EXHIBIT 10.12
INVESTOR RIGHTS AGREEMENT dated as of the Original Issue Date (this
"AGREEMENT") among SALT HOLDINGS CORPORATION, a Delaware corporation (the
"COMPANY") and the HOLDERS that are parties hereto.
WHEREAS, each Holder deems it to be in the best interest of the
Company and the Holders that provision be made for the continuity and stability
of the business and policies of the Company, and, to that end, the Company and
the Holders hereby set forth herein their agreement with respect to the Common
Stock, Preferred Stock and Options owned by them.
NOW, THEREFORE, in consideration of the premises and of the mutual
consents and obligations hereinafter set forth, the parties hereto hereby agree
as follows:
Section 1. DEFINITIONS.
As used in this Agreement:
"AFFILIATE" of the Company or YBR means a Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, the Company or YBR, as applicable. As used in this
definition, the term "control," including the correlative terms "controlling,"
"controlled by" and "under common control with," means possession, directly or
indirectly, of the power to direct or cause the direction of management or
policies (whether through ownership of securities or any partnership or other
ownership interest, by contract or otherwise) of a Person. The term "Affiliate"
shall not include at any time any portfolio companies of Apollo Management V,
L.P. or its Affiliates.
"AFFILIATE" of a Holder (other than YBR) means: (i) any member of the
immediate family of an individual Holder, including parents, siblings, spouse
and children (including those by adoption); the parents, siblings, spouse, or
children (including those by adoption) of such immediate family member, and in
any such case any trust whose primary beneficiary is such individual Holder or
one or more members of such immediate family and/or such Holder's lineal
descendants; (ii) the legal representative or guardian of such individual Holder
or of any such immediate family members in the event such individual Holder or
any such immediate family members becomes mentally incompetent; and (iii) any
Person controlling, controlled by or under common control with a Holder. As used
in this definition, the term "control," including the correlative terms
"controlling," "controlled by" and "under common control with," means
possession, directly or indirectly, of the power to direct or cause the
direction of management or policies (whether through ownership of securities or
any partnership or other ownership interest, by contract or otherwise) of a
Person. The term "Affiliate" shall not include at any time any portfolio
companies of Apollo Management V, L.P or its Affiliates.
"APOLLO GROUP" means Apollo Investment Fund V, L.P., a Delaware
limited partnership, Apollo Overseas Partner V, L.P. and each of their
respective Affiliates.
"ASSET SALE" means the sale of all or substantially all of the assets
of the Company to a Person or Group which is not an Affiliate of YBR.
"BOARD" means the Board of Directors of the Company and any duty
authorized committee thereof. All determinations by the Board required pursuant
to the terms of this Agreement to be made by the Board shall be binding and
conclusive.
"CAUSE" means a Non-YBR Holder's (a) conviction of a felony or crime
of moral turpitude (other than a traffic violation), (b) willful commission of
any action that is materially harmful to the Company or its Affiliates on a
consolidated basis (other than any action taken in good faith utilizing such
Non-YBR Holder's business judgement), or (c) failure to follow any lawful
communicated directive of the Board delivered to the Non-YBR Holder.
"COME ALONG OPTION" has the meaning ascribed to such term in Section
4.2(b).
"COMMON STOCK" means: (a) all shares of the voting or non-voting
common stock of the Company owned by each of the Holders on the date hereof; (b)
all shares of the voting or non-voting common stock hereafter issued by the
Company to or acquired by any Holder, whether in connection with a purchase,
issuance, grant, stock split, stock dividend, reorganization, warrant, option,
convertible security, right to acquire, deferred compensation plan or otherwise;
and (c) all securities of the Company or any other Person which any Holder
acquires in respect of his, her or its shares of Common Stock in connection with
any exchange, merger, recapitalization, consolidation, reorganization or other
transaction to which the Company is a party. All references herein to Common
Stock owned by a Holder include the community interest or similar marital
property interest, if any, of the spouse of such Holder in such Common Stock.
The term "common stock" means any stock of any class of the Company which has no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and which is not subject to redemption by the Company (whether or not shares of
such class have voting rights).
"CONTROL DISPOSITION" means a Disposition which would have the effect
of transferring to a Person or Group that is not an Affiliate of YBR a number of
shares of Common Stock such that, following the consummation of such
Disposition, such Person or Group possesses the voting power to elect a majority
of the Board (whether by merger, consolidation or sale or transfer of Common
Stock).
"DISPOSITION" means any direct or indirect transfer, assignment, sale,
gift, pledge, hypothecation or other encumbrance, or any other disposition, of
Common Stock or Preferred Stock (or any interest therein or right thereto) or of
all or part of the voting power (other than the granting of a revocable proxy)
associated with the Common Stock or Preferred Stock (or any interest therein)
whatsoever, or any other transfer of beneficial ownership of Common Stock or
Preferred Stock whether voluntary or involuntary, including, without limitation
(a) as a part of any liquidation of a Non-YBR Holder's assets or (b) as a part
of any reorganization of a Non-YBR Holder pursuant to the United States or other
bankruptcy law or other similar debtor relief laws; PROVIDED, that (i) without
limiting restrictions contained in this Agreement, pledge arrangements which may
be entered into by a Non-YBR Holder pledging his, her or its Common Stock or
Preferred Stock to banks or other bona fide sources of financing and any
transactions contemplated thereby, shall not constitute a Disposition, and (ii)
the participation by a Non-YBR Holder in a proposed underwritten public offering
of common stock or preferred stock of the Company (including the entry into an
underwriting agreement, a custody agreement and other
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agreements ordinarily executed by selling Holders in connection therewith),
which public offering, if consummated, would constitute a Qualified Public
Offering, and the consummation thereof, or the participation by a Non-YBR Holder
in any other registration pursuant to any demand or piggyback registration
rights that such Non-YBR Holder may have pursuant to any registration rights or
similar agreement with the Company and the consummation thereof, shall not
constitute a Disposition, it being understood that, if such proposed
underwritten public offering is terminated or abandoned prior to consummation or
is not consummated in a manner which constitutes a Qualified Public Offering, or
such other registration is terminated or abandoned prior to consummation or is
not consummated, the Common Stock or Preferred Stock of such participating
Non-YBR Holder shall remain subject to this Agreement and no Disposition thereof
(whether pursuant to agreement entered into in connection with such proposed
underwritten public offering or otherwise) shall be permitted hereunder without
compliance with the terms of this Agreement. The term Disposition shall include
a Control Disposition.
"DIVORCED NON-YBR HOLDER" has the meaning ascribed to such term in
Section 2.1.
"DIVORCED SPOUSE" has the meaning ascribed to such term in Section
2.1.
"ELIGIBLE OFFEREES" means the Company and YBR.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"FAIR MARKET VALUE OF THE SHARES OF COMMON STOCK" means as of any
particular date (the "DETERMINATION DATE") for a share of Common Stock the ratio
of (a) the sum of (i) the product of (A) the ratio of (I) the cash purchase
price paid by YBR, the Apollo Group and their Affiliates for the equity of the
Company as of the Original Issue Date plus the value of the equity retained by
IMC Global, Inc. on the Original Issue Date plus or minus any post-closing
adjustments made in connection with the agreement evidencing the merger between
an affiliate of YBR and the Company to (II) the Company's consolidated earnings
before interest, taxes, depreciation and amortization ("EBITDA") for the 12
months prior to the Original Issue Date as described in the Company's applicable
high yield prospectus and (B) the Company's EBITDA for the 12 months prior to
the Determination Date calculated on the same basis as EBITDA was calculated for
the 12 months prior to the Original Issue Date plus (ii) the amount that would
be received by the Company upon the exercise of all Options outstanding that
have an exercise price that is less than the fair market value per share of
Common Stock as of the Determination Date, such fair market value to be
determined assuming the receipt of amounts for the exercise of all Options
outstanding unless after such assumption the fair market value per share of
Common Stock is less than the exercise price per share of the Options ("IN THE
MONEY OPTIONS") minus (iii) the amount of the Company's net debt and Fair Market
Value of the Shares of Preferred Stock as of the Determination Date to (b) the
number of shares of Common Stock outstanding as of the Determination Date
determined on a fully diluted basis (including the number of shares subject to
In-the Money Options as of such date). For purposes of this definition of Fair
Market Value of the Shares of Common Stock, EBITDA for the 12 months prior to
the Determination Date shall be adjusted to take into account a materially good
or bad winter pursuant to the terms
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agreed to by YBR and the Company's Chief Executive Officer, which terms shall be
set forth on ANNEX I hereto (or other factors that may be appropriate from time
to time). The Company shall deliver a written notice to Holders on a quarterly
basis of such Fair Market Value.
"FAIR MARKET VALUE OF THE SHARES OF PREFERRED STOCK" means the per
share fair market value of the outstanding Preferred Stock of the Company, which
shall be calculated as of any Determination Date as the sum of the Original Cost
and the value of the dividends accrued, but not paid, to the Preferred Stock as
such fair market value was last determined in good faith by the Board prior to
the Offer or, if the Board determines in good faith that such fair market value
has materially changed from the amounts as last determined by the Board prior to
the Offer, the fair market value as determined in good faith by the Board as of
the most recent practicable date prior to the Offer; PROVIDED, HOWEVER, that if
shares of Preferred Stock are publicly traded or quoted at the time of any
Offer, then the fair market value of such shares shall be the most recently
quoted trading price on the business day immediately prior to the Offer. The
Board shall have no obligation to determine such fair market value at any time.
Neither the Company nor any officer, director, employee or agent of the Company
shall have any liability with respect to valuation of shares of Preferred Stock
that are bought or sold at the fair market value, as determined pursuant to this
paragraph even though the fair market value, as so determined, may be more or
less than actual fair market value, and shall be fully protected in relying in
good faith upon the records of the Company and upon information, opinions,
reports or statements presented to the Company by any Person as to matters which
the Company or such director, officer, employee or agent reasonably believes are
within such other Person's professional or expert competence and who has been
selected with reasonable care by or on behalf of the Company. The fair market
value of Preferred Stock as of the date of this Agreement and until the first
determination of fair market value thereof by the Board shall, for purposes of
this paragraph, be deemed to be Original Cost, subject to appropriate adjustment
by the Board for stock splits, stock dividends, combinations and similar
transactions. The Company shall deliver a written notice to Holders on a
quarterly basis of such Fair Market Value.
"GOOD REASON" means voluntary resignation after any of the following
actions are taken by the Company or any of its subsidiaries without the Non-YBR
Holder's consent: (a) the continued failure to pay compensation when due to the
Non-YBR Holder for more than 30 (30) days; (b) a significant diminution in the
responsibilities or authority of the Non-YBR Holder; (c) a significant
diminution in the annual base compensation and other benefits to be paid to the
Non-YBR Holder (but not including any diminution related to a broader
compensation or benefit reduction that is not limited to any particular
employee) or (d) relocation of the Non-YBR Holder's primary work place beyond a
fifty (50) mile radius of the employee's current location; provided, that none
of the events described in the foregoing clauses (a), (b), (c) or (d) shall
constitute Good Reason unless the Non-YBR Holder shall have notified the Company
in writing describing the events which constitute Good Reason and then only if
the Company shall have failed to cure such event within 30 days after the
Company's receipt of such written notice.
"GROUP" shall have the meaning ascribed thereto in Section 13(d)(3) of
the Exchange Act.
"HOLDERS" means the holders of securities of the Company (and the
Persons who have a right to receive securities of the Company pursuant to
Options or any deferred
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compensation plan) who are parties hereto or to any other similar investor
rights agreement or stockholders agreement.
"INITIAL PURCHASED SHARES" shall mean, with respect to each Non-YBR
Holder, all shares of Common Stock and Preferred Stock (a) purchased by such
Non-YBR Holder as of the Original Issue Date and (b) issuable to such Non-YBR
Holder pursuant to a distribution from the Company's Senior Executives' Deferred
Compensation Plan pursuant to any deferral election made thereunder on or prior
to the Original Issue Date, and any securities of the Company which may be
issued or distributed with respect to, or in exchange or substitution for, or
conversion of, such Initial Purchased Securities.
"▇▇▇" has the meaning ascribed to such term in Section 6.2(c).
"MATERIAL AGREEMENT" has the meaning ascribed to such term in Section
4.1.
"NON-INITIAL PURCHASED SHARES" shall mean all shares of Common Stock
or Preferred Stock that may be purchased by, transferred to, or are otherwise
held by, any Non-YBR Holder (whether upon the exercise of an Option or
otherwise) other than Initial Purchased Shares.
"NON-YBR HOLDERS" means Holders other than the Company and YBR.
"NOTICE" has the meaning ascribed to such term in Section 4.1.
"OFFER" has the meaning ascribed to such term in Section 2.1, 2.2,
2.3, 2.4 or 2.5, as applicable.
"OPTION" means the options issued to Holders pursuant to the Company's
2001 Stock Option Plan, as it is amended, supplemented or restated from time to
time, or any other option plan approved by the Company.
"ORIGINAL COST" means:
(a) With respect to a share of Common Stock, $10 per share,
subject to appropriate adjustment by the Board for stock splits, stock
dividends, combinations and similar transactions; and
(b) With respect to a share of Preferred Stock, $1,000 per
share, subject to appropriate adjustment by the Board for stock
splits, stock dividends, combinations and similar transactions.
"ORIGINAL ISSUE DATE" means the date of consummation of the merger
between YBR and the Company.
"PERSON" shall be construed broadly and shall include, without
limitation, an individual, a partnership, a corporation, an association, a joint
stock company, a limited liability company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department agency
or political subdivision thereof.
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"PIGGY-BACK REGISTRATION RIGHTS" has the meaning ascribed to such term
in Section 10.
"PREFERRED STOCK" means shares of any class of preferred stock of the
Company issued and outstanding as of the Original Issue Date or any exchange
debentures issued in exchange for such preferred stock pursuant to its terms.
"PROPORTIONATE PERCENTAGE" means, with respect to any Holder, (i) in
respect of shares of Common Stock, a fraction (expressed as a percentage) the
numerator of which is the total number of shares of Common Stock held by such
Holder (including any shares of Common Stock that such Holder purchases pursuant
to any Option exercised in connection with the applicable Section 4.2
Transaction or any shares distributed pursuant to any deferred compensation plan
in connection with the applicable Section 4.2 Transaction) and the denominator
of which is the total number of shares of Common Stock outstanding at the time
of determination (including any shares of Common Stock that such Holder
purchases pursuant to any Option exercised in connection with the applicable
Section 4.2 Transaction or any shares distributed pursuant to any deferred
compensation plan in connection with the applicable Section 4.2 Transaction) and
(ii) in respect of the Preferred Stock, a fraction (expressed as a percentage)
the numerator of which is the total number of shares of Preferred Stock held by
such Holder and the denominator of which is the total number of shares of
Preferred Stock outstanding at the time of determination.
"PUBLIC SALE" means any sale, occurring simultaneously with or after
an initial public offering, of Common Stock or Preferred Stock to the public
pursuant to an offering registered under the Securities Act or to the public in
the manner described by the provisions of Rule 144(f).
"PURCHASE PRICE" means, subject to adjustment pursuant to Section 3.5
and the provisions of this paragraph, (i) for purposes of the purchase of
Securities Subject to the Offer under Sections 2.1, 2.2, 2.3 or 2.5, and shares
of Common Stock or Preferred Stock purchased by a Divorced Non-YBR Holder or a
Surviving Non-YBR Holder under Sections 2.1 or 2.2, the Original Cost of such
Securities Subject to the Offer and (ii) for purposes of the purchase of
Securities Subject to the Offer under Section 2.4, the Fair Market Value of the
shares of Common Stock and the Fair Market Value of the Shares of Preferred
Stock.
"QUALIFIED PUBLIC OFFERING" means an underwritten public offering of
Common Stock by the Company pursuant to an effective registration statement
filed by the Company with the Securities and Exchange Commission (other than on
Forms S-4 or S-8 or successors to such forms) under the Securities Act, pursuant
to which the aggregate offering price of the Common Stock sold in such offering
is at least $100,000,000.
"QUALIFIED PREFERRED PUBLIC OFFERING" means an underwritten public
offering of Preferred Stock by the Company pursuant to an effective registration
statement filed by the Company with the Securities and Exchange Commission
(other than on Forms S-4 or S-8 or successors to such forms) under the
Securities Act, pursuant to which the aggregate offering price of the Preferred
Stock sold in such offering is at least $50,000,000.
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"RECEIPT NOTICE" has the meaning ascribed to such term in Section 3.4.
"REQUIRED VOTING PERCENTAGE" means a majority of the shares of Common
Stock outstanding owned by the Holders as of the date the vote is taken and the
vote of the shares of Common Stock owned by YBR.
"SALE NOTICE" has the meaning ascribed to such term in Section 4.2(a).
"SECTION 4.2 TRANSACTION" has the meaning ascribed to such term in
Section 4.2(a).
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"SECURITIES SUBJECT TO THE OFFER" means: (i) with respect to an Offer
required under Section 2.1, all shares of Common Stock and Preferred Stock
transferred to or retained by or vested in the Divorced Spouse (defined therein)
and not elected to be purchased by the Divorced Non-YBR Holder (as defined
therein) within the time limits specified in that section, and no others; (ii)
with respect to an Offer required under Section 2.2, all shares of Common Stock
and Preferred Stock vesting in or transferable to any heir or legatee of the
deceased spouse other than the Surviving Non-YBR Holder (as defined in that
Section) and not elected to be purchased by the Surviving Non-YBR Holder within
the time limits specified in that Section, and no others; and (iii) all shares
of Common Stock and Preferred Stock owned by a Non-YBR Holder required to make
an Offer under Sections 2.3, 2.4 and 2.5.
"SUBJECT EMPLOYEE" has the meaning ascribed to such term in Section
6.2(c).
"SURVIVING NON-YBR HOLDER" has the meaning ascribed to such term in
Section 2.2.
"TAG ALONG HOLDER" has the meaning ascribed to such term in Section
4.2(a).
"TAG ALONG NOTICE" has the meaning ascribed to such term in Section
4.2(a).
"YBR" means YBR Holdings LLC, a Delaware limited liability company.
Section 2. GENERAL RULE.
Without limiting Section 7, except as expressly permitted by the terms
of Sections 2, 4, 5, 9 and 10 without the consent of the Company, no Non-YBR
Holder shall make any Disposition, directly or indirectly, through an Affiliate
or otherwise. The preceding sentence shall apply with respect to all shares of
Common Stock and Preferred Stock held at any time by a Non-YBR Holder (including
without limitation to all shares of Common Stock acquired upon the exercise of
any stock option or upon the distribution from any deferred compensation plan),
regardless of the manner in which such Non-YBR Holder initially acquired Common
Stock or Preferred Stock, as applicable. In the event of a conflict between any
provision of this Section 2 and Section 9, the terms of Section 9 shall control.
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2.1 DIVORCE OF NON-YBR HOLDER.
If the marital relationship of a Non-YBR Holder is terminated by
divorce, and pursuant to such divorce, or any property settlement in connection
with such divorce, Common Stock or Preferred Stock, previously registered in the
name of such Non-YBR Holder ("DIVORCED NON-YBR HOLDER") are transferred to, or a
community property interest or similar marital property interest is retained by
or vested in, the spouse of the Divorced Non-YBR Holder ("DIVORCED SPOUSE"), the
Divorced Non-YBR Holder shall promptly notify the Company of such event. The
Divorced Non-YBR Holder shall have the option to purchase all of the Divorced
Non-YBR Holder's Common Stock and all of the Divorced Non-YBR Holder's Preferred
Stock, which have been transferred to or which are retained by or vested in the
Divorced Spouse by virtue of the divorce decree, property settlement, or by
operation of the community property or similar marital property laws for the
Purchase Price, and the Divorced Spouse shall be obligated to sell such Common
Stock and such Preferred Stock, to the Divorced Non-YBR Holder for the Purchase
Price. Such option must be exercised, and the purchase consummated, within 30
days after the Common Stock and the Preferred Stock are transferred to or
otherwise vested in or allowed to be retained by the Divorced Spouse. The option
shall be exercised by the giving of written notice of exercise to the Divorced
Spouse. The Divorced Non-YBR Holder shall, within five days after the expiration
of such 30 day period, deliver written notice to the Company as to whether the
Divorced Non-YBR Holder has purchased all of the Common Stock and the Preferred
Stock, so transferred to or otherwise vested in or retained by the Divorced
Spouse. In the event such written notice states that the Divorced Non-YBR Holder
has not purchased all such Common Stock and Preferred Stock, or no such notice
is delivered to the Company within the time required, the Divorced Spouse shall
be deemed to have made an irrevocable offer (the "OFFER") of all such Common
Stock and Preferred Stock, to the Eligible Offerees, and the Company shall (and
is hereby authorized by the Non-YBR Holders and their respective spouses to),
within five business days after (i) the receipt of such notice, if delivered
within the time required, or (ii) if such notice is not delivered within the
time required, the receipt by the Company of evidence, satisfactory to it that
all such Common Stock and Preferred Stock, were not purchased by the Divorced
Non-YBR Holder within such 30 day period, deliver written notice of the Offer to
the Eligible Offerees stating all such Common Stock and Preferred Stock are
Securities Subject to the Offer pursuant to this Section 2.1, and the date of
such Offer shall be deemed to be the date such written notice of the Offer is so
delivered by the Company.
2.2 DEATH OF SPOUSE.
If the spouse of a Non-YBR Holder dies, and all or any portion of the
Common Stock and/or Preferred Stock registered in the name of such Non-YBR
Holder ("SURVIVING NON-YBR HOLDER") vests in or is transferable to any heir or
legatee other than the Surviving Non-YBR Holder, the Surviving Non-YBR Holder
shall promptly notify the Company of such event. The Surviving Non-YBR Holder
shall have the option to purchase all of the Common Stock and Preferred Stock
vesting in or transferable to such heir or legatee for the Purchase Price, and
such heir or legatee and the estate of the deceased spouse shall be obligated to
sell such Common Stock and Preferred Stock to the Surviving Non-YBR Holder for
the Purchase Price. Such option must be exercised, and the purchase consummated,
within one hundred twenty days after the last to occur of (a) the entry of an
order of a probate or similar court (having jurisdiction over the estate of the
deceased spouse) (i) admitting to probate the will of the deceased spouse, or
(ii)
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determining the heirs of the deceased spouse if the deceased spouse is
determined to have died intestate, or (b) the appointment of the executor,
administrator or legal representative of the estate of the deceased spouse. The
option shall be exercised by the giving of written notice of exercise to the
executor, administrator or legal representative of the deceased spouse's estate.
The Surviving Non-YBR Holder shall, within five days after the expiration of
such 30 day period, deliver written notice to the Company as to whether the
Surviving Non-YBR Holder has purchased all of the Common Stock and Preferred
Stock, vesting in or transferable to any such heir or legatee. In the event such
written notice states that the Surviving Non-YBR Holder has not purchased all
such Common Stock and Preferred Stock, or no such notice is delivered to the
Company within the time required, all such heirs and legatees shall be deemed to
have made an irrevocable Offer (the "OFFER") of such Common Stock and Preferred
Stock, to the Eligible Offerees, and the Company shall (and is hereby authorized
by the Non-YBR Holders and their respective spouses to), within five business
days after (i) the receipt of such notice, if delivered within the time
required, or (ii) if such notice is not given within the time required, the
receipt by the Company of evidence satisfactory to it that all such Common Stock
and Preferred Stock, were not purchased by the Surviving Non-YBR Holder within
such one hundred twenty day period, deliver written notice of the Offer to the
Eligible Offerees stating that all such Common Stock and Preferred Stock are
Securities Subject to the Offer pursuant to this Section 2.2, and the date of
such Offer shall be deemed to be the date such written notice of the Offer is so
delivered by the Company.
2.3 BANKRUPTCY.
If any of the following events occurs:
(a) Any Non-YBR Holder shall (i) voluntarily be adjudicated as
bankrupt or insolvent; (ii) consent to or not contest the appointment
of a receiver or trustee for himself, herself or itself or for all or
any part of his, her or its property; (iii) file a petition seeking
relief under the bankruptcy, rearrangement, reorganization or other
debtor relief laws of the United States or any state or any other
competent jurisdiction; or (iv) make a general assignment for the
benefit of his, her or its creditors; or
(b) If (i) a petition is filed against a Non-YBR Holder seeking
relief under the bankruptcy, rearrangement, reorganization or other
debtor relief laws of the United States or any state or other
competent jurisdiction; or (ii) a court of competent jurisdiction
enters an order, judgment or decree appointing a receiver or trustee
for a Non-YBR Holder, or for any part of his, her or its property, and
such petition, order, judgment or decree shall not be and remain
discharged or stayed within a period of sixty days after its entry;
then any such event shall be deemed an irrevocable "OFFER," and such Non-YBR
Holder shall promptly notify the Company of such event, and the Company shall,
within five business days from receipt thereof (or, if no such notice is
delivered to the Company by the Non-YBR Holders, within five business days from
the Company's receipt of evidence, satisfactory to it, of any of the foregoing
events), deliver written notice of the Offer to the Eligible Offerees stating
that all of the shares of Common Stock and Preferred Stock registered in the
name of such Non-YBR
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Holder are Securities Subject to the Offer pursuant to this Section 2.3. The
date of such Offer shall be deemed to be the date such written notice of the
Offer is so delivered by the Company.
2.4 DEATH OF NON-YBR HOLDER.
The death of a Non-YBR Holder shall be deemed an irrevocable "OFFER"
by his or her estate (the "OFFEROR"), and the Offeror's executor or personal
representative promptly shall notify the Company of that event. The Company
shall, within five business days after learning of such death, deliver written
notice of the Offer to the Eligible Offerees stating that all of the shares of
the Common Stock and Preferred Stock of the Offeror are Securities Subject to
the Offer pursuant to this Section 2.4. The date of such Offer shall be deemed
to be the date on which such written notice is so delivered by the Company.
2.5 INDIRECT TRANSACTION.
In the event of a transaction involving a change of ownership interest
or voting power of a Non-YBR Holder which avoids the restrictions on
Dispositions provided in this Section 2, such transaction shall be deemed a
Disposition by such Non-YBR Holder and an irrevocable "OFFER," and such Non-YBR
Holder ("OFFEROR") shall promptly notify the Company of such event and offer
(the "OFFER"), by written notice to the Company, to sell all Securities Subject
to the Offer to the Eligible Offerees for the Purchase Price. Offers under this
Section 2.5 shall (a) be in writing; (b) be irrevocable for so long as any
Eligible Offeree has the right to purchase any Securities Subject to the Offer;
(c) be sent by the Offeror to the Company; and (d) contain a description of the
proposed transaction and change of ownership interest or voting power. The
Company shall, within five business days from receipt thereof (or, if no such
written notice is delivered to the Company by the Non-YBR Holder, within five
business days from the Company's receipt of evidence, satisfactory to it, of
such a Disposition by the Offeror), deliver written notice of the Offer to the
Eligible Offerees stating that all Common Stock and Preferred Stock registered
in the name of such Non-YBR Holder are Securities Subject to the Offer Pursuant
to this Section 2.5. The date of such Offer shall be deemed to be the date such
written notice of the Offer is so delivered by the Company.
Section 3. PROCEDURES; PRICE.
3.1 THE COMPANY.
The Company shall have the right, for 30 days following the date of an
Offer, to accept the Offer as to all or any Securities Subject to the Offer. If
the Company shall not have sufficient surplus to permit it lawfully to purchase
Securities Subject to the Offer which the Company has accepted in whole or in
part, the Non-YBR Holders shall, promptly upon the request of the Company, take
such action to vote their respective shares to reduce the stated capital of the
Company to the extent permitted by law or to authorize such other steps as may
be appropriate or necessary in order to enable the Company, if possible,
lawfully to purchase such Securities Subject to the Offer.
10
3.2 YBR.
If the Company does not accept the Offer with respect to all
Securities Subject to the Offer within the 30 day period specified in Section
3.1, the Company shall promptly give written notice thereof to YBR and YBR shall
have the right, for 30 days following the receipt of such notice, to accept the
Offer as to any remaining Securities Subject to the Offer.
3.3 CERTAIN EFFECTS OF OFFERS.
Subject to the provisions of Section 6.2, all Common Stock and
Preferred Stock transferred in accordance with the terms of this Agreement to
any third party or to any Eligible Offeree (other than the Company), and all
Securities Subject to the Offer under Sections 2.1 through 2.5 (unless acquired
by the Company), shall remain subject to the terms of this Agreement; PROVIDED,
that upon the sale of (or other realization upon) Common Stock or Preferred
Stock by any banks or other bona fide sources of financing pursuant to, or upon
the occurrence of any transfer of such Common Stock or such Preferred Stock to
any such banks or other bona fide sources of financing or any third party
pursuant to, pledge arrangements which may be entered into by the Company's
Holders pledging their capital stock or notes thereto to secure financing, such
Common Stock and Preferred Stock so pledged shall not remain subject to the
terms of this Agreement.
3.4 ACCEPTANCE; CLOSING.
If an Eligible Offeree (other than the Company) accepts an Offer as to
all or any portion of the Securities Subject to the Offer, it shall evidence its
acceptance by delivering to the Company a written notice of intent to purchase
such Securities Subject to the Offer. The Company shall, in turn, promptly
notify in writing any Non-YBR Holder or any other party required to sell
Securities Subject to the Offer of the receipt of such notices ("RECEIPT
NOTICE"). The Company shall accept an Offer as to the Securities Subject to the
Offer by promptly notifying the Non-YBR Holder or any other party required to
sell Securities Subject to the Offer of such acceptance, and such notice by the
Company shall be deemed a Receipt Notice. The closing of the acquisitions of
Securities Subject to the Offer by Eligible Offerees shall be consummated within
90 days following the delivery of the Receipt Notice. In the case of all
acquisitions of Securities Subject to the Offer by Eligible Offerees such
acquisitions shall be consummated at a closing held at the principal offices of
the Company (unless otherwise mutually agreed), at which time the Purchase Price
(if cash, in the form of a cashier's check) shall be delivered to the transferor
of the Common Stock and the Preferred Stock or the transferor's representative,
and the transferor or the transferor's representative shall deliver to the
Eligible Offerees purchasing such shares and certificates representing the
Securities Subject to the Offer so purchased, duly endorsed for transfer or
accompanied by duly executed stock powers or assignment forms, and evidence of
good title to the Securities Subject to the Offer so purchased and the absence
of liens, encumbrances and adverse claims with respect thereto and such other
matters as are deemed necessary by the Company for the proper transfer of the
Securities Subject to the Offer so purchased to the acquiring Eligible Offerees
on the books of the Company.
11
3.5 FORM OF PAYMENT
The Purchase Price for all Securities Subject to the Offer pursuant to
an Offer made under Sections 2.1 through 2.5 shall be paid in cash.
Section 4. CERTAIN DISPOSITIONS.
4.1 LOAN AND OTHER AGREEMENTS: CERTAIN RESTRICTIONS.
Notwithstanding anything in this Agreement to the contrary, no Non-YBR
Holder shall make any Disposition (including but not limited to a Disposition
pursuant to Sections 2, 4 or 5 (other than pursuant to Section 4.2 or paragraph
5.1(a) and excluding any Disposition pursuant to Section 10) which, in the
Company's reasonable judgment (as evidenced by a resolution of the Board), would
cause a breach or default or acceleration of payments under any loan agreement,
note, indenture or other agreement or instrument to which the Company and/or its
Affiliates are a party and under which the indebtedness or liability of the
Company and/or its Affiliates exceeds $1,000,000 ("MATERIAL AGREEMENT").
Therefore, each Non-YBR Holder desiring or required to make a Disposition shall,
prior to attempting to effect any such Disposition, (a) give written notice
("NOTICE") to the Company describing the proposed Disposition and the proposed
transferee in sufficient detail, setting forth the number of shares of Common
Stock or Preferred Stock as to which such Non-YBR Holder desires to make a
Disposition; and (b) provide such other information concerning the Disposition
as the Company reasonably requests. If, in the Company's reasonable judgment
(which judgment shall be communicated in writing within ten days of the
Company's receipt of the Notice and all other information it has reasonably
requested), the proposed Disposition would cause a breach or default or
acceleration of payments under any Material Agreement, then such Disposition may
not be made, and any attempted Disposition shall be null and void. If the
Company approves such Disposition (which approval shall be deemed given if no
notification is given by the Company in accordance with the immediately
preceding sentence) and any shares of Common Stock or Preferred Stock with
respect to which approval has been given are not actually transferred within the
relevant time period provided in the applicable provisions of this Agreement,
then all of the provisions of this Agreement shall apply to any subsequent
transaction affecting such Common Stock and Preferred Stock (except as expressly
excluded by the other terms of this Agreement). Additionally, all shares of
Common Stock and Preferred Stock transferred (whether to a third party or any
Non-YBR Holder) pursuant to a Disposition complying with the terms of this
Section 4 shall remain subject to this Agreement.
4.2 COME-ALONG AND TAG ALONG RIGHTS.
(a) Subject to the provisions of paragraph 4.2(b), prior to the
consummation of a Qualified Public Offering or Qualified Preferred
Public Offering, if YBR desires to effect (i) an Asset Sale, (ii) any
sale or transfer of shares of Common Stock or Preferred Stock (other
than any transfer described in the seventh sentence of this Section
4.2(a)) following which (when aggregated with all prior such sales or
transfers) YBR shall have disposed of at least 10% of number of shares
of Common Stock or Preferred Stock, as applicable, that YBR owned as
of the time Original Issue Date to a transferee or Group, or (iii) a
12
Control Disposition or any sale or transfer of shares of Common Stock
or Preferred Stock following a Control Disposition (any event
described in subsection (i), (ii) or (iii) being a "SECTION 4.2
TRANSACTION"), it shall give written notice to the Non-YBR Holders
offering such Non-YBR Holders the option to participate in such
Section 4.2 Transaction. The notice shall set forth the material terms
of the proposed Section 4.2 Transaction and identify the contemplated
transferee or Group (a "SALE NOTICE"). Each of the Non-YBR Holders
may, by written notice to YBR (a "TAG ALONG NOTICE") delivered within
ten days after the date of the Sale Notice (each such Non-YBR Holder
delivering such timely notice being a "TAG ALONG HOLDER"), elect to
sell in such Section 4.2 Transaction by specifying the maximum number
of shares of Common Stock or Preferred Stock (including within this
number that number of shares of Common Stock and Preferred Stock to be
distributed to such Tag Along Holder in connection with such Tag Along
Transaction from any deferred compensation plan or which such Tag
Along Holder may obtain by exercising any Options held by the Tag
Along Holder that are vested as of the date of such Tag Along Notice
or which would vest in connection with such Section 4.2 Transaction,
collectively the "DEEMED HELD SHARES") such Tag Along Holder desires
to include in such Section 4.2 Transaction. If none of the Holders
delivers a timely Tag Along Notice, YBR may thereafter consummate the
Section 4.2 Transaction, on substantially the same terms and
conditions as are described in the Sale Notice. If one or more of the
Non-YBR Holders gives YBR a timely Tag Along Notice, then YBR shall
use all reasonable efforts to cause the prospective transferee or
Group to agree to acquire all shares identified in all timely Tag
Along Notices, upon the same terms and conditions as applicable to the
shares held by YBR. If such prospective transferee or Group is unable
or unwilling to acquire all shares proposed to be included in the
Section 4.2 Transaction upon such terms, then YBR may elect to cancel
such Section 4.2 Transaction or to allocate the maximum number of
shares that each prospective transferee or Group is willing to
purchase among YBR and the Tag Along Holders in the proportion that
each such Tag Along Holder's and YBR's Proportionate Percentage bears
to the total Proportionate Percentages of YBR and the Tag Along
Holders (e.g., if the Sale Notice contemplated a Section 4.2
Transaction of 10% Proportionate Percentage by YBR, and if YBR at such
time owns a 30% Proportionate Percentage and one Tag Along Holder who
owns a 20% Proportionate Percentage elects to participate, then YBR
would be entitled to sell a 6% Proportionate Percentage (30%/50% x the
10% Proportionate Percentage) and the Tag Along Holder would be
entitled to sell a 4% Proportionate Percentage (20%/50% x the 10%
Proportionate Percentage) (and for purposes of calculating the maximum
number of shares of Common Stock or Preferred Stock that any Non-YBR
Holder shall be permitted to sell in accordance such Non-YBR Holder's
Proportionate Percentage, such Non-YBR-Holder shall be deemed to first
sell in such Section 4.2 Transaction any shares that the Non-YBR
Holder has previously sold to the Company pursuant to a Section
9(b)(ii) Sale). Notwithstanding the provisions of this Section, during
the first 12 months of this Agreement, YBR may transfer any number of
shares of Common Stock then owned by it on the date hereof without
complying with the provision of this
13
Section so long as such transfer would not be deemed to be a Control
Disposition. Notwithstanding any other provision in this Agreement, no
Section 4.2 Transaction shall be subject to the requirements of
Sections 2.1 through 2.5, Section 3 (other than as set forth in
Section 3.3) or Section 4.1. Upon the closing of the sale of any
shares of Common Stock or Preferred Stock (including any Deemed Held
Shares) pursuant to this paragraph, the Holders shall deliver at such
closing, against payment of the purchase price therefor, certificates
representing their shares of Common Stock or Preferred Stock to be
sold, duly endorsed for transfer or accompanied by duly endorsed stock
powers, and evidence of good title to the shares to be sold and the
absence of liens, encumbrances and adverse claims with respect thereto
and such other matters as are deemed necessary by the Company for the
proper transfer of such shares on the books of the Company. For
purposes of this paragraph 4.2(a), any holder of Common Stock who has
a contractual right to participate in such Section 4.2 Transaction or
any other holder of Common Stock or Preferred Stock who is otherwise
participating in such Section 4.2 Transaction with the consent of YBR
shall be deemed to be a "Non-YBR Holder" hereunder.
(b) If YBR desires to effect a Section 4.2 Transaction, then in
lieu of complying with the requirement of paragraph 4.2(a), YBR at its
option (the "COME ALONG OPTION") may require all Non-YBR Holders to
sell the same percentage of their respective shares of Common Stock or
Preferred Stock (including their Deemed Held Shares) as YBR desires to
sell to the transferee or Group selected by YBR, at the same price per
share and on the same terms and conditions as apply to those sold by
YBR (and for purposes of calculating the number of shares of Common
Stock or Preferred Stock of any Non-YBR Holder that may be subject to
such Come Along Option, such Non-YBR Holder shall be deemed to first
sell in such Section 4.2 Transaction any shares that the Non-YBR
Holder has previously sold to the Company pursuant to a Section 9
(b)(ii) Sale). All Non-YBR Holders shall consent to and raise no
objections against the Section 4.2 Transaction, and if the Section 4.2
Transaction is structured as (i) a merger or consolidation of the
Company or an Asset Sale, each Non-YBR Holder shall waive any
dissenters rights, appraisal rights or similar rights in connection
with such merger, consolidation or Asset Sale, or (ii) a sale of all
the capital stock of the Company, the Non-YBR Holders shall agree to
sell all their shares of Common Stock or Preferred Stock which are the
subject of the Section 4.2 Transaction (including their Deemed Held
Shares). The Non-YBR Holders shall take all necessary and desirable
actions approved by YBR in connection with the consummation of the
Section 4.2 Transaction, including obtaining Board consent to the
Section 4.2 Transaction and the execution of such agreements and such
instruments and other actions reasonably necessary to provide
customary representations, warranties, and indemnities regarding
title, as well as escrow arrangements relating to such Section 4.2
Transaction. Notwithstanding any other provision of this Agreement, no
such Disposition shall be subject to the requirements of Sections 2.1
through 2.5 or Section 3. Upon the closing of any shares of Common
Stock or Preferred Stock pursuant to this paragraph, the Non-YBR
Holders shall deliver at such closing, against payment of the purchase
price
14
therefor, certificates representing their shares of Common Stock or
Preferred Stock to be sold, duly endorsed for transfer or accompanied
by duly endorsed stock powers, and evidence of good title to the
shares to be sold and the absence of liens, encumbrances and adverse
claims with respect thereto and such other matters as are deemed
necessary by the Company for the proper transfer of such shares on the
books of the Company.
(c) For purposes of this Section 4.2, a Control Disposition shall
include an indirect Disposition triggered by a transfer of the
membership units of YBR to a Person or Group that is not an Affiliate
of YBR.
(d) The Company and the Non-YBR Holder shall cooperate in causing
any Deemed Held Shares that are ultimately included in a Section 4.2
Transaction to be delivered to the Non-YBR Holder immediately prior to
the closing of such Section 4.2 Transaction in order that the Non-YBR
Holder may exercise his rights under Section 4.2(a) or that YBR may
exercise its rights under Section 4.2(b), as the case may be.
Section 5. PERMITTED TRANSFERS.
5.1 DISPOSITIONS.
The following Dispositions shall be permitted without compliance with
the provisions of Section 2 and 3 (but Section 4 shall apply to each of the
following Dispositions other than a Disposition described in paragraphs 5.1(a),
and Sections 10 and 11(t) shall apply to 5.1(a)):
(a) By any Non-YBR Holder (i), in the case of shares of Common
Stock or Preferred Stock, with respect to a Public Sale in connection
with the exercise of Piggyback Registration Rights in accordance with
Section 10 or (ii) a Public Sale of Common Stock that occurs at least
twelve months following a Qualified Public Offering or a Public Sale
of Preferred Stock that occurs at least 12 months following a
Qualified Preferred Public Offering;
(b) By any individual Non-YBR Holder during such Non-YBR Holder's
lifetime to: (i) a guardian of the estate of such Non-YBR Holder, (ii)
an inter-vivos trust primarily for the benefit of such Non-YBR Holder;
(iii) an inter-vivos trust whose primary beneficiary is one or more of
such Non-YBR Holder's lineal descendants (including lineal descendants
by adoption); (iv) the spouse of such Non-YBR Holder during marriage
and not incident to divorce; or (v) such Non-YBR Holder's Affiliates;
(c) To any individual Non-YBR Holder by: (i) a guardian of the
estate of such Non-YBR Holder; (ii) an inter-vivos trust whose primary
beneficiary is such Non-YBR Holder or one or more of such Non-YBR
Holder's lineal descendants (including lineal descendants by
adoption), (iii) the spouse of such Non-YBR Holder during marriage and
not incident to divorce; or (iv) such Non-YBR Holder's lineal
descendants (including lineal descendants by adoption);
15
(d) With the consent of the Company, by any Non-YBR Holder to a
qualified retirement plan sponsored by the Non-YBR Holder;
(e) By any qualified retirement plan referred to in paragraph
5.1(d) to participants, alternate payees and beneficiaries to the
extent required by law and the provisions of such plan;
(f) By any Non-YBR Holder which is a trust, to any successor
trust or successor trustee; and
(g) With the consent of the Company, by any Non-YBR Holder to
other entities for tax planning purposes.
PROVIDED, HOWEVER, that as a condition to any such permitted transfer, any
Person (including such Person's spouse, if any), (other than the Company), so
acquiring such Common Stock or Preferred Stock shall be required to subject the
Common Stock acquired by such Person to the provisions of this Agreement, and
thereafter any such Person shall be deemed a "Non-YBR Holder" for the purposes
of this Agreement.
5.2 PLEDGES.
(a) Unless approved by a majority of the Board, no Non-YBR Holder
shall pledge any shares of Common Stock or Preferred Stock held by it,
unless such pledge is made by such Non-YBR Holder to the Company.
(b) A breach by any Non-YBR Holder of the covenants contained in
this Section 5.2 shall not relieve or waive the obligations of all
other Non-YBR Holders to comply with such covenants.
Section 6. CONDITIONS; ADDITIONAL PARTIES.
6.1 CONDITIONS TO PERMITTED TRANSFERS.
As a condition to the Company's obligation to effect a transfer
permitted by this Agreement on the books and records of the Company, any
transferee (other than a transferee described in paragraph 5.1(a)) of Common
Stock or Preferred Stock shall be required to become a party to this Agreement
by executing (together with such Person's spouse, if applicable) an Adoption
Agreement in substantially the form of EXHIBIT A or in such other form that is
reasonably satisfactory to the Company and upon execution of such Adoption
Agreement such transferee shall have all the rights and obligations of a Non-YBR
Holder hereunder.
6.2 ADDITIONAL PARTIES.
(a) If required under the terms of this Agreement, or upon the
written approval of the holders of at least the Required Voting
Percentage, any Person which acquires any shares of Common Stock or
Preferred Stock subsequent to the execution of this Agreement shall
become a party to this Agreement upon executing (together with such
Person's spouse, if any) an Adoption Agreement in
16
substantially the form of EXHIBIT A or in such other form that is
reasonably satisfactory to the Company and upon execution of such
Adoption Agreement such transferee shall have all the rights and
obligations of a Non-YBR Holder hereunder.
(b) In the event that any Person acquires shares of Common Stock
or Preferred Stock from (i) a Non-YBR Holder or any Affiliate or
member of such Non-YBR Holder's Group or (ii) any direct or indirect
transferee of a Non-YBR Holder, including pursuant to any Disposition
contemplated by Section 5.1 of this Agreement, such Person shall be
subject to any and all obligations and restrictions of the Non-YBR
Holder (for whom the shares of Common Stock or Preferred Stock were
purchased) hereunder, as if such Person was such Non-YBR Holder named
herein, including, without limitation, the obligation to make an Offer
to Eligible Offerees pursuant to Section 2.4 upon the death of the
Non-YBR Holder (from whom the shares of Common Stock or Preferred
Stock were purchased). Additionally, whenever a Non-YBR Holder makes a
transfer of shares of Common Stock or Preferred Stock, including
pursuant to any Disposition contemplated by Section 5.1 of this
Agreement, such shares and/or Preferred Stock shall contain a legend
so as to inform any transferee that such shares and/or Preferred Stock
were held originally by a Non-YBR Holder and are subject to repurchase
upon the death of such Non-YBR Holder. Such legend shall not be placed
on any shares of Common Stock or Preferred Stock acquired from a
Non-YBR Holder by the Company, YBR or any of their Affiliates.
(c) Any shares of Common Stock or Preferred Stock acquired by an
individual retirement account ("▇▇▇") on behalf of an employee of the
Company or any of its subsidiaries (the "SUBJECT EMPLOYEE") shall be
deemed to be a Non-YBR Holder. Additionally, such Subject Employee
shall be deemed to be a Non-YBR Holder and his or her ▇▇▇ shall be
deemed to have acquired all shares and/or Preferred Stock it holds
from such Subject Employee pursuant to a transfer that is subject to
Section 6.2(b) above.
Section 7. Restriction on Transfer.
(a) No shares of Common Stock or Preferred Stock shall be
transferable except upon the conditions specified in this Section 7,
which conditions are intended to insure compliance with the provisions
of the Securities Act.
(b) Each certificate representing shares of Common Stock and
Preferred Stock shall (unless otherwise permitted by the provisions of
paragraph (d) below) be stamped or otherwise imprinted with a legend
in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
17
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES OR BLUE SKY LAWS. THESE SECURITIES MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT OR LAWS. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO AN INVESTOR
RIGHTS AGREEMENT DATED AS OF THE ORIGINAL ISSUE DATE AMONG THE
ISSUER OF SUCH SECURITIES (THE "COMPANY"), AND THE OTHER PARTIES
NAMED THEREIN. THE TERMS OF SUCH INVESTOR RIGHTS AGREEMENT
INCLUDE, AMONG OTHER THINGS, RESTRICTIONS ON TRANSFER. A COPY OF
SUCH AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO
THE HOLDER HEREOF UPON WRITTEN REQUEST."
(c) The holder of any shares of Common Stock or Preferred Stock
by acceptance thereof agrees, prior to any transfer of any such
shares, to give written notice to the Company of such holder's
intention to effect such transfer and to comply in all other respects
with the provisions of this Section. Each such notice shall describe
the manner and circumstances of the proposed transfer. Upon request by
the Company, the holder delivering such notice shall deliver a written
opinion, addressed to the Company, of counsel for the holder of such
shares, stating that in the opinion of such counsel (which opinion and
counsel shall be reasonably satisfactory to the Company) such proposed
transfer does not involve a transaction requiring registration or
qualification of such shares under the Securities Act. Such holder of
such shares shall be entitled to transfer such shares in accordance
with the terms of the notice delivered to the Company, if the Company
does not reasonably object to such transfer and request such opinion
within fifteen days after delivery of such notice, or, if it requests
such opinion, does not reasonably object to such transfer within
fifteen days after delivery of such opinion. Each certificate or other
instrument evidencing the securities issued upon the transfer of any
shares of Common Stock shall bear the legend set forth in paragraph
(b) above unless (i) in such opinion of counsel to the holder of such
shares (which opinion and counsel shall be reasonably acceptable to
the Company) registration of any future transfer is not required by
the applicable provisions of the Securities Act or (ii) the Company
shall have waived the requirement of such legends.
(d) Notwithstanding the foregoing provisions of this Section 7,
the restrictions imposed by this Section upon the transferability of
any shares of Common Stock or Preferred Stock shall cease and
terminate when (i) any such shares are sold or otherwise disposed of
(A) pursuant to an effective registration
18
statement under the Securities Act or (B) in a transaction
contemplated by paragraph (c) above which does not require that the
shares so transferred bear the legend set forth in paragraph (b)
hereof, or (ii) the holder of such shares has met the requirements for
transfer of such shares under Rule 144(k) under the Securities Act
(subject to the delivery of opinions as set forth above). Whenever the
restrictions imposed by this Section shall terminate, the holder of
any shares as to which such restrictions have terminated shall be
entitled to receive from the Company, without expense, a new
certificate not bearing the restrictive legend set forth in paragraph
(b) above and not containing any other reference to the restrictions
imposed by this Section.
Section 8. NOTICES.
In the event a notice or other document is required to be sent
hereunder to the Company or to any Holder or the spouse or legal representative
of a Holder, such notice or other document, if sent by mail, shall be sent by
registered mail, return receipt requested (and by air mail in the event the
addressee is not in the continental United States), to the party entitled to
receive such notice or other document at the address set forth on ANNEX II
hereto. Any such notice shall be effective and deemed received three days after
proper deposit in the mails, but actual notice shall be effective however and
whenever received. The Company or any Holder or spouse or their respective legal
representatives may effect a change of address for purposes of this Agreement by
giving notice of such change to the Company, and the Company shall, upon the
request of any party hereto, notify such party of such change in the manner
provided herein. Until such notice of change of address is properly given, the
addresses set forth herein shall be effective for all purposes.
Section 9. REPURCHASE RIGHTS AND SALE RIGHTS. With respect to the Initial
Purchased Shares only (except as otherwise specifically provided):
(a) If a Non-YBR Holder voluntarily resigns, other than for Good
Reason, as an employee of the Company or any of the Company's subsidiaries
or if a Non-YBR Holder's employment with the Company or any of the
Company's subsidiaries is terminated for Cause, then the Company or any of
its subsidiaries shall have the right, but not the obligation, to
repurchase all or any portion of the shares of Common Stock and Preferred
Stock (whether Initial Purchased Shares or Non-Initial Purchased Shares and
whether held by the Non-YBR Holder or one or more permitted transferees) in
accordance with this Section 9 at the Fair Market Value of the shares of
Common Stock and Fair Market Value of the shares of Preferred Stock. The
Company or any of its subsidiaries may exercise its right to purchase such
shares of Common Stock and shares of Preferred Stock until (i) with respect
to any shares of Common Stock that may be received by any Non-YBR Holder
upon exercise of any Options that are vested as of the date of the Non-YBR
Holder's termination of employment ("OPTION SHARES"), the seven month
anniversary of the date of exercise of such Options, (ii) with respect to
any shares of Common Stock or Preferred Stock issuable to any Non-YBR
Holder pursuant to a deferred compensation plan, the later of (A) the seven
month anniversary of the date such shares first become vested pursuant to
such deferred compensation plan or (B) the 30/th/ day following the date of
the Non-YBR Holder's termination of employment or (iii) with
19
respect to any other shares of Common Stock or Preferred Stock, the 30th
day following the date of the Non-YBR Holder's termination of employment
(such date described in subsection (i), (ii) or (iii), as applicable, the
"REPURCHASE DATE"). On or before the Repurchase Date, the Company or its
applicable subsidiary shall give written notice to YBR stating whether it
will exercise such purchase rights. If such notice states that the Company
and its subsidiaries will not exercise its purchase rights, YBR shall have
the right to purchase the shares of Common Stock and shares of Preferred
Stock on the same terms and conditions as the Company and its subsidiaries
until the later of (x) the 30th day following the receipt of such notice or
(y) the Repurchase Date. Notwithstanding any provision of this Section 9(a)
to the contrary, in no event shall the Company or YBR purchase any Option
Shares or shares of Common Stock or Preferred Stock issued pursuant to a
deferred compensation plan prior to six months and one day following the
earlier of (A) the date such shares were first purchased by the Non-YBR
Holder upon exercise of the Options or (B) the date such shares became
vested under any deferred compensation plan, as applicable. The
Determination Date for purposes of determining the Fair Market Value shall
be the closing date of the purchase of the applicable shares, as described
in Section 9(c).
(b) (i) Except as otherwise set forth in Section 9(b)(ii), if a
Non-YBR Holder's employment with the Company or any of the Company's
subsidiaries is terminated by the Company or its applicable subsidiary
without Cause or a Non-YBR Holder voluntarily resigns as an employee
of the Company or any of the Company's subsidiaries for Good Reason
(in either event, a "SECTION 9(b) TERMINATION"), then such Non-YBR
Holder (or any permitted transferee) shall for 30 days following the
date of such Section 9(b) Termination have the right, but not the
obligation, to sell all (but not less than all) of his shares of
Common Stock and Preferred Stock to the Company in accordance with
this Section 9(b)(i) at the Fair Market Value of the Shares of Common
Stock and Fair Market Value of the Shares of Preferred Stock;
PROVIDED, HOWEVER, that notwithstanding the forgoing, in no event
shall the Company purchase any shares of Common Stock that are issued
upon the exercise of any Options prior to the date of such Section
9(b) Termination or any shares of Common Stock or Preferred Stock that
are issued pursuant to a deferred compensation plan prior to six
months and one day following the earlier of (A) the date such shares
were first purchased by the Non-YBR Holder upon exercise of such
Options or (B) the date such shares became vested under any deferred
compensation plan, as applicable (and to the extent the Company is
prohibited from purchasing any shares pursuant to the foregoing
proviso, the Company shall so purchase upon the first date permissible
under the foregoing proviso). In order to exercise the sale right
pursuant to this Section 9(b)(i), the Non-YBR Holder shall be required
to provide the Company with written notice within 30 days following
the date of such Section 9(b) Termination (or, if later, within the 30
consecutive day period beginning six months and one day following the
earlier of (A) the date such shares were first purchased by the
Non-YBR Holder upon exercise of such Options or (B) the date such
shares became vested under any deferred compensation plan, as
applicable) (the "SECTION 9(b) NOTICE PERIOD") stating that he wishes
to exercise such sale right. The Determination Date for purposes of
20
determining the Fair Market Value for purposes of this Section 9(b)(i)
shall be the closing date of the purchase of the applicable shares, as
described in Section 9(c).
(ii) Notwithstanding Section 9(b)(i), in the event of any
Section 9(b) Termination, the applicable Non-YBR Holder (or any
permitted transferee) shall, solely with respect to any Option Shares,
have the right, but not the obligation, to sell all (but not less than
all) of his Option Shares to the Company in accordance with this
Section 9(b)(ii) (a "SECTION 9(b)(ii) SALE"). In order to effectuate
any Section 9(b)(ii) Sale, the applicable Non-YBR Holder must exercise
all Options that are vested as of the date of the Section 9(b)
Termination prior to the six month anniversary of such Section 9(b)
Termination and, within the Section 9(b) Notice Period, provide the
Company with written notice that the Non-YBR Holder wishes to sell his
Option Shares to the Company pursuant to a Section 9(b)(ii) Sale. The
terms of any such Section 9(b)(ii) Sale shall be as follows: (A) the
effective date of such Section 9(b)(ii) Sale shall be six months and
one day following the date of exercise of the Options (or, if later,
the closing date of the purchase of the applicable shares, as
described in Section 9(c)) (the "SECTION 9(b)(ii) SALE DATE"); (B) the
purchase price per each Option Share shall be equal to the Fair Market
Value of the Shares of Common Stock on the Section 9(b)(ii) Sale Date;
and (C) unless otherwise determined by the Company in its discretion
(I) the aggregate purchase price for all Option Shares shall be paid
by the Company via a promissory note (a "COMPANY NOTE") payable to the
Non-YBR Holder in the principal amount equal to such aggregate
purchase price, (II) the Company Note shall bear simple interest,
compounded annually, at the rate equal to the applicable interest rate
contained in the Company's revolving credit facility in effect as of
the Section 9(b)(ii) Sale Date, and (III) all amounts of interest and
principal with respect to the Company Note shall become payable only
upon the earlier to occur of (1) the tenth anniversary of the Section
9(b)(ii) Sale Date or (2) the first date upon which such Option Shares
could have been sold in accordance with Section 4.2 or Section 10.
Notwithstanding the foregoing, in the event that any Non-YBR Holder
requests that the Company provide him with a loan pursuant to Section
9(b)(iii), the Company may, in lieu of making such loan, elect to
extend the period during which an Option may be exercised following
the Non-YBR Holder's termination of employment (the "EXTENSION
PERIOD"); PROVIDED, HOWEVER, that such Extension Period may not extend
beyond the date the Option would otherwise have terminated in
accordance with the terms of the applicable Option Agreement; and
PROVIDED, FURTHER, that (x) unless otherwise determined by the
Company, the Non-YBR Holder may not undertake any Section 9(b)(ii)
Sale during the Extension Period, (y) during the Extension Period the
terms of Section 9(b)(iii) shall not apply, and (z) upon the
termination of the Extension Period the terms of this Section 9(b)(ii)
and Section 9(b)(iii) shall apply.
(iii) Upon the advanced written request of any applicable
Non-YBR Holder, in connection with the exercise of any Options
following a Section 9(b) Termination, the Company shall loan the
Non-YBR Holder an amount equal to the sum of (A) the aggregate
exercise price for all Option Shares (B) the
21
amount of incremental income taxes payable by the Non-YBR Holder in
connection the exercise of such Options (the "INCREMENTAL TAX AMOUNT")
(which amount shall be utilized to pay such aggregate exercise price
and Incremental Tax Amount). Such loan shall be made as of the date
the Options are exercised and shall be evidenced by a full recourse
promissory note (a "NON-YBR HOLDER NOTE"), payable to the Company, in
a principal amount equal to the sum of (A) such aggregate exercise
price and (B) the Incremental Tax Amount. Each Non-YBR Holder Note
shall bear simple interest, compounded annually, at the rate equal to
the market rate in effect as of the date of exercise of the Options.
All interest and principal with respect to a Non-YBR Holder Note shall
become payable only upon the earlier to occur of (x) the seven month
anniversary of the date the loan is made or (y) the first date upon
which such Option Shares could have been sold in accordance with
Section 4.2 or Section 10. Unless otherwise agreed to by the Company
and the Non-YBR Holder, upon the Section 9(b)(ii) Sale Date the
Company shall, in lieu of issuing a Company Note pursuant to the terms
of Section 9(b)(ii): (1) cancel the applicable Non-YBR Holder Note and
(2) issue a Company Note in the principal amount equal to the excess
of (A) the otherwise applicable principal amount of such Company Note
as determined in accordance with Section 9(b)(ii)(C)(I) over (B) the
accreted principal amount of the Non-YBR Holder Note.
(c) The closing of the purchase or sale of the shares of Common Stock
and shares of Preferred Stock, pursuant to this Section 9 shall take place
on a date designated by the Company, one of its subsidiaries, or YBR, as
applicable, consistent with the terms of Section 9(a) or 9(b). The Company,
one of its subsidiaries, or YBR, as applicable, will pay for the shares of
Common Stock and shares of Preferred Stock purchased or sold pursuant to
this Section 9 by delivery of a check or wire transfer of funds, in
exchange for the delivery by the Non-YBR Holder of the certificates
representing such shares of Common Stock and shares of Preferred Stock,
duly endorsed for transfer to the Company or YBR. The Company shall have
the right to record such transfer on its books and records without the
consent of the Non-YBR Holder.
(d) Notwithstanding anything to the contrary contained in this
Agreement, all purchases of shares of Common Stock and shares of Preferred
Stock by the Company shall be subject to applicable restrictions contained
in federal law and the Delaware General Corporation Law and in the
Company's and its respective subsidiaries' debt and equity financing
agreements. Notwithstanding anything to the contrary contained in this
Agreement, if any such restrictions prohibit or otherwise delay the
purchase of the shares of Common Stock and shares of Preferred Stock
hereunder which the Company is otherwise entitled or required to make, then
the Company shall make such purchases within 30 days of the date that it is
permitted to do so under such restrictions. Notwithstanding anything to the
contrary contained in this Agreement, the Company and its subsidiaries may
not effectuate any transaction contemplated by this Section 9 if such
transaction would violate the terms of any Material Agreement; PROVIDED,
HOWEVER, that to the extent that such transaction becomes permissible
pursuant to the terms of such Material Agreement, the Company will
effectuate such transaction as of the date that such transaction first
becomes permissible under the applicable Material Agreement and,
22
with respect to any shares of Common Stock or Preferred Stock that are
distributed to any Non-YBR Holder pursuant to any deferred compensation
plan which such Non-YBR Holder requests to sell pursuant to Section 9(b)(i)
but which sale is not permitted pursuant to this Section 9(d), then the
Company shall loan the Non-YBR Holder an amount equal to the amount of
incremental income taxes payable by the Non-YBR Holder in connection with
such distribution from the deferred compensation plan. Any loan described
in the preceding sentence shall be evidenced by a full recourse promissory
note, payable to the Company, in a principal amount equal to the amount of
such incremental income taxes, which shall be become payable upon the
earliest to occur of (x) the tenth anniversary of the date the loan is
made, (y) the date the Company repurchases such shares pursuant to Section
9(b)(i) and this Section 9(d) or (z) the date such shares are disposed of
in accordance with Section 4.2 or Section 10. In addition, such note shall
be subject to such other terms as described in Section 9(b)(iii) with
respect to the Non-YBR Holder Note.
(e) In the event that shares of Common Stock and shares of Preferred
Stock are purchased or sold pursuant to this Section 9, the Non-YBR Holder,
and such Non-YBR Holder's successors, assigns or representatives, will take
all steps necessary and desirable to obtain all required third-party,
governmental and regulatory consents and approvals and take all other
actions necessary and desirable to facilitate consummation of such
repurchase in a timely manner.
Section 10. PIGGY-BACK REGISTRATION RIGHTS.
(a) PARTICIPATION. Subject to Section 10(b), if at any time after the
date hereof the Company files a Registration Statement (other than a
registration on Form S-4 or S-8 or any successor form to such Forms or any
registration of securities as it relates to an offering and sale to
management of the Company pursuant to any employee stock plan or other
employee benefit plan arrangement) with respect to an offering that
includes any shares of Common Stock or Preferred Stock, then the Company
shall give prompt notice (the "INITIAL NOTICE") to the Non-YBR Holders and
the Non-YBR Holders shall be entitled to include in such Registration
Statement the Registrable Securities (as defined in Section 10(f)) held by
them. If the Non-YBR Holders elect to include any or all of their
Registrable Securities in such Registration Statement, then the Company
shall give prompt notice (the "PIGGYBACK NOTICE") to each Holder (excluding
the Non-YBR Holders) and each such Holder shall be entitled to include in
such Registration Statement the Registrable Securities held by it. The
Initial Notice and Piggyback Notice shall offer the Non-YBR Holders and the
Holders, respectively, the right, subject to Section 10(b) (the "PIGGY BACK
REGISTRATION RIGHT"), to register such number of shares of Registrable
Securities as each Non-YBR Holder and each Holder may request and shall set
forth (i) the anticipated filing date of such Registration Statement and
(ii) the number of shares of Common Stock or Preferred Stock that is
proposed to be included in such Registration Statement. Subject to Section
10(b), the Company shall include in such Registration Statement such shares
of Registrable Securities for which it has received written requests to
register such shares within 15 days after the Initial Notice and 7 days
after the Piggyback Notice has been given.
23
(b) UNDERWRITER'S CUTBACK. Notwithstanding the foregoing, if a
registration pursuant to this Section 10 involves an Underwritten Offering
(as defined in Section 10(f)) and the managing underwriter or underwriters
of such proposed Underwritten Offering delivers an opinion to the Holders
that the total or kind of securities which such Holders and any other
persons or entities intend to include in such offering would be reasonably
likely to adversely affect the price, timing or distribution of the
securities offered in such offering, then the Company shall include in such
registration (i) first, 100% of the securities the Company, or the Person
initiating such registration, proposes to sell, and (ii) second, to the
extent of the amount of securities which all other Holders have requested
to be included in such registration, which, in the opinion of the managing
underwriter or underwriters, can be sold without such adverse effect
referred to above, such amount to be allocated pro rata among all other
Holders based upon the relative aggregate amount of gross proceeds to be
received by any other Holders in the offering (and for purposes of
calculating the foregoing amount, any shares sold by a Non-YBR Holder to
the Company pursuant to a Section 9(b)(ii) Sale shall be deemed to be the
first shares available to be included in such Underwritten Offering by such
Non-YBR Holder).
(c) COMPANY CONTROL. The Company may decline to file a Registration
Statement after giving the Initial Notice or the Piggyback Notice, or
withdraw a Registration Statement after filing and after such Piggyback
Notice, but prior to the effectiveness of the Registration Statement,
provided that the Company shall promptly notify each Holder in writing of
any such action and provided further that the Company shall bear all
reasonable expenses incurred by such Holder or otherwise in connection with
such withdrawn Registration Statement. Notwithstanding any other provision
herein, the Company shall have sole discretion to select any and all
underwriters that may participate in any Underwritten Offering.
(d) PARTICIPATION IN UNDERWRITTEN OFFERINGS. No Person may participate
in any Underwritten Offering hereunder unless such Person (i) agrees to
sell such Person's securities on the basis provided in any underwriting
arrangements approved by the Persons entitled to approve such arrangements
and (ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements, lock-ups and other documents required
for such underwriting arrangements. Nothing in this Section 10(d) shall be
construed to create any additional rights regarding the piggyback
registration of Registrable Securities in any Person otherwise than as set
forth herein.
(e) EXPENSES. The Company or YBR will pay all registration expenses in
connection with each registration of Registrable Securities requested
pursuant to this Section 10; provided, that each Holder shall pay all
applicable underwriting fees, discounts and similar charges.
(f) CERTAIN DEFINITIONS. For purposes of this Section 10:
(i) "REGISTRABLE SECURITIES" shall mean (A) all Initial
Purchased Shares, and (B) all Non-Initial Purchased Shares; PROVIDED, HOWEVER,
that Non-Initial Purchased Shares shall only be deemed to be Registrable
Securities following the date that the Apollo Group has sold shares of Common
Stock in registered offerings in exchange for net proceeds at
24
least equal to the amount of the aggregate amount paid by the Apollo Group for
all shares of Common Stock purchased by the Apollo Group during the period
beginning on the Original Issue Date and ending on the date of any such
registered offering; and, PROVIDED, FURTHER, that any Registrable Securities
shall cease to be Registrable Securities when (I) a registration statement with
respect to the sale of such Registrable Securities has been declared effective
under the Securities Act and such Registrable Securities have been disposed of
in accordance with the plan of distribution set forth in such registration
statement, (II) such Registrable Securities are distributed pursuant to Rule 144
(or any similar provision then in force) under the Securities Act or (III) such
Registrable Securities shall have been otherwise transferred and new
certificates for them not bearing a legend restricting further transfer under
the Securities Act shall have been delivered by the Company; and PROVIDED,
FURTHER, that any securities that have ceased to be Registrable Securities shall
not thereafter become Registrable Securities and any security that is issued or
distributed in respect of securities that have ceased to be Registrable
Securities is not a Registrable Security. Notwithstanding any other provision of
this Section 10(f)(i), with respect to any Registration Statement that registers
shares of Common Stock, "Registrable Securities" shall only include shares of
Common Stock and with respect to any Registration Statement that registers
shares of Preferred Stock, "Registrable Securities" shall only include share of
Preferred Stock.
(ii) "UNDERWRITTEN OFFERING" means a sale of shares of Common
Stock or Preferred Stock to an underwriter for reoffering to the public.
Section 11. MISCELLANEOUS PROVISIONS.
(a) All questions concerning the construction, interpretation
and validity of this Agreement shall be governed by and construed in
accordance with the domestic laws of the State of New York without
giving effect to any choice or conflict of law provision or rule
(whether in the State of New York or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than
the State of New York.
(b) Whenever the context requires, the gender of all words
used herein shall include the masculine, feminine and neuter, and the
number of all words shall include the singular and plural.
(c) This Agreement shall be binding upon the Company, the
Non-YBR Holders, any spouses of the Non-YBR Holders, and their
respective heirs, executors, administrators and permitted successors
and assigns.
(d) This Agreement may be amended or waived from time to time
by an instrument in writing signed by the Company and the Holders
having the Required Voting Percentage, PROVIDED, that this Agreement
may be amended by the Company without the consent of any Holder to
cure any ambiguity or to cure, correct or supplement any defective
provisions contained herein, or to make any other provisions with
respect to matters or questions hereunder as the Company may deem
necessary or advisable so long as such action does not affect
adversely the interest of any Holder.
25
(e) This Agreement shall terminate automatically upon: (i) the
dissolution of the Company; (ii) the occurrence of any event which
reduces the number of Holders to one in accordance with the terms
hereof; or (iii) the consummation of a Control Disposition.
(f) Any Holder who disposes of all of his, her or its Common
Stock and Preferred Stock in conformity with the terms of this
Agreement shall cease to be a party to this Agreement and shall have
no further rights hereunder.
(g) The spouses of the individual Non-YBR Holders are fully
aware of, understand and fully consent and agree to the provisions of
this Agreement and its binding effect upon any community property
interests or similar marital property interests in the Common Stock
and Preferred Stock they may now or hereafter own, and agree that the
termination of their marital relationship with any Non-YBR Holder for
any reason shall not have the effect of removing any Common Stock and
Preferred Stock of the Company otherwise subject to this Agreement
from the coverage of this Agreement and that their awareness,
understanding, consent and agreement are evidenced by their signing
this Agreement. Furthermore, each individual Non-YBR Holder agrees to
cause his or her spouse (and any subsequent spouse) to execute and
deliver, upon the request of the Company, a counterpart of this
Agreement, or an Adoption Agreement substantially in the form of
EXHIBIT A or in a form satisfactory to the Company.
(h) Any Disposition or attempted Disposition in breach of this
Agreement shall be void and of no effect; PROVIDED, that the Company
may determine to treat any attempted Disposition in breach of this
Agreement, as an Offer pursuant to Section 2.5. Additionally, Section
4 shall apply to such attempted Disposition; PROVIDED, HOWEVER, that
the time periods set forth in that Section shall begin to run as of
the date the Company receives evidence satisfactory to it of such
attempted Disposition. In connection with any attempted Disposition in
breach of this Agreement, the Company may hold and refuse to transfer
any Common Stock or any certificate therefor or any Note tendered to
it for transfer, in addition to and without prejudice to any and all
other rights or remedies which may be available to it or the Holders.
Each party to this Agreement acknowledges that a remedy at law for any
breach or attempted breach of this Agreement will be inadequate,
agrees that each other party to this Agreement shall be entitled to
specific performance and injunctive and other equitable relief in case
of any such breach or attempted breach and further agrees to waive (to
the extent legally permissible) any legal conditions required to be
met for the obtaining of any such injunctive or other equitable relief
(including posting any bond in order to obtain equitable relief).
(i) Each individual Non-YBR Holder and his or her spouse, if
any, hereby appoints the Company as their agent and attorney-in-fact
to make the Offers required and take all actions necessary under
Sections 2.1 through 2.5 and Section 6 on their behalf and to execute
any required Adoption Agreement on
26
their behalf, and expressly bind themselves to such Offers and to the
Company's execution of any such Adoption Agreement without further
action on their part, and all such powers of attorney granted herein
are deemed to be coupled with an interest in the Common Stock and
Preferred Stock shall survive the death, disability, bankruptcy or
dissolution of such Non-YBR Holder or his or her spouse, if any.
(j) This Agreement may be executed simultaneously in two or
more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together will
constitute one and the same agreement. It shall not be necessary in
making proof of this Agreement to produce or account for more than one
such counterpart. The failure of any Holder to execute this Agreement
does not make it invalid as against any other Holder.
(k) Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable
law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or any other
jurisdiction, and such invalid, void or otherwise unenforceable
provisions shall be null and void. It is the intent of the parties,
however, that any invalid, void or otherwise unenforceable provisions
be automatically replaced by other provisions which are as similar as
possible in terms to such invalid, void or otherwise unenforceable
provisions but are valid and enforceable to the fullest extent
permitted by law.
(l) Each party hereto shall do and perform or cause to be done
and performed all such further acts and things and shall execute and
deliver all such other agreements, certificates, instruments, and
documents as any other party hereto reasonably may request in order to
carry out the provisions of this Agreement and the consummation of the
transactions contemplated hereby.
(m) The parties to this Agreement agree that jurisdiction and
venue in any action brought by any party hereto pursuant to this
Agreement shall properly (but not exclusively) lie in any federal or
state court located in the State of New York. By execution and
delivery of this Agreement, the parties hereto irrevocably submit to
the jurisdiction of such courts for himself and in respect of his
property with respect to such action. The parties hereto irrevocably
agree that venue would be proper in such court, and hereby waive any
objection that such court is an improper or inconvenient forum for the
resolution of such action. The parties further agree that the mailing
by certified or registered mail, return receipt requested, of any
process required by any such court shall constitute valid and lawful
service of process against them, without necessity for service by any
other means provided by statute or rule of court.
(n) No course of dealing between the Company, or its
subsidiaries, and the Holders (or any of them) or any delay in
exercising any rights hereunder will
27
operate as a waiver of any rights of any party to this Agreement. The
failure of any party to enforce any of the provisions of this
Agreement will in no way be construed as a waiver of such provisions
and will not affect the right of such party thereafter to enforce each
and every provision of this Agreement in accordance with its terms.
(o) BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX
FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY
AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE
AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES
DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE
BENEFITS OF THE JUDICIAL SYSTEM AND OR ARBITRATION, THE PARTIES HERETO
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING
BROUGHT TO ENFORCE OR DEFEND ANY RIGHT OR REMEDIES UNDER THIS
AGREEMENT OR ANY DOCUMENTS RELATED HERETO.
(p) This Agreement sets forth the entire agreement of the
parties hereto as to the subject matter hereof and supersedes all
previous agreements among all or some of the parties hereto, whether
written, oral or otherwise. Unless otherwise provided herein, any
consent required by the Company may be withheld by the Company in its
sole discretion.
(q) No Person not a party to this Agreement, as a third party
beneficiary or otherwise, shall be entitled to enforce any rights or
remedies under this Agreement.
(r) If, and as often as, there are any changes in the Common
Stock or Preferred Stock by way of stock split, stock dividend,
combination or reclassification, or through merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions of this Agreement, as may
be required, so that the rights, privileges, duties and obligations
hereunder shall continue with respect to the Common Stock or Preferred
Stock as so changed.
(s) No director of the Company shall be personally liable to
the Company or any Holder as a result of any acts or omissions taken
under this Agreement in good faith.
(t) Except for Dispositions allowed under Section 4.2 or
Section 9, if the Company proposes for any reason to register shares
of Common Stock or Preferred Stock under the Securities Act, the
Non-YBR Holders shall not engage in, or permit a Disposition of, any
shares of Common Stock or Preferred Stock without the prior written
consent of the Company for a period as shall be determined by the
managing underwriters, which period cannot last more than one
28
hundred and eighty (180) days after the effective date of such
registration statement.
(u) In the event additional shares of Common Stock or
Preferred Stock are issued by the Company to a Holder at any time
during the term of this Agreement, either directly or upon the
exercise or exchange of securities of the Company exercisable for or
exchangeable into shares or Common Stock or Preferred Stock, such
additional shares of Common Stock or Preferred Stock, as a condition
to such issuance, become subject to the terms and provisions of this
Agreement.
(v) Notwithstanding anything to the contrary contained herein,
YBR may assign its rights or obligations, in whole or in part, under
this Agreement to one or more of its Affiliates.
(w) In the event that any member of YBR becomes an owner of
Common Stock or Preferred Stock of the Company, such member shall
automatically become a party to this Agreement and this Agreement
shall be amended and restated to provide that the Apollo Group or a
designee of the Apollo Group shall have all of the rights of YBR
hereunder.
29
This Agreement is executed by the Company and by each Holder and
spouse of a Non-YBR Holder to be effective as of the date first above written.
COMPANY
SALT HOLDINGS CORPORATION
By:
------------------------------------
Name:
Title
HOLDERS
YBR HOLDINGS LLC
By:
------------------------------------
Name:
Title
NON-YBR HOLDERS
See Annex II
30
EXHIBIT A
ADOPTION AGREEMENT
This Adoption Agreement ("Adoption") is executed pursuant to the terms
of the Investor Rights Agreement dated as of the Original Issue Date, a copy of
which is attached hereto (the "Investor Rights Agreement"), by the transferee
("Transferee") executing this Adoption. By the execution of this Adoption, the
Transferee agrees as follows:
(1) ACKNOWLEDGEMENT. Transferee acknowledges that Transferee is
acquiring certain shares of Common Stock and/or Preferred Stock
of Salt Holdings Corporation, a Delaware corporation (the
"Company"), subject to the terms and conditions of the Investor
Rights Agreement, among the Company and the Holders party
thereto. Capitalized terms used herein without definition are
defined in the Investor Rights Agreement and are used herein with
the same meanings set forth therein.
(2) AGREEMENT. Transferee (i) agrees that the shares of Common Stock
and/or Preferred Stock acquired by Transferee, and certain other
shares of Common Stock, Preferred Stock , and other securities
that may be acquired by Transferee in the future, shall be bound
by and subject to the terms of the Investor Rights Agreement,
pursuant to the terms thereof, and (ii) hereby adopts the
Investor Rights Agreement with the same force and effect as if he
were originally a party thereto.
(3) NOTICE. Any notice required as permitted by the Investor Rights
Agreement shall be given to Transferee at the address listed
beside Transferee's signature below.
(4) JOINDER. The spouse of the undersigned Transferee, if applicable,
executes this Adoption to acknowledge its fairness and that it is
in such spouse's best interest, and to bind such spouse's
community interest, if any, in the shares of Common Stock,
Preferred Stock, and other securities referred to above and in
the Investor Rights Agreement, to the terms of the Investor
Rights Agreement.
------------------------------------------
------------------------------------------
31
ANNEX I
32
ANNEX II
(i) If to the Company:
Salt Holdings Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President-Human Resources
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
(ii) If to YBR:
YBR Holdings LLC
c/o Apollo Management, L.P.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
(iii) If to any Non-YBR Holder, to the address set forth with respect
to such Non-YBR Holder in the Company's records.
* * * * *
33
NON-YBR HOLDERS
----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇▇▇▇
----------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
34
