EXHIBIT 4.5
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SHAREHOLDER AGREEMENT
AMONG
LEATHER INVESTORS LIMITED PARTNERSHIP I,
LEATHER INVESTORS LIMITED PARTNERSHIP II,
THE OTHER INVESTORS NAMED ON THE SIGNATURE PAGES HERETO,
▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇,
THE MANAGERS NAMED ON THE SIGNATURE PAGES HERETO
AND
WILSONS THE LEATHER EXPERTS INC.
DATED AS OF MAY 25, 1996
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SHAREHOLDER AGREEMENT
THIS AGREEMENT dated as of May 25, 1996 by and among Wilsons The
Leather Experts Inc., a Minnesota corporation (the "Company"), Leather Investors
Limited Partnership I, a Minnesota limited partnership (the "First Limited
Partnership"), Leather Investors Limited Partnership II, a Minnesota limited
partnership (the "Second Limited Partnership and, together with the First
Limited Partnership, collectively, the "Limited Partnerships" and individually,
a "Limited Partnership"), the other Investors (as hereinafter defined), ▇▇▇▇▇▇
and ▇▇▇▇▇▇ (as hereinafter defined) and the Managers (as hereinafter defined):
RECITALS
As of the date of this Agreement, the Shareholders (as hereinafter
defined) are the owners and holders of (i) all of the shares of outstanding
capital stock of the Company, consisting of 4,800,000 shares of Class A Common
Stock, par value $.01 per share (the "Class A Common Stock"), 3,250,000 shares
of Class B Common Stock, par value $.01 per share (the "Class B Common Stock"),
450,000 shares of Class C Common Stock, par value $.01 per share (the "Class C
Common Stock" and, together with the Class A Common Stock, the Class B Common
Stock and the common stock of the Company undesignated as to class, herein
collectively called the "Common Stock"), and 7,405 shares of Series A Preferred
Stock, par value $.01 per share (the "Preferred Stock"), and (ii) all of the
outstanding general and limited partnership interests in the Limited
Partnerships. The outstanding shares of Common Stock and Preferred Stock of the
Company, together with all other shares of Common Stock and Preferred Stock of
the Company at any time hereafter issued (whether upon exercise of options or
otherwise), are hereinafter referred to as the "Shares". The outstanding general
and limited partnership interests in the Limited Partnerships, together with all
other general and limited partnership interests in the Limited Partnerships at
any time hereafter issued, are hereinafter referred to as the "Partnership
Interests".
The parties hereto believe it to be in the best interests of the
Company and the Shareholders to set forth certain of their rights and
obligations with respect to the Shares and the Partnership Interests, and desire
to subject the Shares and the Partnership Interests owned by the Shareholders to
the terms of this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and conditions contained herein, the parties do hereby agree as
follows:
1. CERTAIN DEFINITIONS.
As used in this Agreement, the following defined terms have the
meanings indicated below.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person.
"Bankruptcy" of a Shareholder means such Shareholder having an order
for relief or an order appointing a trustee, receiver or similar officer entered
in any bankruptcy, insolvency, reorganization, dissolution, receivership or
similar proceeding in which the Shareholder is the debtor. Each Shareholder
shall promptly give notice of any such order to the Company, including a
complete copy of such order.
"Board" or "Board of Directors" means the board of directors of the
Company.
"Business Day" means any day, other than a day which is a Saturday,
Sunday, or legal holiday in the City of Minneapolis or the City of New York or a
day on which banking institutions are authorized by law or other governmental
actions to close.
"Cause" means, with respect to any Employee, (i) the commission by
such Employee of any act of embezzlement against the Company or any of its
subsidiaries, (ii) the conviction of such Employee for, or entry by an Employee
of a guilty plea to, any felony which has a material adverse effect upon the
business, operating results, financial condition or employee, supplier or
customer relations generally of the Company and its Subsidiaries, taken as a
whole, or which precludes such Employee from performing his duties under his
Employment Agreement in the case of ▇▇▇▇▇▇ or ▇▇▇▇▇▇, or his or her duties to
the Company and its Subsidiaries as determined by the Board in the case of any
Manager, for 90 days during any 12-month period, (iii) the conviction of such
Employee for any crime involving dishonesty with respect to the Company (A)
intended by such Employee to result in personal enrichment of such Employee at
the expense of the Company or its Subsidiaries or (B) which has a material
adverse effect upon the business, operating results, financial condition or
employee, supplier or customer relations generally of the Company and its
Subsidiaries, taken as a whole, (iv) the absence by such Employee from
employment with whichever of the Company or its Subsidiaries is then employing
such Employee for a period of more than 90 days during any 12-month period
without the approval of the Board other than for vacations, illness, injury or
disability, (v) willful misconduct by such Employee in breach of the terms of
his Employment Agreement in the case of ▇▇▇▇▇▇ or ▇▇▇▇▇▇, or his or her duties
to the Company and its Subsidiaries as determined by the Board in the case of
any Manager, which misconduct has not been cured within 20 days following
notification thereof to such Employee (or if such misconduct is cured within 20
days after such notice of misconduct is received, but the same misconduct occurs
again at any time thereafter). For purposes hereof, no act or omission of an
Employee shall be deemed "willful" unless done, or omitted, by him or her in bad
faith without the belief his or her action or omission was in the best interests
of the Company or a Subsidiary thereof.
A "Control Transaction" shall be deemed to have occurred if:
(i) a majority of the directors of the Company shall be persons other
than Persons:
(A) who are named as directors in the Company's articles of
incorporation or who are nominated by, or for whose election
proxies shall have been solicited by, the Board of
Directors, or
(B) who are then serving as directors appointed by the Board of
Directors to fill vacancies on the Board of Directors caused
by death or resignation (but not by removal) or to fill
newly-created directorships, or
(ii) more than 33 1/3% of the voting power of the outstanding voting
stock of the Company is acquired or beneficially owned (as
defined in Rule 13d-3 under the 1934 Act or any successor rule
thereto) by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the 1934 Act), or any general
partnership interests in the First Limited Partnership become
held by any Person that, as of the date hereof, does not have a
general partnership interest in the First Limited Partnership;
provided, however, that the following acquisitions and beneficial
ownership shall not constitute a Control Transaction pursuant to
this clause (ii):
(A) any acquisition or beneficial ownership by the Company or a
Subsidiary of the Company, or
(B) any acquisition or beneficial ownership by any employee
benefit plan (or related trust) sponsored or maintained by
the Company or one or more of its Subsidiaries, or
(C) any acquisition or beneficial ownership of voting stock of
the Company or general partnership interests in the First
Limited Partnership by ▇▇▇▇▇▇ or ▇▇▇▇▇▇ or any Person that,
as of the date of this Agreement, is a general partner in
the First Limited Partnership, or
(D) any acquisition or beneficial ownership by a parent
corporation or its wholly-owned subsidiaries, as long as
they shall remain wholly-owned subsidiaries, of 100% of the
outstanding voting stock of the Company as a result of a
merger or statutory share exchange which complies with
clause (iii)(A)(2) hereof or the exception in clause
(iii)(B) hereof in all respects; or
(iii) the shareholders of the Company approve a definitive agreement or
plan to:
(A) merge or consolidate the Company with or into another
corporation (other than (1) a merger or consolidation with a
Subsidiary of the Company or (2) a merger in which:
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(aa) the Company is the surviving corporation, and
(bb) no outstanding voting stock of the Company (other than fractional
shares) held by shareholders immediately prior to the merger is
converted into cash, securities or other property (except (I)
voting stock of a parent corporation owning directly, or
indirectly through wholly-owned subsidiaries, both beneficially
and of record 100% of the voting stock of the Company immediately
after the merger or (II) cash upon the exercise by holders of
voting stock of the Company of statutory dissenters' rights), and
(cc) the Persons who were thebeneficial owners, respectively, of the
outstanding Common Stock and outstanding voting stock of the
Company immediately prior to such merger beneficially own,
directly or indirectly, immediately after the merger, 66 2/3% or
more of, respectively, the then outstanding common stock and the
voting power of the then outstanding voting stock of the
surviving corporation or its parent corporation, and
(dd) if voting stock of the parent corporation is exchanged for voting
stock of the Company in the merger, all holders of any class or
series of voting stock of the Company immediately prior to the
merger have the right to receive substantially the same per share
consideration in exchange for their voting stock of the Company
as all other holders of such class or series), or
(B) exchange, pursuant to a statutory exchange of shares of voting stock
of the Company held by shareholders of the Company immediately prior
to the exchange, shares of one or more classes or series of voting
stock of the Company for cash, securities or other property, except
for (1) voting stock of a parent corporation of the Company owning
directly, or indirectly through wholly-owned subsidiaries, both
beneficially and of record 100% of the voting stock of the Company
immediately after the statutory share exchange if (aa) the Persons who
were the beneficial owners, respectively, of the outstanding Common
Stock and outstanding voting stock of the Company immediately prior to
such statutory share exchange own, directly or indirectly, immediately
after the statutory share exchange 66 2/3% or more of, respectively,
the then outstanding common stock and the voting power of the then
outstanding voting stock of such parent corporation, and (bb) all
holders of any class or series of voting stock of the Company
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immediately prior to the statutory share exchange have the
right to receive substantially the same per share
consideration in exchange for their voting stock of the
Company as all other holders of such class or series, or (2)
cash with respect to fractional shares of voting stock of
the Company or payable as a result of the exercise by
holders of voting stock of the Company of statutory
dissenters' rights, or
(C) sell or otherwise dispose of all or substantially all of the
assets of the Company (in one transaction or a series of
transactions), or
(D) liquidate or dissolve the Company.
"Disability" of an Employee means any physical or mental
incapacitation whereby such Employee is therefore unable for a period of 12
consecutive months or for an aggregate of 12 months in any 24 consecutive month
period to perform his or her duties to the Company and its Subsidiaries.
"Disposition" (including the verb "Dispose") means any sale, transfer,
assignment, exchange or other disposition (whether by gift, upon liquidation of
a corporate Shareholder or otherwise), or pledge or other encumbrance, by a
Shareholder, of all or any part of the Shares or Partnership Interests, as the
case my be, owned by such Shareholder other than (i) a Transfer by Legal
Process, (ii) a sale of Partnership Interests to either or both of ▇▇▇▇ ▇▇▇▇▇▇
("▇▇▇▇▇▇") or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"), (iii) a sale in a Public Offering of
Shares of Common Stock that, at the time of such sale, are considered to be
Unrestricted Stock, or (iv) in the case of ▇▇▇▇▇▇, ▇▇▇▇▇▇ or the Investors, or
Permitted Transferees of ▇▇▇▇▇▇, ▇▇▇▇▇▇ or the Investors, a sale in an Open
Market Transaction of Shares of Common Stock that, at the time of such sale, are
considered to be Unrestricted Stock.
"Employee" means each of ▇▇▇▇▇▇, ▇▇▇▇▇▇ and the Managers, as long as
such Person shall own any Shares or Partnership Interests.
"Employment Agreement" means the Employment Agreement of even date
herewith between the Company and ▇▇▇▇▇▇ or the Company and ▇▇▇▇▇▇, as the case
may be, as the same may be amended from time to time in accordance with the
terms thereof.
"Event" means the death, Disability, Retirement or Termination of or
by ▇▇▇▇▇▇ or ▇▇▇▇▇▇ (other than a Termination by ▇▇▇▇▇▇ or ▇▇▇▇▇▇ without Good
Reason on or before the fifth anniversary of the date of this Agreement, or a
Termination of ▇▇▇▇▇▇ or ▇▇▇▇▇▇ with Cause).
"Fair Market Value" means, with respect to any Shares of Common Stock,
the fair market value of such Shares as determined pursuant to Article 5.
"Good Reason", with respect to ▇▇▇▇▇▇ or ▇▇▇▇▇▇, has the meaning
ascribed thereto in such Employee's Employment Agreement.
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"Investors" means each of the Limited Partnerships, Berman, Goldfarb,
▇▇▇▇ ▇. Sell, Ercu Ucan and ▇▇▇▇▇▇ ▇▇▇▇▇, as long as such Person shall own any
Shares or Partnership Interests, and any other Shareholder (including without
limitation Melville, in the event it becomes a party to this Agreement) other
than the Employees and the Permitted Transferees of the Employees.
"Lien" means, with respect to any property or asset, any mortgage,
lien, pledge, charge, security interest, encumbrance or other similar claim of
any kind in respect of such property or asset.
"Management Warrant" means the Warrant of even date herewith to
purchase 1,200,000 shares of Class A Common Stock (subject to adjustment
depending on the number of Shares of Restricted Stock which vest under the
Restricted Stock Agreement) issued by the Company to Melville pursuant to the
Sale Agreement, together with any warrant or warrants issued in substitution or
exchange therefor.
"Managers" means each of the individuals identified as managers on
Schedule A hereto, as long as such Person shall own any Shares or Partnership
Interests, and any other Shareholder (other than ▇▇▇▇▇▇ or ▇▇▇▇▇▇) who, at the
time he or she becomes a party to this Agreement, is an employee of the Company
or any of its Subsidiaries.
"Melville" means Melville Corporation, a New York corporation.
"1933 Act" means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Open Market Transaction" means a sale of Shares of Common Stock in an
open market transaction at such time as there shall have been a completed Public
Offering and shall be a bona fide public market for the Common Stock, such open
market transaction being pursuant to a registration statement filed under the
1933 Act or pursuant to Rule 144 (or any successor rule) under the 1933 Act.
"Original Cost" means (i) in the case of any Shares of Common Stock or
Partnership Interests held by a Seller, the per share price originally paid for
such security by such Seller or, in the event such Seller acquired such Shares
or Partnership Interests in a transfer other than for value (including for this
purpose any Transfer by Legal Process), by such Seller's transferor
(appropriately adjusted to reflect stock splits, reverse stock splits, stock
dividends, conversions and other recapitalizations), and (ii) in the case of any
Shares of Preferred Stock held by a Seller, $1,000 per share (appropriately
adjusted to reflect stock splits, reverse stock splits, stock dividends,
conversions and other recapitalizations), plus any unpaid dividends on such
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security, determined pursuant to the Articles of Incorporation of the Company,
accrued through the date of purchase of such security under this Agreement.
"Permitted Transferee" means (i) in the case of any Shareholder (other
than an Employee or any other natural person or a Limited Partnership), an
Affiliate of such Shareholder, (ii) in the case of any Investor who is a natural
person, the spouse of such Investor (but only if such Investor shall at all
times prior to such Investor's death retain exclusive voting and consensual
rights (including without limitation rights to consent to any amendment or
termination of this Agreement or any other agreement that the Investor is a
party to in the Investor's capacity as a shareholder of the Company) with
respect to all Shares at any time held by such spouse), and (iii) in the case of
any Shareholder who is a natural person (including without limitation any
Employee), any trust solely for the benefit of one or more of such Shareholder
and his or her Family Members (as hereinafter defined). "Family Members" of any
Shareholder means the spouse of such Shareholder, the parents and lineal
descendants of such Shareholder or his or her spouse, and spouses of parents or
lineal descendants of such Shareholder or his or her spouse.
"Person" means an individual, corporation, partnership, association,
trust or other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Public Offering" means an underwritten public offering of Common
Stock of the Company pursuant to an effective registration statement or other
offering document in compliance with applicable Securities Laws; provided,
however, that a Public Offering shall not include (i) a public offering of the
Warrant, or (ii) an offering pursuant to a registration statement on Form S-4 or
Form S-8 under the 1933 Act or any successor forms thereto.
"Repurchase Event" means the death, Disability, Retirement or
Termination of or by a Manager, or the Termination by ▇▇▇▇▇▇ or ▇▇▇▇▇▇ without
Good Reason on or before the fifth anniversary of the date of this Agreement, or
the Termination of ▇▇▇▇▇▇ or ▇▇▇▇▇▇ with Cause.
"Restricted Stock" means the 1,200,000 Shares of Class B Common Stock
purchased by the Employees under the Manager Stock Purchase Agreement dated as
of the date hereof among the Company and the Employees and designated therein or
in subscription agreements delivered pursuant thereto as "Restricted Common
Stock" (together with any Shares of Common Stock issued in exchange for or in
respect of such Shares pursuant to any stock split, reverse stock split, stock
dividend, conversion or other recapitalization), other than any such Shares that
have vested pursuant to the terms of the Restricted Stock Agreement of even date
herewith among the Company and the Employees (the "Restricted Stock Agreement").
If the relevant time for determination of the Shares of Common Stock considered
to be Restricted Stock occurs after the close of business on a Measuring Date
(as defined in the Restricted Stock Agreement) but prior to notification by the
Board of the Employees of the number of Shares vested with respect to such
Measuring Date, the Shares that, upon receipt of such notice, would be deemed
pursuant to the terms of the Restricted Stock Agreement to have vested as of the
close of business on such Measuring Date shall not be considered to be
Restricted Stock.
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"Retirement" of an Employee means the retirement at age 65 or older of
such Employee from his or her employment with the Company and the Subsidiaries.
"Sale Agreement" means the Sale Agreement dated as of May 24, 1996
among the Company, Wilsons Center Inc. and Melville.
"SEC" means the Securities and Exchange Commission.
"Securities Laws" means the 1933 Act and state blue sky and securities
laws.
"Seller" means (i) a Restricted Stock Seller, a Without Cause
Restricted Stock Seller and a For Cause Restricted Stock Seller (as each such
term is defined in Section 3.1), (ii) a Repurchase Seller (as such term is
defined in Section 3.2), (iii) a ▇▇▇▇▇▇ or ▇▇▇▇▇▇ Seller (as such term is
defined in Section 3.3), (iv) a Section 4.1 Seller (as such term is defined in
Section 4.1) and (v) a Section 4.2 Seller (as such term is defined in Section
4.2).
"Shareholder(s)" means each Person (other than the Company) who shall
be a party to this Agreement (including without limitation each such Person
holding a Partnership Interest), whether in connection with the execution and
delivery hereof as of the date hereof, pursuant to Section 9.2 or otherwise in
accordance herewith, so long as such Person shall own any Shares or Partnership
Interests.
"Subsidiary" means any entity of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other Persons performing similar functions are at the time directly
or indirectly owned by the Company.
"Termination" means, with respect to any Employee, the termination of
such Employee's employment with the Company or a Subsidiary. Whenever the phrase
"Termination of" an Employee is used in this Agreement, it shall mean an
involuntary Termination by the Company or a Subsidiary. Whenever the phrase
"Termination by" an Employee is used in this Agreement, it shall mean a
voluntary Termination by such Employee. Neither the transfer of employment
between any combination of the Company and its Subsidiaries nor a leave of
absence approved by the Board shall be deemed to be a Termination for purposes
of this Agreement.
"Third Party" means a prospective purchaser of Shares or Partnership
Interests in a bona fide arm's-length transaction from a Shareholder where such
purchaser is not a Permitted Transferee of such Shareholder or any other Person
to whom such Shareholder is permitted under Section 2.3 to so transfer such
securities without compliance with Article 4.
"Transfer by Legal Process" means any transfer of any Shares or
Partnership Interests of a Shareholder pursuant to such Shareholder's Bankruptcy
or pursuant to a levy of execution, foreclosure of pledge, garnishment,
attachment, divorce or separation decree or other legal process (other than a
transfer of Shares or Partnership Interests upon the death or
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adjudication of incompetency of a Shareholder to the legal representative or
beneficiaries of such Shareholder or his or her estate, as the case may be).
"Unrestricted Stock" means any Shares of Common Stock other than
Shares of Restricted Stock.
"▇▇▇▇▇▇ and ▇▇▇▇▇▇" means (i) ▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇") and ▇▇▇▇▇ ▇▇▇▇▇▇
("▇▇▇▇▇▇") together, or (ii) ▇▇▇▇▇▇ alone, in the case of the death, Disability,
Retirement or Termination of ▇▇▇▇▇▇, or (iii) ▇▇▇▇▇▇ alone, in the case of the
death, Disability, Retirement or Termination of ▇▇▇▇▇▇.
"Warrant" means the Warrant of even date herewith to purchase
1,500,000 shares of Class A Common Stock issued by the Company to Melville
pursuant to the Sale Agreement, together with any warrant or warrants issued in
substitution or exchange therefor.
2. RESTRICTIONS ON TRANSFER AND ISSUANCE; LEGENDS; PERMITTED TRANSFEREES.
2.1 General.
(a) Except as otherwise provided in this Agreement, no Shareholder
shall, directly or indirectly, Dispose of any Shares or Partnership Interests.
Notwithstanding any other provision in this Agreement to the contrary, except as
provided in Sections 2.3 and 3.1, no Employee shall, directly or indirectly,
Dispose of any Shares of Common Stock that, at the time of such Disposition, are
considered to be Restricted Stock. Any attempt to Dispose of any Shares or
Partnership Interests not in compliance with this Agreement shall be null and
void and none of the Company, the Limited Partnerships or any transfer agent
shall give any effect in the Company's or the Limited Partnerships' records to
such attempted transfer.
(b) Neither of the Limited Partnerships shall offer or sell or
otherwise issue or grant any general or limited partnership interests in such
Limited Partnership which are not outstanding as of the date of this Agreement
without the approval of at least 80% of all of the directors of the Company then
serving on the Board.
2.2 Legend on Securities.
(a) Each Share and Partnership Interest that is held by any
Shareholder shall bear a legend in substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, OFFERED,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OF THE UNITED STATES AND THE
SECURITIES REGULATORY AUTHORITIES OF APPLICABLE
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STATES OR UNLESS IN THE WRITTEN OPINION OF COUNSEL TO THE HOLDER
REASONABLY ACCEPTABLE TO THE ISSUER THAT IS DELIVERED TO THE ISSUER AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THIS SECURITY IS ALSO
SUBJECT TO AND HAS THE BENEFIT OF A SHAREHOLDER AGREEMENT DATED AS OF
MAY 25, 1996, AS THE SAME MAY BE AMENDED FROM TIME TO TIME IN
ACCORDANCE WITH THE TERMS THEREOF, A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL EXECUTIVE OFFICE OF THE ISSUER."
(b) If any Shares or Partnership Interests cease to be subject to the
restrictions set forth in this Agreement, the Company or the appropriate Limited
Partnership, as the case may be, shall, upon the written request of the holder
thereof, issue to such holder in exchange for such holder's existing certificate
a new certificate evidencing such securities without any legend of the nature of
the second sentence of the legend in Section 2.2(a) endorsed thereon.
2.3 Permitted Transferees. Notwithstanding anything in this
Agreement to the contrary, but subject to the next sentence of this Section 2.3,
(a) any Shareholder may at any time transfer, in compliance with all applicable
Securities Laws, any or all of his, her or its Shares or Partnership Interests
(other than any general Partnership Interest), as the case may be, to one or
more of his, her or its Permitted Transferees, (b) ▇▇▇▇▇▇ and/or ▇▇▇▇▇▇ may at
any time prior to his death, Disability, Retirement or Termination transfer, in
compliance with all applicable Securities Laws, up to an aggregate of 1,000,000
Shares of Common Stock to any Person who at the time of such transfer is an
employee of the Company or any Subsidiary thereof, and (c) each of the Limited
Partnerships may upon its liquidation at any time following completion of a
Public Offering transfer, in compliance with all applicable Securities Laws, all
of its Shares to the holders of its Partnership Interests pro rata in accordance
with the terms of its limited partnership agreement, in each case without the
consent of the Company, either Limited Partnership or any other Shareholder or
group of Shareholders and without compliance with Section 2.1 or Article 4;
provided, however, in any such case, that the Company or the appropriate Limited
Partnership, as the case may be, may request such transferee to provide an
opinion of legal counsel reasonably acceptable to the Company or such Limited
Partnership, as the case may be, to the effect that such transfer is in
compliance with such Securities Laws. Any Person who acquires Shares or
Partnership Interests, as the case may be, pursuant hereto shall comply with the
provisions of Section 9.2.
3. EMPLOYEE STOCK REPURCHASE.
3.1 Restricted Stock Repurchase Event.
(a) Upon the occurrence of a Termination of a Manager without Cause
(a "Without Cause Restricted Stock Event"), (i) ▇▇▇▇▇▇ and ▇▇▇▇▇▇ shall have an
option (subject to Section (c) below) to purchase all or any part of the Shares
of Common Stock held by such Manager and his or her Permitted Transferees (the
"Without Cause Restricted Stock Seller") that, immediately after the occurrence
of such Without Cause Restricted Stock Event, are considered
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to be Restricted Stock at a purchase price equal to the Original Cost of such
Shares; (ii) the Company, to the extent not purchased by ▇▇▇▇▇▇ or ▇▇▇▇▇▇, shall
have an obligation (subject to Section (c) and Section 3.4 below) to purchase
all of the remaining unpurchased Shares of Common Stock held by such Without
Cause Restricted Stock Seller that, immediately after the occurrence of such
Without Cause Restricted Stock Event, are considered to be Restricted Stock at
the same purchase price as offered to ▇▇▇▇▇▇ and ▇▇▇▇▇▇; and (iii) the other
Shareholders, to the extent not purchased by ▇▇▇▇▇▇, ▇▇▇▇▇▇ or the Company,
shall have an option (subject to Section (c) below) to purchase all or any part
of the remaining unpurchased Shares of Common Stock held by such Without Cause
Restricted Stock Seller that, immediately after the occurrence of such Without
Cause Restricted Stock Event, are considered to be Restricted Stock at the same
purchase price as offered to ▇▇▇▇▇▇ and ▇▇▇▇▇▇.
(b) Upon the occurrence of a Termination by ▇▇▇▇▇▇ or ▇▇▇▇▇▇ without
Good Reason or a Termination by a Manager or a Termination of an Employee with
Cause (each a "For Cause Restricted Stock Event" and, together with a Without
Cause Restricted Stock Event, a "Restricted Stock Event"), (i) ▇▇▇▇▇▇ and ▇▇▇▇▇▇
shall have an option (subject to Section (c) below) to purchase all or any part
of the Shares of Common Stock held by such Employee and his or her Permitted
Transferees (a "For Cause Restricted Stock Seller" and, together with a Without
Cause Restricted Stock Seller, a "Restricted Stock Seller") that, immediately
after the occurrence of such For Cause Restricted Stock Event, are considered to
be Restricted Stock at the lesser of the Original Cost of such Shares or the
Fair Market Value of such Shares on the date of such For Cause Restricted Stock
Event; (ii) the Company, to the extent not purchased by ▇▇▇▇▇▇ or ▇▇▇▇▇▇, shall
have an option (subject to Section (c) below) to purchase all or any part of the
remaining unpurchased Shares of Common Stock held by such For Cause Restricted
Stock Seller that, immediately after the occurrence of such For Cause Restricted
Stock Event, are considered to be Restricted Stock at the same purchase price as
offered to ▇▇▇▇▇▇ and ▇▇▇▇▇▇; and (iii) the other Shareholders, to the extent
not purchased by ▇▇▇▇▇▇, ▇▇▇▇▇▇ or the Company, shall have an option (subject to
Section (c) below) to purchase all or any part of the remaining unpurchased
Shares of Common Stock held by such For Cause Restricted Stock Seller that,
immediately after the occurrence of such For Cause Restricted Stock Event, are
considered to be Restricted Stock at the same purchase price as offered to
▇▇▇▇▇▇ and ▇▇▇▇▇▇.
(c) Upon the occurrence of a Restricted Stock Event (or, if later,
upon the determination of both (i) the number of Shares of Common Stock held by
the Restricted Stock Seller that, immediately after the occurrence of such
Restricted Stock Event, are considered to be Restricted Stock and (ii) the Fair
Market Value of such Shares of Common Stock, if required), the Restricted Stock
Seller shall give a written notice (the "Restricted Stock Notice") to ▇▇▇▇▇▇ and
▇▇▇▇▇▇, the Company and the other Shareholders stating (i) that a Restricted
Stock Event has occurred and the date of such event, (ii) the number of Shares
of Common Stock held by the Restricted Stock Seller that, immediately after the
occurrence of such Restricted Stock Event, are considered to be Restricted Stock
and (iii) the Original Cost per share (and the Fair Market Value per share, if
required) of such Shares. The receipt of a Restricted Stock Notice by ▇▇▇▇▇▇ and
▇▇▇▇▇▇, the Company and the other Shareholders shall constitute an offer (the
"Restricted Stock Offer") to sell such Shares of Common Stock pursuant to
Section (a) or (b) above. Such offer shall be irrevocable until the expiration
of the last option period with respect thereto. During the
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first 30-day period after receipt of the Restricted Stock Notice by all parties
entitled thereto, ▇▇▇▇▇▇ and ▇▇▇▇▇▇ shall have the exclusive right to accept the
Restricted Stock Offer by giving written notice to the Restricted Stock Seller,
prior to the expiration of such 30-day period, of the number of Shares of Common
Stock subject thereto which ▇▇▇▇▇▇ and ▇▇▇▇▇▇ shall purchase. During the ten-day
period after completion of the ▇▇▇▇▇▇ and ▇▇▇▇▇▇ 30-day period, to the extent
that ▇▇▇▇▇▇ and ▇▇▇▇▇▇ do not accept the Restricted Stock Offer as to all of the
Shares of Common Stock subject thereto, the Company shall have the obligation
(subject to Section 3.4 below) or the exclusive right, as the case may be, to
accept such offer to acquire the remaining Shares of Common Stock subject
thereto by giving written notice to the Restricted Stock Seller, prior to the
expiration of such ten-day period, of the number of such Shares of Common Stock
which the Company shall purchase. During the ten-day period after completion of
the Company's ten-day period, to the extent that the Company does not accept the
Restricted Stock Offer as to all of the remaining Shares of Common Stock subject
thereto, the other Shareholders shall have the right to accept such offer to
acquire the remaining Shares of Restricted Stock subject thereto by giving
written notice to the Restricted Stock Seller, prior to the expiration of such
ten-day period, of the number of such Shares of Common Stock which such
Shareholders shall purchase. If any Shares of Common Stock subject to the
Restricted Stock Offer are not purchased by Waller, Rogers, the Company or the
other Shareholders, the Restricted Stock Seller may retain such remaining Shares
of Common Stock, subject to the terms of this Agreement (except for Sections 3.1
and 3.2, which shall no longer apply to such Shares) and the terms of the
Restricted Stock Agreement.
(d) Waller, Rogers, the Company and/or the other Shareholders, as the
case may be, shall purchase all Shares of Common Stock with respect to which the
Restricted Stock Offer has been accepted as set forth in Section 8.1. A
Restricted Stock Offer Notice shall be deemed to constitute a representation and
warranty by the Restricted Stock Seller that (i) such Seller has good title to
such Shares of Common Stock free of any Liens and (ii) has full power and
authority to make such offer and consummate such sale.
(e) Notwithstanding anything stated herein to the contrary, (i) no
Shareholder or the Company may exercise any option otherwise available to it
under this Section 3.1 unless it purchases the same percentage of Shares of
Common Stock held by the Restricted Stock Seller with respect to which a
purchase option is then available to such Shareholder or the Company under
Section 3.2, and (ii) any Forfeited Restricted Shares (as such term is defined
in the Restricted Stock Agreement) shall be purchased pursuant to paragraph 4 of
the Restricted Stock Agreement (and shall not be subject to any purchase option
or obligation under this Section 3.1).
3.2 Unrestricted Stock Repurchase Event.
(a) Upon the occurrence of a Repurchase Event, (i) ▇▇▇▇▇▇ and ▇▇▇▇▇▇
shall have an option (subject to Section (b) below) to purchase all or any part
of the Shares of Common Stock held by the Employee to whom such Repurchase Event
has occurred (or the legal representative or beneficiaries of such Employee or
his or her estate, as the case may be) and his or her Permitted Transferees (the
"Repurchase Seller") that, immediately after the occurrence of such Repurchase
Event, are considered to be Unrestricted Stock at a purchase price equal to the
-▇▇-
▇▇▇▇ ▇▇▇▇▇▇ Value of such Shares on the date of such Repurchase Event; (ii) the
Company, to the extent not purchased by ▇▇▇▇▇▇ or ▇▇▇▇▇▇, shall have an
obligation (subject to Section (b) and Sections 3.4 and 12.10 below) to purchase
all of the remaining unpurchased Shares of Common Stock held by such Repurchase
Seller that, immediately after the occurrence of such Repurchase Event, are
considered to be Unrestricted Stock at the same purchase price as offered to
▇▇▇▇▇▇ and ▇▇▇▇▇▇; and (iii) the other Shareholders, to the extent not purchased
by ▇▇▇▇▇▇, ▇▇▇▇▇▇ or the Company, shall have an option (subject to Section (b)
below) to purchase all or any part of the remaining unpurchased Shares of Common
Stock held by such Repurchase Seller that, immediately after the occurrence of
such Repurchase Event, are considered to be Unrestricted Stock at the same
purchase price as offered to ▇▇▇▇▇▇ and ▇▇▇▇▇▇; provided, however, that if the
Repurchase Event occurs as a result of the Termination by a Manager on or prior
to the fifth anniversary of the date hereof, or a Termination by ▇▇▇▇▇▇ or
▇▇▇▇▇▇ without Good Reason on or prior to the fifth anniversary of the date
hereof, or a Termination of an Employee with Cause, the purchase price of such
Shares of Common Stock shall be the lesser of the Original Cost of such Shares
or the Fair Market Value of such Shares on the date of such Repurchase Event,
and the Company's obligation to purchase shall become an option to purchase.
(b) Upon the occurrence of a Repurchase Event (or, if later, upon the
determination of (i) the number of Shares of Common Stock held by the Repurchase
Seller that, immediately after the occurrence of such Repurchase Event, are
considered to be Unrestricted Stock and (ii) the Fair Market Value of such
Shares of Common Stock), the Repurchase Seller shall give a written notice (the
"Repurchase Notice") to ▇▇▇▇▇▇ and ▇▇▇▇▇▇, the Company and the other
Shareholders stating (i) that a Repurchase Event has occurred and the date of
such event, (ii) the number of Shares of Common Stock held by the Repurchase
Seller that, immediately after the occurrence of such Repurchase Event, are
considered to be Unrestricted Stock and (iii) the Fair Market Value per share
(and the Original Cost per share, if required) of such Shares. The receipt of a
Repurchase Notice by ▇▇▇▇▇▇ and ▇▇▇▇▇▇, the Company and the other Shareholders
shall constitute an offer (the "Repurchase Offer") to sell such Shares of Common
Stock pursuant to Section (a) above. Such offer shall be irrevocable until the
expiration of the last option period with respect thereto. During the first 30-
day period after receipt of the Repurchase Notice by all parties entitled
thereto, ▇▇▇▇▇▇ and ▇▇▇▇▇▇ shall have the exclusive right to accept the
Repurchase Offer by giving written notice to the Repurchase Seller, prior to the
expiration of such 30-day period, of the number of Shares of Common Stock
subject thereto which ▇▇▇▇▇▇ and ▇▇▇▇▇▇ shall purchase. During the ten-day
period after completion of the ▇▇▇▇▇▇ and ▇▇▇▇▇▇ 30-day period, to the extent
that ▇▇▇▇▇▇ and ▇▇▇▇▇▇ do not accept the Restricted Stock Offer as to all of the
Shares of Common Stock subject thereto, the Company shall have the obligation
(subject to Section 3.4 below) or the exclusive right, as the case may be, to
accept such offer to acquire the remaining Shares of Common Stock subject
thereto by giving written notice to the Repurchase Seller, prior to the
expiration of such ten-day period, of the number of such Shares of Common Stock
which the Company shall purchase. During the ten-day period after completion of
the Company's ten-day period, to the extent that the Company does not accept the
Repurchase Offer as to all of the remaining Shares of Common Stock subject
thereto, the other Shareholders shall have the right to accept such offer to
acquire the remaining Shares of Common Stock subject thereto by giving written
notice to the Repurchase Seller, prior to the expiration of such ten-day period,
of the number of such Shares of Common Stock which such Shareholders shall
purchase. If any
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Shares of Common Stock subject to the Repurchase Offer are not purchased by
Waller, Rogers, the Company or the other Shareholders, the Repurchase Seller may
retain such remaining Shares of Common Stock, subject to the terms of this
Agreement (except for Sections 3.1 and 3.2, which no longer apply to such
Shares).
(c) Waller, Rogers, the Company and/or the other Shareholders, as the
case may be, shall purchase all Shares of Common Stock with respect to which the
Repurchase Offer has been accepted as set forth in Section 8.1. A Repurchase
Offer Notice shall be deemed to constitute a representation and warranty by the
Repurchase Seller that (i) such Seller has good title to such Shares of Common
Stock free of any Liens and (ii) has full power and authority to make such offer
and consummate such sale.
(d) Notwithstanding anything stated herein to the contrary, no
Shareholder or the Company may exercise any option otherwise available to it
under this Section 3.2 unless it purchases the same percentage of Shares of
Common Stock held by the Repurchase Seller with respect to which a purchase
option is then available to such Shareholder or the Company under Section 3.1.
3.3 ▇▇▇▇▇▇ or ▇▇▇▇▇▇ Repurchase Event.
(a) For 30 days after the determination of Fair Market Value
following the occurrence of an Event, the Employee to which such Event has
occurred and/or his Permitted Transferees and/or the legal representative or
beneficiaries of such Employee or his estate (the "▇▇▇▇▇▇ or ▇▇▇▇▇▇ Seller")
shall have an option to offer to sell all or any part of the Shares of Common
Stock held by the ▇▇▇▇▇▇ or ▇▇▇▇▇▇ Seller as set forth in this Section 3.3 (the
"Put Option"), but unless such Put Option is exercised, the ▇▇▇▇▇▇ or ▇▇▇▇▇▇
Seller shall not be obligated under this Agreement to sell Shares of Common
Stock after an Event. Subject to Section (b) below, (i) ▇▇▇▇▇▇ or ▇▇▇▇▇▇ (not
including the ▇▇▇▇▇▇ or ▇▇▇▇▇▇ Seller) shall have an option to purchase all or
any part of the Shares of Common Stock subject to the Put Option at a purchase
price equal to the Fair Market Value of such Shares on the date of such Event;
(ii) the Company, to the extent not purchased by ▇▇▇▇▇▇ or ▇▇▇▇▇▇, shall have an
obligation (subject to Section 3.4 and 12.10 below) to purchase all of the
remaining unpurchased Shares of Common Stock subject to the Put Option at the
same purchase price as offered to ▇▇▇▇▇▇ or ▇▇▇▇▇▇; and (iii) the other
Shareholders, to the extent not purchased by ▇▇▇▇▇▇, ▇▇▇▇▇▇ or the Company,
shall have an option to purchase all or any part of the remaining unpurchased
Shares of Common Stock subject to the Put Option at the same purchase price as
offered to ▇▇▇▇▇▇ or ▇▇▇▇▇▇.
(b) The ▇▇▇▇▇▇ or ▇▇▇▇▇▇ Seller shall, to the extent such ▇▇▇▇▇▇ or
▇▇▇▇▇▇ Seller is exercising the Put Option, give a written notice (the "Put
Notice") to ▇▇▇▇▇▇ or ▇▇▇▇▇▇ (not including the ▇▇▇▇▇▇ or ▇▇▇▇▇▇ Seller), the
Company and the other Shareholders stating (i) that an Event has occurred and
the date of such event, (ii) the number of Shares of Common Stock held by the
▇▇▇▇▇▇ or ▇▇▇▇▇▇ Seller available for purchase pursuant to the Put Option and
(iii) the Fair Market Value per share of such Shares of Common Stock. The
receipt of a Put Notice by ▇▇▇▇▇▇ or ▇▇▇▇▇▇, the Company and the other
Shareholders shall constitute an offer (the "Put Offer") to sell such Shares of
Common Stock pursuant to Section (a) above. Such offer
-14-
shall be irrevocable until the expiration of the last option period with respect
thereto. During the first 30-day period after receipt of the Put Notice by all
parties entitled thereto, ▇▇▇▇▇▇ or ▇▇▇▇▇▇ (not including the ▇▇▇▇▇▇ or ▇▇▇▇▇▇
Seller) shall have the exclusive right to accept the Put Offer by giving written
notice to the ▇▇▇▇▇▇ or ▇▇▇▇▇▇ Seller, prior to the expiration of such 30-day
period, of the number of Shares of Common Stock subject thereto which ▇▇▇▇▇▇ or
▇▇▇▇▇▇ shall purchase. During the ten-day period after completion of the ▇▇▇▇▇▇
or ▇▇▇▇▇▇ 30-day period, to the extent that ▇▇▇▇▇▇ or ▇▇▇▇▇▇ does not accept the
Put Offer as to all of the Shares of Common Stock subject thereto, the Company
shall have the obligation (subject to Section 3.4 below) or the exclusive right,
as the case may be, to accept such offer to acquire the remaining Shares of
Common Stock subject thereto by giving written notice to the ▇▇▇▇▇▇ or ▇▇▇▇▇▇
Seller, prior to the expiration of such ten-day period, of the number of such
Shares of Common Stock which the Company shall purchase. During the ten-day
period after completion of the Company's ten-day period, to the extent that the
Company does not accept the Put Offer as to all of the remaining Shares of
Common Stock subject thereto, the other Shareholders shall have the right to
accept such offer to acquire the remaining Shares of Common Stock subject
thereto by giving written notice to the ▇▇▇▇▇▇ or ▇▇▇▇▇▇ Seller, prior to the
expiration of such ten-day period, of the number of such Shares of Common Stock
which such Shareholders shall purchase.
(c) ▇▇▇▇▇▇ or ▇▇▇▇▇▇ (not including the ▇▇▇▇▇▇ or ▇▇▇▇▇▇ Seller), the
Company and/or the other Shareholders, as the case may be, shall purchase all
Shares of Common Stock with respect to which the Put Offer has been accepted as
set forth in Section 8.1. A Put Offer Notice shall be deemed to constitute a
representation and warranty by the ▇▇▇▇▇▇ or ▇▇▇▇▇▇ Seller that (i) such Seller
has good title to such Shares of Common Stock free of any Liens and (ii) has
full power and authority to make such offer and consummate such sale.
3.4 Legal Inability to Purchase. If the Company has an obligation
under this Section 3 to purchase any Shares owned by a Seller, but is legally
prohibited from purchasing all of such Shares, the Company shall purchase the
number of such Shares, if any, that it may legally purchase, and shall inform
each other Shareholder in writing by the end of the Company's ten-day period of
its legal inability to purchase the remainder of such Shares. The Shares of the
Seller so purchased by the Company shall be allocated proportionately among such
Seller's Restricted and Unrestricted Stock.
4. RIGHT OF FIRST REFUSAL; TRANSFERS BY LEGAL PROCESS; CO-SALE RIGHTS.
4.1 Right of First Refusal.
(a) Subject to Section (e) below, if any Shareholder (a "Section 4.1
Seller") desires to Dispose of any Shares or Partnership Interests to a Third
Party, (i) ▇▇▇▇▇▇ (unless he is the Section 4.1 Seller) and ▇▇▇▇▇▇ (unless he is
the Section 4.1 Seller) shall have an option (subject to Section (b) below) to
purchase all or any part of the Shares or Partnership Interests, as the case may
be, subject to such Disposition at, if the desired Disposition is for value, the
Third Party Price (as hereinafter defined) of such Shares or Partnership
Interests or, if the desired Disposition is other than for value, the Original
Cost of such Shares or Partnership Interests; (ii) if
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the Section 4.1 Seller is ▇▇▇▇▇▇ or ▇▇▇▇▇▇, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇, to the extent
not purchased by ▇▇▇▇▇▇ or ▇▇▇▇▇▇, shall have an option (subject to Section (b)
below) to purchase all or any part of the remaining unpurchased Shares or
Partnership Interests, as the case may be, subject to such Disposition at the
same purchase price offered to ▇▇▇▇▇▇ or ▇▇▇▇▇▇; (iii) the Company, to the
extent not purchased by ▇▇▇▇▇▇, ▇▇▇▇▇▇ or, if applicable pursuant to clause (ii)
hereof, ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇, shall have an option (subject to Section (b) below)
to purchase all or any part of the remaining unpurchased Shares or Partnership
Interests, as the case may be, subject to such Disposition at the same purchase
price as offered to ▇▇▇▇▇▇ and ▇▇▇▇▇▇; and (iv) the other Shareholders
(including ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇, if the Section 4.1 Seller is other than ▇▇▇▇▇▇
or ▇▇▇▇▇▇), to the extent not purchased by Waller, Rogers, the Company or, if
applicable pursuant to clause (ii) hereof, ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇, shall have an
option (subject to Section (b) below) to purchase all or any part of the
remaining unpurchased Shares or Partnership Interests, as the case may be,
subject to such Disposition at the same purchase price as offered to ▇▇▇▇▇▇ and
▇▇▇▇▇▇. "Third Party Price" of any Shares or Partnership Interests means the
price per share (or, if the consideration to be paid in the desired Disposition
is other than cash, the fair market value per share of the non-cash
consideration) that the Third Party has offered in writing to pay for such
Shares or Partnership Interests. In the case of any proposed pledge or
encumbrance of Shares or Partnership Interests, "Third Party Price" means the
fair market value per share of the cash or other property to be received upon
the security of such Shares or Partnership Interests.
(b) The Section 4.1 Seller shall give written notice (a "Section 4.1
Offer Notice") to Waller, Rogers, Berman, Goldfarb, the Company and the other
Shareholders stating (i) that such Section 4.1 Seller desires to effect such a
Disposition, (ii) the number of Shares or Partnership Interests, as the case may
be, proposed to be Disposed of and the identity of the Third Party offering to
acquire such Shares or Partnership Interests, (iii) the Original Cost per share
of such Shares or Partnership Interests, as the case may be, if applicable, (iv)
the Third Party Price per share for such Shares or Partnership Interests, as the
case may be, if applicable, and (v) the other material terms and conditions of
such Disposition. The receipt of a Section 4.1 Offer Notice by Waller, Rogers,
Berman, Goldfarb, the Company and such other Shareholders from any Section 4.1
Seller shall constitute an offer (the "Section 4.1 Offer") by such Section 4.1
Seller to sell such Shares or Partnership Interests, as the case may be,
pursuant to Section (a) above. Such offer shall be irrevocable until the
expiration of the last option period with respect thereto. During the first 30-
day period after receipt of the Section 4.1 Offer Notice by all parties entitled
thereto, ▇▇▇▇▇▇ (unless he is the Section 4.1 Seller) and ▇▇▇▇▇▇ (unless he is
the Section 4.1 Seller) shall have the exclusive right to accept the Section 4.1
Offer by giving written notice to such Section 4.1 Seller, prior to the
expiration of such 30-day period, of the number of Shares or Partnership
Interests, as the case may be, subject thereto which ▇▇▇▇▇▇ and ▇▇▇▇▇▇ shall
purchase. If the Section 4.1 Seller is ▇▇▇▇▇▇ or ▇▇▇▇▇▇, during the ten-day
period after completion of the ▇▇▇▇▇▇ and ▇▇▇▇▇▇ 30-day period, to the extent
that ▇▇▇▇▇▇ or ▇▇▇▇▇▇ does not accept the Section 4.1 Offer as to all of the
Shares or Partnership Interests, as the case may be, subject thereto, ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇ shall have the exclusive right to accept such offer as to the remaining
Shares or Partnership Interests, as the case may be, subject thereto by giving
written notice to such Section 4.1 Seller, prior to the expiration of such ten-
day period, of the number of such Shares or Partnership Interests, as the case
may be, which ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ shall purchase. During the ten-day period
after completion of the ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ten-day
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period, if the Section 4.1 Seller is ▇▇▇▇▇▇ or ▇▇▇▇▇▇, otherwise during the ten-
day period after completion of the ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ten-day period, to the
extent that ▇▇▇▇▇▇ and ▇▇▇▇▇▇ and/or ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇, as the case may be, do
not accept the Section 4.1 Offer as to all of the Shares or Partnership
Interests, as the case may be, subject thereto, the Company shall have the
exclusive right to accept such offer as to the remaining Shares or Partnership
Interests, as the case may be, subject thereto by giving written notice to such
Section 4.1 Seller, prior to the expiration of such ten-day period, of the
number of such Shares or Partnership Interests, as the case may be, which the
Company shall purchase. During the ten-day period after completion of the
Company's ten-day period, to the extent that the Company has not accepted the
Section 4.1 Offer as to all of the remaining Shares or Partnership Interests, as
the case may be, subject thereto, the other Shareholders (including ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇, if the Section 4.1 Seller is other than ▇▇▇▇▇▇ or ▇▇▇▇▇▇) shall have
the right to accept such offer as to the remaining Shares or Partnership
Interests, as the case may be, subject thereto by giving written notice to such
Section 4.1 Seller, prior to the expiration of such ten-day period, of the
number of such Shares or Partnership Interests, as the case may be, which the
other Shareholders shall purchase.
(c) Waller, Rogers, Berman, Goldfarb, the Company and/or the other
Shareholders, as the case may be, shall purchase all Shares or Partnership
Interests, as the case may be, with respect to which the Section 4.1 Offer has
been accepted as set forth in Section 8.1. A Section 4.1 Offer Notice shall be
deemed to constitute a representation and warranty by the Section 4.1 Seller
that (i) such Seller has good title to such Shares or Partnership Interests, as
the case may be, free of any Liens and (ii) has full power and authority to make
such offer and consummate such sale.
(d) Upon the failure to accept the Section 4.1 Offer with respect to
all of the Share or Partnership Interests, as the case may be, subject thereto
within the option periods referred to above there shall commence upon the
expiration of the last such option period a 90-day period during which the
Section 4.1 Seller shall have the right to effect a Disposition to the Third
Party named in the Section 4.1 Offer Notice of all of the remaining Shares or
Partnership Interests, as the case may be, subject to the 4.1 Offer on
substantially the same terms and conditions as were set forth in the Section 4.1
Offer Notice and, if applicable, at a price not less than the Third Party Price;
provided, however, that (i) such Third Party shall have complied with Section
9.2 hereof and (ii) the Company, in the case of a Disposition of Shares, or the
applicable Limited Partnership, in the case of a Disposition of Partnership
Interests, shall have received an opinion of legal counsel reasonably acceptable
to it to the effect that the Disposition to such Third Party is not in violation
of the Securities Laws. If such Section 4.1 Seller does not consummate the sale
of the Shares or Partnership Interests, as the case may be, subject to the
Section 4.1 Offer in accordance with the foregoing limitations, such Shareholder
may not sell such Shares or Partnership Interests without repeating the
foregoing procedures.
(e) Notwithstanding anything in this Agreement to the contrary, the
provisions of this Section 4.1 will not be applicable to Dispositions made
pursuant to and in compliance with Article 3 of this Agreement or pursuant to
the exercise of any right of co-sale granted under Section 4.3 of this
Agreement.
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(f) Notwithstanding anything in this Section 4.1 to the contrary, if
Melville shall at any time become subject to this Agreement and thereafter
desire to Dispose of any Shares or Partnership Interests to a Third Party, the
order of priority of the options granted under this Section 4.1 to purchase all
of any part of the Shares or Partnership Interests, as the case may be, subject
to such Disposition shall change, such that (i) the Company (rather than ▇▇▇▇▇▇
and ▇▇▇▇▇▇) shall have the first such option, (ii) ▇▇▇▇▇▇ and ▇▇▇▇▇▇ (rather
than the Company) shall have the second such option, and (iii) the other
Shareholders shall continue to have the third such option; and all provisions of
this Section 4.1 shall be enforced and applied with such adjustments therein as
may be reasonable in light of such change.
4.2 Transfers by Legal Process.
(a) Upon any Transfer by Legal Process of any Shares or Partnership
Interests of a Shareholder, (i) ▇▇▇▇▇▇ (unless he was the transferor) and ▇▇▇▇▇▇
(unless he was the transferor) shall have an option (subject to Section (b)
below) to purchase all or any part of the Shares or Partnership Interests, as
the case may be, acquired pursuant to such Transfer by Legal Process at the
lesser of the Original Cost of such Shares or Partnership Interests or the fair
market value per share of the consideration, if any, paid for such Shares or
Partnership Interests by the transferee or successor in title thereto in such
Transfer by Legal Process; (ii) the Company, to the extent not purchased by
▇▇▇▇▇▇ or ▇▇▇▇▇▇, shall have an option (subject to Section (b) below) to
purchase all or any part of the remaining unpurchased Shares or Partnership
Interests, as the case may be, acquired pursuant to such Transfer by Legal
Process at the same purchase price as offered to ▇▇▇▇▇▇ and ▇▇▇▇▇▇; and (iii)
the other Shareholders, to the extent not purchased by ▇▇▇▇▇▇, ▇▇▇▇▇▇ or the
Company, shall have an option (subject to Section (b) below) to purchase all or
any part of the remaining unpurchased Shares or Partnership Interests, as the
case may be, acquired pursuant to such Transfer by Legal Process at the same
purchase price as offered to ▇▇▇▇▇▇ and ▇▇▇▇▇▇.
(b) The transferee or successor in title to the Shares or Partnership
Interests, as the case may be, subject to such Transfer by Legal Process (a
"Section 4.2 Seller") shall give written notice (a "Section 4.2 Offer Notice")
to Waller, Rogers, the Company and the other Shareholders stating (i) that such
Transfer by Legal Process has occurred, (ii) the number of Shares or Partnership
Interests, as the case may be, acquired pursuant to such Transfer by Legal
Process, (iii) the Original Cost per share of such Shares or Partnership
Interests, as the case may be, and (iv) the fair market value per share of the
consideration, if any, paid for such Shares or Partnership Interests by the
Section 4.2 Seller in such Transfer by Legal Process and the other material
terms and condition upon which such Shares or Partnership Interests, as the case
may be, were acquired by the Section 4.2 Seller pursuant to such Transfer by
Legal Process. The receipt of a Section 4.2 Offer Notice by Waller, Rogers, the
Company and such other Shareholders from any Section 4.2 Seller shall constitute
an offer (the "Section 4.2 Offer") by such Section 4.2 Seller to sell such
Shares or Partnership Interests, as the case may be, pursuant to Section (a)
above. Such offer shall be irrevocable until the expiration of the last option
period with respect thereto. During the first 30-day period after receipt of the
Section 4.2 Offer Notice by all parties entitled thereto, ▇▇▇▇▇▇ (unless he was
the transferor) and ▇▇▇▇▇▇ (unless he was the transferor) shall have the
exclusive right to accept the Section 4.2 Offer by giving written notice to the
Section 4.2
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Seller, prior to the expiration of such 30-day period, of the number of Shares
or Partnership Interests, as the case may be, subject thereto which ▇▇▇▇▇▇ and
▇▇▇▇▇▇ shall purchase. During the ten-day period after completion of the ▇▇▇▇▇▇
and ▇▇▇▇▇▇ 30-day period, to the extent ▇▇▇▇▇▇ and ▇▇▇▇▇▇ do not accept the
Section 4.2 Offer as to all of the Shares or Partnership Interests, as the case
may be, subject thereto, the Company shall have the exclusive right to accept
such offer to acquire the remaining Shares or Partnership Interests, as the case
may be, subject thereto by giving written notice to the Section 4.2 Seller,
prior to the expiration of such ten-day period, of the number of such Shares or
Partnership Interests, as the case may be, which the Company shall purchase.
During the ten-day period after completion of the Company's ten-day period, to
the extent that the Company does not accept the Section 4.2 Offer as to all of
the remaining Shares or Partnership Interests, as the case may be, subject
thereto, the other Shareholders shall have the right to accept such offer to
acquire the remaining Shares or Partnership Interests, as the case may be,
subject thereto by giving written notice to the Section 4.2 Seller, prior to the
expiration of such ten-day period, of the number of such Shares or Partnership
Interests, as the case may be, which such Shareholders shall purchase. If any
Shares or Partnership Interests, as the case may be, subject to the Section 4.2
Offer are not purchased by Waller, Rogers, the Company or the other
Shareholders, the Section 4.2 Seller may retain such remaining Shares or
Partnership Interests, subject to the terms of this Agreement.
(c) Waller, Rogers, the Company and/or the other Shareholders, as the
case may be, shall purchase all Shares or Partnership Interests, as the case may
be, with respect to which the Section 4.2 Offer has been accepted as set forth
in Section 8.1. A Section 4.2 Offer Notice shall be deemed to constitute a
representation and warranty by the Section 4.2 Seller that (i) such Seller has
good title to such Shares or Partnership Interests, as the case may be, free of
any Liens and (ii) has full power and authority to make such offer and
consummate such sale.
4.3 Co-Sale Rights.
(a) In addition to any incidental rights of co-sale which the
Shareholders might have in connection with "piggy-back" registration rights
granted by the Registration Rights Agreement dated as of the date hereof among
the Company, certain of the other parties hereto and Melville, each of the
Shareholders agrees not to sell for value any Shares of Common Stock owned by
such Shareholder (other than a sale (i) made pursuant to and in compliance with
Article 3 of this Agreement, (ii) in a Public Offering, (iii) in the case of
▇▇▇▇▇▇, ▇▇▇▇▇▇ or the Investors, or Permitted Transferees of ▇▇▇▇▇▇, ▇▇▇▇▇▇ or
the Investors, in an Open Market Transaction or (iv) to Permitted Transferees of
such Shareholder or to any other Person to whom such Shareholder is permitted
under Section 2.3 to so transfer such Shares without compliance with Article 4)
without permitting each other Shareholder holding Shares of Common Stock that,
upon consummation of such sale, would be considered to be Unrestricted Stock to
participate as a seller in such transaction such that each such Shareholder
exercising a right of co-sale hereunder shall be entitled to sell, in connection
with such transaction, a percentage of the total number of Shares of Common
Stock which the purchaser is willing to acquire in such transaction equal to
such Shareholder's percentage ownership of all of the outstanding Shares of
Common Stock owned by the Shareholder proposing the sale and the Shareholders
exercising rights of co-sale
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under this Agreement that, upon consummation of such sale, would be considered
to be Unrestricted Stock.
(b) Before accomplishing or entering into a binding contract for any
sale for value of Shares of Common Stock that would be covered by the rights of
co-sale granted by Section (a) above, each Shareholder agrees to give each other
Shareholder holding Shares of Common Stock that, upon consummation of such sale,
would be considered to be Unrestricted Stock prompt written notice of any such
proposed sale (a "Sale Proposal"), stating the material terms and conditions of
the Sale Proposal. Such other Shareholders each agree to notify the Shareholder
giving such written notice (the "Proposing Party") within 20 Business Days after
receipt of such notice as to whether they wish to exercise their rights of co-
sale and participate in the Sale Proposal, and thereafter all negotiations
leading to the consummation of the Sale Proposal shall be conducted under the
collective control of the Proposing Party and those other Shareholders
exercising their rights of co-sale hereunder, provided that nothing herein
stated shall preclude the Proposing Party from selling such party's Shares of
Common Stock following the exercise of co-sale rights by one or more other
Shareholders if the Proposing Party sells such party's Shares of Common Stock on
finally negotiated terms and conditions which are unacceptable to such other
Shareholders following such negotiations. Failure by a Shareholder to respond
within such 20-Business Day period shall be deemed to be a declination of such
Shareholder's right of co-sale with respect to such Sale Proposal, provided that
(i) such Sale Proposal is fully consummated within 90 days after the expiration
of such 20-Business Day period and (ii) the terms of the actual transaction are
in all material respects the same as those set forth in the notice given by the
Proposing Party to the other Shareholders hereunder. Failure to meet either of
the foregoing conditions shall again subject the Shares of Common Stock covered
by the Sale Proposal to the other Shareholders' rights of co-sale.
5. DETERMINATION OF FAIR MARKET VALUE.
5.1 General. The Fair Market Value of any Shares of Common Stock
purchased under this Agreement shall be (a) prior to the completion of an
initial Public Offering, determined in accordance with Section 5.2 below, and
(b) after the completion of an initial Public Offering, determined in accordance
with Section 5.3 below.
5.2 Appraisal. In the event that any option or obligation to
purchase Shares of Common Stock arises under this Agreement, the Seller and the
Company shall attempt in good faith for at least 15 days after the first attempt
by either such party to agree upon the Fair Market Value per share of such
Shares of Common Stock. At any time after the expiration of such 15-day period,
either the Seller or the Company may make a written demand, delivered or sent to
the other such party, that an appraisal be conducted to determine the Fair
Market Value per share of such Shares of Common Stock, in which case such Fair
Market Value shall be determined by an appraiser selected by the mutual
agreement of the Company and the Seller. If such parties cannot reach mutual
agreement on a single appraiser within 15 days after a demand for an appraisal
has been made, each such party shall select an appraiser that is a nationally or
regionally recognized investment banking firm, and the appraisers so selected
shall select an independent appraiser that is not related to and does not have
any material business relationship with the
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Company, the Seller or any other Shareholder and is a nationally or regionally
recognized investment banking firm, in which case the applicable Fair Market
Value shall be the appraised fair market value which is determined by such
independent appraiser. Any appraisal shall reflect the value of the Company on a
going concern basis (so long as the Company is not insolvent and is otherwise a
"going concern" as defined by generally accepted accounting principles), without
regard to minority shareholder discounts or key man life or disability insurance
benefiting the Company and, in the case of Shares of Common Stock that are at
the relevant time considered to be Restricted Stock, without regard to the fact
that the same had not yet vested at such time pursuant to the terms of the
Restricted Stock Agreement, but shall take into consideration earnings and any
other general or specific economic indicators and circumstances deemed by the
appraiser to be relevant and appropriate. The fees and expenses of appraisal
shall be borne by the Company.
5.3 Fair Market Value After an Initial Public Offering. Upon
completion of an initial Public Offering, the Fair Market Value per share of any
Shares of Common Stock subject to any purchase option or obligation shall equal:
(a) the closing price of a Share of Common Stock on the date of the
event giving rise to a need to calculate Fair Market Value or, if no sale of
Shares of Common Stock shall have occurred on that date, on the next preceding
day on which a sale of Shares of Common Stock occurs:
(i) on the composite tape for New York Stock Exchange listed
shares; or
(ii) if Shares of Common Stock are not quoted on the composite
tape for New York Stock Exchange listed shares, on the principal United States
Securities Exchange registered under the 1934 Act on which Shares of Common
Stock are listed; or
(iii) if Shares of Common Stock are not listed on any such
exchange, on the Nasdaq National Market; or
(b) if clause (a) is inapplicable, the mean between the closing "bid"
and the closing "asked" quotation of a Share of Common Stock on the date of the
event giving rise to a need to calculate Fair Market Value or, if no closing bid
or asked quotation is made on that date, on the next preceding day on which a
quotation is made, on the Nasdaq SmallCap Market or any system then in use.
6. PREEMPTIVE RIGHTS.
6.1 General Rights. Except as provided below, prior to the
completion of an initial Public Offering (a) the Company shall not issue any
shares of Common Stock (or any options, warrants or other rights to purchase or
subscribe for shares of Common Stock or securities convertible into shares of
Common Stock) unless each Shareholder who holds Shares of Common Stock is
offered the right to purchase, at the same price and on the same terms proposed
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to be issued and sold, such amount of such shares of Common Stock (the "Common
Stock Maintenance Securities") as is necessary for such Shareholder to maintain
its Percentage Ownership (as hereinafter defined) of Common Stock as it existed
immediately prior to such issuance (the "Common Stock Preemptive Rights"), and
(b) the Company shall not issue any shares of Preferred Stock (or any options,
warrants or other rights to purchase or subscribe for shares of Preferred Stock
or securities convertible into shares of Preferred Stock) unless each
Shareholder that holds Shares of Preferred Stock is offered the right to
purchase, at the same price and on the same terms proposed to be issued and
sold, such amount of such shares of Preferred Stock (the "Preferred Stock
Maintenance Securities" and together with the Common Stock Maintenance
Securities, the "Maintenance Securities") as is necessary for such Shareholder
to maintain its Percentage Ownership of Shares of Preferred Stock as it existed
immediately prior to such issuance (the "Preferred Stock Preemptive Rights" and,
together with the Common Stock Preemptive Rights, the "Preemptive Rights"). Such
offer shall be made by written notice given to each Shareholder entitled to
receive such offer and shall specify therein the number of shares of Common
Stock or Preferred Stock, as the case may be, being offered, and the purchase
price and other material terms and conditions of such offer. Each Shareholder
shall have the right, during the period specified in Section 6.2, to accept the
offer for any or all of such Shareholder's Maintenance Securities.
6.2 Waiver. Any Shareholder who does not deliver to the Company
written notice of acceptance of any offer made pursuant to Section 6.1 within 20
Business Days after such offer has been made (a "Waiving Shareholder") shall be
deemed to have waived such Shareholder's right to purchase all or any part of
his, her or its Maintenance Securities (including, if the Maintenance Securities
include options, warrants or other rights to acquire other securities, or
securities convertible into other securities, such other securities), but only
if such Maintenance Securities are issued by the Company to others within 90
days after the expiration of such 20-Business Day period on terms and conditions
which are in all material respects the same as those set forth in the offer to
such Waiving Shareholder. If any Shareholder becomes a Waiving Shareholder with
respect to a particular offering, such Shareholder shall still be entitled to
his, hers or its preemptive rights under Section 6.1 with respect to future
offerings.
6.3 Classes of Common Stock. If a Shareholder accepts in accordance
with this Article 6 an offer for any or all of his, her or its Common Stock
Maintenance Securities, such securities shall be issued by the Company to such
Shareholder as shares of the same class or classes as the Shares of Common Stock
held by such Shareholder immediately prior to such issuance (allocated among
such classes, if more than one, in proportion to the total number of such Shares
in each such class).
6.4 Limitations. The Preemptive Rights set forth above shall not
apply to (i) the grant of options to purchase Common Stock or the issuance of
Common Stock to, or the exercise of options to purchase Common Stock by, any
employees of the Company or any of its Subsidiaries, (ii) the exercise of the
Warrant or the Management Warrant by Melville, (iii) the conversion of Shares of
Common Stock of any class into Shares of Common Stock of another class or Shares
of Common Stock without class designation pursuant to the articles of
incorporation of the Company, (iv) the issuance of securities upon the exercise
of rights to
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purchase securities of the Company or the conversion of securities of the
Company as set forth in (i), (ii) or (iii) above, (v) the issuance of securities
pursuant to any stock split, stock dividend or other similar stock
recapitalization, (vi) the issuance of Common Stock pursuant to an initial
Public Offering, (vii) the issuance of securities pursuant to a plan of merger,
reorganization or exchange or in consideration for the acquisition of another
company or (viii) the issuance of securities for consideration other than money.
6.5 Percentage Ownership. As used herein, the term "Percentage
Ownership" means, with respect to any Shareholder, the quotient of the number of
Shares of Common Stock or Preferred Stock, as the case may be, that such
Shareholder owns immediately prior to the proposed issuance, divided by the
total number of Shares of Common Stock or Preferred Stock, as the case may be,
outstanding immediately prior to the proposed issuance.
7. PAYMENT.
7.1 Manner of Purchase by the Company and the Shareholders. The
entire purchase price payable by the Company and the Shareholders for any Shares
or Partnership Interests purchased by them under this Agreement shall be payable
in cash on the date of closing provided in Section 8.1.
7.2 Alternative Manner of Purchase for Shares or Partnership
Interests Subject to a Proposed Disposition or Transfer by Legal Process.
Notwithstanding anything to the contrary in Section 7.1, (a) any Shares or
Partnership Interests subject to an option arising in connection with a proposed
Disposition for value may, at the discretion of the holder of such option, be
purchased upon either the terms set forth in Section 7.1 or the terms, as to
manner of purchase, of the proposed Disposition, and (b) any Shares or
Partnership Interests subject to an option arising in connection with a Transfer
by Legal Process for value may, at the discretion of the holder of such option,
be purchased upon either the terms set forth in this Section 7.1 or the same
terms, as to manner of purchase, as those upon which they were acquired by the
Section 4.2 Seller.
8. CLOSING.
8.1 Duties of Company, Seller and Shareholders. Except as otherwise
set forth in Sections 3 or 4, on the first Business Day to occur at least 30
days after the exercise, waiver and/or expiration of all option and/or
obligation periods as provided in Sections 3 or 4, the Company and/or purchasing
Shareholders, as the case may be, shall tender to the Seller the purchase price
for such Shares or Partnership Interests, as the case may be, in the form(s)
required under Article 7. Coincident with the payment of said purchase price,
the Seller shall deliver the certificate or certificates representing such
Shares or Partnership Interests, as the case may be, to the purchaser(s), duly
endorsed in blank for transfer of record upon the books of the Company or the
Limited Partnership, as the case may be (accompanied, if the Seller is other
than a natural person, by a duly certified copy of evidence of the incumbency
and authority of the Person purporting to act as or on behalf of the Seller and,
if the Seller is the legal representative or beneficiary of a Shareholder or his
or her estate, by a duly certified copy of evidence of such
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Seller's status as such). The purchaser(s) shall be entitled to require such
additional evidence of good title and right and power to transfer good title to
such Shares free and clear of all Liens, as they shall reasonably request. If
there is more than one purchaser, the purchasers' obligations to the Seller
shall be several and not joint, and the Seller's obligations to each purchaser
shall not be conditioned upon the performance of this Agreement by the other
purchasers.
9. CONSENT TO AGREEMENT.
9.1 Filing of Agreement. An executed counterpart of this Agreement
shall be put and remain on file at the principal executive office of the Company
and the principal executive office of each Limited Partnership.
9.2 Written Consent to Agreement. No sale, transfer, assignment,
exchange or other disposition of Shares or Partnership Interests shall be made
by a Shareholder to any Person other than the Company or another Shareholder
unless and until such Person shall agree in writing to take such Shares or
Partnership Interests subject to, and shall subscribe in writing to the terms
and conditions of, this Agreement. Any Person who so agrees in writing to take
Shares or Partnership Interests subject to, and subscribes in writing to the
terms and conditions of, this Agreement, shall be a party to this Agreement
entitled to the benefits thereof and bound thereby.
10. TERMINATION.
10.1 Termination Upon Certain Events. This Agreement shall terminate
upon the bankruptcy, receivership or dissolution of the Company and, except to
the extent set forth in Section 10.4, upon the voluntary written agreement of
the Company, the holders of at least 80% of the Shares of Common Stock then
outstanding and the holders of at least a majority of the Shares of Preferred
Stock then outstanding. Except to the extent set forth in Section 10.4, this
Agreement (other than, in the case of a Control Transaction, Sections 4.3 and
Article 6 hereof) shall also terminate upon the first to occur of (i) a Control
Transaction or (ii) the latter of the second anniversary of the date hereof or
the completion of a Public Offering, except with respect to purchases or sales
of Shares or Partnership Interests triggered by events or circumstances
occurring prior to the first to occur of an event described in clause (i) or
(ii) hereof.
10.2 Transfer of All Shares. Upon the sale or other transfer of all
the Shares and Partnership Interests owned by a Shareholder, such Shareholder
shall no longer be entitled to the benefits of this Agreement.
10.3 Public Offering; Open Market Transactions. This Agreement shall
not be applicable to Shares of Common Stock that have been transferred in a
Public Offering or Open Market Transaction; and transferees of such Shares of
Common Stock in such Public Offering or Open Market Transaction and their
subsequent transferees shall not be deemed to be Shareholders or be required to
comply with Section 9.2 or be bound by or entitled to any benefits of this
Agreement solely by reason of such transfers.
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10.4 Restricted Stock. Notwithstanding anything in this Agreement to
the contrary, subject to the terms of the Restricted Stock Agreement, as long as
any Shares of Common Stock are considered to be Shares of Restricted Stock
hereunder, the terms of this Agreement shall remain in effect as to such Shares
of Restricted Stock.
11. NOTICES; EXERCISE OF OPTIONS; WAIVERS.
11.1 Additional Information in the Event of a Proposed
Disposition. Any holder of an option hereunder may, in the event of a proposed
Disposition and prior to the purchase of any Shares or Partnership Interests,
require the Seller to furnish written evidence of a bona fide offer of the
proposed transferee to purchase such Shares or Partnership Interests. Such
information shall be provided promptly by the Seller.
11.2 Notices by the Company and Optionees. Each notice required or
permitted to be given under this Agreement by the Company or any Shareholder
holding an option hereunder, including but not limited to a notice of exercise,
waiver or expiration of any option, shall be given by the Company or the
optionee to all other parties to this Agreement simultaneously by means
identical to that by which the notice is given to the Seller.
11.3 Method of Sending Notices. Every notice to be given pursuant to
this Agreement shall be delivered personally, or sent by certified or registered
mail, postage prepaid. Notice delivered personally shall be deemed given when
delivered; notice mailed shall be deemed given when properly mailed. Notice
mailed to the Company shall be addressed to its principal executive office, to
the attention of the Company's chief executive officer and chief financial
officer. Notice mailed to any Shareholder shall be addressed to the
Shareholder's address indicated on Schedule A to this Agreement or to such other
address as such Shareholder shall specify by written notice to the Company and
all other Shareholders.
11.4 Failure to Give Required Notice. If any party hereto fails to
give on a timely basis any notice required by this Agreement of any event or
circumstance giving rise to a purchase option or obligation hereunder, the
Company or any other party that discovers such failure shall promptly give
notice thereof to the remaining parties to the end that the applicable
provisions in this Agreement will thereafter be promptly enforced and applied
with such adjustments in the periods specified herein as may be reasonable in
the circumstances.
11.5 Waivers. Any party to this Agreement may irrevocably waive any
rights of such party hereunder by giving notice of such waiver to the other
parties hereto in the manner of giving notice generally specified elsewhere in
this Agreement. Exercise of an option as to some, but not all, Shares or
Partnership Interests subject to the option shall be deemed such a waiver of the
option with respect to the Shares or Partnership Interests not covered by the
option exercise.
11.6 Proportional Purchases. If more than one Shareholder has an
option of the same priority granted under Section 3 or 4 hereof, then, unless a
different allocation is agreed upon by all of the Shareholders exercising such
option, each Shareholder exercising such option shall be entitled to purchase
the same proportion of the Shares or Partnership Interests, as the
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case may be, subject to such option as the total number of Shares of Common
Stock owned by such Shareholder on the first day such option becomes exercisable
bears to the total number of Shares of Common Stock owned by all of the
Shareholders exercising such option on the first day such option becomes
exercisable.
12. MISCELLANEOUS.
12.1 Interested Shareholder. Any determination by the Company to
exercise or not exercise an option or to take or not take any other action under
this Agreement shall be made, if and to the extent permitted by law, without any
participation, directly or indirectly, of the Shareholder whose Shares or
Partnership Interests are subject to the matter in question or of any Affiliate
of such Shareholder, whether in any such Person's capacity as shareholder,
director, officer or employee of the Company; and all parties agree to be bound
by the actions of a majority of those shareholders or directors, excluding the
interested Shareholder and such Shareholder's Affiliates, acting in connection
with any such issue without regard to quorum or voting requirements specified in
the articles of incorporation and/or bylaws of the Company or which would
otherwise apply under the Minnesota Business Corporation Act or other applicable
statute or law.
12.2 Equitable Remedies. The parties hereto agree that the failure
of any party to perform any obligation or duty under this Agreement will cause
irreparable harm to the parties willing to perform their obligations and duties
herein, which harm cannot be adequately compensated by money damages. It is
further agreed by the parties hereto that an order of specific performance or
for injunctive relief against a party or parties in default under the terms of
this Agreement would be equitable and would not work a hardship on the
defaulting party or parties. Accordingly, in the event of a default by any party
hereto, a non-defaulting party, in addition to whatever other remedies are or
might be available at law or in equity, shall have the right to compel specific
performance by (or to obtain injunctive relief against) the defaulting party or
parties as to any obligation or duty created by this Agreement or any breach
thereof.
12.3 Complete Agreement. This Agreement, the Restricted Stock
Agreement and all other instruments and documents referred to herein and therein
constitute the entire understanding and agreement among the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
understandings among the parties with respect to such subject matter. There are
no agreements, understandings, restrictions, representations or warranties among
the parties relating to the subject matter hereof, except for those expressly
set forth in this Agreement, the Restricted Stock Agreement or any other
instruments or documents referred to herein or therein.
12.4 Amendment. This Agreement may be altered, amended or terminated
by a writing signed by the Company, the holders of at least 80% of the Shares of
Common Stock then outstanding and the holders of a majority of the Shares of
Preferred Stock then outstanding.
12.5 Benefit and Assignment. This Agreement shall bind and inure to
the benefit of the parties hereto, their personal representatives, heirs,
successors and assigns.
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12.6 Severability. If any provision or application of this Agreement
is held unlawful or unenforceable in any respect, such illegality or
unenforceability shall not affect other provisions or applications which can be
given effect, and this Agreement shall be construed as if the unlawful or
unenforceable provision or application had never been contained herein or
prescribed hereby.
12.7 Governing Law. This Agreement shall be construed and governed
by and according to the laws of the State of Minnesota.
12.8 Counterparts. This Agreement may be executed in counterparts,
each of which when so executed shall be deemed to be an original, and such
counterparts shall together constitute but one and the same instrument.
12.9 Table of Contents and Captions. The Table of Contents attached
to this Agreement, and the captions preceding the Sections of this Agreement,
are for convenience only, and shall not affect the interpretation of this
Agreement.
12.10 Company Option. Notwithstanding anything in this Agreement to
the contrary, after a Public Offering any obligation of the Company to purchase
Shares pursuant to Section 3.2 or 3.3 shall become an option of the Company to
purchase all or any portion of such Shares.
12.11 Election of Directors. After completion of an initial Public
Offering and prior to completion of a Public Offering in which the gross cash
proceeds of the Public Offering received by the Company is at least $20,000,000,
each Shareholder agrees to vote all of the Shares of Common Stock held by such
Shareholder and entitled to vote in favor of the election to the Board of
Directors of two individuals who shall be nominated by a vote of a majority of
the outstanding Shares of Common Stock held by the Employees and their Permitted
Transferees and, upon the vote of a majority of the outstanding Shares of Common
Stock held by the Employees and their Permitted Transferee, to remove or replace
such directors.
13. RELIANCE ON THIS AGREEMENT.
13.1 METHOD OF DETERMINING PURCHASE PRICE. EACH SHAREHOLDER
ACKNOWLEDGES THAT, ALTHOUGH THERE ARE MANY POSSIBLE METHODS OF DETERMINING THE
PURCHASE PRICE OF THE SHARES AND PARTNERSHIP INTERESTS, ALL OF THE SHAREHOLDERS
HAVE ENTERED INTO THIS AGREEMENT IN RELIANCE UPON THE EXPECTATION AND
UNDERSTANDING THAT THE METHOD(S) CONTAINED IN THIS AGREEMENT FOR DETERMINING THE
PURCHASE PRICE OF THE SHARES AND PARTNERSHIP INTERESTS WILL BE APPLIED UNDER THE
CIRCUMSTANCES AND IN ACCORDANCE WITH THE TERMS AND CONDITIONS SET FORTH IN THIS
AGREEMENT. ACCORDINGLY, IT IS THE INTENTION AND EXPECTATION OF ALL THE
SHAREHOLDERS THAT, IN SITUATIONS IN WHICH THIS
-27-
AGREEMENT IS APPLICABLE, THE COURTS INTERPRET AND APPLY THIS AGREEMENT STRICTLY
IN ACCORDANCE WITH ITS TERMS AND CONDITIONS, WHETHER ACTING UNDER SECTION
302A.751 OF THE MINNESOTA BUSINESS CORPORATION ACT OR OTHERWISE.
13.2 SEPARATE REPRESENTATION. EACH SHAREHOLDER CONFIRMS THAT SUCH
SHAREHOLDER HAS CAREFULLY REVIEWED THIS AGREEMENT AND UNDERSTANDS IT. EACH
SHAREHOLDER FURTHER CONFIRMS THAT SUCH SHAREHOLDER HAS BEEN ADVISED TO CONSULT
WITH LEGAL COUNSEL REPRESENTING SUCH SHAREHOLDER CONCERNING THIS AGREEMENT AND
ANY OTHER AGREEMENTS BETWEEN OR AMONG SUCH SHAREHOLDER, THE COMPANY AND ANY OF
ITS PRESENT OR PROSPECTIVE SHAREHOLDERS, DIRECTORS, OFFICERS AND/OR EMPLOYEES.
13.3 NO EXPECTATIONS OF EMPLOYMENT, ETC. EACH SHAREHOLDER FURTHER
REPRESENTS THAT, ALTHOUGH THE SHAREHOLDER IS (OR FROM TIME TO TIME MAY BE) AN
EMPLOYEE, OFFICER AND/OR DIRECTOR OF THE COMPANY (OR OF A DIRECT OR INDIRECT
SUBSIDIARY OR OTHER AFFILIATE OF THE COMPANY), THE SHAREHOLDER IS HOLDING SHARES
OR PARTNERSHIP INTERESTS, AS THE CASE MAY BE, FOR THEIR POTENTIAL AS AN EQUITY
INVESTMENT AND WITHOUT ANY EXPECTATION UNDER SECTION 302A.751 OF THE MINNESOTA
BUSINESS CORPORATION ACT OR OTHERWISE THAT THE OWNERSHIP OF THE SHARES OR
PARTNERSHIP INTERESTS WILL ENTITLE THE SHAREHOLDER TO ANY RIGHTS AS AN EMPLOYEE,
OFFICER OR DIRECTOR OF THE COMPANY (OR OF ANY SUCH SUBSIDIARY OR OTHER AFFILIATE
OF THE COMPANY) THAT WOULD NOT EXIST IF THE SHAREHOLDER WERE NOT A HOLDER OF
SHARES OR PARTNERSHIP INTERESTS. THE SHAREHOLDER FURTHER AGREES THAT NO CHANGE
IN HIS OR HER EXPECTATIONS CONCERNING EMPLOYMENT OR CONCERNING HIS OR HER
PARTICIPATION AS AN OFFICER OR DIRECTOR WILL HAVE A REASONABLE BASIS UNLESS SET
FORTH IN A WRITTEN AGREEMENT EXPRESSLY GIVING THE SHAREHOLDER ADDITIONAL RIGHTS
AS TO SUCH MATTERS. THE COMPANY HEREBY ADVISES THE SHAREHOLDER THAT THE COMPANY
HAS THE EXPECTATION THAT THE SHAREHOLDER WILL NOT HAVE ANY RIGHT TO EMPLOYMENT
BY THE COMPANY (OR BY ANY DIRECT OR INDIRECT SUBSIDIARY OR OTHER AFFILIATE OF
THE COMPANY) OR TO CONTINUE TO BE AN OFFICER OR DIRECTOR OF THE COMPANY (OR OF
ANY SUCH SUBSIDIARY OR OTHER AFFILIATE) BY VIRTUE OF THE SHAREHOLDER'S OWNERSHIP
OF THE SHARES OR PARTNERSHIP INTERESTS, EXCEPT, WITH RESPECT TO ▇▇▇▇▇▇ AND
▇▇▇▇▇▇, AS SET FORTH IN THE EMPLOYMENT AGREEMENTS, AND THAT NO SHARES OR
PARTNERSHIP INTERESTS WOULD HAVE BEEN ISSUED TO THE SHAREHOLDER IF THE
SHAREHOLDER HAD ANY CONTRARY EXPECTATIONS.
-28-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above stated.
WILSONS THE LEATHER EXPERTS
INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
Its President
-------------------
-29-
OTHER SHAREHOLDERS:
LEATHER INVESTORS LIMITED PARTNERSHIP I
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: General Partner
And: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: General Partner
LEATHER INVESTORS LIMITED PARTNERSHIP II
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: General Partner
And: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: General Partner
/s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------
▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. SELL
----------------------------
▇▇▇▇ ▇. Sell
/s/ ERCU UCAN
---------------------------
Ercu Ucan
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
MANAGERS: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Name and Signature
------------------ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------- -----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------- -----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------- -----------------------------------------
WM ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
/s/ WM ▇▇▇▇▇▇▇ ▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------- -----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------- -----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------- -----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------- -----------------------------------------
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------- -----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇
----------------------------------- -----------------------------------------
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------- -----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------- -----------------------------------------
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------- -----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------- -----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------- -----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------- -----------------------------------------
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------- -----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------- -----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------- -----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------- -----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------- -----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------- -----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------- -----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------