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EXHIBIT 9.1
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SHAREHOLDERS AGREEMENT
HOME INTERIORS & GIFTS, INC.
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Dated as of June 4, 1998
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TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 2
MANAGEMENT OF THE COMPANY AND CERTAIN ACTIVITIES . . . . . . . . . . . . . . . . 6
Section 2.1 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1.1 Board Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1.2 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1.3 Termination of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1.4 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1.5 Initial HMTF Designees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1.6 Initial ▇▇▇▇▇▇ Designees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1.7 Calculation of Share Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.2 Other Activities of the Holders; Fiduciary Duties . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 3
REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.1 Demand Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1.1 Request for Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1.2 Effective Registration and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1.3 Selection of Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1.4 Priority on Demand Registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1.5 Rights of Nonrequesting Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1.6 Deferral of Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.2 Piggyback Registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2.1 Right to Piggyback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2.2 Priority on Registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.3 Holdback Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.4 Registration Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.5 Suspension of Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.6 Registration Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 4
TRANSFERS OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.1 Tag Along Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.1.1 Significant Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.1.2 Threshold Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.1.3 Terms of Participation Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.2 Certain Events Not Deemed Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.3 Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.4 Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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ARTICLE 5
LIMITATION ON TRANSFERS . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.1 Restrictions on Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.2 Restrictive Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.2.1 Securities Act Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.2.2 Other Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.3 Notice of Proposed Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.4 Termination of Certain Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 6
AFFILIATE TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 7
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 8
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.2 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 8.3 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 8.4 Duplicate Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 8.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 8.6 No Waivers; Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 8.7 Actions of ▇▇▇▇▇▇ Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 8.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 8.9 Certain Actions by HMC Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (this "Shareholders Agreement"), dated as
of June 4, 1998, is entered into by and among Home Interiors & Gifts, Inc., a
Texas corporation (including its successors, the "Company"), and the
securityholders listed on the signature pages hereof.
In consideration of the premises, mutual covenants and agreements
hereinafter contained and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 DEFINITIONS.
"ACCREDITED INVESTOR" means an "Accredited Investor," as
defined in Regulation D, or any successor rule then in effect.
"ADVICE" shall have the meaning provided in Section 3.5
hereof.
"AFFILIATE" means, with respect to any Person, any Person who,
directly or indirectly, controls, is controlled by or is under common
control with that Person. For purposes of this definition, "control"
when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or
otherwise.
"BENEFICIAL OWNERSHIP" with respect to any securities shall
mean having "beneficial ownership" (as determined pursuant to Rule
13d-3 under the Exchange Act), including pursuant to any agreement,
arrangement or understanding, whether or not in writing. Without
duplicative counting of the same securities by the same Holder,
securities Beneficially Owned by a Person shall include securities
Beneficially Owned by all other Persons who are Affiliates of such
Person (excluding officers and directors of the Company, the Company
and their controlled Affiliates) who together with such Person would
constitute a "group" within the meaning of Section 13(d)(3) of the
Exchange Act.
"▇▇▇▇▇▇ BOARD SHARE" shall have the meaning set forth in
Section 2.1.1(c) hereof.
"▇▇▇▇▇▇ DESIGNEE" shall have the meaning set forth in Section
2.1.1.
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"▇▇▇▇▇▇ SHAREHOLDERS" means, collectively, those shareholders
of the Company listed on Exhibit A attached hereto and any direct or
indirect transferee of any such shareholder who shall become a party
hereto in accordance with Section 5.1 hereof; provided, however, that
for purposes of Section 2.1 of this Shareholders Agreement, "▇▇▇▇▇▇
Shareholders" shall mean, collectively, those shareholders of the
Company listed on Exhibit A attached hereto and any direct or indirect
transferee of any such shareholder who shall become a party hereto in
accordance with Section 5.1 hereof and who is an Affiliate of such
shareholder or an officer, director, or employee of such shareholder
or its Affiliates (and any of their respective Family Members, their
estates or trusts for the primary benefit of such Family Members).
"CLOSING" shall mean the date on which the transactions
contemplated by the Merger Agreement are consummated.
"COMMON STOCK" means shares of the Common Stock, par value
$0.10 per share, of the Company, and any capital stock into which such
Common Stock thereafter may be changed.
"COMMON STOCK EQUIVALENTS" means, without duplication with any
other Common Stock or Common Stock Equivalents, any rights, warrants,
options, convertible securities or indebtedness, exchangeable
securities or indebtedness, or other rights, exercisable for or
convertible or exchangeable into, directly or indirectly, Common Stock
of the Company and securities convertible or exchangeable into Common
Stock of the Company, whether at the time of issuance or upon the
passage of time or the occurrence of some future event.
"COMPANY" shall have the meaning set forth in the introductory
paragraph hereof.
"CO-SELLER" shall have the meaning set forth in Section 4.1.1
hereof.
"DEMAND REGISTRATION" shall have the meaning set forth in
Section 3.1.1 hereof.
"DEMAND REQUEST" shall have the meaning set forth in Section
3.1.1 hereof.
"DESIGNEES" shall have the meaning provided in Section 2.1.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC
thereunder.
"EXCLUDED REGISTRATION" means a registration under the
Securities Act of (i) securities pursuant to one or more Demand
Registrations pursuant to Section 3.1 hereof, (ii) securities
registered on Form S-8 under the Securities Act or any similar
successor form and (iii) securities registered to effect the
acquisition of or combination with another Person.
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"FAMILY MEMBER" means, as to any natural Person, such Person's
spouse, grandparent or descendant of that grandparent, children
(natural and adopted), natural or adopted siblings, mothers and
fathers-in-law, sons and daughters-in-law, and brothers and
sisters-in-law.
"FULLY-DILUTED COMMON STOCK" means, at any time, the then
outstanding Common Stock plus (without duplication) all shares of
Common Stock issuable, whether at such time or upon the passage of
time or the occurrence of future events, upon the exercise,
conversion, or exchange of all then outstanding Common Stock
Equivalents.
"HMC BOARD SHARE" shall have the meaning set forth in Section
2.1.1(b) hereof.
"HMC SHAREHOLDERS" means, collectively, HM/RB Partners, L.P.
and any direct or indirect transferee of such shareholder who shall
become a party hereto in accordance with Section 5.1 hereof; provided,
however, that for purposes of Section 2.1, Section 4.1, and Section
4.2 of this Shareholders Agreement, "HMC Shareholders" shall mean,
collectively, HM/RB Partners, L.P. and any direct or indirect
transferee of such shareholder who shall become a party hereto in
accordance with Section 5.1 hereof and who is an Affiliate of such
shareholder or an officer, director, or employee of such shareholder
or its Affiliates (and any of their respective Family Members or
trusts for the primary benefit of such Family Members).
"HMTF DESIGNEE" shall have the meaning set forth in Section
2.1.1.
"HMTF" means Hicks, Muse, ▇▇▇▇ & ▇▇▇▇▇ Incorporated, a Texas
corporation, an affiliate of HM/RB Partners, L.P.
"HOLDER" means (i) a securityholder listed on a signature page
hereof and (ii) any direct or indirect transferee of any such
securityholder who shall become a party to this Shareholders Agreement
in accordance with Section 5.1 hereof.
"INDEPENDENT DIRECTOR" means a Person who is not (i) an HMC
Shareholder, (ii) a ▇▇▇▇▇▇ Shareholder or (iii) an employee of the
Company or any of its Subsidiaries or a Family Member of any such
employee.
"MATERIAL ADVERSE EFFECT" shall have the meaning provided in
Section 3.1.4 hereof.
"MERGER AGREEMENT" shall mean the Agreement and Plan of
Merger, dated as of April 13, 1998, among the Company, ▇▇▇▇▇▇▇
Investments, Inc. and the shareholders of the Company party thereto.
"NASD" shall have the meaning provided in Section 3.4(xiv)
hereof.
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"PARTICIPATION OFFER" shall have the meaning provided in
Section 4.1.1 hereof.
"PERSON" or "PERSON" means any individual, corporation,
partnership, limited liability company, joint venture, association,
joint-stock company, trust, unincorporated organization or government
or other agency or political subdivision thereof.
"PREFERRED STOCK" means shares of stock of the Company which
have a preference as to dividends or distribution upon liquidation or
dissolution of the Company, and any capital stock into which such
Preferred Stock thereafter may be changed.
"QUALIFIED IPO" means a firm commitment underwritten public
offering of Common Stock pursuant to a registration statement under
the Securities Act where both (i) the proceeds to the Company (prior
to deducting any underwriters' discounts and commissions) equal or
exceed Twenty-Five Million Dollars ($25,000,000) and (ii) upon
consummation of such offering, the Common Stock is listed on the New
York Stock Exchange or authorized to be quoted and/or listed on the
Nasdaq National Market.
"REGISTRABLE SHARES" means at any time the Common Stock owned
by the Holders, whether owned on the date hereof or acquired
hereafter; provided, however, that Registrable Shares shall not
include any shares of Common Stock (i) the sale of which has been
registered pursuant to the Securities Act and which shares have been
sold pursuant to such registration or (ii) which have been sold
pursuant to Rule 144 or 144A of the SEC under the Securities Act.
"REGISTRATION EXPENSES" shall have the meaning provided in
Section 3.6 hereof.
"REGULATION D" means Regulation D promulgated under the
Securities Act by the SEC.
"REQUIRED FILING DATE" shall have the meaning provided in
Section 3.1.1(b) hereof.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated by the SEC thereunder.
"SELLER AFFILIATES" shall have the meaning provided in Section
3.7.1 hereof.
"SHAREHOLDERS AGREEMENT" means this Shareholders Agreement, as
the same may be amended from time to time.
"SIGNIFICANT SALE" shall have the meaning provided in Section
4.1.1 hereof.
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"SUBSIDIARY" of any Person means (i) a corporation a majority
of whose outstanding shares of capital stock or other equity interests
with voting power, under ordinary circumstances, to elect directors,
is at the time, directly or indirectly, owned by such Person, by one
or more subsidiaries of such Person or by such Person and one or more
subsidiaries of such Person, and (ii) any other Person (other than a
corporation) in which such Person, a subsidiary of such Person or such
Person and one or more subsidiaries of such Person, directly or
indirectly, at the date of determination thereof, has (x) at least a
majority ownership interest or (y) the power to elect or direct the
election of the directors or other governing body of such Person.
"SUSPENSION EVENT" shall have the meaning provided in Section
3.5 hereof.
"SUSPENSION NOTICE" shall have the meaning provided in Section
3.5 hereof.
"THRESHOLD TRANSACTION" shall have the meaning provided in
Section 4.1.2 hereof.
"TRANSFER" means any disposition of any Common Stock or any
interest therein that would constitute a "sale" thereof within the
meaning of the Securities Act.
"TRANSFER NOTICE" shall have the meaning provided in Section
5.3 hereof.
SECTION 1.2 RULES OF CONSTRUCTION. Unless the context otherwise
requires
(1) a term has the meaning assigned to it;
(2) "or" is not exclusive;
(3) words in the singular include the plural, and words
in the plural include the singular;
(4) words used herein, regardless of the gender, will be
deemed and construed to include any other gender, masculine, feminine
or neuter;
(5) provisions apply to successive events and
transactions; and
(6) "herein," "hereof" and other words of similar import
refer to this Shareholders Agreement as a whole and not to any
particular Article, Section or other subdivision hereof.
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ARTICLE 2
MANAGEMENT OF THE COMPANY AND CERTAIN ACTIVITIES
SECTION 2.1 BOARD OF DIRECTORS.
2.1.1 Board Representation. (a) At all times during the
term hereof, subject to Section 2.1.3, the Board of Directors of the Company
shall consist of eleven (11) members (plus such number of directors as may be
elected from time to time pursuant to the terms of any Preferred Stock that may
be issued and outstanding from time to time).
(b) HMTF Designees. Subject to Section 2.1.3, for so
long as the HMC Shareholders own, in the aggregate, at least 50% of the number
of shares of Common Stock owned by the HMC Shareholders at the Closing (the
"Initial HMC Shares"), HMTF shall be entitled to designate to the Board of
Directors of the Company six (6) individuals. Subject to Section 2.1.3, at
such time as the HMC Shareholders own a number of shares of Common Stock equal
to less than 50% of the Initial HMC Shares, HMTF shall be entitled to designate
to the Board of Directors a number of individuals (rounded to the nearest whole
number) equal to the product of (i) nine (9) directors times (ii) the HMC Board
Share; provided, however, that notwithstanding the foregoing, the ▇▇▇▇▇▇
Shareholders shall be entitled to designate at least three (3) of such nine (9)
directors for so long as they are otherwise entitled to do so pursuant to the
first sentence of Section 2.1.1(c) below. The individuals designated by HMTF
pursuant to the first two sentences of this Section 2.1.1(b) are referred to
herein individually as an "HMTF Designee" and collectively as the "HMTF
Designees." As used herein, the term "HMC Board Share" shall mean a fraction,
the numerator of which is the aggregate number of shares of Common Stock owned
by the HMC Shareholders, and the denominator of which is the aggregate number
of shares of Common Stock owned by the HMC Shareholders and the ▇▇▇▇▇▇
Shareholders collectively.
(c) ▇▇▇▇▇▇ Designees. Subject to Section 2.1.3,
for so long as the ▇▇▇▇▇▇ Shareholders own, in the aggregate, at least 50% of
the number of shares of Common Stock owned by the ▇▇▇▇▇▇ Shareholders at the
Closing (the "Initial ▇▇▇▇▇▇ Shares") or, if earlier, until the fifth
anniversary of the date of this Agreement, the ▇▇▇▇▇▇ Shareholders, shall be
entitled to designate to the Board of Directors of the Company three (3)
individuals. Subject to Section 2.1.3, at such time as the ▇▇▇▇▇▇ Shareholders
own a number of shares of Common Stock equal to less than 50% of the Initial
▇▇▇▇▇▇ Shares or, if earlier, from and after the fifth anniversary of the date
of this Agreement, the ▇▇▇▇▇▇ Shareholders, shall be entitled to designate to
the Board of Directors a number of individuals (rounded to the nearest whole
number) equal to the product of (i) the total number of directors to be
designated by the ▇▇▇▇▇▇ Shareholders and the HMC Shareholders pursuant hereto
times (ii) the ▇▇▇▇▇▇ Board Share. The individuals designated by the ▇▇▇▇▇▇
Shareholders pursuant to the first two sentences of this Section 2.1.1(c) are
referred to herein individually as a "▇▇▇▇▇▇ Designee" and collectively as the
"▇▇▇▇▇▇ Designees." As used herein, the term "▇▇▇▇▇▇ Board Share" shall mean a
fraction, the numerator of which is the aggregate number of shares of Common
Stock owned by the ▇▇▇▇▇▇ Shareholders, and the
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denominator of which is the aggregate number of shares of Common Stock owned by
the ▇▇▇▇▇▇ Shareholders and the HMC Shareholders collectively.
(d) Independent Directors. Subject to Section 2.1.3,
HMTF and the ▇▇▇▇▇▇ Designees shall mutually agree (acting reasonably) upon and
designate to the Board of Directors of the Company two (2) Independent
Directors.
(e) Voting of Holders. Each Holder shall vote his or its
shares of Common Stock at any regular or special meeting of shareholders of the
Company or in any written consent executed in lieu of such a meeting of
shareholders and shall take all other actions (including using his or her best
efforts to cause the Board of Directors of the Company to take all actions)
necessary to give effect to the agreements contained in this Shareholders
Agreement (including, without limitation, the election of the Designees) and to
ensure that the articles of incorporation and bylaws of the Company as in
effect at any time hereafter do not conflict in any respect with the provisions
of this Shareholders Agreement. In order to effectuate the provisions of this
Article 2, each Holder hereby agrees that when any action or vote is required
to be taken by such Holder pursuant to this Shareholders Agreement, such Holder
shall use his or its best efforts to call, or cause the appropriate officers
and directors of the Company to call, a special or annual meeting of
shareholders of the Company, as the case may be, or execute or cause to be
executed a consent in writing in lieu of any such meetings pursuant to Article
9.10.A of the Texas Business Corporation Act, as amended from time to time, or
any successor statutes.
2.1.2 Vacancies. If, prior to election to the Board of
Directors of the Company pursuant to Section 2.1.1 hereof, any Designee shall
be unable or unwilling to serve as a director of the Company, the Person or
Persons who designated such Designee shall be entitled to designate a
replacement who shall then be a Designee for purposes of this Article 2. If,
following an election to the Board of Directors of the Company pursuant to
Section 2.1.1 hereof, any Designee shall resign or be removed (which may only
be done by the Person or Persons who designated such Designee) or be unable to
serve for any reason prior to the expiration of his term as a director of the
Company, the Person who designated such Designee pursuant to Section 2.1.1
shall, within thirty (30) days of notice from the Company of such event, notify
the Board of Directors of the Company in writing of a replacement Designee, and
either (i) the Holders shall comply with the provisions of Section 2.1.1(e) to
ensure the election to the Board of Directors of the Company of such
replacement Designee to fill the unexpired term of the Designee who such
replacement Designee is replacing or (ii) the Board of Directors shall elect or
appoint such replacement Designee to fill the unexpired term of the Designee
who such replacement Designee is replacing. If HMTF requests that any HMTF
Designee, or the ▇▇▇▇▇▇ Shareholders request that any ▇▇▇▇▇▇ Designee, be
removed as a director (with or without cause) by written notice thereof to the
Company, then the Company shall take all actions necessary to effect, and each
of the Holders shall vote all his or its capital stock in favor of, such
removal upon such request.
2.1.3 Termination of Rights. The rights and obligations of
HMTF under Section 2.1, shall terminate upon the first to occur of (i) the
termination or expiration of this
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Shareholders Agreement or this Section 2.1, (ii) such time as HMTF elects in
writing to terminate its rights (but not obligations) under this Section 2.1,
or (iii) such time as the HMC Shareholders cease to own, in the aggregate, at
least ten percent (10%) of the number of shares of Common Stock then
outstanding. The rights and obligations of the ▇▇▇▇▇▇ Shareholders under this
Section 2.1 shall terminate upon the first to occur of (i) the termination or
expiration of this Shareholders Agreement or this Section 2.1, (ii) such time
as the ▇▇▇▇▇▇ Shareholders elect in writing to terminate their rights (but not
obligations) under this Section 2.1, or (iii) such time as the ▇▇▇▇▇▇
Shareholders cease to own, in the aggregate, at least ten percent (10%) of the
number of shares of Common Stock then outstanding (provided that this clause
(iii) shall have no force or effect during the first five years of the term of
this Agreement if and only to the extent the ▇▇▇▇▇▇ Shareholders own, in the
aggregate, at least 50% of the Initial ▇▇▇▇▇▇ Shares).
2.1.4 Costs and Expenses. The Company will pay all
reasonable out-of-pocket expenses incurred by the Designees in connection with
their participation in meetings of the Board of Directors (and committees
thereof) of the Company and the Boards of Directors (and committees thereof) of
the Subsidiaries of the Company.
2.1.5 Initial HMTF Designees. The HMC Shareholders and the
▇▇▇▇▇▇ Shareholders hereby consent to the election, as of the date hereof, of
the following four (4) individuals to serve as the initial HMTF Designees to
the Board of Directors of the Company: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇
▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
2.1.6 Initial ▇▇▇▇▇▇ Designees. The HMC Shareholders and
the ▇▇▇▇▇▇ Shareholders hereby consent to the election, as of the date hereof,
of the following three (3) individuals to serve as the initial ▇▇▇▇▇▇ Designees
to the Board of Directors of the Company: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
2.1.7 Calculation of Share Numbers. For purposes of this
Section 2.1 only, any calculation of the number of shares of Common Stock owned
by an HMC Shareholder or a ▇▇▇▇▇▇ Shareholder at any date shall be determined
as follows: (i) "owned" shall mean Beneficial Ownership and (ii) each
calculation shall be equitably adjusted for subsequent stock splits, reverse
stock splits, stock combinations, recapitalizations, stock dividends and the
like.
SECTION 2.2 OTHER ACTIVITIES OF THE HOLDERS; FIDUCIARY DUTIES.
It is understood and accepted that the Holders and their Affiliates have
interests in other business ventures which may be in conflict with the
activities of the Company and its Subsidiaries and that, subject to applicable
law, nothing in this Shareholders Agreement shall limit the current or future
business activities of the Holders, whether or not such activities are
competitive with those of the Company and its Subsidiaries. Nothing in this
Shareholders Agreement, express or implied, shall relieve any officer or
director of the Company or any of its Subsidiaries, or any Holder, of any
fiduciary or other duties or obligations they may have to the Company's
shareholders.
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ARTICLE 3
REGISTRATION RIGHTS
SECTION 3.1 DEMAND REGISTRATION.
3.1.1 Request for Registration.
(a) At any time after one hundred eighty (180)
days after the consummation of a Qualified IPO, (i) HMC Shareholders
owning 35% or more of the aggregate number of Registrable Shares then
owned by the HMC Shareholders or (ii) ▇▇▇▇▇▇ Shareholders owning 35%
or more of the aggregate number of Registrable Shares then owned by
the ▇▇▇▇▇▇ Shareholders, may request the Company, in writing (a
"Demand Request"), to effect the registration under the Securities Act
of all or part of its or their Registrable Shares (a "Demand
Registration"); provided, however, that the Company shall not be
required to effect a Demand Registration pursuant to a Demand Request
unless the proceeds to the Holders of Registrable Shares requested to
be registered thereunder (collectively, the "Requesting Holders")
(prior to deducting any underwriters' discounts and commissions) equal
or exceed ten million dollars ($10,000,000).
(b) Each Demand Request shall specify the number
of Registrable Shares proposed to be sold. Subject to Section 3.1.6,
the Company shall file the Demand Registration within ninety (90) days
after receiving a Demand Request (the "Required Filing Date") and
shall use all commercially reasonable efforts to cause the same to be
declared effective by the SEC as promptly as practicable after such
filing; provided, that the Company need effect only (i) an aggregate
of three (3) Demand Registrations pursuant to Demand Requests made by
the HMC Shareholders and (ii) an aggregate of three (3) Demand
Registrations pursuant to Demand Requests made by the ▇▇▇▇▇▇
Shareholders; provided, further, that if any Registrable Shares
requested to be registered pursuant to a Demand Request are excluded
from the applicable Demand Registration pursuant to Section 3.1.4
below, the Holders making such Demand Request shall have the right,
with respect to each such exclusion, to request one (1) additional
Demand Registration.
3.1.2 Effective Registration and Expenses. A registration
will not count as a Demand Registration until it has become effective (unless
the Requesting Holders withdraw all their Registrable Shares and the Company
has performed its obligations hereunder in all material respects, in which case
such demand will count as a Demand Registration unless the Requesting Holders
pay all Registration Expenses in connection with such withdrawn registration);
provided, that if, after it has become effective, an offering of Registrable
Shares pursuant to a registration is interfered with by any stop order,
injunction, or other order or requirement of the SEC or other governmental
agency or court, such registration will be deemed not to have been effected and
will not count as a Demand Registration.
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3.1.3 Selection of Underwriters. The offering of
Registrable Shares pursuant to a Demand Registration shall be in the form of a
"firm commitment" underwritten offering. The Requesting Holders of a majority
of the Registrable Shares to be registered in a Demand Registration shall
select the investment banking firm or firms to manage the underwritten
offering; provided, that such selection shall be subject to the consent of the
Company, which consent shall not be unreasonably withheld or delayed.
3.1.4 Priority on Demand Registrations. No securities to
be sold for the account of any Person (including the Company) other than a
Requesting Holder shall be included in a Demand Registration unless the
managing underwriter or underwriters shall advise the Company or the Requesting
Holders in writing that the inclusion of such securities will not materially
and adversely affect the price or success of the offering (a "Material Adverse
Effect"). Furthermore, in the event the managing underwriter or underwriters
shall advise the Company or the Requesting Holders that even after exclusion of
all securities of other Persons pursuant to the immediately preceding sentence,
the amount of Registrable Shares proposed to be included in such Demand
Registration by Requesting Holders is sufficiently large to cause a Material
Adverse Effect, the Registrable Shares of the Requesting Holders to be included
in such Demand Registration shall equal the number of shares which the Company
is so advised can be sold in such offering without a Material Adverse Effect
and such shares shall be allocated pro rata among the Requesting Holders on the
basis of the number of Registrable Shares requested to be included in such
registration by each such Requesting Holder.
3.1.5 Rights of Nonrequesting Holders. Upon receipt of any
Demand Request, the Company shall promptly (but in any event within ten (10)
days) give written notice of such proposed Demand Registration to all other
Holders, who shall have the right, exercisable by written notice to the Company
within twenty (20) days of their receipt of the Company's notice, to elect to
include in such Demand Registration such portion of their Registrable Shares as
they may request. All Holders requesting to have their Registrable Shares
included in a Demand Registration in accordance with the preceding sentence
shall be deemed to be "Requesting Holders" for purposes of this Section 3.1
(although such Holders shall not be considered to have effected a Demand
Request pursuant to such Section 3.1).
3.1.6 Deferral of Filing. The Company may defer the filing
(but not the preparation) of a registration statement required by this Section
3.1 until a date not later than one hundred eighty (180) days after the
Required Filing Date (or, if longer, one hundred eighty (180) days after the
effective date of the registration statement contemplated by clause (ii) below)
if (i) at the time the Company receives the Demand Request, the Company or any
of its Subsidiaries is engaged in confidential negotiations or other
confidential business activities, disclosure of which would be required in such
registration statement (but would not be required if such registration
statement were not filed), and the Board of Directors of the Company determines
in good faith that such disclosure would be materially detrimental to the
Company and its shareholders or would have a material adverse effect on any
such confidential negotiations or other confidential business activities, or
(ii) prior to receiving the Demand Request, the Board of Directors of the
Company had determined to effect a registered
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underwritten public offering of the Company's securities for the Company's
account and the Company had taken substantial steps (including, but not limited
to, selecting a managing underwriter for such offering) and is proceeding with
reasonable diligence to effect such offering. A deferral of the filing of a
registration statement pursuant to this Section 3.1.6 shall be lifted, and the
requested registration statement shall be filed forthwith, if, in the case of a
deferral pursuant to clause (i) of the preceding sentence, the negotiations or
other activities are disclosed or terminated, or, in the case of a deferral
pursuant to clause (ii) of the preceding sentence, the proposed registration
for the Company's account is abandoned. In order to defer the filing of a
registration statement pursuant to this Section 3.1.6, the Company shall
promptly (but in any event within ten (10) days), upon determining to seek such
deferral, deliver to each Requesting Holder a certificate signed by an
executive officer of the Company stating that the Company is deferring such
filing pursuant to this Section 3.1.6 and a general statement of the reason for
such deferral and an approximation of the anticipated delay. Within twenty
(20) days after receiving such certificate, the holders of a majority of the
Registrable Shares held by the Requesting Holders and for which registration
was previously requested may withdraw such Demand Request by giving notice to
the Company; and if withdrawn, the Demand Request shall be deemed not to have
been made for all purposes of this Shareholders Agreement. The Company may
defer the filing of a particular registration statement pursuant to this
Section 3.1.6 only once.
SECTION 3.2 PIGGYBACK REGISTRATIONS.
3.2.1 Right to Piggyback. Each time the Company proposes
to register any of its equity securities (other than pursuant to an Excluded
Registration) under the Securities Act for sale to the public (whether for the
account of the Company or the account of any securityholder of the Company) and
the form of registration statement to be used permits the registration of
Registrable Shares, the Company shall give prompt written notice to each Holder
of Registrable Shares (which notice shall be given not less than thirty (30)
days prior to the effective date of the Company's registration statement),
which notice shall offer each such Holder the opportunity to include any or all
of his or its Registrable Shares in such registration statement, subject to the
limitations contained in Section 3.2.2 hereof. Each Holder who desires to have
his or its Registrable Shares included in such registration statement shall so
advise the Company in writing (stating the number of Registrable Shares desired
to be registered) within twenty (20) days after the date of such notice from
the Company. Any Holder shall have the right to withdraw such Holder's request
for inclusion of such Holder's Registrable Shares in any registration statement
pursuant to this Section 3.2.1 by giving written notice to the Company of such
withdrawal. Subject to Section 3.2.2 below, the Company shall include in such
registration statement all such Registrable Shares so requested to be included
therein; provided, however, that the Company may at any time withdraw or cease
proceeding with any such registration if it shall at the same time withdraw or
cease proceeding with the registration of all other equity securities
originally proposed to be registered.
3.2.2 Priority on Registrations. If the managing
underwriter advises the Company that the inclusion of any Registrable Shares
pursuant to Section 3.2.1 would cause a
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Material Adverse Effect, then (i) the number of such Holder's or Holders'
Registrable Shares to be included in the registration statement shall be
reduced to an amount which, in the judgment of the managing underwriter, would
eliminate such Material Adverse Effect or (ii) if no such reduction would, in
the judgment of the managing underwriter, eliminate such Material Adverse
Effect, then the Company shall have the right to exclude all such Registrable
Shares from such registration statement. Any partial reduction in the number
of Registrable Shares to be included in the registration statement pursuant to
clause (i) of the immediately preceding sentence shall be effected pro rata
based on the ratio which such Holder's requested Registrable Shares bears to
the total number of Registrable Shares requested to be included in such
registration statement by all Persons (including Requesting Holders) who have
requested (pursuant to contractual registration rights) that their Registrable
Shares be included in such registration statement. If as a result of the
provisions of this Section 3.2.2 any Holder shall not be entitled to include
all Registrable Shares in a registration that such Holder has requested to be
so included, such Holder may withdraw such Holder's request to include
Registrable Shares in such registration statement. No Person may participate
in any registration statement hereunder unless such Person (x) agrees to sell
such Person's Registrable Shares on the basis provided in any underwriting
arrangements approved by the Company and (y) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements, and
other documents reasonably required under the terms of such underwriting
arrangements; provided, however, that no such Person shall be required to make
any representations or warranties in connection with any such registration
other than representations and warranties as to (i) such Person's ownership of
his or its Registrable Shares to be Transferred free and clear of all liens,
claims, and encumbrances, (ii) such Person's power and authority to effect such
Transfer, and (iii) such matters pertaining to compliance with securities laws
as may be reasonably requested; provided further, however, that the obligation
of such Person to indemnify pursuant to any such underwriting arrangements
shall be several, not joint and several, among such Persons selling Registrable
Shares, and the liability of each such Person will be in proportion thereto,
and provided further that such liability will be limited to, the net amount
received by such Person from the sale of his or its Registrable Shares pursuant
to such registration.
SECTION 3.3 HOLDBACK AGREEMENT. Unless the managing underwriter
otherwise agrees, each of the Company and the Holders agrees (and the Company
agrees, in connection with any underwritten registration, to use its
commercially reasonable efforts to cause its Affiliates to agree) not to effect
any public sale or private offer or distribution of any Common Stock or Common
Stock Equivalents (except, if applicable, as part of such underwritten
registration) during the ten (10) business days prior to the effectiveness
under the Securities Act of any underwritten registration and during such time
period after the effectiveness under the Securities Act of any underwritten
registration (not to exceed one hundred eighty (180) days) as the Company and
the managing underwriter may agree.
SECTION 3.4 REGISTRATION PROCEDURES. Whenever any Holder has
requested that any Registrable Shares be registered pursuant to this
Shareholders Agreement, the Company will use its commercially reasonable
efforts to effect the registration and the sale of such Registrable
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Shares in accordance with the intended method of disposition thereof, and
pursuant thereto the Company will as expeditiously as possible:
(i) prepare and file with the SEC a registration
statement on any appropriate form under the Securities Act with
respect to such Registrable Shares and use its commercially reasonable
efforts to cause such registration statement to become effective;
(ii) prepare and file with the SEC such
amendments, post-effective amendments, and supplements to such
registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for
a period of not less than one hundred eighty (180) days (or such
lesser period as is necessary for the underwriters in an underwritten
offering to sell unsold allotments) and comply with the provisions of
the Securities Act with respect to the disposition of all securities
covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers
thereof set forth in such registration statement;
(iii) furnish to each seller of Registrable Shares
and the underwriters of the securities being registered such number of
copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement
(including each preliminary prospectus), any documents incorporated by
reference therein and such other documents as such seller or
underwriters may reasonably request in order to facilitate the
disposition of the Registrable Shares owned by such seller or the sale
of such securities by such underwriters (it being understood that,
subject to Section 3.5 and the requirements of the Securities Act and
applicable state securities laws, the Company consents to the use of
the prospectus and any amendment or supplement thereto by each seller
of Registrable Shares and the underwriters in connection with the
offering and sale of the Registrable Shares covered by the
registration statement of which such prospectus, amendment or
supplement is a part);
(iv) use its commercially reasonable efforts to
register or qualify such Registrable Shares under such other
securities or blue sky laws of such jurisdictions as the managing
underwriter reasonably requests; use its commercially reasonable
efforts to keep each such registration or qualification (or exemption
therefrom) effective during the period in which such registration
statement is required to be kept effective; and do any and all other
acts and things which may be reasonably necessary or advisable to
enable each seller of Registrable Shares to consummate the disposition
of the Registrable Shares owned by such seller in such jurisdictions
(provided, however, that the Company will not be required to (A)
qualify generally to do business in any jurisdiction where it would
not otherwise be required to qualify but for this subparagraph or (B)
consent to general service of process in any such jurisdiction);
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(v) promptly notify each seller of Registrable
Shares and each underwriter and (if requested by any such Person)
confirm such notice in writing (A) when a prospectus or any prospectus
supplement or post-effective amendment has been filed and, with
respect to a registration statement or any post-effective amendment,
when the same has become effective, (B) of the issuance by any state
securities or other regulatory authority of any order suspending the
qualification or exemption from qualification of any of the
Registrable Shares under state securities or "blue sky" laws or the
initiation of any proceedings for that purpose, and (C) of the
happening of any event which makes any statement made in a
registration statement or related prospectus untrue or which requires
the making of any changes in such registration statement, prospectus
or documents so that they will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading,
and, as promptly as practicable thereafter, prepare and file with the
SEC and furnish a supplement or amendment to such prospectus so that,
as thereafter deliverable to the purchasers of such Registrable
Shares, such prospectus will not contain any untrue statement of a
material fact or omit a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
(vi) make generally available to the Company's
securityholders an earnings statement satisfying the provisions of
Section 11(a) of the Securities Act no later than thirty (30) days
after the end of the twelve (12) month period beginning with the first
day of the Company's first fiscal quarter commencing after the
effective date of a registration statement, which earnings statement
shall cover said twelve (12) month period, and which requirement will
be deemed to be satisfied if the Company timely files complete and
accurate information on Forms 10-Q, 10-K and 8-K under the Exchange
Act and otherwise complies with Rule 158 under the Securities Act;
(vii) if requested by the managing underwriter or
any seller of Registrable Shares, promptly incorporate in a prospectus
supplement or post-effective amendment such information as the
managing underwriter or any seller of Registrable Shares reasonably
requests to be included therein, including, without limitation, with
respect to the Registrable Shares being sold by such seller, the
purchase price being paid therefor by the underwriters and with
respect to any other terms of the underwritten offering of the
Registrable Shares to be sold in such offering, and promptly make all
required filings of such prospectus supplement or post-effective
amendment;
(viii) as promptly as practicable after filing with
the SEC of any document which is incorporated by reference into a
registration statement (in the form in which it was incorporated),
deliver a copy of each such document to each seller of Registrable
Shares who so requests;
(ix) cooperate with the sellers of Registrable
Shares and the managing underwriter to facilitate the timely
preparation and delivery of certificates (which shall
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not bear any restrictive legends unless required under applicable law)
representing securities sold under any registration statement, and
enable such securities to be in such denominations and registered in
such names as the managing underwriter or such sellers of Registrable
Shares may request and keep available and make available to the
Company's transfer agent prior to the effectiveness of such
registration statement a supply of such certificates;
(x) promptly make available for inspection by any
seller of Registrable Shares, any underwriter participating in any
disposition pursuant to any registration statement, and any attorney,
accountant or other agent or representative retained by any such
seller of Registrable Shares or underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate
documents and properties of the Company (collectively, the "Records"),
as shall be reasonably necessary to enable them to exercise their due
diligence responsibilities, and cause the Company's officers,
directors and employees to supply all information requested by any
such Inspector in connection with such registration statement;
provided, that, unless the disclosure of such Records is necessary to
avoid or correct a misstatement or omission in the registration
statement or the release of such Records is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction, the
Company shall not be required to provide any information under this
subparagraph (x) if (A) the Company believes, after consultation with
counsel for the Company, that to do so would cause the Company to
forfeit an attorney-client privilege that was applicable to such
information or (B) if either (1) the Company has requested and been
granted from the SEC confidential treatment of such information
contained in any filing with the SEC or documents provided
supplementally or otherwise or (2) the Company reasonably determines
in good faith that such Records are confidential and so notifies the
Inspectors in writing unless prior to furnishing any such information
with respect to (A) or (B) such Holder of Registrable Shares
requesting such information agrees to enter into a confidentiality
agreement in customary form and subject to customary exceptions; and,
provided, further, that each Holder of Registrable Shares agrees that
it will, upon learning that disclosure of such Records is sought in a
court of competent jurisdiction, give notice to the Company and allow
the Company, at its expense, to undertake appropriate action and to
prevent disclosure of the Records deemed confidential;
(xi) furnish to each seller of Registrable Shares
and underwriter a signed counterpart of (A) an opinion or opinions of
counsel to the Company, and (B) a comfort letter or comfort letters
from the Company's independent public accountants, each in customary
form and covering such matters of the type customarily covered by
opinions or comfort letters, as the case may be, as the sellers of
Registrable Shares or managing underwriter reasonably requests;
(xii) cause the Registrable Shares included in any
registration statement to be (A) listed on the New York Stock Exchange
or (B) authorized to be quoted and/or listed on the Nasdaq National
Market;
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(xiii) provide a CUSIP number for the Registrable
Shares included in any registration statement not later than the
effective date of such registration statement;
(xiv) cooperate with each seller of Registrable
Shares and each underwriter participating in the disposition of such
Registrable Shares and their respective counsel in connection with any
filings required to be made with the National Association of Securities
Dealers, Inc. (the "NASD");
(xv) during the period when the prospectus is
required to be delivered under the Securities Act, promptly file all
documents required to be filed with the SEC pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act;
(xvi) notify each seller of Registrable Shares
promptly of any request by the SEC for the amending or supplementing of
such registration statement or prospectus or for additional
information;
(xvii) prepare and file with the SEC promptly any
amendments or supplements to such registration statement or prospectus
which, in the opinion of counsel for the Company or the managing
underwriter, are required in connection with the distribution of the
Registrable Shares;
(xviii) enter into agreements (including
underwriting agreements in the managing underwriter's customary form)
as are customary in connection with an underwritten registration; and
(xix) advise each seller of Registrable Shares,
promptly after it shall receive notice or obtain knowledge thereof, of
the issuance of any stop order by the SEC suspending the effectiveness
of such registration statement or the initiation or threatening of any
proceeding for such purpose and promptly use its commercially
reasonable efforts to prevent the issuance of any stop order or to
obtain its withdrawal at the earliest possible moment if such stop
order should be issued.
SECTION 3.5 SUSPENSION OF DISPOSITIONS. Upon receipt of any
notice (a "Suspension Notice") from the Company of the happening of any event
of the kind described in Section 3.4(v)(C) or Section 3.4(xix) (a "Suspension
Event"), each Holder will forthwith discontinue disposition of Registrable
Shares until such Holder's receipt of the copies of the supplemented or amended
prospectus, or until it is advised in writing (the "Advice") by the Company
that the use of the prospectus may be resumed, and receipt of copies of any
additional or supplemental filings which are incorporated by reference in the
prospectus, and, if so directed by the Company, such Holder will deliver to the
Company all copies, other than permanent file copies then in such Holder's
possession, of the prospectus covering such Registrable Shares current at the
time of receipt of the Suspension Notice. In the event the Company shall give
any Suspension Notice, the time period regarding the effectiveness of
registration statements set forth in Section 3.4(ii) hereof shall be extended
by the number of days during the period from and
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including the date of the giving of the Suspension Notice to and including the
date when each seller of Registrable Shares covered by such registration
statement shall have received the copies of the supplemented or amended
prospectus or the Advice. The Company shall use its commercially reasonable
efforts and take such actions as are reasonably necessary to render the Advice
as promptly as practicable following the conclusion of the Suspension Event.
SECTION 3.6 REGISTRATION EXPENSES. All expenses incident to the
Company's performance of or compliance with this Article 3 including, without
limitation, all registration and filing fees, all fees and expenses associated
with filings required to be made with the NASD (including, if applicable, the
fees and expenses of any "qualified independent underwriter" as such term is
defined in Rule 2720(b)(15) of the NASD Conduct Rules, and of its counsel), as
may be required by the rules and regulations of the NASD, fees and expenses of
compliance with securities or "blue sky" laws (including reasonable fees and
disbursements of counsel in connection with "blue sky" qualifications of the
Registrable Shares), rating agency fees, printing expenses (including expenses
of printing certificates for the Registrable Shares in a form eligible for
deposit with The Depository Trust Company and of printing prospectuses if the
printing of prospectuses is requested by a holder of Registrable Shares),
messenger and delivery expenses, the Company's internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the fees and expenses incurred in
connection with any listing of the Registrable Shares, fees and expenses of
counsel for the Company and its independent certified public accountants
(including the expenses of any special audit or "cold comfort" letters required
by or incident to such performance), Securities Act liability insurance (if the
Company elects to obtain such insurance), the fees and expenses of any special
experts retained by the Company in connection with such registration, and the
fees and expenses of other persons retained by the Company and reasonable fees
and expenses of one firm of counsel for the sellers of Registrable Shares
(which shall be selected by the Holders of a majority of the Registrable Shares
being included in any particular registration statement) (all such expenses
being herein called "Registration Expenses"), will be borne by the Company
whether or not any registration statement becomes effective; provided, that in
no event shall Registration Expenses include any underwriting discounts,
commissions, or fees attributable to the sale of the Registrable Shares or any
counsel, accountants, or other persons separately retained or employed by the
Holders.
SECTION 3.7 INDEMNIFICATION.
3.7.1 The Company agrees to indemnify and reimburse, to the
fullest extent permitted by law, each seller of Registrable Shares, and each of
its employees, advisors, agents, representatives, partners, officers, and
directors and each Person who controls such seller of Registrable Shares
(within the meaning of the Securities Act or the Exchange Act) and any agent or
investment advisor thereof (collectively, the "Seller Affiliates") (A) against
any and all losses, claims, damages, liabilities, and expenses, joint or
several (including, without limitation, reasonable attorneys' fees and
disbursements except as limited by Section 3.7.3) based upon, arising out of,
related to or resulting from any untrue or alleged untrue statement of a
material fact contained in any registration statement, prospectus, or
preliminary prospectus or any
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amendment thereof or supplement thereto, or any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein not misleading, (B) against any and all loss, liability,
claim, damage, and expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation or investigation or
proceeding by any governmental agency or body, commenced or threatened, or of
any claim whatsoever based upon, arising out of, related to or resulting from
any such untrue statement or omission or alleged untrue statement or omission,
and (C) against any and all costs and expenses (including reasonable fees and
disbursements of counsel) as may be reasonably incurred in investigating,
preparing, or defending against any litigation, or investigation or proceeding
by any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon, arising out of, related to or resulting from any such
untrue statement or omission or alleged untrue statement or omission, to the
extent that any such expense or cost is not paid under subparagraph (A) or (B)
above; except insofar as the same are made in reliance upon and in strict
conformity with information furnished in writing to the Company by such seller
of Registrable Shares or any Seller Affiliate for use therein or arise from
such seller's or any Seller Affiliate's failure to deliver a copy of the
registration statement or prospectus or any amendments or supplements thereto
after the Company has furnished such seller of Registrable Shares or Seller
Affiliate with a sufficient number of copies of the same. The reimbursements
required by this Section 3.7.1 will be made by periodic payments during the
course of the investigation or defense, as and when bills are received or
expenses incurred.
3.7.2 In connection with any registration statement in
which a seller of Registrable Shares is participating, each such seller of
Registrable Shares will furnish to the Company in writing such information and
affidavits as the Company reasonably requests for use in connection with any
such registration statement or prospectus and, to the fullest extent permitted
by law, each such seller of Registrable Shares will indemnify the Company and
its directors and officers and each Person who controls the Company (within the
meaning of the Securities Act or the Exchange Act) against any and all losses,
claims, damages, liabilities, and expenses (including, without limitation,
reasonable attorneys' fees and disbursements except as limited by Section
3.7.3) resulting from any untrue statement or alleged untrue statement of a
material fact contained in the registration statement, prospectus, or any
preliminary prospectus or any amendment thereof or supplement thereto, or any
omission or alleged omission of a material fact required to be stated therein
or necessary to make the statements therein not misleading, but only to the
extent that such untrue statement or alleged untrue statement or omission or
alleged omission is contained in any information or affidavit so furnished in
writing by such seller of Registrable Shares or any of its Seller Affiliates
specifically for inclusion in the registration statement; provided, that the
obligation to indemnify will be several, not joint and several, among such
sellers of Registrable Shares, and the liability of each such seller of
Registrable Shares will be in proportion to, and provided further that such
liability will be limited to, the net amount received by such seller of
Registrable Shares from the sale of Registrable Shares pursuant to such
registration statement; provided, however, that such seller of Registrable
Shares shall not be liable in any such case to the extent that, prior to the
filing of any such registration statement or prospectus or amendment thereof or
supplement thereto, such seller of Registrable Shares has furnished in writing
to the Company information expressly
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for use in such registration statement or prospectus or any amendment thereof
or supplement thereto which corrected or made not misleading information
previously furnished to the Company.
3.7.3 Any Person entitled to indemnification hereunder will
give prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification (provided that the failure to give such
notice shall not limit the rights of such Person except to the extent such
failure prejudiced the indemnifying party) and permit such indemnifying party
to assume the defense of such claim; provided, however, that any person
entitled to indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim, but the fees and
expenses of such counsel shall be at the expense of such person unless (X) the
indemnifying party has agreed to pay such fees or expenses, (Y) the
indemnifying party shall have failed to assume the defense of such claim or (Z)
in the reasonable opinion of counsel to such indemnified party, a conflict of
interest between such indemnified and indemnifying parties may exist with
respect to such claim. If such defense is not assumed by the indemnifying
party as permitted hereunder, the indemnifying party will not be subject to any
liability for any settlement made by the indemnified party without its consent
(but such consent will not be unreasonably withheld or delayed). If such
defense is assumed by the indemnifying party pursuant to the provisions hereof,
such indemnifying party shall not settle or otherwise compromise the applicable
claim unless (1) such settlement or compromise contains a full and
unconditional release of the indemnified party or (2) the indemnified party
otherwise consents in writing. An indemnifying party who is not entitled to,
or elects not to, assume the defense of a claim will not be obligated to pay
the fees and expenses of more than one counsel for all parties indemnified by
such indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party, a conflict of interest may exist between
such indemnified party and any other of such indemnified parties with respect
to such claim, in which event the indemnifying party shall be obligated to pay
the reasonable fees and disbursements of such additional counsel or counsels.
3.7.4 Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by Section 3.7.1 or Section 3.7.2 are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages, liabilities, or expenses (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such
losses, claims, liabilities, or expenses (or actions in respect thereof) in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and the indemnified party in connection with the actions
which resulted in the losses, claims, damages, liabilities or expenses as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by such indemnifying party or indemnified party, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The parties hereto agree
that it would not be just and equitable if contribution pursuant to this
Section 3.7.4 were determined by pro rata allocation (even if the
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Holders or any underwriters or all of them were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to in this Section 3.7.4. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages,
liabilities, or expenses (or actions in respect thereof) referred to above
shall be deemed to include any legal or other fees or expenses reasonably
incurred by such indemnified party in connection with investigating or, except
as provided in Section 3.7.3, defending any such action or claim.
Notwithstanding the provisions of this Section 3.7.4, no Holder shall be
required to contribute an amount greater than the dollar amount by which the
net proceeds received by such Holder with respect to the sale of any
Registrable Shares exceeds the amount of damages which such Holder has
otherwise been required to pay by reason of such statement or omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. The Holders'
obligations in this Section 3.7.4 to contribute shall be several in proportion
to the amount of Registrable Shares registered by them and not joint.
If indemnification is available under this Section 3.7, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Section 3.7.1 and Section 3.7.2 without regard to the relative
fault of said indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 3.7.4 subject, in the case of the
Holders, to the limited dollar amounts set forth in Section 3.7.2.
3.7.5 The indemnification and contribution provided for
under this Shareholders Agreement will remain in full force and effect
regardless of any investigation made by or on behalf of the indemnified party
or any officer, director, or controlling Person of such indemnified party and
will survive the Transfer of the Common Stock and the termination of this
Shareholders Agreement.
ARTICLE 4
TRANSFERS OF SECURITIES
SECTION 4.1 TAG ALONG RIGHTS.
4.1.1 Significant Sales. In the event any HMC Shareholder
desires to Transfer (in one transaction or a series of related transactions)
shares of Common Stock representing more than twenty percent (20%) of the
shares of Common Stock then held by the HMC Shareholders (a "Significant
Sale"), then at least thirty (30) days prior to the closing of such Significant
Sale, the HMC Shareholders shall make an offer (the "Participation Offer") to
each ▇▇▇▇▇▇ Shareholder (each, a "Co-Seller") to include in the proposed
Significant Sale a portion of such Co-Seller's Common Stock which represents
the same percentage of such Co-Seller's Fully-Diluted Common Stock as the
shares being sold by the HMC Shareholders represent of the HMC Shareholders'
aggregate Fully-Diluted Common Stock; provided, that, if the consideration to
be received by the HMC Shareholders includes any securities, only Co-Sellers
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who have certified to the reasonable satisfaction of HMTF that they are
Accredited Investors shall be entitled to participate in such Transfer, unless
the transferee consents otherwise (which consent shall not be unreasonably
withheld or delayed).
4.1.2 Threshold Transactions. In the event any HMC
Shareholder desires to Transfer shares of Common Stock in a transaction the
result of which would cause the HMC Shareholders to cease to own, in the
aggregate, at least fifty percent (50%) of the Initial HMC Shares (a "Threshold
Transaction"), then at least thirty (30) days prior to the closing of such
Threshold Transaction, the HMC Shareholders shall deliver a Participation Offer
to each Co-Seller to include in the proposed Threshold Transaction a percentage
of such Co-Seller's Common Stock equal to the sum of (A) that percentage of
shares of such Co-Seller's Common Stock which represents the same percentage of
such Co-Seller's Initial ▇▇▇▇▇▇ Shares as the aggregate percentage of shares of
Common Stock sold by the HMC Shareholders in all transactions not constituting
Significant Sales prior to the date of the Participation Offer with respect to
the Threshold Transaction represented of the Initial HMC Shares plus (B) that
percentage of shares of such Co-Seller's Common Stock which represents the same
percentage of such Co-Seller's Fully-Diluted Common Stock as the shares being
sold by the HMC Shareholders in the proposed Threshold Transaction represent of
the HMC Shareholders' Fully-Diluted Common Stock; provided, that in no event
shall the Co-Sellers be entitled to sell in the aggregate more shares of Common
Stock than the number of shares proposed to be sold in the Threshold
Transaction; provided, further, that, if the consideration to be received by
the HMC Shareholders includes any securities, only Co-Sellers who have
certified to the reasonable satisfaction of HMTF that they are Accredited
Investors shall be entitled to participate in such Transfer, unless the
transferee consents otherwise. For purposes of this Section 4.1.2, "a
transaction not constituting a Significant Sale" shall not include any Transfer
by an HMC Shareholder that would not constitute a Significant Sale pursuant to
Section 4.2 hereof.
4.1.3 Terms of Participation Offer. The Participation Offer shall
describe the terms and conditions of the proposed Significant Sale or Threshold
Transaction and shall be conditioned upon (i) the consummation of the
transactions contemplated in the Participation Offer with the transferee named
therein, and (ii) each Co-Seller's execution and delivery of all agreements and
other documents as the HMC Shareholders are required to execute and deliver in
connection with such Significant Sale or Threshold Transaction (provided that
the Co-Seller shall not be required to make any representations or warranties
other than representations and warranties as to (A) such Co-Seller's ownership
of his or its Common Stock to be Transferred free and clear of all liens,
claims, and encumbrances, (B) such Co-Seller's power and authority to effect
such Transfer and (C) such matters pertaining to compliance with securities
laws as the transferee may reasonably require). If any Co-Seller shall accept
the Participation Offer, the HMC Shareholders shall reduce, to the extent
necessary, the number of shares of Common Stock they otherwise would have sold
in the proposed Transfer so as to permit those Co-Sellers who have accepted the
Participation Offer to sell the number of shares of Common Stock that they are
entitled to sell under this Section 4.1, and the HMC Shareholders and such
Co-Sellers shall Transfer the number of shares of Common Stock specified in the
Participation Offer to the proposed transferee in accordance with the terms of
such Transfer as set forth in the
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Participation Offer. If any Co-Seller elects not to Transfer all or any
portion of his Common Stock pursuant to a Significant Sale, the other
Co-Sellers shall have the right, on a pro rata basis, to sell additional shares
of Common Stock such that the Co-Sellers, in the aggregate, sell all shares of
Common Stock permitted pursuant to this Section 4.1 (provided that the HMC
Shareholders shall have no obligation to provide any notice to such other
Co-Sellers other than the original Participation Offer).
SECTION 4.2 CERTAIN EVENTS NOT DEEMED TRANSFERS. In no event
shall any (i) exchange, reclassification, or other conversion of shares into
any cash, securities, or other property pursuant to a merger or consolidation
of the Company or any of its Subsidiaries with, or any sale or transfer by the
Company or any of its Subsidiaries of all or substantially all its assets to,
any Person, in each case in which holders of Common Stock are treated
substantially the same, (ii) statutory share exchange involving, or
recapitalization of, the Company or any of its Subsidiaries in which holders of
Common Stock are treated substantially the same, (iii) Transfer by a HMC
Shareholder pursuant to an effective registration statement under the
Securities Act in compliance with Section 3 or (iv) transfer by a HMC
Shareholder pursuant to Rule 144 under the Securities Act, constitute a
Significant Sale for purposes of Section 4.1. In addition, Section 4.1 hereof
shall not apply to any Transfer by any HMC Shareholder to any Person who will
become an HMC Shareholder as a result of and after giving effect to such
Transfer.
SECTION 4.3 TRANSFER AND EXCHANGE. When shares of Common Stock
are presented to the Company with a request to register the Transfer of such
shares of Common Stock or to exchange such shares of Common Stock for
securities of other authorized denominations, the Company shall register the
Transfer or make the exchange as requested if the requirements of this
Shareholders Agreement for such transaction are met; provided, however, that
the shares of Common Stock surrendered for Transfer or exchange shall be duly
endorsed or accompanied by a written instrument of transfer in form
satisfactory to the Company, duly executed by the Holder thereof or his or its
attorney and duly authorized in writing. No service charge shall be made for
any registration of Transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental charge
payable in connection therewith.
SECTION 4.4 REPLACEMENT SECURITIES. If a mutilated certificate
evidencing shares of Common Stock is surrendered to the Company or if the
Holder of a certificate evidencing shares of Common Stock claims and submits an
affidavit or other evidence, satisfactory to the Company, to the effect that
the certificate evidencing shares of Common Stock has been lost, destroyed or
wrongfully taken, the Company shall issue a replacement certificate if the
Company's requirements are met. If required by the Company, such
securityholder must provide an indemnity bond, or other form of indemnity,
sufficient in the judgment of the Company to protect the Company against any
loss which may be suffered. The Company may charge such securityholder for its
reasonable out-of-pocket expenses in replacing a certificate evidencing shares
of Common Stock which has been mutilated, lost, destroyed, or wrongfully taken.
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ARTICLE 5
LIMITATION ON TRANSFERS
SECTION 5.1 RESTRICTIONS ON TRANSFER. The Common Stock shall not
be Transferred or otherwise conveyed, assigned or hypothecated before
satisfaction of (i) the conditions specified in this Section 5.1, and in
Section 5.2 and Section 5.3, which conditions are intended to ensure compliance
with the provisions of the Securities Act with respect to the Transfer of any
Common Stock and (ii) if applicable, Article 4 hereof. Any purported Transfer
in violation of this Article 5 and/or, if applicable, Article 4 hereof shall be
void ab initio and of no force or effect. Other than Transfers subject to
Section 4.1 hereof and other than Transfers to the public pursuant to an
effective registration statement or sales to the public pursuant to Rule 144
under the Securities Act otherwise permitted hereunder, each Holder will cause
any proposed transferee of any Common Stock or any interest therein held by him
or it to agree to take and hold such Common Stock subject to the provisions and
upon the conditions specified in this Shareholders Agreement.
SECTION 5.2 RESTRICTIVE LEGENDS.
5.2.1 Securities Act Legend. Except as otherwise provided
in Section 5.4 hereof, each certificate evidencing shares of Common Stock held
by a Holder, and each certificate evidencing shares of Common Stock issued to
any subsequent transferee of such Common Stock, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR PURSUANT TO THE
SECURITIES OR "BLUE SKY" LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE
OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED, EXCEPT
PURSUANT TO (i) A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH
IS EFFECTIVE UNDER SUCH ACT, (ii) RULE 144 UNDER SUCH ACT, OR (iii) ANY OTHER
EXEMPTION FROM REGISTRATION UNDER SUCH ACT.
5.2.2 Other Legends. Except as otherwise permitted by the
last sentence of Section 5.1, each certificate evidencing shares of Common
Stock issued to each Holder or a subsequent transferee shall include a legend
in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER, VOTING AND OTHER TERMS AND CONDITIONS SET FORTH IN
THE SHAREHOLDERS AGREEMENT DATED AS OF JUNE 4, 1998, A COPY OF WHICH MAY BE
OBTAINED FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES.
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SECTION 5.3 NOTICE OF PROPOSED TRANSFERS. Prior to any Transfer
or attempted Transfer of any Common Stock, the Holder of such Common Stock
shall (i) give ten (10) days' prior written notice (a "Transfer Notice") to the
Company of such Holder's intention to effect such Transfer, describing the
manner and circumstances of the proposed Transfer, and (ii) either (A) provide
to the Company an opinion reasonably satisfactory to the Company from counsel
who shall be reasonably satisfactory to the Company (or supply such other
evidence reasonably satisfactory to the Company) that the proposed Transfer of
such Common Stock may be effected without registration under the Securities
Act, or (B) certify to the Company that the Holder reasonably believes the
proposed transferee is a "qualified institutional buyer" and that such Holder
has taken reasonable steps to make the proposed transferee aware that such
Holder may rely on Rule 144A under the Securities Act in effecting such
Transfer. After receipt of the Transfer Notice and opinion (if required), the
Company shall, within five (5) days thereof, so notify the Holder of such
Common Stock and such Holder shall thereupon be entitled to Transfer such
Common Stock in accordance with the terms of the Transfer Notice. Each
certificate evidencing shares of Common Stock issued upon such Transfer shall
bear the restrictive legend set forth in Section 5.2.1, unless in the opinion
of such counsel such legend is not required in order to ensure compliance with
the Securities Act, and Section 5.2.2, if applicable. The Holder of the Common
Stock giving the Transfer Notice shall not be entitled to Transfer such Common
Stock until receipt of the notice from the Company under this Section 5.3.
SECTION 5.4 TERMINATION OF CERTAIN RESTRICTIONS. Notwithstanding
the foregoing provisions of this Article 5, the restrictions imposed by Section
5.2.1 upon the transferability of the Common Stock and the legend requirements
of Section 5.2.1 shall terminate as to any Common Stock (i) when and so long as
such Common Stock shall have been effectively registered under the Securities
Act and disposed of pursuant thereto or (ii) when the Company shall have
received an opinion of counsel reasonably satisfactory to it that such Common
Stock may be transferred without registration thereof under the Securities Act
and that such legend may be removed. Whenever the restrictions imposed by
Section 5.2.1 shall terminate as to any Common Stock, the Holder thereof shall
be entitled to receive from the Company, at the Company's expense, a new
certificate evidencing such shares of Common Stock not bearing the restrictive
legend set forth in Section 5.2.1.
ARTICLE 6
AFFILIATE TRANSACTIONS
The Company and the HMC Shareholders agree that neither the Company
nor any Subsidiary of the Company shall enter into any material transaction
with any HMTF Designee or HMC Shareholder or their respective Affiliates unless
such transaction has been approved by the ▇▇▇▇▇▇ Designees. Notwithstanding
the foregoing, this Article 6 shall not apply to the execution and delivery by
the Company of the Monitoring and Oversight Agreement and the Financial
Advisory Agreement (as each such term is defined in the Merger Agreement).
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ARTICLE 7
TERMINATION
SECTION 7.1 TERMINATION. The provisions of this Shareholders
Agreement shall terminate on the earlier of (i) June 4, 2008 and (ii) the
mutual written consent of a majority in interest of the HMC Shareholders (based
on the number of shares of Common Stock then owned) and a majority in interest
of the ▇▇▇▇▇▇ Shareholders (based on the number of shares of Common Stock then
owned); provided, however, that Section 4.1 and Article 5 (other than Sections
5.2 and 5.4) of this Shareholders Agreement shall terminate upon the
consummation prior to the expiration of such ten (10) year period of a
Qualified IPO.
ARTICLE 8
MISCELLANEOUS
SECTION 8.1 NOTICES. Any notices or other communications
required or permitted hereunder shall be in writing, and shall be sufficiently
given if made by hand delivery, by telex, by telecopier or registered or
certified mail, postage prepaid, return receipt requested, addressed as follows
(or at such other address as may be substituted by notice given as herein
provided):
If to the Company:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
With copies to (which shall not constitute notice):
Hicks, Muse, ▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
If to any Holder, at its address listed on the signature pages hereof.
Any notice or communication hereunder shall be deemed to have been
given or made as of the date so delivered if personally delivered; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and
five (5) calendar days after mailing if sent by registered or
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certified mail (except that a notice of change of address shall not be deemed
to have been given until actually received by the addressee).
Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it.
SECTION 8.2 GOVERNING LAW. THIS SHAREHOLDERS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
SECTION 8.3 SUCCESSORS AND ASSIGNS. Whether or not an express
assignment has been made pursuant to the provisions of this Shareholders
Agreement, provisions of this Shareholders Agreement that are for the Holders'
benefit as the holders of any Common Stock are, except as otherwise expressly
provided herein, also for the benefit of, and enforceable by, all subsequent
holders of such Common Stock, except as otherwise expressly provided herein.
This Shareholders Agreement shall be binding upon the Company, each Holder,
and, except as otherwise expressly provided herein, their respective heirs,
devisees, successors and assigns.
SECTION 8.4 DUPLICATE ORIGINALS. All parties may sign any number
of copies of this Shareholders Agreement. Each signed copy shall be an
original, but all of them together shall represent the same agreement.
SECTION 8.5 SEVERABILITY. In case any provision in this
Shareholders Agreement shall be held invalid, illegal or unenforceable in any
respect for any reason, the validity, legality and enforceability of any such
provision in every other respect and the remaining provisions shall not in any
way be affected or impaired thereby
SECTION 8.6 NO WAIVERS; AMENDMENTS.
8.6.1 No failure or delay on the part of the Company or any
Holder in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Company or any Holder at law or in equity or otherwise.
8.6.2 Any provision of this Shareholders Agreement may be
amended or waived if, but only if, such amendment or waiver is in writing and
is signed by the Company, a majority in interest of the HMC Shareholders (based
on the number of shares of Common Stock then owned) and a majority in interest
of the ▇▇▇▇▇▇ Shareholders (based on the number of shares of Common Stock then
owned); provided, however, that (i) any amendment to the provisions of Section
2.1 (and any definition used therein) shall be required to be in writing and be
signed by the Company and a majority in interest of the HMC Shareholders, as
such term is defined
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for the purposes of such Section (based on the number of shares of Common Stock
owned), and a majority in interest of the ▇▇▇▇▇▇ Shareholders, as such term is
defined for the purposes of such Section, (ii) any amendment to the provisions
of Section 4.1 and Section 4.2 (and any definition used therein) shall be
required to be in writing and signed by a majority in interest of the HMC
Shareholders, as such term is defined for the purposes of such Section (based
on the number of shares of Common Stock owned), and a majority in interest of
the ▇▇▇▇▇▇ Shareholders, and (iii) any amendment to (A) the provisions of this
Section 8.6.2 or (B) any amendment which would change the number of Holders
which shall be required for the Holders or any of them to take any action under
this Section 8.6.2 or any other provision of this Shareholders Agreement shall
be required to be in writing and signed by all of the Holders affected and, if
applicable, the Company.
SECTION 8.7 ACTIONS OF ▇▇▇▇▇▇ SHAREHOLDERS. Except as otherwise
provided herein, any action required to be taken or right which is exercisable
by the ▇▇▇▇▇▇ Shareholders hereunder may be taken by the ▇▇▇▇▇▇ Shareholders
acting pursuant to the affirmative vote of the holders of a majority of the
shares of Common Stock owned by them, and they shall have no liability to any
other Person with respect to any such action or any such right exercised.
SECTION 8.8 COUNTERPARTS. This Shareholders Agreement may be
executed in counterparts, each of which shall be deemed to be an original, but
all of which, when taken together, shall constitute one and the same agreement.
SECTION 8.9 CERTAIN ACTIONS BY HMC SHAREHOLDERS. Except as
otherwise provided or permitted herein, the HMC Shareholders shall not take or
omit to take any action or enter into any transaction that would result in the
shares of Common Stock owned by the ▇▇▇▇▇▇ Shareholders being treated
differently, on a per share Common Stock basis, than the shares of Common Stock
owned by the HMC Shareholders.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Shareholders
Agreement to be duly executed as of the date first above written.
HOME INTERIORS & GIFTS, INC.
By:
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Chief Executive Officer
SIGNATURE PAGE TO SHAREHOLDERS AGREEMENT
32
IN WITNESS WHEREOF, the parties have caused this Shareholders
Agreement to be duly executed as of the date first above written.
SHAREHOLDER:
HI EQUITY PARTNERS, L.P.
By: TOH/HOME INTERIORS, LLC,
its General Partner
By:
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President and Secretary
ADDRESS FOR NOTICES:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
SIGNATURE PAGE TO SHAREHOLDERS AGREEMENT
33
IN WITNESS WHEREOF, the parties have caused this Shareholders
Agreement to be duly executed as of the date first above written.
SHAREHOLDER:
▇▇▇▇▇▇ FAMILY PARTNERSHIP, LTD.
By:
------------------------------------------
Name: M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: General Partner
ADDRESS FOR NOTICES:
c/o M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
#▇▇ ▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
SIGNATURE PAGE TO SHAREHOLDERS AGREEMENT
34
IN WITNESS WHEREOF, the parties have caused this Shareholders
Agreement to be duly executed as of the date first above written.
SHAREHOLDER:
------------------------------------------------
M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
ADDRESS FOR NOTICES:
#▇▇ ▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
SIGNATURE PAGE TO SHAREHOLDERS AGREEMENT
35
IN WITNESS WHEREOF, the parties have caused this Shareholders
Agreement to be duly executed as of the date first above written.
SHAREHOLDER:
ESTATE OF ▇▇▇▇ ▇▇▇▇▇▇▇▇
By:
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: Executor
ADDRESS FOR NOTICES:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
SIGNATURE PAGE TO SHAREHOLDERS AGREEMENT
36
IN WITNESS WHEREOF, the parties have caused this Shareholders
Agreement to be duly executed as of the date first above written.
SHAREHOLDER:
▇▇▇▇▇▇▇▇ FAMILY PARTNERSHIP, LTD.
By:
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: General Partner
ADDRESS FOR NOTICES:
c/o ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
SIGNATURE PAGE TO SHAREHOLDERS AGREEMENT
37
IN WITNESS WHEREOF, the parties have caused this Shareholders
Agreement to be duly executed as of the date first above written.
SHAREHOLDER:
---------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
ADDRESS FOR NOTICES:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
SIGNATURE PAGE TO SHAREHOLDERS AGREEMENT
38
IN WITNESS WHEREOF, the parties have caused this Shareholders
Agreement to be duly executed as of the date first above written.
SHAREHOLDER:
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
ADDRESS FOR NOTICES:
▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
SIGNATURE PAGE TO SHAREHOLDERS AGREEMENT
39
IN WITNESS WHEREOF, the parties have caused this Shareholders
Agreement to be duly executed as of the date first above written.
SHAREHOLDER:
-----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
ADDRESS FOR NOTICES:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
SIGNATURE PAGE TO SHAREHOLDERS AGREEMENT
40
IN WITNESS WHEREOF, the parties have caused this Shareholders
Agreement to be duly executed as of the date first above written.
SHAREHOLDER:
----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
ADDRESS FOR NOTICES:
▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
SIGNATURE PAGE TO SHAREHOLDERS AGREEMENT
41
IN WITNESS WHEREOF, the parties have caused this Shareholders
Agreement to be duly executed as of the date first above written.
SHAREHOLDER:
▇▇▇▇▇▇ 1997 CHARITABLE REMAINDER UNIT TRUST
By:
-------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Independent Special Trustee
ADDRESS FOR NOTICES:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
SIGNATURE PAGE TO SHAREHOLDERS AGREEMENT
42
IN WITNESS WHEREOF, the parties have caused this Shareholders
Agreement to be duly executed as of the date first above written.
SHAREHOLDER:
▇▇▇▇▇▇▇ FAMILY TRUST
By:
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Trustee
By:
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Trustee
ADDRESS FOR NOTICES:
▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
SIGNATURE PAGE TO SHAREHOLDERS AGREEMENT
43
IN WITNESS WHEREOF, the parties have caused this Shareholders
Agreement to be duly executed as of the date first above written.
SHAREHOLDER:
----------------------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
ADDRESS FOR NOTICES:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
SIGNATURE PAGE TO SHAREHOLDERS AGREEMENT