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EXHIBIT 4.7
FORM OF MANAGEMENT STOCKHOLDER'S AGREEMENT
This Management Stockholder's Agreement (this "Agreement") is
entered into as of the date set forth on the signature page hereof between
Regal Cinemas, Inc., a Tennessee corporation (the "Company"), and the key
employee of the Company whose name and address are set forth on the signature
page hereof (the "Management Stockholder") (the Company and the Management
Stockholder being hereinafter collectively referred to as the "Parties").
On January 19, 1998, Screen Acquisition Corp., a Delaware
corporation ("Holdco I"), Monarch Acquisition Corp., a Delaware corporation
("Holdco II" and, together with Holdco I, the "Holdcos"), and the Company
entered into an Agreement and Plan of Merger (as amended, supplemented or
otherwise modified from time to time, the "Merger Agreement") pursuant to which
the Holdcos are to be merged with and into the Company (the "Merger").
Pursuant to the Merger Agreement, each share of the Company's Common Stock, no
par value (the "Common Stock"), will be converted into the right to receive
$31.00 in cash, as further specified in the Merger Agreement, and holders of
options to purchase shares of Common Stock will either retain such options or
receive cash upon the cancellation of such options, as further specified in the
Merger Agreement.
In addition to this Agreement, there are several other agreements
("Other Management Stockholders' Agreements") which have been, or which in the
future will be, entered into between the Company and other individuals who are
or will be key employees of the Company (collectively, the "Other Management
Stockholders").
The Company has agreed to sell to the Management Stockholder the
number of shares of Common Stock set forth on the signature page hereof (the
"Purchase Stock"). In addition, the Company will grant to the Management
Stockholder as of the effective time of the Merger the number of time options
(the "New Time Options") set forth on the signature page hereof and the number
of performance options (the "New Performance Options" and, together with the
New Time Options, the "New Options") set forth on the signature page hereof to
purchase shares of Common Stock at the exercise price per share of Common Stock
set forth on the signature page hereof pursuant to the terms of the 1998 Stock
Purchase and Option Plan for Key Employees of Regal Cinemas, Inc. (the "New
Plan") and the form of Non-Qualified Stock Option Agreement attached hereto as
Exhibit A.
In accordance with Section 5.06 of the Merger Agreement, after
the Merger, the Management Stockholder has agreed to retain the number of
options (the "Old Options" and, together with the New Options, the "Options")
set forth on the signature page hereof to purchase shares of Common Stock at
the exercise prices set forth on the signature page hereof.
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Within five days of the Merger, the Company shall effect a stock
split (the "Stock Split") resulting in a Base Price (as defined below) of $5.00
per share, which $5.00 per share Base Price is equivalent to the $31.00 per
share consideration payable in the Merger.
Unless otherwise agreed in writing by the parties hereto,
notwithstanding the foregoing, the number of shares of Common Stock subject to
the Old Options and the per share exercise price of each Old Option shall be
adjusted to take into account the Stock Split, so that after the Stock Split
(i) the aggregate spread for the Old Options before the Merger and the Stock
Split shall be equal to the aggregate spread for the Old Options after the
Stock Split and (ii) the ratio of each Old Option's per share exercise price to
the fair market value of a share of Common Stock shall be the same before the
Merger and the Stock Split as after the Stock Split. For purposes of this
paragraph, the fair market value of a share of Common Stock before the Merger
and the Stock Split shall be deemed to be $31.00 and the fair market value of a
share of Common Stock after the Stock Split shall be deemed to be $5.00.
NOW THEREFORE, to implement the foregoing and in consideration of
the grant of New Options and of the mutual agreements contained herein, the
Parties agree as follows:
1. Retention of Old Options; Purchase of Stock; Issuance of
New Options.
(a) The Management Stockholder hereby agrees to retain the Old
Options (which shall hereafter be subject to the terms and conditions of this
Agreement) and not to receive in connection with the Merger the amount that
would otherwise be payable to the Management Stockholder in respect of such Old
Options by operation of the provisions of Section 5.06 of the Merger Agreement.
(b) The Management Stockholder hereby subscribes for and shall
purchase as of the date set forth on the signature page hereof opposite the
caption "Base Date" (the "Base Date"), and the Company shall sell to the
Management Stockholder as of the Base Date, the Purchase Stock at a purchase
price per share of $5.00 (the "Base Price"), which number of shares of Purchase
Stock and which Base Price are calculated after giving effect to the Stock
Split. The Company shall have no obligation to sell any Purchase Stock to any
person who (i) is a resident or citizen of a state or other jurisdiction in
which the sale of the Purchase Stock to him or her would constitute a violation
of the securities or "blue sky" laws of such jurisdiction or (ii) is not an
employee of the Company or any of its subsidiaries on the date hereof.
(c) The aggregate price for the Purchase Stock, if any, shall
be the amount set forth on the signature page hereof (such amount hereinafter
sometimes referred to as the "Aggregate Purchase Price"). The Aggregate
Purchase Price, if any, shall be paid in the following manner: the Management
Stockholder shall promptly (and in any event within five business days after
the date hereof) deliver to the Company cash or a certified bank check or
checks payable to the order of the Company in the amount of the Aggregate
Purchase Price. If applicable, as of the Base Date, in consideration of
receipt of the Aggregate Purchase Price,
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the Company will deliver to the Management Stockholder a certificate,
registered in the Management Stockholder's name, for the Purchase Stock, which
shall be subject to the terms and conditions hereinafter set forth. The
Company shall have no obligation to sell any Purchase Stock unless and until
(i) it shall have received the Aggregate Purchase Price, (ii) the Merger shall
have been consummated and (iii) the Stock Split shall have occurred.
(d) Subject to the terms and conditions hereinafter set forth
and as of the Base Date (the "Option Grant Date"), the Company shall issue to
the Management Stockholder the New Options and the Parties shall execute and
deliver to each other copies of the Non-Qualified Stock Option Agreement
concurrently with the issuance of the New Options.
2. Management Stockholder's Representations, Warranties and
Agreements.
(a) The Management Stockholder agrees and acknowledges that he
will not, directly or indirectly, offer, transfer, sell, assign, pledge,
hypothecate or otherwise dispose of (any such act being referred to herein as a
"transfer") any shares of the Purchase Stock or Common Stock issuable upon
exercise of Old Options (the "Old Option Stock") or New Options (the "New
Option Stock"; the Purchase Stock, the Old Option Stock and the New Option
Stock, collectively, the "Stock") unless such transfer complies with Section 3
of this Agreement.
If the Management Stockholder is an "affiliate" (as defined under
Rule 405 of the rules and regulations promulgated under the Act (as defined
below) and as interpreted in good faith by the Board of Directors of the
Company) of the Company (an "Affiliate"), the Management Stockholder also
agrees and acknowledges that he will not transfer any shares of the Stock
unless (i) the transfer is pursuant to an effective registration statement
under the Securities Act of 1933, as amended, and the rules and regulations in
effect thereunder (collectively, the "Act"), and in compliance with applicable
provisions of state securities laws or (ii) counsel for the Management
Stockholder (which counsel shall be reasonably acceptable to the Company) shall
have furnished the Company with an opinion, reasonably satisfactory in form and
substance to the Company, that no such registration is required because of the
availability of an exemption from registration under the Act or (iii) such
transfer is effected as set forth in the immediately following paragraph.
Notwithstanding the foregoing provisions of this Section 2(a),
the Company acknowledges and agrees that any of the following transfers are
deemed to be in compliance with the Act and this Agreement and no opinion of
counsel is required in connection therewith: (x) a transfer made pursuant to
Section 4, 5 or 6 hereof, (y) a transfer upon the death of the Management
Stockholder to his executors, administrators, testamentary trustees, legatees
or beneficiaries (the "Management Stockholder's Estate") or a transfer to the
executors, administrators, testamentary trustees, legatees or beneficiaries of
a person who has become a holder of Stock in accordance with the terms of this
Agreement, provided that it is expressly understood that any such transferee
shall be bound by the provisions of this Agreement and (z) a transfer made
after the Base Date in compliance with the federal
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securities laws to a trust or custodianship the beneficiaries of which may
include only the Management Stockholder, his spouse or his lineal descendants
(a "Management Stockholder's Trust") or a transfer made to such a trust by a
person who has become a holder of Stock in accordance with the terms of this
Agreement, provided that, in the case of any transfer under this clause (z),
such transfer is made expressly subject to this Agreement and the transferee
agrees in writing to be bound by the terms and conditions hereof.
(b) The certificate (or certificates) representing the Stock
shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS
OF THE MANAGEMENT STOCKHOLDER'S AGREEMENT DATED AS OF MAY __,
1998, BETWEEN REGAL CINEMAS, INC. (THE "COMPANY") AND THE
MANAGEMENT STOCKHOLDER NAMED ON THE FACE HEREOF (A COPY OF WHICH
IS ON FILE WITH THE SECRETARY OF THE COMPANY)."
(c) The Management Stockholder acknowledges that he has been
advised that (i) the Stock has been registered on Form S-8 under the Act and
the Company shall maintain the effectiveness of such Form S-8, or if such Form
S-8 ceases to be effective, shall cause the Stock to be registered on a new
Form S-8 or other Form of the Securities and Exchange Commission ("SEC")
available to the Company for such purpose, in each case to the extent necessary
to permit the Options to be exercised, subject to the terms and conditions
hereof and of such Options, (ii) it is not anticipated that there will be any
market on an exchange or a quotation service for the Stock, (iii) a restrictive
legend in the form heretofore set forth shall be placed on the certificates
representing the Stock and (iv) a notation shall be made in the appropriate
records of the Company indicating that the Stock is subject to restrictions on
transfer and appropriate stop transfer restrictions will be issued to the
Company's transfer agent with respect to the Stock.
If the Management Stockholder is an Affiliate, the Management
Stockholder also acknowledges that (1) the Stock must be held indefinitely and
the Management Stockholder must continue to bear the economic risk of the
investment in the Stock unless it is subsequently registered under the Act or
an exemption from such registration is available, (2) when and if shares of the
Stock may be disposed of without registration in reliance on Rule 144 of the
rules and regulations promulgated under the Act, such disposition can be made
only in limited amounts in accordance with the terms and conditions of such
Rule and (3) if the Rule 144 exemption is not available, public sale without
registration will require compliance with Regulation A or some other exemption
under the Act.
(d) If any shares of the Stock are to be disposed of in
accordance with Rule 144 under the Act or otherwise, the Management Stockholder
shall promptly notify the
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Company of such intended disposition and shall deliver to the Company at or
prior to the time of such disposition such documentation as the Company may
reasonably request in connection with such sale and, in the case of a
disposition pursuant to Rule 144, shall deliver to the Company an executed copy
of any notice on Form 144 required to be filed with the SEC.
(e) The Management Stockholder agrees that, if any shares of
the capital stock of the Company are offered to the public pursuant to an
effective registration statement under the Act (other than registration of
securities issued under an employee plan), the Management Stockholder will not
effect any public sale or distribution of any shares of the Stock not covered
by such registration statement within 7 days prior to, or within 180 days (or
such shorter period as the Company and the Controlling Shareholders (as defined
below) shall agree) after, the effective date of such registration statement,
unless otherwise agreed to in writing by the Company.
(f) The Management Stockholder represents and warrants that
(i) he has received and reviewed the document(s) comprising the Prospectus (the
"Prospectus") relating to the Stock and the documents referred to therein,
certain of which documents set forth the rights, preferences and restrictions
relating to the Stock and (ii) he has been given the opportunity to obtain any
additional information or documents and to ask questions and receive answers
about such documents, the Company and the business and prospects of the Company
which he deems necessary to evaluate the merits and risks related to his
investment in the Stock and to verify the information contained in the
Prospectus and the information received as indicated in this Section 2(f)(ii),
and he has relied solely on such information.
(g) The Management Stockholder further represents and warrants
that (i) his financial condition is such that he can afford to bear the
economic risk of holding the Stock for an indefinite period of time and has
adequate means for providing for his current needs and personal contingencies,
(ii) he can afford to suffer a complete loss of his investment in the Stock,
(iii) he understands and has taken cognizance of all risk factors related to
the purchase of the Stock, including those set forth in the Prospectus referred
to above, and (iv) his knowledge and experience in financial and business
matters are such that he is capable of evaluating the merits and risks of his
purchase of the Stock as contemplated by this Agreement.
3. Restriction on Transfer.
Except for transfers permitted by clauses (x), (y) and (z) of
Section 2(a) or a sale of shares of Stock pursuant to an effective registration
statement under the Act filed by the Company (as described herein but excluding
the Form S-8 filed in connection with this Agreement and the Other Management
Stockholders' Agreements and the transactions contemplated hereby and thereby)
or pursuant to the Sale Participation Agreement (as defined below), the
Management Stockholder agrees that he will not transfer any shares of the Stock
at any time prior to the fifth anniversary of the Base Date. No transfer of
any such shares in violation hereof shall be made or recorded on the books of
the Company and any such transfer shall be void and of no effect. Subject to
Section 4 below, the Management
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Stockholder shall not be restricted from transferring Stock after the fifth
anniversary of the Base Date in compliance with applicable securities laws.
4. Right of First Refusal.
If at any time after the fifth anniversary of the Base Date and
prior to a Public Offering (as hereinafter defined), the Management Stockholder
receives a bona fide offer to purchase any or all of his shares of Stock (the
"Offer") from a third party (the "Offeror") which the Management Stockholder
wishes to accept, the Management Stockholder shall cause the Offer to be
reduced to writing and shall notify the Company in writing of his wish to
accept the Offer. The Management Stockholder's notice shall contain an
irrevocable offer to sell such shares of Stock to the Company (in the manner
set forth below) at a purchase price equal to the price contained in, and on
the same terms and conditions of, the Offer, and shall be accompanied by a true
copy of the Offer (which shall identify the Offeror). At any time within 15
days after the date of the receipt by the Company of the Management
Stockholder's notice, the Company shall have the right and option to purchase,
or to arrange for a third party to purchase, all of the shares of Stock covered
by the Offer either (i) at the same price and on the same terms and conditions
as the Offer or (ii) if the Offer includes any consideration other than cash,
then at the sole option of the Company, at the equivalent all cash price,
determined in good faith by the Company's Board of Directors, by delivering a
certified bank check or checks in the appropriate amount (and any such non-cash
consideration to be paid) to the Management Stockholder at the principal office
of the Company against delivery of certificates or other instruments
representing the shares of Stock so purchased, appropriately endorsed by the
Management Stockholder. If at the end of such 30-day period, the Company has
not tendered the purchase price for such shares in the manner set forth above,
the Management Stockholder may during the succeeding 60-day period sell not
less than all of the shares of Stock covered by the Offer to the Offeror at a
price and on terms no less favorable to the Management Stockholder than those
contained in the Offer. Promptly after such sale, the Management Stockholder
shall notify the Company of the consummation thereof and shall furnish such
evidence of the completion and time of completion of such sale and of the terms
thereof as may reasonably be requested by the Company. If, at the end of 60
days following the expiration of the 30-day period for the Company to purchase
the Stock, the Management Stockholder has not completed the sale of such shares
of the Stock as aforesaid, the provisions of this Section 4 shall again be in
effect with respect to such shares of the Stock.
5. Management Stockholder's Resale of Stock and Options to
the Company Upon The Management Stockholder's Death or
Disability.
(a) Except as otherwise provided herein, if, prior to the
fifth anniversary of the Base Date, (i) the Management Stockholder is still in
the employ of the Company or any subsidiary of the Company, or has retired from
the Company and its subsidiaries at age 65 or over (or such other age as may be
approved by the Board of Directors of the Company) after having been employed
by the Company or any subsidiary for at least three years after the Base Date,
and (ii) the Management Stockholder either dies or becomes permanently
disabled, then the Management Stockholder, the Management Stockholder's Estate
or a Management
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Stockholder's Trust, as the case may be, shall have the right, for one year
following the date of death or permanent disability, (A) to sell to the
Company, and the Company shall be required to purchase, on one occasion, all or
any portion of the shares of Stock then held by the Management Stockholder, the
Management Stockholder's Estate and/or the Management Stockholder's Trust, as
the case may be, at the Section 5 Repurchase Price, as determined in accordance
with Section 7, (B) to require the Company to pay to the Management
Stockholder, the Management Stockholder's Estate and/or the Management
Stockholder's Trust, as the case may be, an additional amount equal to the
Option Excess Price determined on the basis of the Section 5 Repurchase Price
as provided in Section 8 with respect to the termination of outstanding Old
Options held by the Management Stockholder and (C) to require the Company to
pay to the Management Stockholder, the Management Stockholder's Estate and/or
the Management Stockholder's Trust, as the case may be, an additional amount
equal to Option Excess Price determined on the basis of a Section 5 Repurchase
Price as provided in Section 8 with respect to the termination of outstanding
New Time Options held by the Management Stockholder.
(b) The Management Stockholder, the Management Stockholder's
Estate and/or the Management Stockholder's Trust, as the case may be, shall
send written notice to the Company of its intention to sell shares of Stock in
exchange for the payment referred in Section 5(a) above and to terminate such
Options (in exchange for the payment referred to in Section 5(a)) (the
"Redemption Notice"). The completion of the purchase shall take place at the
principal office of the Company on the tenth business day after the giving of
the Redemption Notice. The Section 5 Repurchase Price and the payment with
respect to the Options as described above shall be paid by delivery to the
Management Stockholder, the Management Stockholder's Estate and/or the
Management Stockholder's Trust, as the case may be, of a certified bank check
or checks in the appropriate amount payable to the order of the Management
Stockholder, the Management Stockholder's Estate and/or the Management
Stockholder's Trust, as the case may be, against delivery of certificates or
other instruments representing the Stock so purchased and appropriate documents
cancelling the Options so terminated appropriately endorsed or executed by the
Management Stockholder, the Management Stockholder's Estate and/or the
Management Stockholder's Trust, or his, her or its duly authorized
representative; provided, however, that the Company shall reduce the amount to
be paid by any amounts owed by the Management Stockholder to the Company. For
purposes of this Agreement, the Management Stockholder shall be deemed to have
a "permanent disability" if the Management Stockholder is unable to engage in
the activities required by the Management Stockholder's job by reason of any
medically determined physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a continuous
period of not less than 12 months.
(c) Notwithstanding anything in Section 5(a) to the contrary
and subject to Section 11, if there exists and is continuing a default or an
event of default on the part of the Company or any subsidiary of the Company
under any loan, guarantee or other agreement under which the Company or any
subsidiary of the Company has borrowed money or if a repurchase or payment
referred to in Section 5(a) would result in a default or an event of default on
the part of the Company or any subsidiary of the Company under any such
agreement or if such repurchase or payment would not be permitted under any
applicable
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statutes of the State of Tennessee or would otherwise violate any such statutes
(or if the Company reincorporates in another state, any applicable statutes of
such state) (each such occurrence being an "Event"), the Company shall not be
obligated to repurchase any of the Stock from, or make payment in respect of
any Options to, the Management Stockholder, the Management Stockholder's Estate
and/or a Management Stockholder's Trust, as the case may be, until the first
business day which is 10 calendar days after all of the foregoing Events have
ceased to exist (the "Repurchase Eligibility Date"); provided, however, that
the number of shares of Stock subject to repurchase under this Section 5(c)
shall be that number of shares of Stock and the number of Exercisable Option
Shares (as defined in Section 8) for purposes of calculating the Option Excess
Price payable under this Section 5(c) shall be the number of Exercisable Option
Shares, held by the Management Stockholder, the Management Stockholder's Estate
and/or a Management Stockholder's Trust, as the case may be, at the time of
delivery of a Redemption Notice in accordance with Section 5(b) hereof (as
adjusted below for option exercises); provided, further, that the Repurchase
Calculation Date (as defined below) shall be determined as of the Repurchase
Eligibility Date (unless the Section 5 Repurchase Price would be greater if the
Repurchase Calculation Date had been determined as if no Event had occurred, in
which case, solely for purposes of this proviso, the Repurchase Calculation
Date shall be determined as if no Event had occurred). All Options shall
continue to be exercisable until the repurchase pursuant to the Redemption
Notice, provided that to the extent any Options are exercised after the date of
such Redemption Notice, the number of Exercisable Option Shares for purposes of
calculating the Option Excess Price shall be reduced and the number of shares
of Stock shall be increased accordingly.
(d) Notwithstanding any other provision of this Section 5 to
the contrary and subject to Section 11, the Management Stockholder, the
Management Stockholder's Estate and/or a Management Stockholder's Trust, as the
case may be, shall have the right to withdraw any Redemption Notice which has
been pending for 60 or more days and which has remained unsatisfied because of
the provisions of Section 5(c). In the event any Redemption Notice is so
withdrawn, it shall be deemed not to be a Redemption Notice for purposes of
this Section 5.
6. The Company's Option to Repurchase Stock
and Options of Management Stockholder.
(a) If, on or prior to the fifth anniversary of the Base Date,
(i) the Management Stockholder's active employment with the Company (and/or, if
applicable, its subsidiaries) is terminated by the Company or the Management
Stockholder for any reason, (ii) the beneficiaries of a Management
Stockholder's Trust shall include any person or entity other than the
Management Stockholder, his spouse or his or his spouse's lineal descendants,
or (iii) the Management Stockholder shall effect a transfer of any of the Stock
other than as permitted in this Agreement (each, a "Section 6(a) Call Event"),
then the Company shall have the right to (A) purchase all, but not less than
all, of the shares of Purchase Stock and Old Option Stock then held by the
Management Stockholder or a Management Stockholder's Trust at the Section 5
Repurchase Price, as determined in accordance with Section 7, and (B) terminate
all, but not less than all, of the Old Options then held by the Management
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Stockholder or a Management Stockholder's Trust upon payment of the Option
Excess Price determined on the basis of the Section 5 Repurchase Price.
(b) If, on or prior to the fifth anniversary of the Base Date,
the Management Stockholder's employment is terminated as a result of the death
or permanent disability of the Management Stockholder or if the Management
Stockholder dies or becomes permanently disabled after the retirement of the
Management Stockholder from the Company or any of its subsidiaries at age 65 or
over (or such other age as may be approved by the Board of Directors of the
Company) after having been employed by the Company or any subsidiary for at
least three years after the Base Date (each a "Section 6(b) Call Event"), then
the Company shall have the right to (A) purchase all, but not less than all, of
the shares of New Option Stock then held by the Management Stockholder, the
Management Stockholder's Estate or a Management Stockholder's Trust at the
Section 5 Repurchase Price, as determined in accordance with Section 7, and (B)
terminate all, but not less than all, of the New Options then held by the
Management Stockholder or a Management Stockholder's Trust upon payment of the
Option Excess Price determined on the basis of a Section 5 Repurchase Price.
(c) If, on or prior to the fifth anniversary of the Base Date,
(i) the Management Stockholder's employment is terminated by the Company
without Cause or (ii) the Management Stockholder voluntarily terminates with
Good Reason (a "Section 6(c) Call Event"), then the Company shall have the
right to (A) purchase all, but not less than all, of the shares of New Option
Stock then held by the Management Stockholder, the Management Stockholder's
Estate or a Management Stockholder's Trust at the Section 5 Repurchase Price,
as determined in accordance with Section 7, and (B) terminate all, but not less
than all, of the New Options then held by the Management Stockholder or a
Management Stockholder's Trust that were exercisable immediately prior to such
Section 6(c) Call Event upon payment of the Option Excess Price with respect
thereto determined on the basis of a Section 5 Repurchase Price. If any
Section 6(c) Call Event has occurred, then, whether or not the Company
exercises the call rights granted under this Section 6(c), all New Options held
by the Management Stockholder or the Management Stockholder's Trust, as the
case may be, that were not exercisable immediately prior to the occurrence of
such Section 6(c) Call Event will terminate immediately without payment
therefor.
(d) If, on or prior to the fifth anniversary of the Base Date,
(i) the Management Stockholder voluntarily terminates his employment, (ii) the
beneficiaries of a Management Stockholder's Trust shall include any person or
entity other than the Management Stockholder, his spouse or his or his or
spouse's lineal descendants, or (iii) the Management Stockholder shall effect a
transfer of any of the Stock other than as permitted in this Agreement (a
"Section 6(d) Call Event"), then the Company shall have the right to (i)
purchase all, but not less than all, of the shares of New Option Stock then
held by the Management Stockholder, the Management Stockholder's Estate or a
Management Stockholder's Trust at the Section 6(d) Repurchase Price, as
determined in accordance with Section 7, and (ii) terminate all, but not less
than all, of the New Options then held by the Management Stockholder or a
Management Stockholder's Trust that were exercisable immediately prior to such
Section 6(d) Call Event upon payment of the Option Excess Price with respect
thereto determined on the basis of a Section 6(d) Repurchase Price. If any
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Section 6(d) Call Event has occurred, then, whether or not the Company
exercises the call rights granted under this Section 6(d), all New Options held
by the Management Stockholder or the Management Stockholder's Trust, as the
case may be, that were not exercisable immediately prior to the occurrence of
such Section 6(d) Call Event will terminate immediately without payment
therefor.
(e) If, on or prior to the fifth anniversary of the Base Date,
the Company terminates the employment of the Management Stockholder for Cause
(a "Section 6(e) Call Event" and collectively with any Section 6(a) Call Event,
Section 6(b) Call Event, Section 6(c) Call Event or Section 6(d) Call Event, a
"Call Event"), then the Company shall have the right to purchase all, but not
less than all, of the shares of New Option Stock then held by the Management
Stockholder, the Management Stockholder's Estate or a Management Stockholder's
Trust at the Section 6(e) Repurchase Price. If any Section 6(e) Call Event has
occurred, then, whether or not the Company exercises the call rights granted
under this Section 6(e), all New Options held by the Management Stockholder or
the Management Stockholder's Trust, as the case may be, whether or not
exercisable prior to such Section 6(e) Call Event, will terminate immediately
without payment therefor.
(f) The Company shall have a period of 90 days from the date
of a Call Event in which to give notice in writing to the Management
Stockholder of the exercise of such election ("Call Notice"). The completion
of the purchases pursuant to the foregoing 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 applicable Repurchase Price and
any payment with respect to the Options shall be paid by delivery to the
Management Stockholder, the Management Stockholder's Estate or a Management
Stockholder's Trust, as the case may be, of a certified bank check or checks in
the appropriate amount payable to the order of the Management Stockholder, the
Management Stockholder's Estate or a Management Stockholder's Trust, as the
case may be, against delivery of certificates or other instruments representing
the Stock so purchased and appropriate documents cancelling the Options so
terminated, appropriately endorsed or executed by the Management Stockholder,
the Management Stockholder's Estate or a Management Stockholders Trust or his,
her or its authorized representative.
(g) Notwithstanding any other provision of this Section 6 to
the contrary and subject to Section 11, if there exists and is continuing any
Event, the Company shall delay the repurchase of any of the Stock or the
Options pursuant to a Call Notice timely given in accordance with Section 6(f)
hereof from the Management Stockholder, the Management Stockholder's Estate or
a Management Stockholder's Trust, as the case may be, until the Repurchase
Eligibility Date; provided, however, that (i) the number of shares of Stock
subject to repurchase under this Section 6(g) and (ii) in the case of a
repurchase pursuant to Section 6(a), (b), (c) or (d), the number of Exercisable
Option Shares for purposes of calculating the Option Excess Price payable under
this Section 6(g) shall be the number of shares of Stock or Exercisable Option
Shares, as the case may be, held by the Management Stockholder, the Management
Stockholder's Estate or a Management Stockholder's Trust, as the case may be,
at the time of delivery of a Call Notice in accordance with Section 6(d) hereof
(as adjusted below for option exercises); and provided, further, that the
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Calculation Date shall be determined in accordance with Section 7 based on the
Repurchase Eligibility Date (unless (x) in the case of a Section 6(a) Call
Event, a Section 6(b) Call Event or a Section 6(c) Call Event, the applicable
Repurchase Price would be greater if the Repurchase Calculation Date had been
determined as if no Event had occurred, in which case the Repurchase
Calculation Date shall be determined as if no Event had occurred, and (y) in
the case of a Section 6(d) Call Event or a Section 6(e) Call Event, the
applicable Repurchase Price would be less if the Repurchase Calculation Date
had been determined as if no Event had occurred, in which case the Repurchase
Calculation Date shall be determined as if no Event had occurred). All Options
exercisable as of the date of a Call Notice, in the case of a repurchase
pursuant to Sections 6(a), (b), (c) and (d), shall continue to be exercisable
until the repurchase pursuant to such Call Notice, provided that to the extent
that any Options are exercised after the date of such Call Notice, the number
of Exercisable Option Shares for purposes of calculating the Option Excess
Price shall be reduced and the number of shares of Stock shall be increased
accordingly.
7. Determination of Repurchase Price.
(a) The Section 5 Repurchase Price, the Section 6(d)
Repurchase Price and the Section 6(e) Repurchase Price are hereinafter
collectively referred to as the "Repurchase Price." The Repurchase Price shall
be calculated as of the date (the "Repurchase Calculation Date") that is: (i)
in the case of a repurchase at the Section 5 Repurchase Price, the date of the
event giving rise to such repurchase and (ii) in the case of a repurchase at
the Section 6(d) Repurchase Price or the Section 6(e) Repurchase Price, the
last day of the month preceding the date of the event giving rise to such
repurchase. The event giving rise to the repurchase shall be the death,
permanent disability, retirement or termination of employment, as the case may
be, of the Management Stockholder, and not the giving of any notice required
pursuant to Section 5 or 6.
(b) The Section 5 Repurchase Price shall be a per share
Repurchase Price equal to (i) prior to a Public Offering, the fair market value
per share of the Common Stock, as determined in good faith by the Board of
Directors of the Company after consultation with an independent investment
banking or valuation firm and (ii) after a Public Offering, the Market Price
Per Share.
(c) The Section 6(d) Repurchase Price shall be a per share
Repurchase Price equal to the lesser of the Section 5 Repurchase Price and the
Book Value Per Share.
(d) The Section 6(e) Repurchase Price shall be a per share
Repurchase Price equal to the lesser of the Base Price and the Section 5
Repurchase Price.
(e) For purposes of this Agreement the following definitions
shall apply: "Cause" shall mean (i) the Management Stockholder's willful
refusal to perform in any material respect his duties or responsibilities for
the Company or willful disregard in any material respect of any financial or
other budgetary limitations established in good faith by the chief executive
officer or Board of Directors of the Company, (ii) the engaging by the
Management Stockholder in conduct that causes material and demonstrable injury,
monetarily
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or otherwise, to the Company, including, but not limited to, misappropriation
or conversion of assets of the Company (other than nonmaterial assets), (iii)
conviction of or entry of a plea of nolo contendere to a felony or (iv) a
material breach of any written employment agreement to which the Management
Stockholder is a party, including, without limitation, engaging in action in
violation of the restrictive covenants contained in such employment agreement.
For purposes hereof, no act or failure to act by the Management Stockholder
shall be deemed to be "willful" if done, or omitted to be done, by the
Management Stockholder in good faith and with the reasonable belief that such
action or omission was in the best interest of the Company. "Good Reason"
shall mean (i) a reduction in the Management Stockholder's base salary or an
amendment to the Company's annual cash bonus plan which would materially impair
the ability of the Management Stockholder to receive a bonus (other than the
establishment in good faith of the "EBITDA" or other performance targets by the
Company's Board of Directors) or (ii) other than as approved by the current
chief executive officer of the Company, a substantial reduction in the
Management Stockholder's duties and responsibilities or a transfer of the
Management Stockholder's primary workplace by more than fifty (50) miles from
the current workplace; provided, however, that in the event the Management
Stockholder is party to a written employment agreement, the definitions of
"Good Reason" and "Cause" therein shall supersede the preceding definitions.
(f) As used herein, "Book Value Per Share" shall be the
quotient of (a) (i) the Base Price plus (ii) the aggregate net income of the
Company from and after the Base Date (as decreased by any net losses from and
after the Base Date) excluding any one time costs and expenses charged to
income associated with the Merger and any related transactions plus (iii) the
aggregate dollar amount contributed to (or credited to common stockholders'
equity of) the Company after the Base Date as equity of the Company (including
consideration that would be received upon the exercise of all outstanding stock
options and other rights to acquire Common Stock and the conversion of all
securities convertible into Common Stock and other stock equivalents) plus (iv)
to the extent reflected as deductions to Book Value Per Share in clause (ii)
above, unusual or other items recognized by the Company (including, without
limitation, extraordinary charges, and one time or accelerated write-offs of
good will), in each case, if and to the extent determined in good faith by the
Board of Directors of the Company, minus (v) to the extent reflected as
additions to Book Value Per Share in clause (ii) above, unusual or other items
recognized by the Company, in each case, if and to the extent determined in
good faith by the Board of Directors of the Company, minus (vi) the aggregate
dollar amount of any dividends paid by the Company after the Base Date, divided
by (b) the sum of the number of shares of Common Stock then outstanding and the
number of shares of Common Stock issuable upon the exercise of all outstanding
stock options and other rights to acquire Common Stock and the conversion of
all securities convertible into shares of Common Stock. The items referred to
in the calculations set forth in clauses (a)(ii) through (vi) of the
immediately preceding sentence shall be determined in good faith, and to the
extent possible, in accordance with generally accepted accounting principles
applied on a basis consistent with any prior periods as reflected in the
consolidated financial statements of the Company.
(g) As used herein the term "Public Offering" shall mean the
sale of shares of Common Stock to the public subsequent to the date hereof
pursuant to a registration
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statement under the Act which has been declared effective by the SEC (other
than a registration statement on Form S-8 or any other similar form) which
results in an active trading market in 20% or more of the Common Stock or as
otherwise results in an active trading market as determined in good faith by
the Board of Directors. A "Qualified Public Offering" shall mean a Public
Offering pursuant to an effective registration statement relating to the sale
of any shares of the Common Stock held by KKR 1996 Fund L.P., a Delaware
limited partnership, KKR Partners II, L.P., a Delaware limited partnership,
Regal Equity Partners, L.P., a Delaware limited partnership and an affiliate of
▇▇▇▇▇, Muse ▇▇▇▇ & ▇▇▇▇▇ Incorporated, or their respective affiliates
(collectively, the "Controlling Shareholders"); provided, however, that a
"Qualified Public Offering" shall be deemed to have occurred if there has been
any Public Offering and there exists an active trading market in 40% or more of
the Common Stock.
(h) As used herein, the term "Market Price Per Share" shall
mean the price per share equal to the average of the last sale price of the
Common Stock on the Repurchase Calculation Date on each exchange on which the
Common Stock may at the time be listed or, if there shall have been no sales on
any of such exchanges on the Repurchase Calculation Date, the average of the
closing bid and asked prices on each such exchange at the end of the Repurchase
Calculation Date (or if there is no such bid and asked price on the Repurchase
Calculation Date, then on the next preceding date when such bid and asked price
occurred) or, if the Common Stock shall not be so listed, the average of the
closing sales prices as reported by NASDAQ at the end of the Repurchase
Calculation Date in the over-the-counter market. If the Common Stock is not so
listed or reported by NASDAQ, then the Market Price Per Shares shall be the
Section 5 Repurchase Price.
(i) In determining the Repurchase Price, appropriate
adjustments shall be made for any stock dividends, splits, combinations,
recapitalizations or any other adjustment in the number of outstanding shares
of Common Stock in order to maintain, as nearly as practicable, the intended
operation of the provisions of this Section 7.
8. Stock Issued to Management Stockholder Upon Exercise of
Stock Options; Termination of Options.
(a) The Company may from time to time grant to the Management
Stockholder, in addition to the New Options, options under the New Plan to
purchase shares of Common Stock at the Base Price or at a different option
exercise price.
(b) All outstanding Options granted to the Management
Stockholder, whether or not then exercisable, will be automatically terminated
(i) with respect to New Options, in the case of an occurrence of a Section 6(e)
Call Event, without any payment therefor, (ii) with respect to New Options
which were not exercisable immediately prior to a Section 6(d) Call Event, in
the case of a Section 6(d) Call Event, without any payment therefor, and (iii)
in the case of any other event giving rise to a put or call right pursuant to
Section 5 or 6 (other than the occurrence of a Section 6(c) Call Event), upon
payment of the Option Excess Price with respect thereto. The Option Excess
Price with respect to any Old Option is the excess, if any, of the Section 5
Repurchase Price over the exercise price with
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respect to such Old Option, multiplied by the number of Exercisable Option
Shares thereunder. The Option Excess Price with respect to any New Option is
the excess, if any, of the Section 5 Repurchase Price or the Section 6(d)
Repurchase Price, depending on which Repurchase Price is being used to
repurchase the remainder of the New Option Stock, over the exercise price with
respect to such New Option, multiplied by the number of Exercisable Option
Shares thereunder. For purposes hereof, "Exercisable Option Shares" with
respect to any Option shall mean the shares of Common Stock which, at the time
of determination of the Option Excess Price, could be purchased by the
Management Stockholder upon exercise of such Option (after giving effect to any
required accelerated vesting of such Option). If the Option Excess Price with
respect to any Option is zero or a negative number, such Option, whether or not
then exercisable, shall be automatically terminated without payment of any
amount upon the exercise of any put or call right pursuant to Section 5 or 6
with respect to any Stock arising from an event which also gives rise to a put
or call right with respect to such Option; provided, however, that, upon the
occurrence of any Section 6(c) Call Event, any exercisable Old Option not
repurchased pursuant to Section 6 shall remain exercisable until the expiration
or termination of such Old Option pursuant to the terms thereof.
9. The Company's Representations and Warranties.
(a) The Company represents and warrants to the Management
Stockholder that (i) this Agreement has been duly authorized, executed and
delivered by the Company and (ii) the Purchase Stock, the Old Option Stock and
the New Option Stock, when issued and delivered in accordance with the terms
hereof, will be duly and validly issued, fully paid and nonassessable.
(b) If the Company shall have consummated a Public Offering,
the Company (i) will use reasonable efforts to register the Stock on a Form S-8
Registration Statement or any successor to Form S-8 to the extent such
registration is then available with respect to such Stock and (ii) will file
the reports required to be filed by it under the Act and the Securities
Exchange Act of 1934, as amended, and the rules and regulations adopted by the
SEC thereunder (collectively, the "Exchange Act"), to the extent required from
time to time to enable the Management Stockholder to sell shares of Stock
without registration under the Act within the limitations of the exemptions
provided by (A) Rule 144 under the Act, as such Rule may be amended from time
to time, or (B) any similar rule or regulation hereafter adopted by the SEC.
Notwithstanding anything contained in this Section 9(b), the Company may de-
register under Section 12 of the Exchange Act if it is then permitted to do so
pursuant to the Exchange Act and, in such circumstances, shall not be required
hereby to file any reports which may be necessary in order for Rule 144 or any
similar rule or regulation under the Act to be available. Nothing in this
Section 9(b) shall be deemed to limit in any manner the restrictions on sales
of Stock contained in this Agreement.
10. "Piggyback" Registration Rights.
(a) Effective upon the date of this Agreement until the later
of (i) the first occurrence of a Qualified Public Offering (as defined in
Section 7(g) above) or (ii) the fifth anniversary of the Base Date, the
Management Stockholder hereby agrees to be bound by all
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of the terms, conditions and obligations of the Registration Rights Agreement
dated as of May __, 1998 (the "Registration Rights Agreement") among the Company
and one or more of the Controlling Shareholders and, in the case of a Qualified
Public Offering and subject to the limitations set forth in this Section 10,
shall have all of the rights and privileges of the Registration Rights
Agreement, in each case as if the Management Stockholder were an original party
(other than the Company) thereto; provided, however, that the Management
Stockholder shall not have any rights to request or demand registration under
Section 3 of the Registration Rights Agreement; and provided, further, that the
Management Stockholder shall not be bound by any amendments to the Registration
Rights Agreement unless the Management Stockholder consents in writing thereto.
Notwithstanding anything to the contrary contained in the Registration Rights
Agreement, the Management Stockholder's rights and obligations under the
Registration Rights Agreement shall be subject to the limitations and
additional obligations set forth in this Section 10. All Stock purchased or
held by the Management Stockholder, the Management Stockholder's Estate or the
Management Stockholder's Trust which is subject to this Agreement shall be
deemed to be Registrable Securities as defined in the Registration Rights
Agreement.
(b) The Company will promptly notify the Management
Stockholder in writing (a "Notice") of any proposed registration (a "Proposed
Registration") in connection with a Qualified Public Offering. If within 15
days of the receipt by the Management Stockholder of such Notice, the Company
receives from the Management Stockholder, the Management Stockholder's Estate
or the Management Stockholder's Trust a written request (a "Request") to
register shares of Stock held by the Management Stockholder, the Management
Stockholder's Estate or the Management Stockholder's Trust (which Request will,
subject to the terms of the Custody Agreement and Power of Attorney (as defined
below), be irrevocable unless otherwise mutually agreed to in writing by the
Management Stockholder and the Company), shares of Stock will be so registered
as provided in this Section 10; provided, however, that for each such
registration statement only one Request, which shall be executed by the
Management Stockholder, the Management Stockholder's Estate or the Management
Stockholder's Trust, as the case may be, may be submitted for all Registrable
Securities held by the Management Stockholder, the Management Stockholder's
Estate and the Management Stockholder's Trust.
(c) The maximum number of shares of Stock which will be
registered pursuant to a Request will be the lowest of (i) the number of shares
of Stock then held by the Management Stockholder (which for purposes of this
Section 10(c) shall include shares held by the Management Stockholder's Estate
or a Management Stockholder's Trust), including all shares of Stock which the
Management Stockholder is then entitled to acquire under an unexercised Option
to the extent then exercisable, (ii) the maximum number of shares of Stock
which the Company can register in the Proposed Registration, after giving
effect to the provisions of any written agreement (other than the Registration
Rights Agreement) to which the Company and any holder of shares of Common Stock
are parties (other than the Management Stockholder or any Other Management
Stockholder) that provides for the registration of shares of Common Stock of
such holder by the Company (any such other written agreement, an "Other
Registration Rights Agreement"), without adverse effect on the offering in the
view of the managing underwriters (reduced pro rata with all Other
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Management Stockholders) as more fully described in Section 10(d) and (iii) the
maximum number of shares of Stock which the Management Stockholder (pro rata
based upon the aggregate number of shares of Common Stock the Management
Stockholder and all Other Management Stockholders have requested be registered)
and all Other Management Stockholders are permitted to register under the
Registration Rights Agreement.
(d) If a Proposed Registration involves an underwritten
offering and the managing underwriter advises the Company in writing that, in
its opinion, the number of shares of Common Stock and Stock of the Management
Stockholder requested to be included in the Proposed Registration, after giving
effect to the provisions of any Other Registration Rights Agreement, exceeds the
number which can be sold in such offering, so as to be likely to have an adverse
effect on the price, timing or distribution of the shares of Common Stock
offered in such Qualified Public Offering as contemplated by the Proposed
Registration, then the Company will include in the Proposed Registration (i)
first, 100% of the shares of Common Stock the Company proposes to sell (after
giving effect to the priority, pro ration or cutback provisions contained in any
Other Registration Rights Agreement); provided that the registration of shares
of Common Stock was initiated by the Company with respect to shares intended to
be registered for sale for its own account, (ii) second, the number of shares of
Common Stock that the Company is required (after giving effect to the priority,
pro ration or cutback provisions contained in any Other Registration Rights
Agreement and any withdrawal from the proposed registration of shares of Common
Stock by a holder of shares of Common Stock that is a party to such Other
Registration Rights Agreement) to include in such registration pursuant to an
Other Registration Rights Agreement and (iii) third, to the extent of the number
of shares of Common Stock requested to be included in such registration which,
in the opinion of such managing underwriter, can be sold without having the
adverse effect referred to above, the number of shares of Common Stock which the
Holders (as defined in the Registration Rights Agreement (which term shall
include for purposes hereof the Management Stockholder, the Management
Stockholder's Estate, the Management Stockholder's Trust and Other Management
Stockholders)), have requested to be included in the Proposed Registration, such
amount to be allocated pro rata among all requesting Holders on the basis of the
relative number of shares of Common Stock then held by each such Holder (except
to the extent that two or more requesting Holders shall have agreed to a
different allocation among such requesting Holders); provided that any shares
thereby allocated to any such Holder that exceed such Holder's request will be
reallocated among the remaining requesting Holders in like manner.
(e) Upon delivering a Request the Management Stockholder will,
if requested by the Company, execute and deliver a custody agreement and power
of attorney in form and substance reasonably satisfactory to the Company with
respect to the shares of Stock to be registered pursuant to this Section 10 (a
"Custody Agreement and Power of Attorney"). The Custody Agreement and Power of
Attorney will provide, among other things, that the Management Stockholder will
deliver to and deposit in custody with the custodian and attorney-in-fact named
therein a certificate or certificates representing such shares of Stock (duly
endorsed in blank by the registered owner or owners thereof or accompanied by
duly executed stock powers in blank) and irrevocably appoint said custodian and
attorney-in-fact as the Management Stockholder's agent and attorney-in-fact
with full power and authority to act under the Custody Agreement and Power of
Attorney on the Management Stockholder's behalf with respect to the matters
specified therein.
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(f) The Management Stockholder agrees that he or she will
execute such other agreements as the Company may reasonably request to further
evidence the provisions of this Section 10.
11. Pro Rata Repurchases.
Notwithstanding anything to the contrary contained in Sections 5,
6 or 7, if at any time consummation of all purchases and payments to be made by
the Company pursuant to this Agreement and the Other Management Stockholders'
Agreements would result in an Event, then the Company shall make purchases
from, and payments to, the Management Stockholder and Other Management
Stockholders pro rata (on the basis of the proportion of the number of shares
of Stock and the number of Options each such Management Stockholder and all
Other Management Stockholders have elected or are required to sell to the
Company) for the maximum number of shares of Stock and shall pay the Option
Excess Price for the maximum number of Options permitted without resulting in
an Event (the "Maximum Repurchase Amount"). The provisions of Sections 5(c)
and 6(g) shall apply in their entirety to payments and repurchases with respect
to Options and shares of Stock which may not be made due to the limits imposed
by the Maximum Repurchase Amount under this Section 11. Until all of such
Stock and Options are purchased and paid for by the Company, the Management
Stockholder and the Other Management Stockholders whose Stock and Options are
not purchased in accordance with this Section 11 shall have priority, on a pro
rata basis, over other purchases of Common Stock and Options by the Company
pursuant to this Agreement and Other Management Stockholders' Agreements.
12. Rights to Negotiate Repurchase Price.
Nothing in this Agreement shall be deemed to restrict or prohibit
the Company from purchasing shares of Stock or Options from the Management
Stockholder, at any time, upon such terms and conditions, and for such price,
as may be mutually agreed upon between the Parties, whether or not at the time
of such purchase circumstances exist which specifically grant the Company the
right to purchase, or the Management Stockholder the right to sell, shares of
Stock or the Company has the right to pay, or the Management Stockholder has
the right to receive, the Option Excess Price under the terms of this
Agreement.
13. Covenant Regarding 83(b) Election.
Except as the Company may otherwise agree in writing, the
Management Stockholder hereby covenants and agrees that he will make an
election provided pursuant to Treasury Regulation 1.83-2 with respect to the
Stock acquired upon each exercise of the New Options (the "Election"); and the
Management Stockholder further covenants and agrees that he will furnish the
Company with copies of the forms of Election the Management Stockholder files
within 30 days after each exercise of such New Options and with evidence that
each such Election has been filed in a timely manner.
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14. Notice of Change of Beneficiary.
Immediately prior to any transfer of Stock to a Management
Stockholder's Trust, the Management Stockholder shall provide the Company with
a copy of the instruments creating the Management Stockholder's Trust and with
the identity of the beneficiaries of the Management Stockholder's Trust. The
Management Stockholder shall notify the Company immediately prior to any change
in the identity of any beneficiary of the Management Stockholder's Trust.
15. Expiration of Certain Provisions.
The provisions contained in Sections 4, 5 and 6 of this Agreement
and the portion of any other provision of this Agreement which incorporates the
provisions of such Sections, shall terminate and be of no further force or
effect with respect to any shares of Stock sold by the Management Stockholder
(i) pursuant to an effective registration statement filed by the Company
pursuant to Section 10 hereof or (ii) pursuant to the terms of the Sale
Participation Agreement of even date herewith (the "Sale Participation
Agreement") among the Management Stockholder and one or more of the Controlling
Shareholders.
The provisions contained in Sections 2(e), 3, 4, 5, 6 and 13 of
this Agreement, and the portion of any other provisions of this Agreement which
incorporates the provisions of such Sections, shall terminate and be of no
further force or effect upon the consummation of a merger, reorganization,
business combination or liquidation of the Company, but only if such merger,
reorganization, business combination or liquidation results in the Controlling
Shareholders, together, no longer having the power, directly or indirectly, (A)
to elect a majority of the Board of Directors of the Company or such other
corporation which succeeds to the Company's rights and obligations pursuant to
such merger, reorganization, business combination or liquidation, or (B) if the
resulting entity of such merger, reorganization, business combination or
liquidation is not a corporation, to select the general partner(s) or other
persons or entities controlling the operations and business of the resulting
entity.
16. Recapitalizations, etc.
The provisions of this Agreement shall apply, to the full extent
set forth herein with respect to the Stock or the Options, to any and all
shares of capital stock of the Company or any capital stock, partnership units
or any other security evidencing ownership interests in any successor or assign
of the Company (whether by merger, consolidation, sale of assets or otherwise)
which may be issued in respect of, in exchange for or in substitution for the
Stock or the Options, by reason of any stock dividend, split, reverse split,
combination, recapitalization, liquidation, reclassification, merger,
consolidation or otherwise.
17. Management Stockholder's Employment by the Company.
Nothing contained in this Agreement or in any other agreement
entered into by the Company and the Management Stockholder contemporaneously
with the execution of this Agreement (i) obligates the Company or any
subsidiary of the Company to employ the
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Management Stockholder in any capacity whatsoever or (ii) prohibits or
restricts the Company (or any such subsidiary) from terminating the employment,
if any, of the Management Stockholder at any time or for any reason whatsoever,
with or without Cause, subject to any rights to payments or benefits to which
the Management Stockholder may be entitled under any employment agreement with
the Company, and the Management Stockholder hereby acknowledges and agrees that
neither the Company nor any other person has made any representations or
promises whatsoever to the Management Stockholder concerning the Management
Stockholder's employment or continued employment by the Company or any
subsidiary of the Company.
18. State Securities Laws.
The Company hereby agrees to use its best efforts to comply with
all state securities or "blue sky" laws which might be applicable to the sale
of the Stock and the issuance of the Options to the Management Stockholder.
19. Binding Effect.
The provisions of this Agreement shall be binding upon and accrue
to the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns. In the case of a transferee permitted
under Section 2(a) hereof, such transferee shall be deemed the Management
Stockholder hereunder; provided, however, that no transferee (including without
limitation, transferees referred to in Section 2(a) hereof) shall derive any
rights under this Agreement unless and until such transferee has delivered to
the Company a valid undertaking and becomes bound by the terms of this
Agreement.
20. Amendment.
This Agreement may be amended only by a written instrument signed
by the Parties hereto.
21. Closing.
Except as otherwise provided herein, the closing of each purchase
and sale of shares of Stock and the payment of the Option Excess Price, if any,
pursuant to this Agreement shall take place at the principal office of the
Company on the tenth business day following delivery of the notice by either
Party to the other of its exercise of the right to purchase or sell such Stock
hereunder or to cause the payment of the Option Excess Price, if any.
22. Applicable Law.
The laws of the state of New York shall govern the
interpretation, validity and performance of the terms of this Agreement,
regardless of the law that might be applied under principles of conflicts of
law. Any suit, action or proceeding against the Management Stockholder with
respect to this Agreement, or any judgment entered by any court in respect
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of any thereof, may be brought in any court of competent jurisdiction in the
State of New York and the Management Stockholder hereby submits to the non-
exclusive jurisdiction of such courts for the purpose of any such suit, action,
proceeding or judgment. By the execution and delivery of this Agreement, the
Management Stockholder appoints The Corporation Trust Company, at its office in
New York, New York as his agent upon which process may be served in any such
suit, action or proceeding. Service of process upon such agent, together with
notice of such service given to the Management Stockholder in the manner
provided in Section 25 hereof, shall be deemed in every respect effective
service of process upon him in any suit, action or proceeding. Nothing herein
shall in any way be deemed to limit the ability of the Company to serve any
such writs, process or summonses in any other manner permitted by applicable
law or to obtain jurisdiction over the Management Stockholder, in such other
jurisdictions and in such manner, as may be permitted by applicable law. The
Management Stockholder hereby irrevocably waives any objections which he 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 brought in any court of
competent jurisdiction in the State of New York, and hereby further irrevocably
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in any inconvenient forum. No suit, action or
proceeding against the Company with respect to this Agreement may be brought in
any court, domestic or foreign, or before any similar domestic or foreign
authority other than in a court of competent jurisdiction in the State of New
York, and the Management Stockholder hereby irrevocably waives any right which
he may otherwise have had to bring such an action in any other court, domestic
or foreign, or before any similar domestic or foreign authority. The Company
hereby submits to the jurisdiction of such courts for the purpose of any such
suit, action or proceeding. Each Party hereto hereby irrevocably and
unconditionally waives trial by jury in any legal action or proceeding in
relation to this Agreement and for any counterclaim therein.
23. Assignability of Certain Rights by the Company.
The Company shall have the right to assign any or all of its
rights or obligations to purchase shares of Stock pursuant to Sections 4, 5 and
6 hereof; provided, however, that the Company shall remain obligated to perform
its obligations notwithstanding such assignment in the event that such assignee
fails to perform the obligations so assigned to it.
24. Miscellaneous.
In this Agreement (i) all references to "dollars" or "$" are to
United States dollars and (ii) the word "or" is not exclusive. If any
provision of this Agreement shall be declared illegal, void or unenforceable by
any court of competent jurisdiction, the other provisions shall not be
affected, but shall remain in full force and effect.
25. Notices.
All notices and other communications provided for herein shall be
in writing and shall be deemed to have been duly given if delivered by hand
(whether by overnight
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courier or otherwise) or sent by registered or certified mail, return receipt
requested, postage prepaid, or by overnight delivery or telecopy, to the Party
to whom it is directed:
(a) If to the Company, to it at the following addresses:
Regal Cinemas, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇ III
c/o Kohlberg Kravis ▇▇▇▇▇▇▇ & Co.
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
- and -
c/o Hicks, Muse, ▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
with a copies to:
Bass, ▇▇▇▇▇ & ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: F. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
-and-
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
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-and-
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
(b) If to the Management Stockholder, to him at the address
set forth on the signature page hereof;
or at such other address as either party shall have
specified by notice in writing to the other.
26. Covenant Not to Compete; Confidential Information.
(a) In consideration of the Company entering into this
Agreement with the Management Stockholder, the Management Stockholder hereby
agrees that, effective as of the Base Date and for so long as the Management
Stockholder is employed by the Company or one of its subsidiaries and for a
period of one year (or such longer period provided in any employment agreement
with the Management Stockholder) thereafter (the "Noncompete Period"), the
Management Stockholder shall not directly or indirectly, either as principal,
manager, agent consultant, officer, stockholder, partner, investor, lender,
employee or in any other capacity, engage in or have any financial interest in
any business in Competition (as defined below) with the business of the
Company, its subsidiaries, its theater affiliates, or any affiliate of either
Kohlberg Kravis & ▇▇▇▇▇▇▇ & Co. L.P. or Hicks, Muse, ▇▇▇▇ & ▇▇▇▇▇ Incorporated
principally engaged in the theater business in existence as of the date of
Management Stockholder's termination of employment (the "Restricted Group"),
other than through the Management Stockholder's employment with the Company or
any of its subsidiaries. For purposes of this Section 26(a), a business shall
be deemed to be in "Competition" with the Restricted Group if it is principally
engaged in the theater business within the same geographic area in which any
member of the Restricted Group conducts such business. Nothing in this Section
26 shall be construed so as to preclude the Management Stockholder from
investing in any publicly or privately held company, provided that the
Management Stockholder's beneficial ownership of any class of such company's
securities does not exceed 1% of the outstanding securities of such class.
Notwithstanding the foregoing, in the event that the Management Stockholder has
an employment agreement with the Company, any covenant not to compete therein
will supersede this Section 26(a).
(b) The Management Stockholder will not disclose or use at any
time any Confidential Information (as defined below) of which the Management
Stockholder is or becomes aware, whether or not such information is developed
by him, except to the extent that such disclosure or use is (i) directly
related to and required by the Management Stockholder's performance of duties,
if any, assigned to the Management Stockholder by the Company or (ii) required
by law. As used in this Agreement, the term "Confidential Information" means,
unless otherwise defined in the Management Stockholder's employment
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agreement, if any, with the Company, information that is not generally known to
the public and that is used, developed or obtained by the Company or its
subsidiaries in connection with its business, including but not limited to (i)
products or services, (ii) fees, costs and pricing structures, (iii) designs,
(iv) computer software, including operating systems, applications and program
listings, (v) flow charts, manuals and documentation, (vi) data bases, (vii)
accounting and business methods, (viii) inventions, devices, new developments,
methods and processes, whether patentable or unpatentable and whether or not
reduced to practice, (ix) customers and clients and customer or client lists,
(x) other copyrightable works, (xi) all technology and trade secrets, and (xii)
all similar and related information in whatever form. Confidential Information
will not include any information that has been published in a form generally
available to the public prior to the date the Management Stockholder proposes
to disclose or use such information. The Management Stockholder acknowledges
and agrees that all copyrights, works, inventions, innovations, improvements,
developments, patents, trademarks and all similar or related information which
relate to the actual or anticipated business of the Company and its
subsidiaries (including its predecessors) and conceived, developed or made by
the Management Stockholder while employed by the Company or its subsidiaries
belong to the Company. The Management Stockholder will perform all actions
reasonably requested by the Company (whether during or after the Noncompete
Period) to establish and confirm such ownership at the Company's expense
(including without limitation assignments, consents, powers of attorney and
other instruments). If the Management Stockholder is bound by any other
agreement with the Company regarding the use or disclosure of confidential
information, the provisions of this Agreement shall be read in such a way as
not to permit any more extensive use or disclosure of confidential information.
(c) The Management Stockholder agrees, during the Noncompete
Period, not to solicit for employment or employ, for the benefit of any person
or entity other than the Company or any of its subsidiaries, any person who is,
or was during the six months preceding any such solicitation for employment or
employment, employed by the Company or any of its theater affiliates (other
than secretarial or other administrative employees who worked directly for the
Management Stockholder prior to such termination).
(d) Notwithstanding clauses (a), (b) and (c) above, if at any
time a court holds that the restrictions stated in such Sections 26(a), (b) and
(c) are unreasonable or otherwise unenforceable under circumstances then
existing, the parties agree that the maximum period, scope or geographic area
determined to be reasonable under such circumstances by such court will be
substituted for the stated period, scope or area. Because the Management
Stockholder's services are unique and because the Management Stockholder has
had access to Confidential Information, the parties hereto agree that money
damages will be an inadequate remedy for any breach of this Agreement. In the
event of a breach or threatened breach of this Agreement, the Company or its
successors or assigns may, in addition to other rights and remedies existing in
their favor, apply to any court of competent jurisdiction for specific
performance and/or injunctive relief in order to enforce, or prevent any
violations of, the provisions hereof (without the posting of a bond or other
security).
(e) Notwithstanding anything to the contrary in this Section
26, the provisions of Sections 26(a) and (c) shall not be applicable to or
binding upon any
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Management Stockholder who is not a Vice President or higher level employee of
the Company or its subsidiaries.
[The signature page follows this page.]
25
SIGNATURE PAGE TO MANAGEMENT STOCKHOLDER'S AGREEMENT
By their signatures below, the undersigned hereby agree to the
foregoing Management Stockholder's Agreement, and the provisions set forth
below constitute part of such agreement.
REGAL CINEMAS, INC.
By:
------------------------------------
Name:
Title:
NAME OF MANAGEMENT STOCKHOLDER:
------------------------------------
ADDRESS OF MANAGEMENT STOCKHOLDER:
------------------------------------
SIGNATURE OF MANAGEMENT STOCKHOLDER:
------------------------------------
NUMBER OF SHARES OF PURCHASE STOCK:
------------------------------------
AGGREGATE PURCHASE PRICE FOR PURCHASE
STOCK:
------------------------------------
NUMBER OF OLD OPTIONS:
------------------------------------
EXERCISE PRICE(S) OF OLD OPTIONS:
------------------------------------
NUMBER OF NEW TIME OPTIONS:
------------------------------------
NUMBER OF NEW PERFORMANCE OPTIONS:
------------------------------------
EXERCISE PRICE OF NEW OPTIONS:
------------------------------------
BASE DATE: , 199
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AGREEMENT DATE: , 199
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------------------------------------