Exhibit 10.9
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AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
Dated as of October 22, 1998
By and Among
THE MDC ENTITIES,
DIMAC HOLDINGS, INC.,
THE MANAGEMENT STOCKHOLDERS
and
THE NON-MANAGEMENT STOCKHOLDERS
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TABLE OF CONTENTS
PAGE
ARTICLE I
CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 CERTAIN DEFINITIONS. . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
TRANSFER OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.1 RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.2 PERMITTED TRANSFERS. . . . . . . . . . . . . . . . . . . . 5
Section 2.3 SALES BY MDC SUBJECT TO TAG-ALONG RIGHTS . . . . . . . . . 6
Section 2.4 GRANT TO MDC OF BRING-ALONG RIGHTS . . . . . . . . . . . . 8
Section 2.5 CALL UPON TERMINATION OF MANAGEMENT STOCKHOLDER'S EMPLOYMENT 9
Section 2.6 REGISTRATION RIGHTS AND RELATED MATTERS. . . . . . . . . . 11
ARTICLE III
BOARD OF DIRECTORS OF THE COMPANY . . . . . . . . . . . . . . . . . . . 15
Section 3.1 BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. . . . . . . . . . . 15
Section 4.1 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS . . . . 15
ARTICLE V
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.1 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . 17
Section 5.2 CAPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.3 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.4 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.5 SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . 18
Section 5.6 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.7 SUBMISSION TO JURISDICTION . . . . . . . . . . . . . . . . 18
Section 5.8 BENEFITS ONLY TO PARTIES . . . . . . . . . . . . . . . . . 19
Section 5.9 TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.10 PUBLICITY . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.11 CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . 20
(i)
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this "AGREEMENT"), dated as of
October 22, 1998, by and among DIMAC Holdings, Inc., a Delaware corporation (the
"COMPANY"), ▇▇▇▇▇▇ De Leeuw & Co. IV, L.P., a California limited partnership,
Delta Fund LLC, a California limited liability company, and ▇▇▇▇▇▇ De Leeuw &
Co. IV Associates, L.P., a California limited partnership (each individually, an
"MDC ENTITY", collectively the "MDC ENTITIES" and collectively with their
Related Persons (as defined below), "MDC"), the individuals listed on Schedule A
attached hereto under the heading "MANAGEMENT STOCKHOLDERS" (each individually,
a "MANAGEMENT STOCKHOLDER" and, collectively, the "MANAGEMENT STOCKHOLDERS," it
being understood that any other member of the management of the Company or its
Subsidiaries who becomes a stockholder of the Company through the receipt of
Call Shares (as defined below) shall be a Management Stockholder and each of the
Persons listed on Schedule A hereto under the heading "NON-MANAGEMENT
STOCKHOLDERS" (each, individually a "NON-MANAGEMENT STOCKHOLDER" and,
collectively, the "NON-MANAGEMENT STOCKHOLDERS") (each of the Management
Stockholders, MDC and the Non-Management Stockholders is hereinafter referred to
as a "STOCKHOLDER," it being understood and agreed that any holder of Common
Stock of the Company (including through the exercise of any option or warrant)
during the term of this Agreement shall become a party to this Agreement and
shall be referred to within the term "STOCKHOLDER").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, MDC, the Management Stockholders and the Non-Management
Stockholders own shares of voting and non-voting common stock, $0.001 par value,
of the Company (the "COMMON STOCK"); and
WHEREAS, the Stockholders each desire to grant to the others certain rights
in connection with the shares of Common Stock now or hereafter owned by them
(collectively, with any shares of Common Stock hereafter issued by the Company
during the term of this Agreement, including pursuant to the exercise of
warrants, the "SHARES") as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants herein set forth
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the following meanings:
(a) "AFFILIATE" shall mean, with respect to any Person, (i) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person, (ii) directly or indirectly
through one or more intermediaries beneficially owning or holding 10% or more of
the combined voting power of the total Voting Securities of such referenced
Person or (iii) of which 10% or more of the combined voting power of the total
Voting Securities directly or indirectly through one or more intermediaries is
beneficially owned or held by such referenced Person or a Subsidiary of such
referenced Person. For all purposes of this Agreement, MDC and its Affiliates
shall be considered an Affiliate of the Company. For purposes of this
definition, "CONTROL" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used with
respect to any Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of Voting Securities, by agreement or
otherwise; and the terms "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing. Notwithstanding the foregoing, for
purposes of this Agreement, none of the TCW Entities nor the Michigan Fund shall
be considered Affiliates of the Company or any of its Subsidiaries.
(b) "BUSINESS DAY" shall mean any day except a Saturday, a Sunday or other
day on which commercial banks are required or authorized to close in New York,
New York.
(c) "CALL SHARES" shall mean shares of the Common Stock received upon the
exercise of class A options granted to employees of the Company (or the
Company's Subsidiaries) pursuant to the Management Equity Incentive Plan.
(d) "GRANT DATE" shall mean (i) with respect to any Vested Stock Option,
the date upon which such Vested Stock Option was granted to the Management
Stockholder and (ii) with respect to any Call Share, the date upon which the
Vested Stock Option in respect of such Call Share was granted to the Management
Stockholder.
(e) "IPO" shall mean an initial public offering of the Common Stock.
(f) "MANAGEMENT EQUITY INCENTIVE PLAN" shall mean the Company's 1998 Stock
Option Plan or like stock incentive plan as amended from time to time.
(g) "NON-MDC STOCKHOLDERS" shall mean all Stockholders other than MDC.
(h) "PERSON" shall mean and include an individual, a partnership, a joint
venture, a corporation, a limited liability company, a trust, an unincorporated
organization or a government or agency or political subdivision thereof.
(i) "PURCHASERS" has the meaning given to such term in the Securities
Purchase Agreement dated as of October 22, 1998 by and among the Company, DIMAC
Corporation, a Delaware corporation, and the purchasers listed on the signature
pages thereto.
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(j) "RELATED PERSONS" shall mean with respect to any MDC Entity, any
partnership with the same controlling general partner as such MDC Entity and any
of the partners of such MDC Entity or the general partner of such MDC Entity
which receive Shares upon a distribution to any such partners by any such MDC
Entity.
(k) "SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, or any similar Federal statute, and the rules and regulations of
the Securities and Exchange Commission promulgated thereunder, all as the same
shall be in effect at the time.
(l) "SUBSIDIARY" shall mean, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of capital stock or other equity interests entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors or other managing authority thereof is at the time owned or
controlled, directly or indirectly, by such Person and its Subsidiaries.
(m) "TCW ENTITIES" means Trust Company of the West and its Affiliates and
any of the Purchasers and their Affiliates and any Person to whom any shares of
Common Stock or Warrants that were held by any of the Purchasers may be
transferred in accordance with the terms of the Stockholders Agreement.
(n) "TRANSACTION VALUE" means the sum of (a) the cash purchase price
(including any installment payments), (b) the value of any equity securities
issued by the purchaser in connection with such transaction, (c) the face value
of any promissory note or other debt instrument issued by the purchaser in
connection with such transaction and (d) the amount of any liabilities assumed
by the purchaser in connection with such transaction (other than ordinary course
of business trade payables).
(o) "VESTED STOCK OPTIONS" shall mean vested class A stock options for the
Common Stock granted to certain key employees of the Company (or the Company's
Subsidiaries) pursuant to the Management Equity Incentive Plan.
(p) "VOTING SECURITIES" means any class of equity interests of a Person
pursuant to which the holders thereof have, at the time of determination, the
general voting power under ordinary circumstances to vote for the election of
directors, managers, trustees or general partners of such Person (regardless of
whether at the time any other class or classes will have or might have voting
power by reason of the happening of any contingency).
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ARTICLE II
TRANSFER OF SHARES
Section 2.1 RESTRICTIONS. (a) No Stockholder shall sell, assign, pledge,
or in any manner, transfer any of the Shares or any right or interest therein,
to any Person (each such action, a "TRANSFER") except as permitted by this
Agreement.
(b) From and after the date hereof, all share certificates representing
Shares held by any of the Stockholders shall bear a legend which shall state as
follows:
The shares represented by this certificate are subject to certain
restrictions against transfer set forth in an Amended and Restated
Stockholders Agreement dated as of October 22, 1998, as may be amended from
time to time. A copy of such Stockholders Agreement has been filed in the
registered office of the Company in the State of Delaware, where the same
may be inspected daily during business hours.
(c) In addition to the legend required by Section 2.1(b) above, all share
certificates representing Shares held by any of the Stockholders shall bear a
legend which shall state as follows:
The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the "Securities Act"), and such
shares may not be offered, sold, pledged or otherwise transferred except
(1) pursuant to an exemption from, or in a transaction not subject to, the
registration requirements under the Securities Act or (2) pursuant to an
effective registration statement under the Securities Act, in each case in
accordance with any applicable securities laws of any State of the United
States.
(d) In addition to the legends required by Sections 2.1(b) and (c) above,
all share certificates representing Call Shares shall bear a legend which shall
state as follows:
The shares represented by this certificate are also subject to the
Management Call as described in Section 2.5 of the Stockholders Agreement
referred to above.
Any Call Shares transferred by a Management Stockholder in a Permitted Transfer
described in Section 2.2(a)(i) or (ii) shall remain Call Shares of the
transferee and certificates representing such shares shall bear the legend
required by this Section 2.1(d). Any Call Shares transferred by a Management
Stockholder in a Permitted Transfer described in any other clause of Section 2.2
shall not remain Call Shares of the transferee and certificates representing
such shares shall not bear the legend required by this Section 2.1(d).
(e) Promptly upon execution and delivery of this Agreement, each
Stockholder shall deliver to the Secretary of the Company all certificates then
held by such
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Stockholder representing Shares which do not have such legends affixed thereto
as are required by Section 2.1 above. The Company shall cause such legends to
be affixed promptly to each of such certificates and such certificates to be
returned promptly to the registered holder thereof. The Company agrees that it
will not cause or permit the Transfer of any Shares to be made on its books
unless the Transfer is permitted by this Agreement and has been made in
accordance with the terms hereof.
(f) No Transfer of Shares permitted or not otherwise prohibited by the
terms and conditions of this Agreement shall be valid unless the transferee
thereof enters into a written agreement, in form and substance reasonably
satisfactory to the Company, to the effect that said assignee agrees to be bound
by all of the terms and conditions set forth in this Agreement, including those
regarding Shares and the purchase options with respect thereto; PROVIDED,
HOWEVER, that the conditions set forth in this Section 2.1 shall not apply to
any sale of Shares pursuant to an effective registration statement under the
Securities Act or, provided such sale is not to an Affiliate of the selling
Stockholder, pursuant to Rule 144 promulgated under the Securities Act.
Section 2.2 PERMITTED TRANSFERS. (a) Notwithstanding anything to the
contrary contained herein, a Stockholder may at any time effect any of the
following Transfers (each a "PERMITTED TRANSFER" and each transferee, a
"PERMITTED TRANSFEREE"):
(i) A Stockholder's Transfer of any or all Shares owned by such
Stockholder following such Stockholder's death by will or intestacy to such
Stockholder's legal representative, heir or legatee.
(ii) A Stockholder's Transfer of any or all Shares owned by such
Stockholder as a gift or gifts during such Stockholder's lifetime to such
Stockholder's spouse, children, step-children, grandchildren, parents or a
trust or other legal entity for the benefit of any Stockholder or any of
the foregoing.
(iii) With respect to the MDC Entities, a Transfer of any or all
Shares owned by them to any of their Related Persons.
(iv) A Transfer by a Stockholder which is made pursuant to Section
2.3 hereof.
(v) A Transfer by a Stockholder which is made pursuant to Section
2.4, 2.5 or 2.6 hereof.
(vi) A Transfer by a Stockholder to the Company.
(vii) A Transfer by MDC to any Person on or before October 31, 1998;
PROVIDED that after giving effect to such Transfer, MDC owns at least 60%
of the issued and outstanding Common Stock.
(viii) Following an IPO, a Transfer by a Stockholder holding Call
Shares as follows: (a) during the period from the date of the IPO until
the first anniversary thereof a number
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of Call Shares equal to one-third (33.33%) of the aggregate number of Call
Shares and Vested Stock Options held by such Stockholder at the date of the
IPO and (b) during the period from the date of the IPO until the second
anniversary of the IPO, a number of Call Shares equal to two-thirds
(66.67%) of the aggregate number of Call Shares and Vested Stock Options
held by such Stockholder at the date of the IPO.
(ix) The transfer by the State Treasurer of the State of Michigan,
Custodian of the Michigan Public School Employees' Retirement System; State
Employees' Retirement System; Michigan State Police Retirement System; and
Michigan Judges Retirement System (the "MICHIGAN FUND") to any successor or
additional trustee or custodian of the assets of the Michigan Fund as may
be appointed, and qualified under the applicable laws of the State of
Michigan.
(x) With respect to any Stockholder which is an entity, a Transfer
of any or all Shares owned by it to any of its Affiliates so long as such
Affiliate is an entity.
(xi) A Transfer by the TCW Entities to any Person of any Shares
issued to such TCW Entities pursuant to the exercise of warrants.
(b) In any such Transfer referred to above in Section 2.2(a) (other than
events in which this Agreement shall terminate in accordance with the provisions
of Section 5.9 hereof), the Permitted Transferee shall receive and hold such
Shares subject to the provisions of this Agreement as if such Permitted
Transferee were an original signatory hereto and shall be deemed to be a party
to this Agreement.
Section 2.3 SALES BY MDC SUBJECT TO TAG-ALONG RIGHTS. (a) In the event
that MDC proposes to effect a Transfer (other than a Permitted Transfer
described in Section 2.2(a) (iii), (v) or (vii) above) of any of the Common
Stock owned by it (the "MDC STOCK"), then MDC shall promptly give written notice
(the "MDC NOTICE") to the Company and the other Stockholders at least twenty
days prior to the closing of such Transfer. The MDC Notice shall be accompanied
by a copy of any agreement or term sheet relating to the Transfer (if available)
and describe in reasonable detail the proposed Transfer including, without
limitation, the name of, and the number of shares of MDC Stock to be purchased
by, the transferee, the purchase price of each share of MDC Stock to be sold,
any additional consideration, the terms and conditions of payment offered by the
transferee, any other significant terms of such sale and the date such proposed
sale is expected to be consummated (the "TAG-ALONG SALE DATE"), the aggregate
number of Shares of Common Stock held of record by MDC as of the close of
business on the day immediately preceding the date of the MDC Notice, the
Participant's (as defined below) pro-rata portion (as defined below) and
confirmation that the transferee has been informed of the "Tag-Along Rights"
provided for herein and has agreed to purchase shares from any Participant in
accordance with the terms hereof, it being understood that if such proposed
Transfer by MDC is in (i) an IPO or (ii) a public offering pursuant to a
registration statement filed under Section 2.6, the subsequent provisions of
this Section 2.3 shall not apply.
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(b) Each Stockholder shall have the right, exercisable upon irrevocable
written notice to MDC (the "TAG-ALONG NOTICE") no less than ten days prior to
the proposed Transfer, to participate in such sale of MDC Stock on the same
terms and conditions as set forth in the MDC Notice, including, without
limitation, the making of all representations, warranties, indemnifications
(including participating in any escrow arrangements) and similar agreements on a
ratable basis (based upon the number of Shares participating in such Transfer)
which obligations will be limited to the net proceeds received by such
Stockholder in such sale, and to sell all or any portion of the number of the
Shares owned by it as determined in accordance with the calculation set forth
below. Each Stockholder other than MDC electing to participate in the sale
described in the MDC Notice (each a "PARTICIPANT") shall indicate in its
Tag-Along Notice to MDC the maximum number of its Shares it desires to sell in
such sale (which number may be in excess of the number of shares set forth in
the MDC Notice). Each such Participant shall be entitled to sell a "PRO RATA
PORTION" (as such term is hereinafter defined) of such maximum number. To the
extent one or more of the Stockholders exercise such right of participation in
accordance with the terms and conditions set forth in this Section 2.3, the
number of shares of MDC Stock that MDC may sell in the transaction shall be
correspondingly reduced. For purposes of this Section 2.3, "PRO RATA PORTION"
shall mean for each Participant a fraction the numerator of which is the number
of Shares of MDC Stock proposed to be sold in the MDC Notice and the denominator
of which is the sum of (A) the total number of Shares owned by MDC immediately
prior to the sale proposed in the MDC Notice and (B) the total number of Shares
desired to be sold by all of the Participants electing to participate in the
sale (including any Shares that may be issued pursuant to any warrant or other
right). Not later than five days prior to the date scheduled for such sale, MDC
shall provide notice to each Participant of the "PRO RATA PORTION" of Shares to
be sold by such Participant in such sale.
(c) The Tag-Along Notice given by any Participant shall constitute such
Participant's irrevocable agreement to sell the Shares specified in the
Tag-Along Notice on the terms and conditions applicable to the proposed
Transfer; PROVIDED, HOWEVER, that in the event that there is any material change
in the material terms and conditions of such proposed Transfer applicable to the
Participant (including, but not limited to, any decrease in the purchase price
that occurs other than pursuant to an adjustment mechanism set forth in the
agreement relating to the proposed Transfer) after such Participant gives its
Tag-Along Notice, then, notwithstanding anything herein to the contrary, the
Participant shall have the right to withdraw from participation in the proposed
Transfer with respect to all of its Shares affected thereby. If the transferee
does not consummate the purchase of all of the Shares requested to be included
in the proposed Transfer by any Participant on the same terms and conditions
applicable to MDC (except as otherwise provided herein), then MDC shall not
consummate the proposed Transfer of any of its shares of Common Stock to such
transferee, unless the shares of MDC and the Participants are reduced or limited
PRO RATA in proportion to the respective number of shares of Common Stock
actually sold in any such proposed Transfer and all other terms and conditions
of the proposed Transfer are the same for MDC and the Participant, subject to
the provisos set forth in Section 2.4(b).
(d) If a Tag-Along Notice from any Participant is not received by MDC
prior to the ten day period specified above, MDC shall have the right to
consummate the proposed
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Transfer without the participation of such Participant, but only on terms and
conditions which are no more favorable in any material respect to MDC (and in
any event, at no greater a purchase price, except as the purchase price may be
adjusted pursuant to the agreement regarding the relevant sale or other
disposition) than as stated in the MDC Notice and only if such proposed Transfer
occurs on a date within ninety (90) days of the Tag-Along Sale Date. If such
proposed Transfer does not occur within such ninety (90) day period, the shares
of Common Stock that were to be subject to such proposed Transfer thereafter
shall continue to be subject to all of the restrictions contained in this
Agreement.
(e) Any Participant shall effect its participation in the sale by
delivering on the date scheduled for such sale to MDC for delivery to the
prospective transferee one or more certificates, in proper form for transfer,
which represent the number of Shares which such Participant is entitled to sell
in accordance with this Section 2.3. Such certificate or certificates that any
Participant delivers to MDC shall be delivered on such date to such transferee
in consummation of the sale of the Shares pursuant to the terms and conditions
specified in the MDC Notice, and MDC shall concurrently therewith remit to each
such Participant that portion of the sale proceeds to which such Participant is
entitled by reason of its participation in such sale. MDC's sale of Shares in
any sale proposed in an MDC Notice shall be effected on substantially the terms
and conditions set forth in such MDC Notice.
(f) The exercise or non-exercise of the rights of the Stockholders
hereunder to participate in one or more sales of Shares made by MDC shall not
adversely affect their rights to participate in subsequent sales of Shares
subject to this Section 2.3.
(g) In no event shall MDC receive special consideration or a control
premium in connection with any sale contemplated by this Section 2.3; PROVIDED,
HOWEVER, that it is understood that MDC shall be entitled to receive a
reasonable transaction fee, not to exceed 2% of Transaction Value, payable upon
the closing of any sale contemplated by this Section 2.3 if MDC provides
services in connection with such sale that would customarily be provided by a
third party financial advisor.
Section 2.4 GRANT TO MDC OF BRING-ALONG RIGHTS. (a) Each time the
stockholders of the Company meet, or act by written consent in lieu of meeting,
for the purpose of approving a "Sale of the Business" (as such term is
hereinafter defined), each Stockholder agrees to vote all of its Shares, and to
sell all of its Shares, as directed by MDC. In order to effect the foregoing
covenant, each Stockholder (other than the Michigan Fund and the TCW Entities)
hereby grants to MDC with respect to all of such Stockholder's Shares an
irrevocable proxy (which is deemed to be coupled with an interest) for the term
of this Agreement with respect to any stockholder vote or action by written
consent to effect the Sale of the Business. As used herein, "SALE OF THE
BUSINESS" shall mean any transaction or series of transactions (whether
structured as a stock sale, merger, consolidation, reorganization, asset sale or
otherwise) negotiated on an arm's-length basis, which results in the sale or
transfer of all or substantially all of the assets or all of the shares of
capital stock of the Company to an unaffiliated bona fide third party in which
all consideration payable to holders of the Common Stock is distributed pro rata
pursuant to share ownership.
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(b) In furtherance of its covenants in Section 2.4(a), each Stockholder
hereby agrees to cooperate fully with MDC and the purchaser in any such Sale of
the Business and, to execute and deliver all documents (including purchase
agreements) and instruments as MDC and the purchaser request to effect such Sale
of the Business, including, without limitation, the making of all
representations, warranties and indemnifications (including participating in any
escrow arrangements) and similar arrangements on a ratable basis (based upon the
number of Shares owned by the Stockholders as if all such Shares and options or
warrants to purchase Shares were converted into Common Stock) which obligations
will be limited to the net proceeds received by such Stockholder in such Sale of
the Business, but excluding employment agreements and covenants not to compete
(the determination of whether or not to enter into any such agreements being in
the sole and absolute discretion of each Stockholder). MDC agrees that upon
such Sale of the Business each Stockholder will receive its PRO RATA share of
the consideration (including consideration for non-competes, consulting
agreements or similar arrangements) paid by the purchaser determined on the
basis of such Stockholder's Share ownership.
(c) Prior to any Sale of the Business, if MDC elects to exercise the
rights afforded under this Section 2.4, MDC shall provide the Stockholders with
written notice (the "DRAG-ALONG NOTICE") not less than ten days prior to the
proposed date of the Sale of the Business. The Drag-Along Notice shall set
forth: (i) the name and address of the third party; (ii) the proposed amount and
form of consideration to be paid per share and the terms and conditions of
payment offered by the third party; (iii) the aggregate number of Shares held of
record by MDC as of the date of the Drag-Along Notice; (iv) the proposed date of
the Sale of the Business; and (v) confirmation that the proposed third party has
agreed to purchase each Stockholder's Shares in accordance with the terms
hereof.
(d) Each Stockholder shall effect its participation in the Sale of the
Business by delivering to MDC on the date of the Sale of the Business for
delivery to the third party one or more certificates, in proper form for
transfer, which represent the number of Shares which such Stockholder is
required to sell in accordance with this Section 2.4. Such certificate or
certificates that any Stockholder delivers to MDC shall be delivered on such
date to such third party in consummation of the Sale of the Business pursuant to
the terms and conditions specified in the Drag Along Notice, and MDC shall
concurrently therewith remit to each Stockholder that portion of the sale
proceeds to which such Stockholder is entitled by reason of its participation in
such Sale of the Business.
(e) In no event shall MDC receive special consideration or a control
premium in connection with a sale contemplated by this Section 2.4; PROVIDED,
HOWEVER, that it is understood that MDC shall be entitled to receive a
reasonable transaction fee, not to exceed 2% of Transaction Value, payable upon
the closing of any such sale contemplated by this Section 2.4 if MDC provides
services in connection with such sale that would customarily be provided by a
third party financial advisor.
Section 2.5 CALL UPON TERMINATION OF MANAGEMENT STOCKHOLDER'S EMPLOYMENT.
(a) If a Management Stockholder's active employment with the Company (and/or,
if applicable, its
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Subsidiaries) is voluntarily or involuntarily terminated for any reason
whatsoever (including, without limitation, termination by the Company and/or its
Subsidiaries with or without cause) at any time on or before the date which is
five years from the Grant Date of any Vested Stock Options or Call Shares, the
Company shall, on the terms and conditions of this Section 2.5, have the right
(the "MANAGEMENT CALL"), at the option of the Company, to purchase, at the Call
Share Repurchase Price or Vested Option Repurchase Price (each as defined
below), as the case may be, determined in accordance with Section 2.5(b) hereof,
all, or any portion, of such Call Shares and/or such Vested Stock Options then
held by such Management Stockholder (including, if applicable, such Shares held
by any Permitted Transferee of such Management Stockholder). Notwithstanding
the foregoing, the Company shall not have such option if (i) the termination of
employment results from the death or permanent disability of the Management
Stockholder or (ii) the termination of employment results from the retirement of
the Management Stockholder from the Company or any of its Subsidiaries at age 65
or over; PROVIDED that, in the case of any such termination resulting from
permanent disability or retirement, the Management Stockholder enters into an
agreement, in form and substance satisfactory to the Company, within 15 days of
the date of such termination, not to compete, directly or indirectly, with the
Company and/or any of its Subsidiaries for a period of five (5) years from the
date of such termination in any geographic area where the Company and/or its
Subsidiaries then or during such five-year period conducts business.
The Company shall have a period of 60 days from the date of such
termination in which to give notice in writing to the Management Stockholder of
the exercise of such option. The closing of the purchase shall take place at
the principal office of the Company on the tenth business day after the giving
of notice of the exercise of the option to purchase. The Call Share Repurchase
Price or the Vested Option Repurchase Price, as the case may be, shall be paid
by delivery to the Management Stockholder holding the Call Shares or Vested
Stock Options (including, if applicable, such Shares held by any Permitted
Transferee of such Management Stockholder) of a check or checks in the
appropriate amount payable to the order of such Management Stockholder or
Permitted Transferee, as the case may be, against delivery of certificates or
other instruments representing the Call Shares or Vested Stock Options, as the
case may be, so purchased, appropriately endorsed by such Management Stockholder
or Permitted Transferee, as the case may be, or his duly authorized
representative. For purposes of this Agreement, a Management Stockholder shall
be deemed to have a "permanent disability" when the Board of Directors of the
Company shall, in good faith, so determine. In connection with such closing,
such Management Stockholder (including, if applicable, such Shares held by any
Permitted Transferee of such Management Stockholder) shall warrant to the
Company good and marketable title to the purchased Call Shares or Vested Stock
Options, as the case may be, free and clear of all claims, liens, charges,
encumbrances and security interests of any nature whatsoever except those under
this Agreement.
(b) The offering price for each Call Share (the "CALL SHARE REPURCHASE
PRICE") shall be as follows:
10
DATE OF NOTICE OF EXERCISE REPURCHASE PRICE
Grant Date through and including the first 105% multiplied by the
anniversary of the Grant Date exercise price of such
Call Share
From the first anniversary of the Grant (105%)2 multiplied by the
Date through and including the second exercise price of such
anniversary of the Grant Date Call Share
From the second anniversary of the Grant (105%)3 multiplied by the
Date through and including the third exercise price of such
anniversary of the Grant Date Call Share
From the third anniversary of the Grant (105%)4 multiplied by the
Date through and including the fourth exercise price of such
anniversary of the Grant Date Call Share
From the fourth anniversary of the Grant (105%)5 multiplied by the
Date through and including the fifth exercise price of such
anniversary of the Grant Date Call Share
The offering price for each Vested Stock Option (the "VESTED OPTION
REPURCHASE PRICE") shall be an amount equal to the Call Share Repurchase Price
determined pursuant to this Section 2.5(b) as if such Vested Stock Option was
exercised immediately prior to the giving of notice by the Company of the
exercise of the option to purchase LESS the exercise price of such Vested Stock
Option.
Section 2.6 REGISTRATION RIGHTS AND RELATED MATTERS. (a) If the Company
intends (other than in connection with an IPO) to register Shares on Form ▇-▇,
▇▇▇▇ ▇-▇ or Form S-3 or any corresponding form applicable at the time under the
Securities Act as then in effect (or any similar statute then in effect), the
Company will give written notice to each Stockholder of its intention to do so,
at least 15 days prior to the time of the filing of any registration statement
or qualification papers, and at the written request of any Stockholder given
within 10 days after receipt of any such notice (which request shall specify the
number of Shares intended to be sold or disposed of by such Stockholder and
shall describe the nature of any proposed sale or other disposition thereof
which may include a distribution over a reasonable period of time), the Company
will use its reasonable best efforts to cause such Shares to be registered or
qualified to the extent required (in the opinion of the Company's counsel) to
permit the sale or other disposition thereof (in accordance with the methods
described by such Stockholder) (such right of each Stockholder to participate in
the proposed offering, a "PIGGY-BACK RIGHT"). The number of Shares that any
Stockholder intends to sell shall be subject to underwriters' cutbacks resulting
from the underwriters' conclusion that the inclusion of all of the Shares
requested to be included in the proposed offering would materially adversely
affect the distribution of Shares in such offering or the market price of Common
Stock if such Common Stock is publicly traded. Such underwriters' cutbacks
shall be made on a pro rata basis by multiplying the number of Shares
11
that each Stockholder desires to sell in the proposed offering by a fraction the
numerator of which shall be the number of Stockholders' Shares that the
underwriters deem appropriate to sell in the proposed offering and the
denominator of which shall be the total number of Shares that all of the
Stockholders initially desire to sell in the proposed offering.
(b) Notwithstanding any other provisions hereof, the Company shall ensure
that (i) any registration statement relating to a Stockholder's exercise of its
piggy-back rights complies in all material respects with the Securities Act and
(ii) any such registration statement does not, when it becomes effective,
contain an untrue statement or omission.
(c) All out-of-pocket expenses, disbursements and fees in connection with
any action to be taken under this Section 2.6 shall be borne by the Company,
including the reasonable fees and expenses of one counsel for all participating
Stockholders, provided that the foregoing expenses shall in no event include the
underwriters' discount in connection with an offering.
(d) In the event of any registration under the provisions of this Section
2.6, the Company, to the extent permitted by law, will indemnify any Stockholder
participating in such registration, its respective officers and directors, if
any, and each Person, if any, who controls such Stockholder within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act,
against all losses, claims, damages and liabilities caused by any untrue
statement of a material fact contained in the registration statement or
prospectus (and as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), or caused by any omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading and will reimburse such Stockholder, its
officers and directors and any Person, if any, who controls such Stockholder
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, against any legal or other expenses reasonably incurred by such
Stockholder, officer, director or Person in connection with investigating or
defending any such losses, claims, damages and liabilities, except insofar as
such losses, claims, damages or liabilities are caused by any untrue statement
or omission contained in information furnished in writing to the Company by such
Stockholder participating in such registration or by underwriters expressly for
use therein. The obligation of the Company under this Section 2.6 to register
securities for any of the Stockholders shall be subject to the condition that
each such Stockholder and the underwriters involved in the offering shall
furnish to the Company in writing such information as shall be reasonably
requested by the Company for use in connection with the preparation of any such
registration statement or prospectus and, to the extent permitted by law, shall
indemnify the Company, its directors and officers, any other underwriter, the
other Stockholders participating in such registration and each Person, if any,
who controls the Company, any other underwriter or such other Stockholders,
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, against all losses, claims, damages and liabilities caused by any
untrue statement or omission contained in information so furnished in writing to
the Company by such Stockholder or such underwriter expressly for use therein;
provided that the liability of any such Stockholder for such losses, claims,
damages and liabilities shall not exceed the net proceeds received by such
Stockholder in any such offering.
12
(e) In case any action, claim or proceeding shall be brought against any
Person entitled to indemnification hereunder, such indemnified party shall
promptly notify each indemnifying party in writing, and such indemnifying party
shall assume the defense thereof, including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees and expenses
incurred in connection with the defense thereof. The failure to so notify such
indemnifying party shall not affect any obligation it may have to any
indemnified party under this Agreement or otherwise except to the extent that
(as finally determined by a court of competent jurisdiction (which determination
is not subject to review or appeal)) such failure materially and adversely
prejudiced such indemnifying party. Each indemnified party shall have the right
to employ separate counsel in such action, claim or proceeding and participate
in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of each indemnified party unless (i) such indemnifying party has
agreed to pay such expenses; (ii) such indemnifying party has failed promptly to
assume the defense and employ counsel reasonably satisfactory to such
indemnified party, or (iii) the named parties to any such action, claim or
proceeding (including any impleaded parties) include both such indemnified party
and such indemnifying party or an affiliate or controlling person of such
indemnifying party, and such indemnified party shall have been advised in
writing by counsel that either (x) there may be one or more legal defenses
available to it which are different from or in addition to those available to
such indemnifying party or such affiliate or controlling person or (y) a
conflict of interest may exist if such counsel represents such indemnified party
and such indemnifying party or its affiliate or controlling person; PROVIDED,
HOWEVER, that such indemnifying party shall not, in connection with any one such
action or proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be responsible hereunder for the fees and expenses of more
than one separate firm of attorneys (in addition to any local counsel), which
counsel shall be designated by such indemnified party.
No indemnified party shall be liable for any settlement effected without
its written consent. Each indemnifying party agrees, jointly and severally,
that it will not, without the indemnified party's prior written consent, consent
to entry of any judgment or settle or compromise any pending or threatened
claim, action or proceeding in respect of which indemnification or contribution
may be sought hereunder unless the foregoing contains an unconditional release,
in form and substance reasonably satisfactory to the indemnified parties, of the
indemnified parties from all liability and obligation arising therefrom.
(f) The indemnifying party's liability to any such indemnified party
hereunder shall not be extinguished solely because any other indemnified party
is not entitled to indemnify hereunder.
(g) The indemnification provided for under this 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 securities.
13
(h) If the indemnification provided for in this Section 2.6 from the
indemnifying party is unavailable, or insufficient to hold harmless, to any
indemnified party hereunder in respect of any losses, claims, damages or
liabilities referred to herein, then the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the indemnifying party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action. The amount paid or payable by a party under this Section 2.6 as a
result of the losses, claims, damages and liabilities referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with any investigation or legal or administrative
action or proceeding. The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 2.6(d) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to herein. Notwithstanding the
provisions of this subsection (h), a Stockholder shall not be required to
contribute any amount in excess of the amount by which (i) the amount (net of
payment of all expenses) at which the securities that were sold by such
Stockholder and distributed to the public were offered to the public exceeds
(ii) the amount of any damages which such Stockholder has otherwise been
required to pay by reason of such untrue 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 indemnity and contribution agreements contained in this Section 2.6 are
in addition to any liability that the indemnifying parties may have to the
indemnified parties.
(i) As expeditiously as possible after the effectiveness of any
registration statement pursuant to this Section 2.6 and prior to such date as
shall be certified to the Company as the date upon which the Transfer
contemplated by such registration statement will be effected by any
participating Stockholder, the Company will deliver in exchange for certificates
representing Shares so registered bearing the legends set forth in Section 2.1,
certificates therefor not bearing such legends as shall be required to effect
such Transfer. In the event that the proposed Transfer is not made as
contemplated by any such participating Stockholder, by acceptance thereof such
Stockholder shall be deemed to have agreed that it will deliver such
certificates not bearing such legends to the Company in exchange for new
certificates bearing the legends set forth in Section 2.1 if the Company shall
request and the Company agrees that it will make such exchange.
14
(j) The registration rights provided in this Section 2.6 shall terminate
after an IPO as to any Stockholder which can immediately sell all of its Shares
in a single sale pursuant to Rule 144 under the Securities Act.
(k) Each of the Stockholders agrees that in connection with any public
offering, such Stockholder will not, without the prior written consent of the
Company, directly or indirectly, offer to sell, sell, contract to sell
(including, without limitation, any short sale), grant any option for the sale
of, acquire any option to dispose of, or otherwise dispose of any Shares for a
period of 180 days following the date of the consummation of such public
offering.
(l) So long as the Company shall not have registered any of its securities
pursuant to Section 12 of the Securities Exchange Act of 1934 (the "EXCHANGE
ACT") or filed a registration statement pursuant to the requirements of the
Securities Act, the Company shall, at any time and from time to time, upon the
request of any holder of Shares and upon the request of any Person designated by
such holder as a prospective purchaser of any Shares, furnish in writing to such
holder or such prospective purchaser, as the case may be, a statement as of a
date not earlier than 12 months prior to the date of such request of the nature
of the business of the Company and the products and services it offers and
copies of the most recent balance sheet and profit and loss and retained
earnings statements of the Company, together with similar financial statements
for such part of the two preceding fiscal years as the Company shall have been
in operation, all such financial statements to be audited to the extent audited
statements are reasonably available, and all other information required by Rule
144A under the Securities Act; PROVIDED THAT, in any event the most recent
financial statements so furnished shall include a balance sheet as of a date
less than 16 months prior to the date of such request, statements of profit and
loss and retained earnings for the 12 months preceding the date of such balance
sheet, and, if such balance sheet is not as of a date less than 6 months prior
to the date of such request, additional statements of profit and loss and
retained earnings for the period from the date of such balance sheet to a date
less than 6 months prior to the date of such request. If the Company shall have
registered any of its securities pursuant to the requirements of Section 12 of
the Exchange Act or filed a registration statement pursuant to the requirements
of the Securities Act, the Company shall timely file the reports required to be
filed by it under the Securities Act and the Exchange Act (including but not
limited to the reports under Sections 13 and 15(d) of the Exchange Act referred
to in subparagraph (c) of Rule 144 adopted by the Commission under the
Securities Act) and the rules and regulations adopted by the Commission
thereunder (or, if the Company is not required to file such reports, it will,
upon the request of any holder of Shares, make publicly available other
information) and will take such further action as any holder of Shares may
reasonably request, all to the extent required from time to time to enable such
holder to sell Shares without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 and Rule 144A under the
Securities Act, as such Rules may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the Commission. Upon the
request of any holder of Shares, the Company will deliver to such holder a
written statement as to whether it has complied with the requirements of this
Section 2.6(h).
15
ARTICLE III
BOARD OF DIRECTORS OF THE COMPANY
Section 3.1 BOARD OF DIRECTORS. (a) As long as MDC controls the voting
power (through proxy or otherwise) of at least 50% of the Voting Stock, each
Stockholder agrees to vote all of the Shares held by such Stockholder so as to
elect and maintain a Board, a majority of which members consist of persons
designated by MDC and initially the board should be composed of the following:
▇▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇.
(b) As long as MDC controls the voting power (through proxy or otherwise)
of at least 50% of the Voting Stock, in the event that any director designated
by MDC for any reason ceases to serve as a director during his term of office,
the resulting vacancy on the Board shall be filled by a director designated by
MDC.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Section 4.1 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. (a) Each
Stockholder represents and warrants, severally and not jointly, that: (i) such
Stockholder is acquiring, or has acquired, the shares of Common Stock for
investment for such Stockholder's own account and not with a view to, or for the
resale in connection with, the distribution or other disposition thereof; (ii)
such Stockholder will not, during the term of this Agreement, directly or
indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise
dispose of any shares of Common Stock except in accordance with this Agreement;
(iii) such Stockholder (A) has either (1) preexisting personal or business
relationships with the Company, or any of its respective officers, directors or
any of its respective Affiliates or (2) such knowledge and experience in
financial and business matters such that such Stockholder is capable of
evaluating the merits and risks relating to the purchase of shares of Common
Stock under this Agreement, or such Stockholder has been advised by a
representative possessing such knowledge and experience who is unaffiliated with
or who is not compensated, directly or indirectly, by the Company or any of its
Affiliates, or (B) is a Trust, the beneficiary of which is a Person meeting the
requirements of (1) and/or (2) of clause (iii)(A) above; (iv) such Stockholder
has been given an opportunity which such Stockholder deems adequate to obtain
information and documents relating to the Company and to ask questions of and
receive answers from representatives of the Company concerning such
Stockholder's investment in the Common Stock of the Company; (v) such
Stockholder's financial condition is such that such Stockholder can afford to
bear the economic risk of holding the Common Stock for an indefinite period of
time; such Stockholder has adequate means of providing for such Stockholder's
current needs and contingencies and has no need for such Stockholder's
investment in the Common Stock to be liquid; and (vi) such Stockholder can
afford to suffer a complete loss of such Stockholder's investment in the Common
Stock.
(b) Each Stockholder further acknowledges that such Stockholder has been
advised by the Company that: (i) the offer and sale of the Common Stock has not
been registered
16
under the Securities Act, but is intended to be exempt from registration
pursuant to Section 4(2) of the Securities Act and the rules promulgated
thereunder by the Securities and Exchange Commission, and that the Shares cannot
be sold, pledged, assigned or otherwise disposed of unless the same is
subsequently registered under the Securities Act or an exemption from such
registration is available; (ii) it is anticipated that there will not be any
public market for the Shares in the foreseeable future; (iii) a restrictive
legend in the form set forth in Section 2.1 shall be placed on the certificates
representing the Shares; and (iv) a notation shall be made in the appropriate
records of the Company indicating that the Shares are subject to restrictions on
transfer and if the Company should at some time in the future engage the
services of a stock transfer agent, appropriate stop transfer restrictions will
be issued to such transfer agent with respect to the Shares.
(c) Each Stockholder further represents and warrants that (i) such
Stockholder has full right, power and authority to execute, deliver and perform
this Agreement; (ii) all actions necessary or required to be taken by or on the
part of such Stockholder to execute, deliver and perform this Agreement and to
consummate the transactions contemplated by this Agreement have been duly
authorized and approved by all necessary or required action of such Stockholder
and have been validly taken; and (iii) this Agreement has been duly executed and
delivered by such Stockholder and is a valid and binding agreement of such
Stockholder enforceable in accordance with its terms, except to the extent that
its enforceability may be subject to applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity.
ARTICLE V
MISCELLANEOUS
Section 5.1 ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior arrangements or understandings (whether written or
oral) with respect thereto.
Section 5.2 CAPTIONS. The Article and Section captions used herein are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 5.3 COUNTERPARTS. For the convenience of the parties, any number
of counterparts of this Agreement may be executed by the parties hereto and each
such executed counterpart shall be deemed to be an original instrument.
Section 5.4 NOTICES. All notices, consents, requests, instructions,
approvals and other communications provided for herein and all legal process in
regard hereto shall be validly given, made or served, if in writing and
delivered by personal delivery, overnight courier, telecopier or registered or
certified mail, return-receipt requested and postage prepaid addressed as
follows:
17
If to the Company, to:
DIMAC Holdings, Inc.
c/▇ ▇▇▇▇▇▇ De Leeuw & Co., Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Tel.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
White & Case LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Tel.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the MDC Entities, to:
▇▇▇▇▇▇ De Leeuw & Co., Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Tel.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to any of the Non-Management or Management Stockholders, to the
addresses set forth opposite each of their names on Schedule A attached
hereto,
or to such other address as any such party hereto may, from time to time,
designate in writing to all other parties hereto, and any such communication
shall be deemed to be given, made or served as of the date so delivered or, in
the case of any communication delivered by mail, as of the date so received.
Section 5.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the Company, the Stockholders and their respective
heirs, devisees, legal representatives, successors, permitted assigns and other
permitted transferees. The rights of a Stockholder under this Agreement may not
be assigned or otherwise conveyed by any Stockholder except in connection with a
Transfer of Shares which is in compliance with this Agreement; PROVIDED,
HOWEVER, the rights of MDC under Sections 2.3, 2.4 and 3.1 are not assignable
other than as a result of a Permitted Transfer described in Section 2.2(a)(iii).
18
Section 5.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO SUCH STATE'S CHOICE OF LAW PROVISIONS.
Section 5.7 SUBMISSION TO JURISDICTION. (a) Each of the parties hereto
(other than the Michigan Fund) hereby irrevocably acknowledges and consents that
any legal action or proceeding brought with respect to any of the obligations
arising under or relating to this Agreement may be brought in the courts of the
State of New York or in the United States District Court for the Southern
District of New York, as the party bringing such action or proceeding may elect,
and each of the parties hereto (other than the Michigan Fund) hereby irrevocably
submits to and accepts with regard to any such action or proceeding, for itself
and in respect of its property, generally and unconditionally, the jurisdiction
of the aforesaid courts. Subject to Section 5.7(b), the foregoing shall not
limit the rights of any party to serve process in any other manner permitted by
law. The foregoing consents to jurisdiction shall not constitute general
consents to service of process in the State of New York for any purpose except
as provided above and shall not be deemed to confer rights on any Person other
than the respective parties to this Agreement.
(b) Each of the parties hereto (other than the Michigan Fund) hereby
waives any right it may have under the laws of any jurisdiction to commence by
publication any legal action or proceeding with respect to this Agreement. To
the fullest extent permitted by applicable law, each of the parties hereto
(other than the Michigan Fund) hereby irrevocably waives the objection which it
may now or hereafter have to the laying of the venue of any suit, action or
proceeding arising out of or relating to this Agreement in any of the courts
referred to in Section 5.7(a) and hereby further irrevocably waives any claim
that any such court is not a convenient forum for any such suit, action or
proceeding.
(c) The parties hereto agree that any judgment obtained by any party
hereto or its successors or assigns in any action, suit or proceeding referred
to above may, in the discretion of such party (or its successors or assigns), be
enforced in any jurisdiction, to the extent permitted by applicable law.
(d) The parties hereto agree that the remedy at law for any breach of this
Agreement may be inadequate and that should any dispute arise concerning the
sale or disposition of any Shares or the voting thereof or any other similar
matter hereunder, this Agreement shall be enforceable in a court of equity by an
injunction or a decree of specific performance. Such remedies shall, however, be
cumulative and nonexclusive, and shall be in addition to any other remedies
which the parties hereto may have.
Section 5.8 BENEFITS ONLY TO PARTIES. Nothing expressed by or mentioned
in this Agreement is intended or shall be construed to give any Person, other
than the parties hereto and their respective successors or permitted assigns,
any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision herein contained, this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
19
benefit of the parties hereto and their respective successors and permitted
assigns, and for the benefit of no other Person.
Section 5.9 TERMINATION. This Agreement shall terminate upon the
happening of any one of the following events:
(a) the voluntary or involuntary dissolution of the Company;
(b) the Sale of the Business as provided in Section 2.4; and
(c) the consummation of an IPO, except that (i) the rights of the
Stockholders under Section 2.6 shall survive such termination (ii) the rights of
the Management Stockholders and obligations of MDC under Section 2.3 shall
survive such termination, and (iii) the restrictions under Section 2.1 and
2.2(a)(viii) of this Agreement in respect of Stockholders transferring Call
Shares following an IPO and any rights of the Company to repurchase Call Shares
and/or Vested Stock Options pursuant to Section 2.5 shall survive such
termination for a period of two years following the IPO;
PROVIDED, HOWEVER, the provisions of Section 5.11 shall survive any termination
of this Agreement.
Section 5.10 PUBLICITY. Except as otherwise required by applicable laws
or regulations, none of the parties hereto shall issue or cause to be issued any
press release or make or cause to be made any other public statement in each
case relating to or connected with or arising out of this Agreement or the
matters contained herein, without obtaining the prior approval of the Company to
the contents and the manner of presentation and publication thereof.
Section 5.11 CONFIDENTIALITY. Each of the parties hereto hereby agrees
that it shall keep (and shall cause its directors, officers, employees,
representatives and outside advisors and its affiliates to keep) all non-public
information relating to the Company (including any such information received
prior to the date hereof) confidential except information which (i) becomes
known to such Stockholder from a source, other than the Company, its respective
directors, officers, employees, representatives or outside advisors, which
source is not obligated to the Company to keep such information confidential or
(ii) becomes generally available to the public through no breach of this
Agreement by any party hereto. Each of the parties hereto agrees that such
non-public information (a) shall be communicated only to those of its directors,
officers, employees, representatives, outside advisors and affiliates who need
to know such non-public information and (b) will not be used by such party or
its directors, officers, employees, representatives, outside advisors or
affiliates either to compete with the Company or to conduct itself in a manner
inconsistent with the antitrust laws of the United States or any state.
Notwithstanding the foregoing, a party hereto may disclose non-public
information if required to do so by law or a court of competent jurisdiction or
by any governmental agency; PROVIDED, HOWEVER, that prompt notice of such
required disclosure be given to the Company prior to the making of such
disclosure so that the Company may seek a protective order or other appropriate
remedy; PROVIDED FURTHER, that such party shall not be required to give such
disclosure to the Company if such disclosure is required by any regulatory
agency in the ordinary course of
20
business. In the event that such protective order or other remedy is not
obtained, the party hereto required to disclose the non-public information will
disclose only that portion which such party is advised by counsel is legally
required to be disclosed and will request that confidential treatment be
accorded such portion of the non-public information. In addition,
notwithstanding the foregoing, the TCW Entities may disclose any information
regarding the Company to any prospective purchasers of securities of the Company
so long as such prospective purchasers agree to maintain the confidentiality of
such information at least to the extent provided for in this paragraph.
Section 5.12 FEE; EXPENSES. The parties hereto acknowledge that MDC
Management Company IV, LLC, an Affiliate of MDC, or its respective successors or
assigns, (i) have received from the Company or its Subsidiaries an aggregate
transaction fee equal to $9,900,000 and (ii) shall receive an ongoing management
fee, adjusted annually, equal to the greater of $550,000 per annum and 1.06% of
pro forma EBITDA of the Company, for the preceding fiscal year, PROVIDED that in
no event shall such ongoing management fee exceed $1,000,000 in any year, in
each case plus reimbursement for its out-of-pocket expenses.
Section 5.13 AMENDMENTS; WAIVERS. No provision of this Agreement may be
amended, modified or waived without approval of the holders of 66-2/3% of the
then outstanding shares of Common Stock held by Persons party hereto; provided
that no amendment or waiver of a provision of this Agreement which adversely
affects the rights of any of the Non-MDC Stockholders may be made without such
Non-MDC Stockholders' consent with the Non-MDC Stockholders being considered as
a group with the determination by the holders of a majority of the outstanding
Shares and Vested Stock Options held by the Non-MDC Stockholders being binding
on all Non-MDC Stockholders; provided further that no amendment or waiver of a
provision of this Agreement which adversely and disproportionately affects the
rights of any of the Management Stockholders may be made without such Management
Stockholders' consent with the Management Stockholders being considered as a
group with the determination by the holders of a majority of the outstanding
Shares and Vested Stock Options held by the Management Stockholders being
binding on all Management Stockholders; provided further that no amendment of
Sections 2.2(a)(viii) and 2.5 which adversely affects the rights, or
obligations, of any of the Management Stockholders may be made without such
Management Stockholder's consent; provided further that (x) no amendment which
adversely and disproportionately affects the rights of the TCW Entities may be
made without the TCW Entities' consent with the TCW Entities being considered as
a group with the determination by the holders of a majority of the outstanding
Shares held by the TCW Entities being binding on all TCW Entities, and (y) no
amendment of Section 2.3 or 2.6 which adversely affects the rights of the TCW
Entities may be made without the TCW Entities' consent with the TCW Entities
being considered as a group with the determination by the holders of a majority
of the outstanding Shares held by the TCW Entities being binding on all TCW
Entities.
21
Section 5.14 SEVERABILITY. In case any of the provisions contained
herein shall, for any reason, be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision or provisions are not
contained herein.
[SIGNATURE PAGE FOLLOWS]
22
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
DIMAC HOLDINGS, INC.
By /s/ ▇▇▇▇▇ ▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇
Title: Assistant Secretary
▇▇▇▇▇▇ DE LEEUW & CO. IV, L.P.,
By: MDC Management Co. IV, LLC,
its General Partner
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Member
DELTA FUND LLC
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Member
▇▇▇▇▇▇ DE LEEUW & CO. IV ASSOCIATES, L.P.
By: MDC Management Co. IV, LLC,
its General Partner
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Member
TCW/CRESCENT MEZZANINE PARTNERS, L.P.
TCW/CRESCENT MEZZANINE TRUST
TCW/CRESCENT MEZZANINE INVESTMENT
PARTNERS, L.P.
By: TCW/Crescent Mezzanine, L.L.C.,
its general partner or managing owner
By /s/ ▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
TCW SHARED OPPORTUNITY FUND II, L.P.
By: TCW Investment Management
Company, its investment advisor
By /s/ ▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
TCW LEVERAGED INCOME TRUST, L.P.
By: TCW Advisors (Bermuda), Limited,
as general partner
By /s/ ▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
By: TCW Investment Management
Company, as investment advisor
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
FIRST UNION INVESTORS, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President
DIMAC EQUITY INVESTORS, L.L.C.
By: Merchant GP, Inc., as managing member
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President