section 4.2
in connection with the Sale by the Prospective Selling Group of the Drag Along
Sale Percentage of the total number of Shares held by the Prospective Selling
Group to the Prospective Buyer.
4.2.1. Exercise. If the Prospective Selling Group elect to exercise
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their rights under this Section 4.2, the Prospective Selling Group shall
furnish a written notice (the
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"Drag Along Notice") to each other holder of Shares. The Drag Along Notice
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shall set forth the principal terms of the proposed Sale insofar as it
relates to the Common Stock, including the number of Shares to be acquired
from the Prospective Selling Group, the Drag Along Sale Percentage, the per
Share consideration to be received in the proposed Sale and the name and
address of the Prospective Buyer and whether or not the Prospective Buyer
is an Affiliate of the Majority Investors. If the Prospective Selling Group
consummate the proposed Sale to which reference is made in the Drag Along
Notice, each other holder of Shares (each a "Participating Seller", and,
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together with the Prospective Selling Group, collectively, the "Drag Along
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Sellers") shall be bound and obligated to Sell the Drag Along Sale
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Percentage of his Shares in the proposed Sale on the same terms and
conditions, with respect to each Share Sold (subject to Section 4.3.4 in
the case of Options), as the Prospective Selling Group shall Sell each
Share in the Sale (subject to Section 4.3.4 in the case of Options).
Further, in the event that the Prospective Selling Group is given an option
as to the form and amount of consideration to be received, all Drag Along
Sellers will be given the same option, and if any Drag Along Seller is
prohibited by applicable law or regulation (other than federal or state
securities law) from receiving such form of consideration, the Company
and/or Prospective Selling Group shall use reasonable commercial efforts to
cause the prospective purchaser to accommodate such holder to the fullest
extent possible, including without limitation, complying with Section 17 of
this Agreement. If at the end of the 180th day following the date of the
effectiveness of the Drag Along Notice the Prospective Selling Group have
not completed the proposed Sale, each Participating Seller shall be
released from his obligation under the Drag Along Notice, the Drag Along
Notice shall be null and void, and it shall be necessary for a separate
Drag Along Notice to be furnished and the terms and provisions of this
Section 4.2 separately complied with, in order to consummate such proposed
Sale pursuant to this Section 4.2.
4.2.2. Drag Along Fairness Opinion, etc. The provision of this
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Section 4.2.2 shall apply in the case of a proposed Sale pursuant to
Section 4.2 to a Prospective Buyer which is an Affiliate of the Majority
Investors.
4.2.2.1. Objection Notice. In the case of a proposed Sale
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pursuant to Section 4.2 to a Prospective Buyer which is an Affiliate
of the Majority Investors, if, within ten business days after the
effectiveness of the Drag Along Notice in respect of such proposed
Sale, the Majority Sellers or the Majority Non-Investor Shareholders
shall furnish a written notice to the Company and the Prospective
Selling Group to the effect that they dispute the fairness of the per
share price to be paid in the proposed Sale as set forth in such Drag
Along Notice (an "Objection Notice"), then such proposed Sale shall
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not be effected pursuant to the provisions of Section 4.2 until the
Company or the Prospective Selling Group shall have complied with the
terms of Section 4.2.2.2.
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4.2.2.2. Consultation and Fairness Opinion. (a) After receipt of
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an Objection Notice, the Prospective Selling Group shall meet with the
holders of Shares who shall have delivered such Objection Notice to
discuss the per share price to be paid in such proposed Sale as set
forth in the Drag Along Notice.
(b) The Prospective Selling Group may effect a proposed Sale
pursuant to Section 4.2 which shall have been the subject of a meeting
described in the foregoing clause (a) after the third business day
following such meeting unless the Majority Sellers and/or the Majority
Non-Investor Shareholders (as applicable) shall have furnished the
Company and the Prospective Selling Group with a written notice
requesting a fairness opinion. Following such a request, such
proposed Sale shall not be effected pursuant to Section 4.2 until the
Prospective Selling Group shall have furnished to, or caused to be
furnished to, such requesting holders of Shares (with a copy to each
other holder of Shares) a notice which includes a favorable written
opinion of an Independent Investment Banking Firm to the effect that
the Sale is fair to such holders of Shares from a financial point of
view (a "Drag Along Fairness Opinion"). In rendering such Drag Along
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Fairness Opinion, such Independent Investment Banking Firm shall
consider (i) the form and amount of consideration to be received
pursuant to such Sale in respect of shares of Common Stock by holders
of shares of Common Stock and (ii) other factors it may deem relevant.
In the event the Company or the Prospective Selling Group shall
furnish a Drag Along Fairness Opinion to the holders of Shares other
than Investor Shares prior to the consummation of a Sale pursuant to
the provisions of Section 4.2, there shall be no requirement that the
Prospective Selling Group comply with the foregoing provisions of this
Section 4.2.2. All fees and costs of such Independent Investment
Banking Firm shall be paid by the Company.
4.2.2.3. Preferred Drag Along. In the event that, at the time
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of a proposed Sale pursuant to this Section 4.2 to a Prospective Buyer
which is an Affiliate of the Majority Investors, the Prospective
Selling Group holds shares of the 11.5% Cumulative Preferred Stock of
the Company (the "Preferred") such that the Prospective Selling Group
possesses the power to cause a Sale of such Preferred Stock pursuant
to Section 7.2 of the 11.5% Cumulative Preferred Stock Purchase
Agreement dated December 21, 1998 (the "Preferred Agreement") to which
the Company and certain subscribers are party, then the Prospective
Selling Group will exercise its rights under the Preferred Agreement
to cause the Sale to such Prospective Buyer of a Drag Along Percentage
of the Preferred Stock under the Preferred Stock Agreement equal to
the Drag Along Percentage being sold under this Section 4.2.
4.3 Miscellaneous. The following provisions shall be applied to any
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prospective Sale to which Section 4.1 or 4.2 applies:
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4.3.1. Certain Legal Requirements. In the event the consideration to
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be paid in exchange for Shares in a proposed Sale pursuant to Section 4.1
or Section 4.2 includes any securities, and the receipt thereof by a
Participating Seller would require under applicable law (a) the
registration or qualification of such securities or of any person as a
broker or dealer or agent with respect to such securities or (b) the
provision to any Tag Along Seller or Drag Along Seller of any information
other than such information as a prudent issuer would furnish to investors
in an offering made pursuant to Regulation D solely to "accredited
investors", the Prospective Selling Group shall be obligated only to use
their reasonable efforts to cause the requirements under Regulation D to be
complied with to the extent necessary to permit such Participating Seller
to receive such securities, it being understood and agreed that the
Prospective Selling Group shall not be under any obligation to effect a
registration of such securities under the Securities Act or similar
statutes. Notwithstanding any provisions of this Section 4, if use of
reasonable efforts does not result in the requirements under Regulation D
being complied with to the extent necessary to permit such Participating
Seller to receive such securities, the Prospective Selling Group shall
cause to be paid to such Participating Seller in lieu thereof, against
surrender of the Shares (in accordance with Section 4.3.6 hereof) which
would have otherwise been Sold by such Participating Seller to the
Prospective Buyer in the Sale, an amount in cash equal to the Fair Market
Value of such Shares as of the date of the issuance of securities in
exchange for Shares. The obligation of the Prospective Selling Group to use
reasonable efforts to cause such requirements to have been complied with to
the extent necessary to permit a Participating Seller to receive such
securities shall be conditioned on such Participating Seller executing such
documents and instruments, and taking such other actions (including without
limitation if required by the Prospective Selling Group, agreeing to be
represented during the course of such transaction by a "purchaser
representative" (as defined in Regulation D) in connection with evaluating
the merits and risks of the prospective investment and acknowledging that
he was so represented), as the Prospective Selling Group shall reasonably
request in order to permit such requirements to be complied with. Unless
the Participating Seller in question shall have taken all actions
reasonably requested by the Prospective Selling Investors in order to
comply with the requirements under Regulation D, such Participating Seller
shall not have the right to require the payment of cash in lieu of
securities under this Section 4.3.1.
4.3.2. Further Assurances. Each Participating Seller, whether in his
------------------
capacity as a Participating Seller, stockholder, officer or director of the
Company, or otherwise, shall take or cause to be taken all such actions as
may be necessary or reasonably desirable in order expeditiously to
consummate each Sale pursuant to Section 4.1 or Section 4.2 and any related
transactions, including without limitation executing, acknowledging and
delivering consents, assignments, waivers and other documents or
instruments; furnishing information and copies of documents; filing
applications, reports, returns, filings and other documents or instruments
with governmental
-12-
authorities; and otherwise cooperating with the Prospective Selling Group
and the Prospective Buyer; provided, however, that Participating Sellers
-------- -------
shall be obligated to become liable in respect of any representations,
warranties, covenants, indemnities or otherwise to the Prospective Buyer
solely to the extent provided in the immediately following sentence.
Without limiting the generality of the foregoing, each Participating Seller
agrees to execute and deliver such agreements as may be reasonably
specified by the Prospective Selling Group to which such Prospective
Selling Group will also be party, including without limitation agreements
to (a) make individual representations, warranties, covenants and other
agreements as to the unencumbered title to its Shares and the power,
authority and legal right to Transfer such Shares and the absence of any
Adverse Claim with respect to such Shares and (b) be liable (whether by
purchase price adjustment, indemnity payments or otherwise) in respect of
representations, warranties, covenants and agreements in respect of the
Company and its subsidiaries; provided, however, that, except with respect
-------- -------
to individual representations, warranties, covenants, indemnities and other
agreements of Participating Sellers of the type described in clause (a)
above, the aggregate amount of such liability shall not exceed either (i)
such Participating Seller's pro rata portion of any such liability, to be
determined in accordance with such Participating Seller's portion of the
total number of Shares included in such Sale or (ii) the proceeds to such
Participating Seller in connection with such Sale.
4.3.3. Sale Process. The Prospective Selling Group shall, in their
------------
sole discretion, decide whether or not to pursue, consummate, postpone or
abandon any proposed Sale and the terms and conditions thereof. No
Prospective Selling Group or any Affiliate of any member of the Prospective
Selling Group shall have any liability to any other holder of Shares
arising from, relating to or in connection with the pursuit, consummation,
postponement, abandonment or terms and conditions of any proposed Sale
except to the extent such member of the Prospective Selling Group shall
have failed to comply with the provisions of this Section 4.
4.3.4. Treatment of Options. If any Participating Seller shall Sell
--------------------
Options in any Sale pursuant to Section 4.1 or 4.2, such Participating
Seller shall receive in exchange for such Options consideration equal to
the amount (if greater than zero) determined by multiplying (a) the
purchase price per share of Common Stock received by the holders of the
Prospective Selling Group in such Sale less the exercise price per share of
such Option by (b) the number of shares of Common Stock issuable upon
exercise of such Option (to the extent exercisable at the time of such
Sale), subject to reduction for any tax or other amounts required to be
withheld under applicable law.
4.3.5. Expenses. All reasonable costs and expenses incurred by the
--------
Prospective Selling Group or the Company in connection with any proposed
Sale pursuant to this Section 4 (whether or not consummated), including
without limitation all attorneys fees and expenses, all accounting fees and
charges and all finders,
-13-
brokerage or investment banking fees, charges or commissions, shall be paid
by the Company. The reasonable fees and expenses of a single legal counsel
representing any or all of the other Tag Along Sellers or Drag Along
Sellers in connection with any proposed Sale pursuant to this Section 4
(whether or not consummated) shall be paid by the Company. Any other costs
and expenses incurred by or on behalf of any or all of the other Tag Along
Sellers or Drag Along Sellers in connection with any proposed Sale pursuant
to this Section 4 (whether or not consummated) shall be borne by such Tag
Along Seller(s) or Drag Along Seller(s).
4.3.6. Closing. The closing of a Sale pursuant to Section 4.1 or 4.2
-------
shall take place at such time and place as the Prospective Selling Group
shall specify by notice to each Participating Seller. At the closing of any
Sale under this Section 4, each Participating Seller shall deliver the
certificates evidencing the Shares to be Sold by such Participating Seller,
duly endorsed, or with stock (or equivalent) powers duly endorsed, for
transfer with signature guaranteed, free and clear of any liens or
encumbrances, with any stock (or equivalent) transfer tax stamps affixed,
against delivery of the applicable consideration.
4.4 Period. The foregoing provisions of this Section 4 shall expire on the
------
earlier of (a) a Change of Control or (b) the closing of a Qualified Public
Offering.
5. OTHER INVESTOR TRANSFER RIGHTS.
5.1 Transfer Restrictions. No holder of Other Investor Shares shall
---------------------
Transfer any of such Shares to any other Person except as set forth below:
5.1.1 Investors and Company. Any holder of Other Investor Shares may
---------------------
Transfer any or all of such Other Investor Shares to (a) any Investor or
(b) with the Board's approval, (i) the Company or any subsidiary of the
Company or (ii) to any director, officer or employee of, or consultant or
adviser to, or franchisee (or Affiliate thereof) of, the Company or its
subsidiaries.
5.1.2. Permitted Transferees. Subject to the provisions of Section
---------------------
12.1, any holder of Other Investor Shares may Transfer any or all of such
Other Investor Shares to (A) a Person under common control with such holder
or (b) in the case of any Regulated Stockholder (as such term is defined in
Section 17) pursuant to Section 17(b)(i).
5.1.3. Tag Alongs, Drag Alongs, etc. Any holder of Other Investor
----------------------------
Shares may Transfer any or all of such Other Investor Shares in accordance
with the provisions, terms and conditions of Section 4 hereof.
-14-
5.1.4. Public. Subject to the provisions of Section 11.4.4, any
------
holder of Other Investor Shares may Transfer any or all of such Other
Investor Shares in a Public Offering or, after the closing of an Initial
Public Offering, pursuant to Rule 144.
5.1.5. Pledge. DP Transitory Corporation may pledge any or all of its
------
Other Investor Shares and, upon any foreclosure of such pledge such Other
Investor Shares may be Transferred free of any restrictions other than
restrictions imposed by applicable securities laws.
Any attempted Transfer of Other Investor Shares not in compliance with this
Section 5 shall be null and void, and the Company shall not in any way give
effect to any such impermissible Transfer.
5.2 Period. The foregoing provisions of this Section 5 shall expire upon
------
the earlier of (a) a Change of Control and (b) the closing of a Qualified Public
Offering.
6. SELLER TRANSFER RIGHTS.
6.1 Transfer Restrictions. No holder of Seller Shares shall Transfer any
---------------------
of such Shares to any other Person except as set forth below
6.1.1. Members of Immediate Family. Subject to the provisions of
---------------------------
Section 12.1, any holder of Seller Shares may Transfer any or all of such
Seller Shares (i) to a Member of the Immediate Family of such holder or
(ii) after May 31, 2000, to a Charitable Organization.
6.1.2. Upon Death. Subject to the provisions of Section 12.1, upon
----------
the death of any holder of Seller Shares, the Seller Shares held by such
holder may be distributed by will or other instrument taking effect at
death or by applicable laws of descent and distribution to such holder's
estate, executors, administrators and personal representatives, and then to
such holder's heirs, legatees or distributees, whether or not such
recipients are Members of the Immediate Family of such holder.
6.1.3. Investors and Company. Any holder of Seller Shares may
---------------------
Transfer any or all of such Seller Shares to (a) any Investor or (b) with
the Board's approval, the Company or any subsidiary of the Company.
6.1.4. Tag Alongs, Drag Alongs, etc. Any holder of Seller Shares may
----------------------------
Transfer any or all of such Seller Shares in accordance with the
provisions, terms and conditions of Section 4 hereof.
-15-
6.1.5 Public. Subject to the provisions of Section 11.4.4, any holder
------
of Seller Shares may Transfer any or all of such Seller Shares in a Public
Offering or, after the closing of an Initial Public Offering, pursuant to
Rule 144.
Any attempted Transfer of Seller Shares not in compliance with this Section 6
shall be null and void, and the Company shall not in any way give effect to any
such impermissible Transfer.
6.2 Period. The foregoing provisions of this Section 6 shall expire upon
------
the earlier of (a) a Change of Control and (b) the closing of a Qualified Public
Offering.
7. INTENTIONALLY DELETED
8. MANAGEMENT TRANSFER RIGHTS.
8.1 Transfer Restrictions. No holder of Management Shares shall Transfer
---------------------
any of such Shares to any other Person except as set forth below:
8.1.1. Members of Immediate Family. Subject to the provisions of
---------------------------
Section 12.1, any holder of Management Shares may Transfer any or all of
his Management Shares to a Member of the Immediate Family of such holder.
8.1.2. Upon Death. Subject to the provisions of Sections 9 and 12.1,
----------
upon the death of any holder of Management Shares, the Management Shares
held by such holder may be distributed by will or other instrument taking
effect at death or by applicable laws of descent and distribution to such
holder's estate, executors, administrators and personal representatives,
and then to such holder's heirs, legatees or distributees, whether or not
such recipients are Members of the Immediate Family of such holder.
8.1.3. Investors and Company. Any holder of Management Shares may
---------------------
Transfer any or all of such Management Shares to (a) any Investor or (b)
with the Board's approval, the Company or any subsidiary of the Company.
8.1.4. Puts and Calls. Any holder of Management Shares may Transfer
--------------
any or all of such Management Shares in accordance with the provisions,
terms and conditions of Section 9 hereof or pursuant to any put or call
right set forth in any agreement between the Company and a Manager which
governs Management Shares.
8.1.5. Tag Alongs, Drag Alongs, etc. Any holder of Management Shares
----------------------------
may Transfer any or all of such Management Shares in accordance with the
provisions, terms and conditions of Section 4 hereof.
-16-
8.1.6. Public. Subject to the provisions of Section 11.4.4, any
------
holder of Management Shares may Transfer any or all of such Management
Shares in a Public Offering or, after the closing of an Initial Public
Offering, pursuant to Rule 144.
Any attempted Transfer of Management Shares not in compliance with this Section
8 shall be null and void, and the Company shall not in any way give effect to
any such impermissible Transfer.
8.2 Period. The foregoing provisions of this Section 8 shall expire upon
------
the earlier of (a) a Change of Control and (b) the closing of a Qualified Public
Offering.
9. OPTIONS TO PURCHASE SHARES.
9.1 Call Options. Except as the Company may otherwise agree, upon any
------------
termination of the employment by the Company and its subsidiaries of any holder
of Management Shares, the Company shall have the right to purchase for cash or
notes (as provided below in this Section 9.1) all or any portion of the
Management Shares, held by such holder or originally issued to such holder but
held by one or more Permitted Transferees (collectively, the "Stockholder Call
----------------
Group") on the following terms:
-----
9.1.1. Termination of Employment For Cause.
-----------------------------------
(a) If the employment of any Manager with the Company or any of
its subsidiaries is terminated by the Company or its subsidiaries for
Cause, then the Company may purchase all or any portion of the
Management Shares held by such Manager's Stockholder Call Group at a
price equal to the lesser of the Cost or the Fair Market Value of such
Shares on the date of such termination.
(b) Subject to the provisions of Section 9.2, in each case
Shares are purchased pursuant to clause (a) above, the Company will
pay for such Management Shares in cash.
9.1.2. Other Termination of Employment.
-------------------------------
(a) If the employment of any Manager with the Company or any of
its subsidiaries is terminated for any reason other than by the
Company or its subsidiaries for Cause, then the Company may purchase
all or any portion of the Management Shares held by such Manager's
Stockholder Call Group at a price equal to the Fair Market Value of
such Shares on the date of such termination.
(b) Subject to the provisions of Section 9.2, in each case
Shares are purchased pursuant to clause (a) above, the Company will
pay for such Management Shares in cash.
-17-
9.1.3. Treatment of Options. If any Management Shares to be Sold to
--------------------
the Company pursuant to this Section 9.1 are Options, the holder of such
Management Shares shall receive in exchange for such Options consideration
equal to the amount (if greater than zero) determined by multiplying (a)
the purchase price per share of Common Stock determined as set forth in
this Section 9.1 less the exercise price per share of such Option by (b)
the number of shares of Common Stock issuable upon exercise of such Option
(to the extent exercisable at the time of such Sale), subject to reduction
for any tax or other amounts required to be withheld under applicable law.
9.1.4. Notices, etc. Any Call Option may be exercised by delivery of
------------
written notice thereof (the "Call Notice") to all members of the applicable
-----------
Stockholder Call Group within 60 days of the effectiveness of the
termination of employment in question (the "Call Option Exercise Period").
---------------------------
The Call Notice shall state that the Company has elected to exercise the
Call Option, and the number and price of the Shares with respect to which
the Call Option is being exercised.
9.1.5. Prepayment. Any promissory note issued under this Section 9.1
----------
may be prepaid in whole or in part at any time and from time to time
without premium or penalty.
9.2 Cash Payments. If any payment of cash required upon the purchase and
-------------
sale of Management Shares to the Company upon the exercise of any Call Option or
any payment on a promissory note issued under this Section 9.2 would (a)
constitute, result in or give rise to any breach or violation of, or any default
or right or cause of action under, any agreement to which the Company or any of
its subsidiaries is, from time to time, a party or (b) leave the Company and its
subsidiaries with less cash than, in the good faith judgment of the Board, is
necessary to operate the business of the Company and its subsidiaries in the
ordinary course of business, then,
(i) in the case of a cash payment due at a closing of any
purchase and sale of Management Shares to the Company upon the
exercise of any Call Option, the Company will issue a promissory note
of the Company in the aggregate principal amount of such payment, the
principal amount of which note will be due and payable in four equal
annual installments, the first such installment becoming due and
payable on the first anniversary of the issuance of such note, and
interest will accrue on such note from the date of issuance at a
floating rate equal to the Credit Agreement Rate and be payable
annually in arrears, in each case subject to the provisions of clause
(ii) below, and
(ii) in the case of the cash payment in respect of a promissory
note issued under this Section 9.2, notwithstanding any of the
provisions of such note, including without limitation, the stated
maturity of such note and the stated date on which interest payments
are due, such payment will not become due and
-18-
payable until such time as such payment can be made without violating
any such agreement and not resulting in the Company and its
subsidiaries having less cash than the Board determines is necessary
to operate the business as contemplated above; provided, however, that
-------- -------
the promissory note shall be payable in full upon a Change of Control.
9.3 Closing. The closing of any purchase and sale of Management Shares
-------
pursuant to this Section 9 shall take place as soon as reasonably practicable
and in no event later than 30 days after termination of the applicable Call
Option Exercise Period at the principal office of the Company, or at such other
time and location as the parties to such purchase may mutually determine. At
the closing of any purchase and sale of Management Shares pursuant to any Call
Options, the holders of Shares to be sold shall deliver to the Company a
certificate or certificates representing the Shares to be purchased by the
Company duly endorsed, or with stock (or equivalent) powers duly endorsed, for
transfer with signature guaranteed, free and clear of any lien or encumbrance,
with any necessary stock (or equivalent) transfer tax stamps affixed, and the
Company shall pay to such holder by certified or bank check or wire transfer of
immediately available federal funds or note, as may be applicable, the purchase
price of the Shares being purchased by the Company. The delivery of a
certificate or certificates for Shares by any Person selling Shares pursuant to
any Call Option shall be deemed a representation and warranty by such Person
that: (a) such Person has full right, title and interest in and to such Shares,
(b) such Person has all necessary power and authority and has taken all
necessary action to sell such Shares as contemplated, (c) such Shares are free
and clear of any and all liens or encumbrances and (d) there is no Adverse Claim
with respect to such Shares.
9.4 Acknowledgment. Each holder of Management Shares acknowledges and
--------------
agrees that neither the Company nor any Person directly or indirectly affiliated
with the Company (in each case whether as a director, officer, manager,
employee, agent or otherwise) shall have any duty or obligation to affirmatively
disclose to him, and he shall not have any right to be advised of, any material
information regarding the Company or otherwise at any time prior to, upon, or in
connection with any termination of his employment by the Company and its
subsidiaries or any repurchase of the Shares upon the exercise of any Call
Option.
9.5 Period. The foregoing provisions of this Section 9 shall expire upon
------
the earlier of (a) a Change of Control and (b) the closing of the Qualified
Public Offering.
10. PREEMPTIVE RIGHT. The Company shall not issue or sell any shares of any of
its capital stock or any securities convertible into or exchangeable for any
shares of its capital stock, issue or grant any options or warrants for the
purchase of, or enter into any agreements providing for the issuance (contingent
or otherwise) of, any of its capital stock or any stock or securities
convertible into or exchangeable for any shares of its capital stock, in each
case, to any Investor or an Affiliate thereof (each an "Issuance" of "Subject
-------- -------
Securities"), except in compliance with the following provisions of this Section
----------
10.
-19-
10.1. Right of Participation.
----------------------
10.1.1. Offer. Not fewer than twenty days prior to the consummation
-----
of the Issuance, a notice (the "Preemption Notice") shall be furnished by
-----------------
the Company to each holder of Investor Shares, Other Investor Shares,
Seller Shares, and Management Shares (the "Preemptive Offerees"). The
-------------------
Preemption Notice shall include:
(a) The principal terms of the proposed Issuance, including
without limitation the amount and kind of Subject Securities to be
included in the Issuance, the number of Equivalent Shares represented
by such Subject Securities (if applicable), the percentage of the
total number of Equivalent Shares outstanding as of immediately prior
to giving effect to such Issuance which the number of Equivalent
Shares held by such Preemptive Offeree constitutes (the "Preemptive
----------
Portion"), the maximum and minimum price (including without limitation
-------
if applicable, the maximum and minimum Price Per Equivalent Share) per
unit of the Subject Securities and the name and address of the
Investor or Affiliate to whom the Subject Securities will be Issued
(the "Prospective Subscriber"); and
----------------------
(b) An offer by the Company to Issue, at the option of each
Preemptive Offeree, to such Preemptive Offeree such portion of the
Subject Securities to be included in the Issuance as may be requested
by such Preemptive Offeree (not to exceed the Preemptive Portion of
the total amount of Subject Securities to be included in the
Issuance), on the same terms and conditions, with respect to each unit
of Subject Securities issued to the Preemptive Offerees, as each of
the Prospective Subscribers shall be Issued units of Subject
Securities.
10.1.2. Exercise.
--------
10.1.2.1. General. Each Preemptive Offeree desiring to accept
-------
the offer contained in the Preemption Notice shall send a written
commitment to the Company within twenty days after the effectiveness
of the Preemption Notice specifying the amount of Subject Securities
(not in any event to exceed the Preemptive Portion of the total amount
of Subject Securities to be included in the Issuance) which such
Preemptive Offeree desires to be issued (each a "Participating
-------------
Buyer"). Each Preemptive Offeree who has not so accepted such offer
-----
shall be deemed to have waived all of his rights with respect to the
Issuance, and the Company shall thereafter be free to Issue Subject
Securities in the Issuance to the Prospective Subscriber and any
Participating Buyers, at a price no less than the minimum price set
forth in the Preemption Notice and on other principal terms not
substantially more favorable to the Prospective
-20-
Subscriber than those set forth in the Preemption Notice, without any
further obligation to such non-accepting Preemptive Offerees. If,
prior to consummation, the terms of such proposed Issuance shall
change with the result that the price shall be less than the minimum
price set forth in the Preemption Notice or the other principal terms
shall be substantially more favorable to the Prospective Subscriber
than those set forth in the Preemption Notice, it shall be necessary
for a separate Preemption Notice to be furnished, and the terms and
provisions of this Section 10.1 separately complied with, in order to
consummate such Issuance pursuant to this Section 10.1.
10.1.2.2. Irrevocable Acceptance. The acceptance of each
----------------------
Participating Buyer shall be irrevocable except as hereinafter
provided, and each such Participating Buyer shall be bound and
obligated to acquire in the Issuance on the same terms and conditions,
with respect to each unit of Subject Securities Issued, as the
Prospective Subscriber, such amount of Subject Securities as such
Participating Buyer shall have specified in such Participating Buyer's
written commitment.
10.1.2.3. Time Limitation. If at the end of the 180th day
---------------
following the date of the effectiveness of the Preemption Notice the
Company has not completed the Issuance, each Participating Buyer shall
be released from his obligations under the written commitment, the
Preemption Notice shall be null and void, and it shall be necessary
for a separate Preemption Notice to be furnished, and the terms and
provisions of this Section 10.1 separately complied with, in order to
consummate such Issuance pursuant to this Section 10.1.
10.1.3. Other Securities. The Company may condition the participation
----------------
of the Preemptive Offerees in an Issuance upon the purchase by such
Preemptive Offerees of any securities (including without limitation debt
securities) other than Subject Securities ("Other Securities") in the event
----------------
that the participation of the Prospective Subscriber in such Issuance is so
conditioned. In such case, each Participating Buyer shall acquire in the
Issuance, together with the Subject Securities to be acquired by it, Other
Securities in the same proportion to the Subject Securities to be acquired
by it as the proportion of Other Securities to Subject Securities being
acquired by the Prospective Subscriber in the Issuance, on the same terms
and conditions, as to each unit of Subject Securities and Other Securities
issued to the Participating Buyers, as the Prospective Subscriber shall be
issued units of Subject Securities and Other Securities.
10.1.4. Certain Legal Requirements. In the event that the
--------------------------
participation in the Issuance by a holder of Shares as a Participating
Buyer would require under applicable law (a) the registration or
qualification of such securities or of any person as a broker or dealer or
agent with respect to such securities or (b) the provision to any
participant in the Sale of any information other than such information as a
prudent issuer would
-21-
furnish to investors in an offering made pursuant to Regulation D solely to
"accredited investors", the Company shall be obligated only to use its
reasonable efforts to cause the requirements under Regulation D to be
complied with to the extent necessary to permit such Participating Buyer to
receive such securities, it being understood and agreed that the Company
shall not be under any obligation to effect a registration of such
securities under the Securities Act or similar state statutes.
Notwithstanding any provision of this Section 10, if the use of reasonable
efforts shall not result in such requirements being complied with to the
extent necessary to permit such holder of Shares to participate in the
Issuance, such holder shall not be entitled to participate in the Issuance.
The obligation of the Company to use reasonable efforts to cause such
requirements to be complied with to the extent necessary to permit a holder
of Shares to participate in the Issuance shall be conditioned upon such
holder of Shares executing such documents and instruments, and taking such
other actions (including without limitation if required by the Company,
agreeing to be represented during the course of such transaction by a
"purchaser representative" (as defined in Regulation D) in connection with
evaluating the merits and risks of the prospective investment and
acknowledging that he was so represented), as the Company shall reasonably
request in order to permit such requirements to have been complied with.
Unless the holder of Shares in question shall have taken all actions
reasonably requested by the Company in connection with the Issuance in
order to comply with the requirements under Regulation D, such holder shall
not have the right to participate in the Issuance.
10.1.5. Further Assurances. Each Preemptive Offeree and each
------------------
Stockholder to whom the Shares held by such Preemptive Offeree were
originally issued, shall, whether in his capacity as a Participating Buyer,
Stockholder, officer or director of the Company, or otherwise, take or
cause to be taken all such reasonable actions as may be necessary or
reasonably desirable in order expeditiously to consummate each Issuance
pursuant to this Section 10.1 and any related transactions, including
without limitation executing, acknowledging and delivering consents,
assignments, waivers and other documents or instruments; filing
applications, reports, returns, filings and other documents or instruments
with governmental authorities; and otherwise cooperating with the Company
and the Prospective Subscriber. Without limiting the generality of the
foregoing, each Participating Buyer and Stockholder agrees to execute and
deliver such subscription and other agreements specified by the Company to
which the Prospective Subscriber will be party.
10.1.6. Expenses. All reasonable costs and expenses incurred by the
--------
holders of Investor Shares or the Company in connection with any proposed
Issuance of Subject Securities (whether or not consummated), including
without limitation all attorney's fees and charges, all accounting fees and
charges and all finders, brokerage or investment banking fees, charges or
commissions, shall be paid by the Company. The reasonable fees and
expenses of a single legal counsel representing any or all of the other
holders of Shares in connection with such proposed Issuance of Subject
Securities
-22-
(whether or not consummated) shall be paid by the Company. Any other costs
and expenses incurred by or on behalf of any other holder of Shares in
connection with such proposed Issuance of Subject Securities (whether or
not consummated) shall be borne by such holder.
10.1.7. Closing. The closing of an Issuance pursuant to Section 10.1
-------
shall take place at such time and place as the Company shall specify by
notice to each Participating Buyer. At the Closing of any Issuance under
this Section 10.1.7, each Participating Buyer shall be delivered the notes,
certificates or other instruments evidencing the Subject Securities (and,
if applicable, Other Securities) to be Issued to such Participating Buyer,
registered in the name of such Participating Buyer or his designated
nominee, free and clear of any liens or encumbrances, with any transfer tax
stamps affixed, against delivery by such Participating Buyer of the
applicable consideration.
10.2. Excluded Transactions. Notwithstanding the preceding provisions of
---------------------
this Section 10, the preceding provisions of this Section 10 shall not restrict:
(a) Any Issuance of Common Stock upon the exercise or conversion of
any Options or Convertible Securities outstanding on the date hereof or
Issued after the date hereof in compliance with the provisions of this
Section 10;
(b) The Issuance of Shares to the Investors and the Other Investors at
Closing in accordance with the Merger Agreement; and
(c) Any Issuance of Class A Common Stock upon exchange of Class A
Common Stock pursuant to the ▇▇▇▇ Subscription Agreement.
10.3. Period. The foregoing provisions of this Section 10 shall expire on
------
the earlier of (a) a Change of Control or (b) the closing of the Initial Public
Offering.
11. REGISTRATION RIGHTS. The Company will perform and comply, and cause each
of its subsidiaries to perform and comply, with such of the following provisions
as are applicable to it. Each holder of Shares will perform and comply with
such of the following provisions as are applicable to such holder.
11.1. Demand Registration Rights for Investor Shares.
----------------------------------------------
11.1.1. General. One or more holders of Investor Shares representing
-------
at least 25% of the total amount of Investor Shares then outstanding
("Initiating Investors"), by notice to the Company specifying the intended
--------------------
method or methods of disposition, may request that the Company effect the
registration under the Securities Act for a Public Offering of all or a
specified part of the Registrable Securities held by such Initiating
-23-
Investors (for purposes of this Agreement, "Registrable Investor
--------------------
Securities" shall mean Registrable Securities constituting Investor
----------
Shares). The Company will then use its best efforts to effect the
registration under the Securities Act of the Registrable Securities which
the Company has been requested to register by such Initiating Investors
together with all other Registrable Securities which the Company has been
requested to register pursuant to Section 11.3 or by other holders of
Registrable Investor Securities by notice delivered to the Company within
20 days after the Company has given the notice required by Section 11.3.1
(which request shall specify the intended method of disposition of such
Registrable Securities), all to the extent requisite to permit the
disposition (in accordance with the intended methods thereof as aforesaid)
of the Registrable Securities which the Company has been so requested to
register; provided, however, that the Company shall not be obligated to
-------- -------
take any action to effect any such registration pursuant to this Section
11.1.1:
(a) Within 180 days immediately following the effective
date of any registration statement pertaining to an underwritten
public offering of securities of the Company for its own account
(other than a Rule 145 Transaction, or a registration relating
solely to employee benefit plans); or
(b) On any form other than Form S-3 (or any successor
form) if the Company has previously effected three or more
registrations of Registrable Securities under this Section 11.1.1
on any form other than Form S-3 (or any successor form);
provided, however, that no registrations of Registrable
-------- -------
Securities which shall not have become and remained effective in
accordance with the provisions of this Section 11, and no
registrations of Registrable Securities pursuant to which the
Initiating Investors and all other holders of Registrable
Investor Securities joining therein are not able to include at
least 90% of the Registrable Securities which they desired to
include, shall be included in the calculation of numbers of
registrations contemplated by this clause (b).
11.1.1.1. Form. Except as otherwise provided above, each
----
registration requested pursuant to this Section 11.1.1 shall be
effected by the filing of a registration statement on Form S-1 (or any
other form which includes substantially the same information as would
be required to be included in a registration statement on such form as
currently constituted), unless the use of a different form has been
agreed to in writing by holders of at least a majority of the
Registrable Investor Securities to be included in the proposed
registration statement in question (the "Majority Participating
----------------------
Investors").
----------
-24-
11.1.2. Payment of Expenses. The Company shall pay all reasonable
-------------------
expenses of holders of Investor Shares incurred in connection with each
registration of Registrable Securities requested pursuant to this Section
11.1, other than underwriting discount and commission, if any, and
applicable transfer taxes, if any.
11.1.3. Additional Procedures. In the case of a registration pursuant
---------------------
to Section 11.1 hereof, whenever the Majority Participating Investors shall
request that such registration shall be effected pursuant to an
underwritten o ffering, the Company shall include such information in the
written notices to holders of Registrable Securities referred to in Section
11.3. In such event, the right of any holder of Registrable Securities to
have securities owned by such holder included in such registration pursuant
to Section 11.1 shall be conditioned upon such holder's participation in
such underwriting and the inclusion of such holder's Registrable Securities
in the underwriting (unless otherwise mutually agreed upon by the Majority
Participating Investors and such holder). If requested by such
underwriters, the Company together with the holders of Registrable
Securities proposing to distribute their securities through such
underwriting will enter into an underwriting agreement with such
underwriters for such offering containing such representations and
warranties by the Company and such holders and such other terms and
provisions as are customarily contained in underwriting agreements with
respect to secondary distributions, including without limitation customary
indemnity and contribution provisions (subject, in each case, to the
limitations on such liabilities set forth in this Agreement).
11.2. [INTENTIONALLY DELETED]
11.3. Piggyback Registration Rights.
-----------------------------
11.3.1. Piggyback Registration.
----------------------
11.3.1.1. General. Each time the Company proposes to register
-------
any shares of Common Stock under the Securities Act on a form which
would permit registration of Registrable Securities for sale to the
public, for its own account or pursuant to Section 11.1.1 (or at any
other time an Investor or an Affiliated Fund is participating in the
registration of Registrable Securities), for sale in a Public
Offering, the Company will give notice to all holders of Registrable
Securities of its intention to do so. Any such holder may, by written
response delivered to the Company within 20 days after the
effectiveness of such notice, request that all or a specified part of
the Registrable Securities held by such holder be included in such
registration. The Company thereupon will use its reasonable efforts to
cause to be included in such registration under the Securities Act all
shares of Common Stock which the Company has been so requested to
register by such holders, to the extent required to permit the
-25-
disposition (in accordance with the methods to be used by the Company
or other holders of shares of Common Stock in such Public Offering) of
the Registrable Securities to be so registered. No registration of
Registrable Securities effected under this Section 11.3 shall relieve
the Company of any of its obligations to effect registrations of
Registrable Securities pursuant to Section 11.1 hereof.
11.3.1.2. Excluded Transactions. The Company shall not be
---------------------
obligated to effect any registration of Registrable Securities under
this Section 11.3 incidental to the registration of any of its
securities in connection with:
(a) Any Public Offering relating to employee benefit plans
or dividend reinvestment plans or to any equity plan for
franchisees or sale of equity to any franchisee (or Affiliate
thereof);
(b) Any Public Offering relating to the acquisition or
merger after the date hereof by the Company or any of its
subsidiaries of or with any other businesses; or
(c) The Initial Public Offering unless (i) such offering
shall have been initiated by the Investors pursuant to Section
11.1.1 or (b) one or more Investors shall have requested that all
or a specified part of its Registrable Securities be included in
such offering pursuant to this Section 11.3.1.
11.3.2. Payment of Expenses. The Company shall pay all reasonable
-------------------
expenses of a single legal counsel representing any and all holders of
Registrable Securities incurred in connection with each registration of
Registrable Securities requested pursuant to this Section 11.3.
11.3.3. Additional Procedures. Holders of Shares participating in any
---------------------
Public Offering pursuant to this Section 11.3 shall take all such actions
and execute all such documents and instruments that are reasonably
requested by the Company to effect the sale of their Shares in such Public
Offering, including without limitation being parties to the underwriting
agreement entered into by the Company and any other selling shareholders in
connection therewith and being liable in respect of the representations and
warranties by, and the other agreements (including without limitation
customary selling stockholder representations, warranties, indemnifications
and "lock-up" agreements) for the benefit of the underwriters provided,
--------
however, that (a) with respect to individual representations, warranties,
-------
indemnities and agreements of sellers of Shares in such Public Offering,
the aggregate amount of such liability shall not exceed such holder's net
proceeds from such offering and (b) to the extent selling stockholders give
further representations, warranties and indemnities, then with respect to
all other representations, warranties and indemnities of sellers of shares
in such Public Offering,
-26-
the aggregate amount of such liability shall not exceed the lesser of (i)
such holder's pro rata portion of any such liability, in accordance with
such holder's portion of the total number of Shares included in the
offering or (ii) such holder's net proceeds from such offering.
11.4. Certain Other Provisions.
-----------------------
11.4.1. Underwriter's Cutback. In connection with any registration
---------------------
of shares, the underwriter may determine that marketing factors (including
without limitation an adverse effect on the per share offering price)
require a limitation of the number of shares to be underwritten.
Notwithstanding any contrary provision of this Section 11 and subject to
the terms of this Section 11.4.1, the underwriter may limit the number of
shares which would otherwise be included in such registration by excluding
any or all Registrable Securities from such registration (it being
understood that the number of shares which the Company seeks to have
registered in such registration shall not be subject to exclusion, in whole
or in part, under this Section 11.4.1). Upon receipt of notice from the
underwriter of the need to reduce the number of shares to be included in
the registration, the Company shall advise all holders of the Company's
securities that would otherwise be registered and underwritten pursuant
hereto, and the number of shares of such securities, including Registrable
Securities, that may be included in the registration shall be allocated in
the following manner, unless the underwriter shall determine that marketing
factors require a different allocation: shares, other than Registrable
Securities, requested to be included in such registration by shareholders
shall be excluded unless the Company has, with the consent of the Majority
Investors, granted registration rights which are to be treated on an equal
basis with Registrable Securities for the purpose of the exercise of the
underwriter cutback; and, if a limitation on the number of shares is still
required, the number of Registrable Securities and other shares of Common
Stock that may be included in such registration shall be allocated among
holders thereof in proportion, as nearly as practicable, to the respective
amounts of Common Stock which each shareholder requested be registered in
such registration. For purposes of any underwriter cutback, all Common
Stock held by any holder of Registrable Securities which is a partnership
or corporation shall also include any Common Stock held by the partners,
retired partners, shareholders or affiliated entities of such holder, or
the estates and family members of any such partners and retired partners
and any trusts for the benefit of any of the foregoing persons, and such
holder and other persons shall be deemed to be a single selling holder, and
any pro rata reduction with respect to such selling holder shall be based
upon the aggregate amount of Common Stock owned by all entities and
individuals included in such selling holder, as defined in this sentence.
No securities excluded from the underwriting by reason of the underwriter's
marketing limitation shall be included in such registration. If any holder
of Registrable Securities disapproves of the terms of the underwriting, it
may elect to withdraw therefrom by written notice to the Company and the
underwriter. The Registrable Securities so withdrawn shall also be
withdrawn from registration.
-27-
11.4.2. Other Actions. If and in each case when the Company is
-------------
required to use its best efforts to effect a registration of any
Registrable Securities as provided in this Section 11, the Company shall
take appropriate and customary actions in furtherance thereof, including,
without limitation: (a) promptly filing with the Commission a registration
statement and using reasonable efforts to cause such registration statement
to become effective, (b) preparing and filing with the Commission such
amendments and supplements to such registration statements as may be
required to comply with the Securities Act and to keep such registration
statement effective for a period not to exceed 180 days from the date of
effectiveness or such earlier time as the Registrable Securities covered by
such registration statement shall have been disposed of in accordance with
the intended method of distribution therefor or the expiration of the time
when a prospectus relating to such registration is required to be delivered
under the Securities Act, (c) use its best efforts to register or qualify
such Registrable Securities under the state securities or "blue sky" laws
of such jurisd ictions as the sellers shall reasonably request; provided,
--------
however, that the Company shall not be obligated to file any general
-------
consent to service of process or to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it would
not otherwise be so subject, and (d) otherwise cooperate reasonably with,
and take such customary actions as may reasonably be requested by the
holders of Registrable Securities in connection with, such registration.
11.4.3. Selection of Underwriters and Counsel. The underwriters and
-------------------------------------
legal counsel to be retained in connection with any Public Offering shall
be selected by the Board or, in the case of an offering following a request
therefor under Section 11.1.1, the Initiating Investors.
11.4.4. Lock-Up. Without the prior written consent of the
underwriters managing any Public Offering, for a period beginning seven
days immediately preceding and ending on the 180th day following the
effective date of the registration statement used in connection with such
offering, no holder of Shares (whether or not a selling shareholder
pursuant to such registration statement) shall (a) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase,
lend, or otherwise Transfer, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
such Common Stock or (b) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences
of ownership of Common Stock, whether any such transaction described in
clause (a) or (b) above is to be settled by delivery of such Common Stock
or such other securities, in cash or otherwise; provided, however, that the
-------- -------
foregoing restrictions shall not apply to (i) transactions relating to
shares of Common Stock or other securities acquired in open market
transactions after the completion of the Initial Public Offering
-28-
or (ii) Transfers to a Permitted Transferee of such holder in accordance
with the terms of this Agreement or (iii) conversions of shares of Common
Stock into other classes of Common Stock without change of holder.
11.5. Indemnification and Contribution.
--------------------------------
11.5.1. Indemnities of the Company. In the event of any registration
--------------------------
of any Registrable Securities or other debt or equity securities of the
Company or any of its subsidiaries under the Securities Act pursuant to
this Section 11 or otherwise, and in connection with any registration
statement or any other disclosure document produced by or on behalf of the
Company or any of its subsidiaries including without limitation reports
required and other documents filed under the Exchange Act and other
documents purs uant to which any debt or equity securities of the Company
or any of its subsidiaries are sold (whether or not for the account of the
Company or its subsidiaries), the Company will, and hereby does, and will
cause each of its subsidiaries, jointly and severally to, indemnify and
hold harmless each seller of Registrable Securities, any Person who is or
might be deemed to be a controlling Person of the Company or any of its
subsidiaries within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, their respective direct and indirect
partners, advisory board members, directors, officers, trustees, members
and shareholders, and each other Person, if any, who controls any such
seller or any such holder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act (each such person being
referred to herein as a "Covered Person"), against any losses, claims,
--------------
damages or liabilities (or actions or proceedings in respect thereof),
joint or several, to which such Covered Person may be or become subject
under the Securities Act, the Exchange Act, any other securities or other
law of any jurisdiction, the common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (a) any untrue statement or
alleged untrue statement of any material fact contained or incorporated by
reference in any registration statement under the Securities Act, any
preliminary prospectus or final prospectus included therein, or any related
summary prospectus, or any amendment or supplement thereto, or any document
incorporated by reference therein, or any other such disclosure document
(including without limitation reports and other documents filed under the
Exchange Act and any document incorporated by reference therein) or other
document or report, (b) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading or (c) any violation or alleged violation
by the Company or any of its subsidiaries of any federal, state, foreign or
common law rule or regulation applicable to the Company or any of its
subsidiaries and relating to action or inaction in connection with any such
registration, disclosure document or other document or report, and will
reimburse such Covered Person for any legal or any other expenses incurred
by it in connection with investigating or defending any such loss, claim,
damage, liability, action or proceeding; provided, however, that
-------- -------
-29-
neither the Company nor any of its subsidiaries shall be liable to any
Covered Person in any such case to the extent that any such loss, claim,
damage, liability, action or proceeding arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement,
incorporated document or other such disclosure document or other document
or report, in reliance upon and in conformity with written information
furnished to the Company or to any of its subsidiaries through an
instrument duly executed by such Covered Person specifically stating that
it is for use in the preparation thereof. The indemnities of the Company
and of its subsidiaries contained in this Section 11.5.1 shall remain in
full force and effect regardless of any investigation made by or on behalf
of such Covered Person and shall survive any transfer of securities.
11.5.2. Indemnities to the Company. The Company and any of its
--------------------------
subsidiaries may require, as a condition to including any securities in any
registration statement filed pursuant to this Section 11, that the Company
and any of its subsidiaries shall have received an undertaking satisfactory
to it from the prospective seller of such securities, to indemnify and hold
harmless the Company and any of its subsidiaries, each director of the
Company or any of its subsidiaries, each officer of the Company or any of
its subsidiaries who shall sign such registration statement, each other
Person (other than such seller), if any, who controls the Company and any
of its subsidiaries within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act and each other prospective seller of such
securities with respect to any statement in or omission from such
registration statement, any preliminary prospectus, final prospectus or
summary prospectus included therein, or any amendment or supplement
thereto, or any other disclosure document (including without limitation
reports and other documents filed under the Exchange Act or any document
incorporated therein) or other document or report, if such statement or
omission was made in reliance upon and in conformity with written
information furnished to the Company or any of its subsidiaries through an
instrument executed by such seller specifically stating that it is for use
in the preparation of such registration statement, preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement, incorporated
document or other document or report. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of
the Company, any of its subsidiaries or any such director, officer or
controlling Person and shall survive any transfer of securities.
11.5.3. Contribution. If the indemnification provided for in Sections
------------
11.5.1 or 11.5.2 hereof is unavailable to a party that would have been
entitled to indemnification pursuant to the foregoing provisions of this
Section 11.5 (an "Indemnitee") under any such Section in respect of any
losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) referred to therein, then each party that would have been
an indemnifying party thereunder shall, in lieu of indemnifying such
Indemnitee, contribute to the amount paid or payable by such
-30-
Indemnitee as a result of such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) in such proportion as is
appropriate to reflect the relative fault of such indemnifying party on the
one hand and such Indemnitee on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof). The relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such
indemnifying party or such Indemnitee and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The parties agree that it would not be just or
equitable if contribution pursuant to this Section 11.5.3 were determined
by pro rata allocation or by any other method of allocation which does not
take account of the equitable considerations referred to in the preceding
sentence. The amount paid or payable by a contributing party as a result of
the losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) referred to above in this Section 11.5.3 shall include any
legal or other expenses reasonably incurred by such Indemnitee in
connection with investigating or defending any such action or claim. 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.
11.5.4. Limitation on Liability of Holders of Registrable Securities.
------------------------------------------------------------
The liability of each holder of Registrable Securities in respect of any
indemnification or contribution obligation of such holder arising under
this Section 11.5 shall not in any event exceed an amount equal to the net
proceeds to such holder (after deduction of all underwriters' discounts and
commissions) from the disposition of the Registrable Securities disposed of
by such holder pursuant to such registration.
12. CERTAIN ISSUANCES AND TRANSFERS, ETC.
12.1. Transfers to Permitted Transferees. Each holder of Shares agrees
----------------------------------
that no Transfer of any such Shares to any Permitted Transferee shall be
effective unless such Permitted Transferee has delivered to the Company a
written acknowledgment and agreement in form and substance reasonably
satisfactory to the Company that such Shares to be received by such Permitted
Transferee shall remain Investor Shares, Other Investor Shares, Seller Shares,
or Management Shares hereunder, as the case may be, and shall continue to be
subject to all of the provisions of this Agreement and that such Permitted
Transferee shall be bound by and a party to this Agreement as the holder of
Investor Shares, Other Investor Shares, Seller Shares, or Management Shares, as
the case may be, hereunder.
12.2. Other Transfers and Issuances. Notwithstanding any other provision
-----------------------------
of this Agreement, (a) Shares Transferred (i) pursuant to Section 4.1 (other
than 4.1.6(a), (b) or (c)) or 4.2 hereof or (ii) in a Public Offering or after
the Initial Public Offering pursuant to
-31-
Rule 144 or (iii) after foreclosure pursuant to Section 5.1.5 shall be
conclusively deemed thereafter not to be Shares (or Investor Sha res, Other
Investor Shares, Seller Shares or Management Shares) under this Agreement and
not to be subject to any of the provisions hereof or entitled to the benefit of
any of the provisions hereof, (b) Shares Transferred as described in Section
4.1.6(c) shall upon acquisition be deemed for all purposes hereof to be either
Management Shares or Other Investor Shares hereunder (as the Board of Directors
may specify) and each holder of Investor Shares agrees that it will not Transfer
any such Shares to any Person described in Section 4.1.6(c) unless such Person
shall have executed a counterpart signature page to this Agreement and has
delivered to the Company a written acknowledgment and agreement in form and
substance reasonably satisfactory to the Company that such Shares to be received
shall be deemed to be Management Shares or Other Investor Shares, as applicable,
and shall be subject to all of the provisions of this Agreement and that such
Person shall be bound by and a party to this Agreement as a holder of Management
Shares or Other Investor Shares hereunder and (c) any (i) Other Investor Shares
acquired by any holder of Shares pursuant to Section 5.1.1, (ii) Seller Shares
acquired by any holder of Shares pursuant to Section 6.1.1, (iii) Management
Shares acquired by any holder of Shares pursuant to Section 8.1.1 and (iv)
Subject Securities constituting Common Stock acquired by any holder of Shares
pursuant to Section 10 hereof shall upon such acquisition be deemed for all
purposes hereof to be Investor Shares, Other Investor Shares, Seller Shares or
Management Shares hereunder, as the case may be, of like kind with the other
Shares held by such acquiring holder.
13. REMEDIES.
13.1. Generally. The Company and each holder of Shares shall have all
---------
remedies available at law, in equity or otherwise in the event of any breach or
violation of this Agreement or any default hereunder by the Company or any
holder of Shares. The parties acknowledge and agree that in the event of any
breach of this Agreement, in addition to any other remedies which may be
available, each of the parties hereto shall be entitled to specific performance
of the obligations of the other parties hereto and, in addition, to such other
equitable remedies (including without limitation preliminary or temporary
relief) as may be appropriate in the circumstances.
13.2. Deposit. Without limiting the generality of Section 13.1, if any
-------
holder of Shares fails to deliver to the Company the certificate or certificates
evidencing Shares to be sold to the Company pursuant to Section 4 or 9 hereof,
the Company may, at its option, in addition to all other remedies it may have,
deposit the purchase price (including any promissory note constituting all or
any portion thereof) for such Shares with any national bank or trust company
having combined capital, surplus and undivided profits in excess of One Hundred
Million Dollars ($100,000,000) (the "Escrow Agent") and the Company shall cancel
------------
on its books the certificate or certificates representing such Shares and
thereupon all of such holder's rights in and to such Shares shall terminate.
Thereafter, upon delivery to the Company by such holder of the certificate or
certificates evidencing such Shares (duly endorsed, or with stock powers
-32-
duly endorsed, for transfer, with signature guaranteed, free and clear of any
liens or encumbrances, and with any stock transfer tax stamps affixed), the
Company shall instruct the Escrow Agent to deliver the purchase price (without
any interest from the date of the closing to the date of such delivery, any such
interest to accrue to the Company) to such holder.
14. LEGENDS.
14.1. Restrictive Legend. Each certificate representing Shares shall have
------------------
the following legend endorsed conspicuously thereupon:
The voting of the shares of stock represented by this certificate, and
the sale, encumbrance or other disposition thereof, are subject to the
provisions of a Stockholders Agreement to which the issuer and certain of
its stockholders are party, a copy of which may be inspected at the
principal office of the issuer or obtained from the issuer without charge.
Each certificate representing Investor Shares shall also have the following
legend endorsed conspicuously thereupon:
The shares of stock represented by this certificate were originally
issued to, or issued with respect to shares originally issued to, the
following Investor: .
-------------------------
Each certificate representing Other Investor Shares shall also have the
following legend endorsed conspicuously thereupon:
The shares of stock represented by this certificate were originally
issued to, or issued with respect to shares originally issued to, the
following Other Investor: .
-------------------------
Each certificate representing Seller Shares shall also have the following
legend endorsed conspicuously thereupon:
The shares of stock represented by this certificate were originally
issued to, or issued with respect to shares originally issued to, the
following Seller: .
-------------------------
Each certificate representing Management Shares shall also have the
following legend endorsed conspicuously thereupon:
The shares of stock represented by this certificate were originally
issued to, or issued with respect to shares originally issued to, the
following Manager: .
-------------------------
-33-
Any person who acquires Shares which are not subject to all or part of the
terms of this Agreement shall have the right to have such legend (or the
applicable portion thereof) removed from certificates representing such Shares.
14.2. 1933 Act Legends. Each certificate representing Shares shall have
----------------
the following legend endorsed conspicuously thereupon:
The securities represented by this certificate were issued in a
private placement, without registration under the Securities Act of 1933,
as amended (the "Act"), and may not be sold, assigned, pledged or otherwise
transferred in the absence of an effective registration under the Act
covering the transfer or an opinion of counsel, satisfactory to the issuer,
that registration under the Act is not required.
14.3. Stop Transfer Instruction. The Company will instruct any transfer
------------------------
agent not to register the Transfer of any Shares until the conditions specified
in the foregoing legends are satisfied.
14.4. Termination of 1933 Act Legend. The requirement imposed by Section
------------------------------
13.2 hereof shall cease and terminate as to any particular Shares (a) when, in
the opinion of Ropes & ▇▇▇▇ or other counsel reasonably acceptable to the
Company, such legend is no longer required in order to assure compliance by the
Company with the Securities Act or (b) when such Shares have been effectively
registered under the Securities Act or transferred pursuant to Rule 144.
Wherever (x) such requirement shall cease and terminate as to any Shares or (y)
such Shares shall be transferable under paragraph (k) of Rule 144, the holder
thereof shall be entitled to receive from the Company, without expense, new
certificates not bearing the legend set forth in Section 14.2 hereof.
15. AMENDMENT, TERMINATION, ETC.
15.1. Oral Modifications. This Agreement may not be orally amended,
------------------
modified, extended or terminated, nor shall any oral waiver of any of its terms
be effective.
15.2. Written Modifications. This Agreement may be amended, modified,
---------------------
extended or terminated, and the provisions hereof may be waived, only by an
agreement in writing signed by the Majority Shareholders; provided, however,
-------- -------
that (a) the consent of the Majority Investors shall be required for any
amendment, modification, extension, termination or waiver under this Agreement,
(b) the consent of the Majority Other Investors shall be required for any
amendment, modification, extension, termination or waiver which has a material
adverse effect on the rights of the holders of Other Investor Shares as such
under this Agreement, (c) the consent of the Majority Sellers shall be required
for any amendment, modification, extension, termination or waiver which has a
material adverse effect on the rights of the holders of Seller Shares as such
under this Agreement, (d) the consent of the Majority Managers shall be
-34-
required for any amendment, modification, extension, termination or waiver which
has a material adverse effect on the rights of the holders of Management Shares
as such under this Agreement and (e) the consent of each Regulated Stockholder
shall be required for any amendment, modification, extension, termination or
waiver of Section 17 hereof. Each such amendment, modification, extension,
termination and waiver shall be binding upon each party hereto and each holder
of Shares subject hereto. In addition, each party hereto and each holder of
Shares subject hereto may waive any right hereunder by an instrument in writing
signed by such party or holder.
15.3. Termination. No termination under this Agreement shall relieve any
-----------
Person of liability for breach prior to termination.
16. DEFINITIONS. For purposes of this Agreement:
16.1. Certain Matters of Construction. In addition to the definitions
-------------------------------
referred to or set forth below in this Section 16:
(a) The words "hereof", "herein", "hereunder" and words of similar
import shall refer to this Agreement as a whole and not to any particular
Section or provision of this Agreement, and reference to a particular
Section of this Agreement shall include all subsections thereof;
(b) Definitions shall be equally applicable to both nouns and verbs
and the singular and plural forms of the terms defined; and
(c) The masculine, feminine and neuter genders shall each include the
other.
16.2. Definitions. The following terms shall have the following meanings:
-----------
"Adverse Claim" shall have the meaning set forth in Section 8-302 of
-------------
the applicable Uniform Commercial Code.
"Affiliate" shall mean, with respect to any specified Person, (a) any
---------
other Person which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control
with, such specified Person (for the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled
by" and "under common control with"), as used with respect to any Person,
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise) and
(b) each Person of which such specified Person or an Affiliate (as defined
in clause (a) above) thereof shall, directly or indirectly, beneficially
own at least 25% of any class of outstanding capital stock or other
evidence of beneficial interest at such time. With respect to any
-35-
Person who is an individual, "Affiliate" shall also include, without
limitation, any member of such individual's Members of the Immediate
Family. When such term is used in the context of a Regulatory Problem (as
defined in Section 17(a)) it also has the meaning ascribed to it in any
Applicable Law.
"Affiliated Fund" shall mean each corporation, trust, limited
---------------
liability company, general or limited partnership or other entity under
common control with any Investor.
"Agreement" shall have the meaning set forth in the Preamble.
---------
"Applicable Law," with respect to any Person, means all provisions of
--------------
all laws, statutes, ordinances, rules, regulations, permits, certificates
or orders of any governmental authority applicable to such Person or any of
its assets or property or to which such Person or any of its assets or
property is subject, and all judgements, injunctions, orders and decrees of
all courts and arbitrators in proceedings or actions in which such Person
is a party or by which it or any of its assets or properties is or may be
bound or subject.
"▇▇▇▇ Subscription Agreement" shall mean the ▇▇▇▇ Subscription
---------------------------
Agreement of even date between TM Transitory Merger Corporation and each of
the Investors.
"BCIP" shall mean, collectively, one or more of the following Persons:
----
BCIP Associates II, BCIP Trust Associates II, BCIP Associates II-B, BCIP
Trust Associates II-B and BCIP Associates II-C.
"Board" shall have the meaning set forth in Section 2.1.
-----
"Call Notice" shall have the meaning set forth in Section 9.1.4.
-----------
"Call Option" shall mean an option by the Company to purchase all or
-----------
any portion of the Management Shares held by, or originally issued to, any
Person upon the termination of such Person's employment by the Company and
its subsidiaries, including without limitation the option to purchase
Management Shares set forth in Section 9.
"Call Option Exercise Period" shall have the meaning set forth in
---------------------------
Section 9.1.4.
"Cause" with respect to any Manager, shall mean the following events
-----
or conditions: (i) the failure to devote substantially all of his or her
business time to the performance of his or her duties to the Company or any
of its Affiliates (other than by reason of disability), or refusal or
failure to follow or carry out any reasonable direction of the Board, and
the continuance of such refusal or failure for a period of ten days after
notice to the Manager, (ii) the material breach by the Manager of any
-36-
material agreement to which the Manager and the Company or any of its
Affiliates are party, (iii) the commission of fraud, embezzlement, theft or
other dishonesty by the Manager with respect to the Company or any of its
Affiliates; (iv) the conviction of the Manager of, or plea by the Manager
of nolo contendere to, any felony or any other crime involving dishonesty
or moral turpitude and (v) any other intentional action or intentional
omission that involves a material breach of fiduciary obligation on the
part of the Manager.
"Change of Control" shall mean (a) any change in the ownership of the
-----------------
capital stock of the Company if, immediately after giving effect thereto,
any Person (or group of Persons acting in concert) other than the Investors
and their Affiliates will have the direct or indirect power to elect a
majority of the members of the Board or (b) any change in the ownership of
the capital stock of the Company if, immediately after giving effect
thereto, the Investors and their Affiliates shall own less than 25% of the
Equivalent Shares.
"Charitable Organization" shall mean a charitable organization as
-----------------------
described by Section 501(c)(3) of the Internal Revenue Code of 1986, as in
effect from time to time.
"Class A Stock" shall have the meaning set forth in the Recitals.
-------------
"Class L Stock" shall have the meaning set forth in the Recitals.
-------------
"Closing" shall have the meaning set forth in Section 1.1.
-------
"Commission" shall mean the Securities and Exchange Commission.
----------
"Common Stock" shall mean the common stock of the Company including
------------
without limitation the Class A Common and the Class L Common.
"Company" shall have the meaning set forth in the Preamble.
-------
"Convertible Securities" shall mean any evidence of indebtedness,
----------------------
shares of stock (other than Common Stock or Options) or other securities
directly or indirectly convertible into or exchangeable or exercisable for
shares of Common Stock.
"Cost" shall mean, for any Share, the price paid to the issuer of such
----
Share.
"Covered Person" shall have the meaning set forth in Section 11.5.1.
--------------
"Credit Agreement" shall mean the Credit Agreement of even date
----------------
between the Company and certain of its subsidiaries and ▇▇▇▇▇▇ Guaranty
Trust Company of New
-37-
York and the other banks party thereto and all related documents and any
credit agreement and related documents relating to any direct or indirect
refinancing thereof.
"Credit Agreement Rate" shall mean the rate payable on revolving
---------------------
credit loans under the Credit Agreement.
"Drag Along Fairness Opinion" shall have the meaning set forth in
---------------------------
Section 4.2.2.
"Drag Along Notice" shall have the meaning set forth in Section 4.2.1.
-----------------
"Drag Along Sale Percentage" shall have the meaning set forth in
--------------------------
Section 4.2.
"Drag Along Sellers" shall have the meaning set forth in Section
------------------
4.2.1.
"Equivalent Shares" shall mean as to any outstanding shares of Common
-----------------
Stock, such number of shares of Common Stock, and as to any outstanding
Options or Convertible Securities, the maximum number of shares of Common
Stock for which or into which such Options or Convertible Securities may at
the time be exercised or converted.
"Escrow Agent" shall have the meaning set forth in Section 13.2.
------------
"Exchange Act" shall mean the Securities Exchange Act of 1934, as in
------------
effect from time to time.
"Fair Market Value" shall mean, as of any date, as to any Share of
-----------------
Common Stock, the Board's good faith determination of the fair value of
such Share as of the applicable reference date.
"Indemnitee" shall have the meaning set forth in Section 11.5.3.
----------
"Independent Investment Banking Firm" shall mean a nationally
-----------------------------------
recognized investment banking firm selected by the Board which does not
hold any equity interest in the Company or in any shareholder of the
Company and which is not employed by either the Company or any of the
Investors at the time the applicable Drag Along Fairness Opinion is
furnished (other than employment for the purpose of providing such Drag
Along Fairness Opinion).
"Initial Public Offering" means the initial Public Offering by the
-----------------------
Company for its own account registered on Form S-1 (or any successor form
under the Securities Act).
-38-
"Initiating Investors" shall have the meaning set forth in Section
--------------------
11.1.1.
"Investor Shares" shall mean all shares of Common Stock originally
---------------
issued to, or issued with respect to shares originally issued to, or held
by, the Investors, whenever issued, subject to Section 12.2.
"Investors" shall have the meaning set forth in the Preamble.
---------
"Issuance" shall have the meaning set forth in Section 10.
--------
"Majority Investors" shall mean, as of any date, the holders of a
------------------
majority of the Investor Shares outstanding on such date.
"Majority Managers" shall mean, as of any date, the holders of a
-----------------
majority of the Management Shares outstanding on such date.
"Majority Non-Investor Shareholders" shall mean, as of any date, the
----------------------------------
holders of a majority of the Shares (other than Investor Shares)
outstanding on such date.
"Majority Other Investors" shall mean, as of any date, the holders of
------------------------
a majority of the Other Investor Shares outstanding on such date.
"Majority Participating Financers" shall have the meaning set forth in
--------------------------------
Section 11.2.1.
"Majority Participating Investors" shall have the meaning set forth in
--------------------------------
Section 11.1.1.
"Majority Sellers" shall mean, as of any date, the holders of a
----------------
majority of the Seller Shares outstanding on such date.
"Majority Shareholders" shall mean, as of any date, the holders of
---------------------
Voting Shares constituting fifty-two percent (52%) of the total Equivalent
Shares represented by all of the Voting Shares outstanding on such date.
"Management Shares" shall mean (a) all shares of Common Stock
-----------------
originally issued to, or issued with respect to shares originally issued
to, or held by, a Manager, whenever issued, including without limitation
all shares of Common Stock issued pursuant to the exercise of any Option
and (b) all Options originally held by a Manager (treating such Options as
a number of Shares equal to the number of Equivalent Shares represented by
such Options for all purposes of this Agreement except (i) for purposes of
Section 10, Options granted after the date of the Closing and (ii) as
otherwise specifically set forth herein), subject to Section 12.2.
-39-
"Managers" shall have the meaning set forth in the Preamble.
--------
"Members of the Immediate Family" shall mean, with respect to any
-------------------------------
individual, each spouse or child or other descendants of such individual,
each trust created primarily for the benefit of one or more of the
aforementioned Persons and their spouses and each custodian or guardian of
any property of one or more of the aforementioned Persons in his capacity
as such custodian or guardian.
"Merger Agreement" shall have the meaning set forth in the Recitals.
----------------
"Merger Corp" shall have the meaning set forth in the Recitals.
-----------
"Objection Notice" shall have the meaning set forth in Section 4.2.2.
----------------
"Options" shall mean any options or warrants to subscribe for,
-------
purchase or otherwise acquire either Common Stock or Convertible
Securities.
"Other Investor Shares" shall mean all shares of Common Stock
---------------------
originally issued to, or issued with respect to shares originally issued
to, or held by, an Other Investor, whenever issued, subject to Section
12.2.
"Other Investors" shall have the meaning set forth in the Preamble.
---------------
"Other Securities" shall have the meaning set forth in Section 10.1.3.
----------------
"Participating Buyer" shall have the meaning set forth in Section
-------------------
10.1.2.
"Participating Seller" shall have the meaning set forth in Section
--------------------
4.1.2 and 4.2.1.
"Permitted Transferee" shall mean (a) as to each Investor Share, a
--------------------
Transferee of such Investor Share resulting from a Transfer referred to in
Section 4.1.6(a) or (b), (b) as to each Other Investor Share, a Transferee
of such Other Investor Share in compliance with Section 5.1.2, (c) as to
each Seller Share, a Transferee of such Seller Share in compliance with
Section 6.1.1 or 6.1.2 and (e) as to each Management Share, a Transferee of
such Management Share in compliance with Section 8.1.1 or 8.1.2.
"Person" shall mean any individual, partnership, corporation, company,
------
association, trust, joint venture, unincorporated organization, entity, or
any government, governmental department or agency or political subdivision
thereof.
"Preemption Notice" shall have the meaning set forth in Section
-----------------
10.1.1.
-40-
"Preemptive Offerees" shall have the meaning set forth in Section
-------------------
10.1.1.
"Preemptive Portion" shall have the meaning set forth in Section
------------------
10.1.1.
"Price Per Equivalent Share" shall mean the Board's good faith
--------------------------
determination of the price per Equivalent Share of any Convertible
Securities or Options which are the subject of an Issuance pursuant to
Section 10 hereof.
"Prospective Buyer" shall have the meaning set forth in Section 4.1.
-----------------
"Prospective Selling Group" shall have the meaning set forth in
-------------------------
Section 4.1 or 4.2., as applicable.
"Prospective Subscriber" shall have the meaning set forth in Section
----------------------
10.1.1.
"Public Offering" shall mean a public offering and sale of Common
---------------
Stock for cash pursuant to an effective registration statement under the
Securities Act.
"Qualified Public Offering" shall mean a Public Offering, other than
-------------------------
any Public Offering or sale pursuant to a registration statement on Form S-
8 or comparable form, in which the sum of the aggregate price to the public
of all Common Stock sold in such offering, together with the aggregate
price to the public of all Common Stock sold in all previous such Public
Offerings, shall exceed $75 million.
"Registrable Investor Securities" shall have the meaning set forth in
-------------------------------
Section 11.1.1.
"Registrable Securities" shall mean (a) all shares of Class A Stock,
----------------------
(b) all shares of Class A Stock issuable upon conversion of Shares of Class
L Stock, (c) all shares of Class A Stock issuable upon exercise of any
Option or Convertible Securities, and (d) all shares of Class A Stock
directly or indirectly issued or issuable with respect to the securities
referred to in clauses (a), (b) or (c) above by way of stock dividend or
stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization, in each
case constituting Shares. As to any particular Registrable Securities,
such shares shall cease to be Registrable Securities when (i) such shares
shall have been Transferred pursuant to Section 4.1 (other than Section
4.1(a), (b) or (c)) or 4.2 hereof, (ii) a registration statement with
respect to the sale of such securities shall have become effective under
the Securities Act and such securities shall have been disposed of in
accordance with such registration statement, (iii) such securities shall
have been Transferred pursuant to Rule 144, (iv) subject to the provisions
of Section 14 hereof, such securities shall have been otherwise
transferred, new certificates for them not bearing a legend restricting
further transfer shall have been delivered by the Company and subsequent
disposition of them shall not require
-41-
registration of them under the Securities Act and such securities may be
distributed without volume limitation or other restrictions on transfer
under Rule 144 (including without application of paragraphs (c), (e) (f)
and (h) of Rule 144) or (v) such securities shall have ceased to be
outstanding.
"Regulation D" shall mean Regulation D under the Securities Act.
------------
"Rule 144" shall mean Rule 144 under the Securities Act (or any
--------
successor provision).
"Rule 145 Transaction" shall mean a registration on Form S-4 pursuant
--------------------
to Rule 145 of the Securities Act.
"Sale" shall have the meaning set forth in Section 4.1.
----
"Securities Act" shall mean the Securities Act of 1933, as in effect
--------------
from time to time.
"Sellers" shall have the meaning set forth in the Preamble.
-------
"Seller Shares" shall mean all shares of Common Stock originally
-------------
issued to, or issued with respect to shares originally issued to, or held
by, the Sellers, whenever issued, subject to Section 12.2.
"Shares" shall mean all Investor Shares, Other Investor Shares, Seller
------
Shares, and Management Shares.
"Stockholder Call Group" shall have the meaning set forth in Section
----------------------
9.1.
"Stockholders" shall have the meaning set forth in the Preamble.
------------
"Subject Securities" shall have the meaning set forth in Section 10.
------------------
"Tag Along Holder" shall have the meaning set forth in Section 4.1.1.
----------------
"Tag Along Notice" shall have the meaning set forth in Section 4.1.1.
----------------
"Tag Along Offer" shall have the meaning set forth in Section 4.1.2.
---------------
"Tag Along Sale Percentage" shall have the meaning set forth in
-------------------------
Section 4.1.1.
"Tag Along Sellers" shall have the meaning set forth in Section 4.1.2.
-----------------
-42-
"Transfer" shall mean any sale, pledge, assignment, encumbrance or
--------
other transfer or disposition of any Shares to any other Person, whether
directly, indirectly, voluntarily, involuntarily, by operation of law,
pursuant to judicial process or otherwise.
"Voting Shares" shall mean all shares of Common Stock other than
-------------
shares of Common Stock which pursuant to the Company's Articles of
Incorporation are not at the time and in the hands of the holder thereof
entitled to vote generally.
17. REGULATORY COMPLIANCE COOPERATION.
(a) Definitions.
"Applicable Law," with respect to any Person, means all provisions of
--------------
all laws, statues, ordinances, rules, regulations, permits, certificates or
orders of any Governmental Authority applicable to such person or any of
its assets or property or to which such Person or any of its assets or
property is subject, and all judgements, injunctions, orders and decrees of
all courts and arbitrators in proceedings or actions in which such Person
is a party to or by which it or any of its assets or properties is or may
be bound or subject.
"Conversion Event" shall mean (a) any public offering or public sale
----------------
of securities of the Company (including a public offering registered under
the Securities Act of 1933 and a public sale pursuant to Rule 144 of the
Securities and Exchange Commission or any similar rule then in force), (b)
any sale of securities of the Company to a person or group of persons
(within the meaning of the Securities Exchange Act of 1934, as amended (the
"1934 Act")) if, after such sale, such person or group of persons in the
aggregate would own or control securities which possess in the aggregate
the ordinary voting power to elect a majority of the Company's directors
(provided that such sale has been approved by the Company's Board of
Directors or a committee thereof), (c) any sale of securities of the
Company to a person or group of persons (within the meaning of the ▇▇▇▇
▇▇▇) if, after such sale, such person or group of persons in the aggregate
would own or control securities of the Company (excluding any nonvoting
Class A Stock being converted and disposed of in connection with such
Conversion Event) which possess in the aggregate the ordinary voting power
to elect a majority of the Company's directors, (d) any sale of securities
of the Company to a person or group of persons (within the meaning of the
▇▇▇▇ ▇▇▇) if, after such sale, such person or group of persons would not,
in the aggregate, own, control or have the right to acquire more than two
percent (2%) of the outstanding securities of any class of voting
securities of the Company, (e) a merger, consolidation or similar
transaction involving the Company if, after such transaction, a person or
group of persons (within the meaning of the ▇▇▇▇ ▇▇▇) in the aggregate
would own or control securities which possess in the aggregate the ordinary
voting power to elect a majority of the surviving
-43-
Company's directors (provided that the transaction has been approved by the
Company's Board or a committee thereof) and (f) any tag along sale or drag
along sale initiated by others, including any such sale pursuant to Section
4.
"Regulated Stockholder" shall mean DP Investors I, LLC, DP Investors
---------------------
II, LLC, ▇.▇. ▇▇▇▇▇▇ Capital Corporation, Sixty Wall Street Fund, L.P., and
any other stockholder (i) that is subject to the provisions of Regulation Y
or Regulation K of the Board of Governors of the Federal Reserve System, 12
C.F.R. Part 225 (or any successor to such Regulations) and (ii) that holds
Securities of the Company and (iii) that has provided written notice to the
Company of its status as a "Regulated Stockholder" hereunder.
"Regulatory Problem" means any set of facts or circumstances wherein
------------------
it has been asserted by any governmental regulatory agency (or Regulated
Stockholder reasonably believes that there is a risk of such assertion)
that such Regulated Stockholder is not entitled to acquire, own, hold or
control, or exercise any significant right (including the right to vote)
with respect to, any Securities of the Company or any subsidiary of the
Company.
"Securities" means, with respect to any Person, such Person's
----------
"securities" as defined in Section 2(1) of the Securities Act of 1933, as
amended, and includes such Person's capital stock or other equity interests
or any options, warrants or other securities that are directly or
indirectly convertible into, or exercisable or exchangeable or, such
Person's capital stock or other equity or equity-linked interests,
including phantom stock and stock appreciation rights. Whenever a
reference herein to Securities is referring to any derivative Securities,
the rights of a Stockholder shall apply to such derivative Securities and
all underlying Securities directly or indirectly issuable upon conversion,
exchange or exercise of such derivative securities.
(b) Regulatory Matters Generally.
----------------------------
(i) If a Regulated Stockholder determines that it has a Regulatory Problem,
the Company agrees to take all such actions, subject to Applicable Law, as
are reasonably requested by such Regulated Stockholder (1) to effectuate
and facilitate any transfer by such Regulated Stockholder of any Securities
of the Company then held by such Regulated Stockholder to any Person
designated by such Regulated Stockholder, (2) to permit such Regulated
Stockholder (or any Affiliate of such Regulated Stockholder) to exchange
all or any portion of the voting Securities then held by such Person on a
share-for-share basis for shares of a class of nonvoting Securities of the
Company, which nonvoting Securities shall be identical in all respect to
such voting Securities, except that such new Securities shall be nonvoting
and shall be convertible into voting Securities on such terms as are
requested by such Regulated Stockholder in light of regulatory
considerations then prevailing, and (3) to continue and preserve the
-44-
respective allocation of the voting interests with respect to the Company
provided for in this Agreement and with respect to such Regulated
Stockholder's ownership of the Company's voting Securities. Such actions
may include, without limitation, (x) entering into such additional
agreements as are reasonably requested by such Regulated Stockholders to
permit any Person(s) designated by such Regulated Stockholder to exercise
any voting power which is relinquished by such Regulated Stockholder upon
any exchange of voting Securities for nonvoting Securities of the Company,
and (y) entering into such additional agreements, adopting such amendments
to the charter documents of the Company and taking such additional actions
as are reasonably requested by such Regulated Stockholder in order to
effectuate the intent of the foregoing.
(ii) If a Regulated Stockholder has the right or opportunity to
acquire any of the Company's Securities from the Company, any Stockholder
or any other Person (as the result of a preemptive offer, pro rata offer or
--- ----
otherwise), at such Regulated Stockholder's request the Company will offer
to sell (or if the Company is not the seller, to cooperate with the seller
and such Regulated Stockholder to permit such seller to sell) such non-
voting Securities on the same terms as would have existed has such
Regulated Stockholder acquired the Securities so offered and immediately
requested their exchange for non-voting Securities pursuant to clause (i)
above.
(iii) Each Stockholder agrees to cooperate with the Company in
complying with this Section 17, including without limitation, voting to
approve amending the Company's charter documents in a manner reasonably
requested by the Regulated Stockholder requesting such amendment.
(iv) The Company agrees not to amend or waive the voting or other
provisions of this Agreement or the Company's charter documents if such
amendment or waiver would cause any Regulated Stockholder to have a
Regulatory Problem, provided, that any such Regulated Stockholder notifies
--------
the Company that it would have a Regulatory Problem promptly after it has
notice of such amendment or waiver.
(v) If a Regulated Stockholder shall now or hereafter have a right to
appoint or designate a Director and such right shall, in the reasonable
judgment of such Regulated Stockholder, cause a Regulatory Problem, such
Regulatory Stockholder may, upon notice to the Company, relinquish its
right to appoint such Director at any time.
(c) Notice of Conversion to Other Regulated Stockholders; Deferral. The
--------------------------------------------------------------
Company shall not convert or directly or indirectly redeem, purchase or
otherwise acquire any shares of voting Class A Stock or any other class of
capital stock of the Company or take any other action affecting the voting
rights of such shares, if such action will increase the percentage of any class
of outstanding voting securities owned or controlled by any Regulated
Stockholder (other than any such stockholder which requested that the Company
take such action, or which
-45-
otherwise waives in writing its rights under this paragraph (c)), unless the
Company gives written notice (the "Deferral Notice") of such action to each
Regulated Stockholder. The Company will defer making any such conversion,
redemption, purchase or other acquisition, or taking any such other action for a
period of twenty (20) days (the "Deferral Period") after giving the Deferral
Notice in order to allow each Regulated Stockholder to determine whether it
wishes to convert or take any other action with respect to the Common Stock it
owns, controls or has the power to vote, and if any such Regulated Stockholder
than elects to convert any shares of voting Class A Stock, it shall notify the
Company in writing within ten (10) days of the issuance of the Deferral Notice,
in which case the Company shall (i) promptly notify from time to time prior to
the end of such 20-day period each other Regulated Stockholder holding shares of
each proposed conversion, and (ii) effect the conversions requested by all
Regulated Stockholders in response to the notices issued pursuant to this
paragraph (c) at the end of the Deferral Period. Upon complying with the
procedures hereinabove set forth in this paragraph (c), the Company may so
convert or directly or indirectly redeem, purchase or otherwise acquire any
shares or voting Class A Stock or any other class of capital stock of the
Company or take any other action affecting the voting rights of such shares.
(d) Restrictions on Redemptions, Etc. The Company shall not redeem, purchase,
---------------------------------
acquire to take any other action affecting outstanding shares of capital stock
if, after giving effect to such redemption, purchase, acquisition or other
action, a Regulated Stockholder would own more than 24.99% of the total equity
of the Company or more than 24.99% of the total value of all capital stock and
subordinated debt of the Company (in each case determined by assuming such
Regulated Holder (but no other holder) has exercised, converted or exchanged all
of its options, warrants and other convertible or exchangeable securities). The
Company shall not be a party to any merger, consolidation, recapitalization,
reorganization or other transaction pursuant to which a Regulated Holder would
be required to take any Securities or subordinated debt which might reasonably
be expected to cause such person to have a Regulatory Problem.
(e) Restrictions on Conversions and Transfers by a Regulated Stockholder.
--------------------------------------------------------------------
Notwithstanding anything to the contrary contained in this Agreement or in the
Company's Restated Articles of Incorporation:
(i) no Regulated Stockholder may, without the prior written consent of
the Company, convert any of its non-voting Class A Stock into voting shares of
Class A Stock to the extent that immediately prior thereto, or as a result of
such conversion, the number of shares of voting Class A Stock which constitute
voting stock held by such Regulated Stockholder would exceed the number of
shares of voting Class A Stock which such Regulated Stockholder reasonably
determines it and its Affiliates may own, control or have the power to vote
under any law, regulation, rule or other requirement of any governmental
authority at the time applicable to such Regulated Stockholder or its
Affiliates; provided, however, that each Regulated Stockholder may convert to
-------- -------
such nonvoting shares of Class A Stock into shares of voting Class A stock if
such Regulated Stockholder reasonably believes that such converted
-46-
shares will be Transferred within fifteen (15) days pursuant to a Conversion
Event and such holder agrees not to vote any such shares of voting Class A stock
prior to such Conversion Event and undertakes to promptly convert such shares
back into nonvoting shares of Class A Stock if such shares are not Transferred
pursuant to a Conversion Event.
(ii) In addition, without the prior written consent of the
Company, no Regulated Stockholder may Transfer any of its shares of nonvoting
Class A Stock unless such transfer is either (x) pursuant to a Conversion Event
or (y) as a condition to such transfer, such Regulated Stockholder shall obtain
the consent of any such transferee that such transferee shall be bound by the
same conversion and transfer restrictions contained in this Agreement and in the
Company's Restated Articles of Incorporation as if such transferee were a
Regulated Stockholder.
(iii) Each Regulated Stockholder may provide for further
restrictions upon the conversion of any shares of nonvoting Class A Stock by
providing the Company with signed, written instructions specifying such
additional restrictions and legending such shares as to the existence of such
restrictions.
18. MISCELLANEOUS.
18.1. Authority; Effect; etc. Each party hereto represents and warrants to
-----------------------
and agrees with each other party that the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized on behalf of such party and do not violate any agreement or
other instrument applicable to such party or by which its assets are bound. This
Agreement does not, and shall not be construed to, give rise to the creation of
a partnership among any of the parties hereto, or to constitute any of such
parties members of a joint venture or other association. Domino's shall be
jointly and severally liable for all obligations of the Company pursuant to this
Agreement.
18.2. Notices. Any notices and other communications required or permitted
-------
in this Agreement shall be effective if in writing and (a) delivered personally
or (b) sent (i) by Federal Express, DHL or UPS or (ii) by registered or
certified mail, postage prepaid, in each case, addressed as follows:
If to the Company or the Investors, to them:
c/o Bain Capital, Inc.
Two ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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with a copy to:
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
If to a Seller, to him or her:
▇/▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to the Other Investors, the Financers or the Managers, to them at
the addresses set forth in the stock record book of the Company.
Notice to the holder of record of any shares of capital stock shall be
deemed to be notice to the holder of such shares for all purposes hereof.
Unless otherwise specified herein, such notices or other communications
shall be deemed effective (a) on the date received, if personally delivered, (b)
two business days after being sent by Federal Express, DHL or UPS and (c) three
business days after deposit with the U.S. Postal Service, if sent by registered
or certified mail. Each of the parties hereto shall be entitled to specify a
different address by giving notice as aforesaid to each of the other parties
hereto.
18.3. Binding Effect, etc. Except for restrictions on the Transfer of
-------------------
Shares set forth in other agreements, plans or other documents, this Agreement
constitutes the entire agreement of the parties with respect to its subject
matter, supersedes all prior or contemporaneous oral or written agreements or
discussions with respect to such subject matter, and shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
representatives, successors and assigns.
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18.4. Descriptive Headings. The descriptive headings of this Agreement are
--------------------
for convenience of reference only, are not to be considered a part hereof and
shall not be construed to define or limit any of the terms or provisions hereof.
18.5. Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one instrument.
18.6. Severability. In the event that any provision hereof would, under
------------
applicable law, be invalid or unenforceable in any respect, such provision shall
be construed by modifying or limiting it so as to be valid and enforceable to
the maximum extent compatible with, and possible under, applicable law. The
provisions hereof are severable, and in the event any provision hereof should be
held invalid or unenforceable in any respect, it shall not invalidate, render
unenforceable or otherwise affect any other provision hereof.
19. GOVERNING LAW.
19.1. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the domestic substantive laws of the State of New York without
giving effect to any choice or conflict of laws provision or rule that would
cause the application of the domestic substantive laws of any other
jurisdiction.
19.2. Consent to Jurisdiction. Each party to this Agreement, by its
-----------------------
execution hereof, (a) hereby irrevocably submits to the exclusive jurisdiction
of the state courts of the State of New York sitting in the County of New York
or the United States District Court for the Southern District of New York for
the purpose of any action, claim, cause of action or suit (in contract, tort or
otherwise), inquiry, proceeding or investigation arising out of or based upon
this Agreement or relating to the subject matter hereof, (b) hereby waives to
the extent not prohibited by applicable law, and agrees not to assert, and
agrees not to allow any of its subsidiaries to assert, by way of motion, as a
defense or otherwise, in any such action, any claim that it is not subject
personally to the jurisdiction of the above-named courts, that its property is
exempt or immune from attachment or execution, that any such proceeding brought
in one of the above-named courts is improper, or that this Agreement or the
subject matter hereof or thereof may not be enforced in or by such court and (c)
hereby agrees not to commence or maintain any action, claim, cause of action or
suit (in contract, tort or otherwise), inquiry, proceeding or investigation
arising out of or based upon this Agreement or relating to the subject matter
hereof or thereof other than before one of the above-named courts nor to make
any motion or take any other action seeking or intending to cause the transfer
or removal of any such action, claim, cause of action or suit (in contract, tort
or otherwise), inquiry, proceeding or investigation to any court other than one
of the above-named courts whether on the grounds of inconvenient forum or
otherwise. Notwithstanding the foregoing, to the extent that any party hereto
is or becomes a party in any litigation in connection with which it may assert
indemnification rights set forth in this agreement, the court in which such
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litigation is being heard shall be deemed to be included in clause (a) above.
Each party hereto hereby consents to service of process in any such proceeding
in any manner permitted by New York law, and agrees that service of process by
registered or certified mail, return receipt requested, at its address specified
pursuant to Section 18.2 hereof is reasonably calculated to give actual notice.
19.3. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
--------------------
WHICH CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES AND COVENANTS THAT IT
WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO
TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE OR ACTION, CLAIM, CAUSE OF
ACTION OR SUIT (IN CONTRACT, TORT OR OTHERWISE), INQUIRY, PROCEEDING OR
INVESTIGATION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER
HEREOF OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE TRANSACTIONS
CONTEMPLATED HEREBY, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING.
EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE OTHER PARTIES
HERETO THAT THIS SECTION 19.3 CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH THEY
ARE RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT. ANY PARTY HERETO MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 19.3 WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO
TRIAL BY JURY.
19.4. Exercise of Rights and Remedies. No delay of or omission in the
-------------------------------
exercise of any right, power or remedy accruing to any party as a result of any
breach or default by any other party under this Agreement shall impair any such
right, power or remedy, nor shall it be construed as a waiver of or acquiescence
in any such breach or default, or of any similar breach or default occurring
later; nor shall any such delay, omission nor waiver of any single breach or
default be deemed a waiver of any other breach or default occurring before or
after that waiver.
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Stockholders Agreement
December 21, 1998
IN WITNESS WHEREOF, each of the undersigned has duly executed this
Agreement (or caused this Agreement to be executed on its behalf by its officer
or representative thereunto duly authorized) under seal as of the date first
above written.
THE COMPANY: TISM, Inc.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
DOMINO'S: DOMINO'S, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
THE INVESTORS: ▇▇▇▇ Capital Fund VI, ▇.▇.
▇▇▇▇ Capital VI Coinvestment Fund, L.P.
By: ▇▇▇▇ Capital Partners VI, L.P.,
their general partner
By: ▇▇▇▇ Capital Investors VI, Inc.,
its general partner
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
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Stockholders Agreement
December 21, 1998
BCIP Associates II
BCIP Trust Associates II
BCIP Associates II-B
BCIP Trust Associates II-B
BCIP Associates II-C
By: ▇▇▇▇ Capital, Inc.,
their Managing Partner
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
PEP Investments PTY Ltd.
By: ▇▇▇▇ Capital, Inc.,
its attorney-in-fact
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
Sankaty High Yield Asset Partners, L.P.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Title: Managing Director
Brookside Capital Partners Fund, L.P.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------
Title: Managing Director
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Stockholders Agreement
December 21, 1998
THE OTHER INVESTORS: RGIP, LLC
By: /s/ ▇. ▇▇▇▇▇▇▇▇ Malt
--------------------------------
Name: ▇. ▇▇▇▇▇▇▇▇ Malt
Title: Authorized Signatory
DP Investors I, LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
DP Investors II, LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
▇.▇. ▇▇▇▇▇▇ Capital Corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
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Stockholders Agreement
December 21, ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Fund, L.P.
By: Sixty Wall Street Corporation, its general
partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
DP Transitory Corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
THE SELLERS:
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, individually and as
trustee
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, individually and as
trustee
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Stockholders Agreement
December 21, 1998
THE MANAGERS:
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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