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EXHIBIT C
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
by and among
▇▇▇▇▇▇'▇ FURNITURE, INC.
and
THE STOCKHOLDERS LISTED ON
THE SIGNATURE PAGES HEREOF
Dated as of January [ ], 2000
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TABLE OF CONTENTS
PAGE
Section 1. Definitions...................................................2
Section 2. Corporate Governance..........................................8
2.1 Board of Directors............................................8
2.2 Certain Actions Requiring Consent of the GECC Designee
and the THLi Fund Designee...................................11
2.3 Management...................................................14
2.4 Directors' Indemnification..................................15
2.5 Expenses.....................................................15
2.6 Cooperation..................................................16
Section 3. Restrictions on Transfers of Stock...........................16
Section 4. Rights of First Offer........................................16
Section 4A. ▇▇▇▇▇▇ Trust Stock Rights of First Offer....................18
Section 5. Tag-Along Rights.............................................20
Section 6. Conflicting Agreements.......................................21
Section 7. Legend.......................................................21
Section 8. Representations and Warranties...............................22
Section 9. Duration of Agreement........................................23
Section 10. Further Assurances..........................................24
Section 11. Amendment and Waiver........................................24
Section 12. Severability................................................24
Section 13. Entire Agreement............................................24
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Section 14. Successors and Assigns......................................24
Section 15. Counterparts................................................25
Section 16. Remedies....................................................25
Section 17. Notices and Other Communications............................25
Section 18. Governing Law; Consent to Jurisdiction......................27
Section 19. Descriptive Headings........................................27
Section 20. Construction................................................28
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AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
This Amended and Restated Stockholders Agreement (this "Agreement") is
made as of January [ ], 2000 by and among ▇▇▇▇▇▇'▇ Furniture, Inc., a Delaware
corporation (the "Company") and each of the stockholders of the Company listed
on the signature pages hereof (each, a "Signatory Stockholder" and collectively,
the "Signatory Stockholders").
W I T N E S S E T H :
WHEREAS, pursuant to a Securities Purchase Agreement between the Company
and General Electric Capital Corporation (collectively, with GE Capital Equity
Investments, Inc., "GECC") dated August 26, 1996 (the "1996 Securities Purchase
Agreement"), GECC purchased from the Company 5,000,000 shares of the Company's
common stock, par value $.001 per share (the "Common Stock"), for an aggregate
purchase price of $5,000,000, the Company's 10% Subordinated Pay-in-Kind Notes
due August 31, 2001, as described in the Securities Purchase Agreement (the
"Notes"), in the initial principal amount of $5,000,000, and, in connection with
the Notes, a warrant (the "First Warrant") to purchase 1,400,000 shares of
Common Stock;
WHEREAS, concurrently with such purchase by GECC, (i) ▇▇▇▇▇▇ Group
purchased 1,000,000 shares of Common Stock for an aggregate purchase price of
$1,000,000, (ii) certain other investors purchased 3,000,000 shares of Common
Stock for an aggregate purchase price of $3,000,000 and (iii) Japan Omnibus Ltd.
(formerly named ▇▇▇▇▇ Investments Inc.) and certain other holders of
indebtedness of the Company exchanged such indebtedness for shares of Common
Stock, as more fully described in the Securities Purchase Agreement;
WHEREAS, in connection with the 1996 Securities Purchase Agreement, the
Company entered into a Stockholders Agreement with certain stockholders dated
August 26, 1996 (the "Prior Stockholders Agreement");
WHEREAS, pursuant to a Supplemental Securities Purchase Agreement
between the Company, GECC and Japan Omnibus LTD. ("JOL"), dated August 14, 1997,
(i) the Company and GECC amended and restated the provisions of the Notes, (ii)
GECC and JOL purchased certain additional notes, (iii) in connection with the
Notes, GECC and JOL received warrants (the "Second Warrants") to purchase
1,300,000 shares of Common Stock and (iv) GECC and JOL received an additional
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warrant (the "Performance Warrant," and collectively with the First Warrant and
the Second Warrants, the "Warrants") to purchase 1,000,000 shares of Common
Stock;
WHEREAS, pursuant to a Securities Purchase Agreement among the Company,
TH ▇▇▇.▇▇▇▇▇▇ Internet Partners, L.P. and TH ▇▇▇.▇▇▇▇▇▇ Internet Parallel
Partners, L.P. (collectively with their Affiliates, "THLi"), and the purchasers
listed on the signature pages thereto (collectively, the "Purchasers"), dated
the date hereof (the "2000 Securities Purchase Agreement," and, together with
the 1996 Securities Purchase Agreement, the "Securities Purchase Agreements"),
the Purchasers are purchasing from the Company 380,000 shares of the Company's
Series A Convertible Preferred Stock, par value $.001 per share (the "Series A
Preferred Stock"), for an aggregate purchase price of $19,000,000;
WHEREAS, pursuant to the 2000 Securities Purchase Agreement, the Company
will restructure the Notes, as more fully described in the 2000 Securities
Purchase Agreement; and
WHEREAS, it is a condition to the consummation of the foregoing
transactions that the parties hereto enter into this Agreement to amend, restate
and supersede the Prior Stockholders Agreement in accordance with Section 11 of
the Prior Stockholders Agreement, and the parties hereto deem it to be in their
best interests to enter into this Agreement establishing and setting forth their
agreement with respect to certain rights and obligations associated with
ownership of shares of capital stock of the Company.
SECTION 1. DEFINITIONS. As used herein, the following terms shall have
the following meanings (capitalized terms used herein and not defined herein
shall have the meanings assigned to such terms in the 2000 Securities Purchase
Agreement):
"Affiliate" and "Associate" have the meanings ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
"Beneficially Own" with respect to any securities shall mean having
"beneficial ownership" of such securities (as determined pursuant to Rule 13d-3
under the Exchange Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing.
"Board" has the meaning assigned to it in Section 2.1.
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"By-laws" means the By-laws of the Company as in effect on the date
hereof, as they may be amended from time to time hereafter.
"Capitalized Lease" shall mean, with respect to any person, any lease or
any other agreement for the use of property which, in accordance with generally
accepted accounting principals, should be capitalized on the lessee's or user's
balance sheet.
"Capitalized Lease Obligation" of any person shall mean and include, as
of any date as of which the amount thereof is to be determined, the amount of
the liability capitalized or disclosed (or which should be disclosed) in a
balance sheet of such person in respect of a Capitalized Lease of such person.
"Certificate" means the Certificate of Incorporation of the Company as
in effect on the date stated hereof, as it may be amended from time to time
hereafter.
"Common Stock Equivalents" means rights, options, scrip, warrants or
other securities convertible into, or exchangeable or exercisable for, shares of
Common Stock.
"Company" has the meaning assigned to it in the first paragraph hereof.
"Current Market Price", when used with reference to shares of Common
Stock for any given date, shall mean the closing price per share of Common Stock
on such date. The closing price for each day shall be the last quoted sale price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System or such other system then in use, or,
if on any such date the Common Stock or such other securities are not quoted by
any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Common Stock or
such other securities selected by the Board of Directors of the Company. If the
Common Stock is listed or admitted to trading on a national securities exchange,
the closing price shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Common Stock or such other
securities are not listed or admitted to trading on the New York Stock Exchange,
as reported in the principal consolidated transaction reporting system with
respect to
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securities listed on the principal national securities exchange on which the
Common Stock or such other securities are listed or admitted to trading.
"E-Commerce Activities" shall mean business-to-business and e-commerce
activities, including commerce related to transactions on the Internet, related
to the E-Commerce Proceed Uses.
"Employment Agreement" shall mean the Employment Agreement dated as
of August 26, 1996, as amended, between the Company and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
("▇▇▇▇▇▇").
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor Federal statute, and the rules and regulations of the
omission thereunder, all as the same shall be in effect at the time. Reference
to a particular section of the Securities Exchange Act of 1934, as amended,
shall include reference to the comparable section, if any, of any such successor
Federal statute.
"Fully Diluted" shall mean, when used with reference to the Common
Stock, at any date as of which the number of shares thereof is to be determined,
(i) all shares of Common Stock outstanding at such date and (ii) all shares of
Common Stock issuable in respect of vested options or warrants to purchase, or
securities convertible into, exercisable for or exchangeable for, shares of
Common Stock outstanding on such date, the conversion, exercise or exchange
price of which is less than the Current Market Price.
"Group" has the meaning assigned such term for purposes of Rule 13d-5
under the Exchange Act.
"Guarantee" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of any Person guaranteeing, or in effect guaranteeing,
any Indebtedness, dividend or other obligation of any other Person (the "Primary
Obligor") in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement, contingent or
otherwise, by such Person: (i) to purchase such Indebtedness or obligation or
any property or assets constituting security therefor, (ii) to advance or supply
funds (x) for the purchase or payment of such Indebtedness or obligation, (y) to
maintain working capital or other balance sheet condition or otherwise to
advance or make available funds for the purchase or payment of such Indebtedness
or obligation, (iii) to lease property or to purchase
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securities or other property or services primarily for the purpose of assuring
the owner of such Indebtedness or obligation of the ability of the primary
obligor to make payment of such Indebtedness or obligation, or (iv) otherwise to
assure the owner of the Indebtedness or obligation of the primary obligor
against loss in respect thereof. For the purposes of any computations made under
this Agreement, a Guarantee in respect of any Indebtedness for borrowed money
shall be deemed to be Indebtedness equal to the principal amount of the
Indebtedness for borrowed money which has been guaranteed, and a Guarantee in
respect of any other obligation or liability or any dividend shall be deemed to
be Indebtedness equal to the maximum aggregate amount of such obligation,
liability or dividend.
"▇▇▇▇▇▇ Group" shall mean those Persons listed on Schedule A attached
hereto.
"▇▇▇▇▇▇ Trusts" shall mean the ▇▇▇▇▇▇ Group other than ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
"Indebtedness" shall mean, with respect to any person, (i) all
obligations of such person for borrowed money, or with respect to deposits or
advances of any kind, (ii) all obligations of such person evidenced by bonds,
debentures, notes or similar instruments, (iii) all obligations of such person
under conditional sale or other title retention agreements relating to property
purchased by such person, (iv) all obligations of such person issued or assumed
as the deferred purchase price of property or services (other than accounts
payable to suppliers and similar accrued liabilities incurred in the ordinary
course of business and paid in a manner consistent with industry practice), (v)
all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any lien or security interest on property owned or acquired by such person
whether or not the obligations secured thereby have been assumed, but only to
the extent of such security, if such obligations have not been assumed, (vi) all
Capitalized Lease Obligations of such person, (vii) all Guarantees of such
person, (viii) all obligations (including but not limited to reimbursement
obligations) relating to the issuance of letters of credit for the account of
such person, (ix) all obligations arising out of foreign exchange contracts, and
(x) all obligations arising out of interest rate and currency swap agreements,
cap, floor and collar agreements, interest rate insurance, currency spot and
forward contracts and other agreements or arrangements designed to provide
protection against fluctuations in interest or currency exchange rates.
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"Permal Group" shall mean those Persons listed on Schedule C attached
hereto.
"Permitted Transfer" shall mean any Transfer (i) by an individual Stock
holder to such Stockholder's spouse, former spouse, child, parent, parent of a
spouse, sibling or grandchild (collectively, "Relatives") or to or among a trust
of which there are no principal beneficiaries other than one or more Relatives
of such Stockholder; (ii) from a Relative of an individual Stockholder to
another Relative of that individual Stockholder or to that individual
Stockholder; (iii) by any Stockholder to any of its Affiliates or partners; or
(iv) by an Individual Stockholder pursuant to laws of descent or survivorship.
"Person" means any individual, corporation, limited liability company,
limited or general partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivisions thereof.
"Proportionate Share" means, with respect to each Stockholder, a number
of shares of Common Stock which bears the same ratio to the number of shares of
Common Stock beneficially owned by such Stockholder on a Fully Diluted basis as
the Tag-Along Number bears to the number of shares of Common Stock beneficially
owned by the Selling Stockholders on a Fully Diluted basis.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of the date hereof, between the Company and the stockholders listed on
the signature page thereto as it may be amended from time to time.
"Related Party" shall mean any officer, director or beneficial holder of
3% or more of the outstanding shares of capital stock of the Company or any
Subsidiary, any Relative of any such officer, director or beneficial holder of
the Company or any Subsidiary, and any Affiliate or Associate of any of the
foregoing persons.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Sell" as to any Stock, shall mean to sell, or in any other way directly
or indirectly transfer (including by operation of law, by merger or
consolidation, or sale of securities of a holding company), assign, distribute
or otherwise dispose of, such
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Stock; and the terms "Sale" and "Sold" shall have meanings correlative to the
foregoing. A Permitted Transfer shall not constitute a Sale for purposes of this
Agreement.
"Stock" means (i) any shares of Common Stock and (ii) any Common Stock
Equivalents (including, without limitation, the Common Stock issuable upon
conversion, exercise or exchange thereof), in each case, whether owned on the
date hereof or acquired hereafter.
"Stockholder" and "Stockholders" shall mean the stockholders listed on
Schedule B hereto; provided that any transferee of Stock pursuant to a Permitted
Transfer shall be treated as a Stockholder for purposes of this Agreement and
shall be entitled to the benefits of, and shall be bound by, the provisions of
this Agreement.
"Stockholder's Group" shall mean, with respect to any Stockholder who is
a member of the ▇▇▇▇▇▇ Group or the Permal Group, either the ▇▇▇▇▇▇ Group or the
Permal Group, as the case may be.
"Subsidiary" means with respect to any Person, (i) any corporation,
partnership or other entity of which shares of capital stock or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other similar managing body of such corporation, partnership or
other entity are at the time owned by such Person, or (ii) the management of
which is otherwise controlled, directly or indirectly, through one or more
intermediaries by such Person.
"Transfer" as to any Stock, means to Sell, or in any other way directly
or indirectly transfer, assign, distribute, pledge, encumber or otherwise
dispose of, either voluntarily or involuntarily, and whether or not for value.
"Voting Shares" means shares of any class of capital stock of the
Company the holders of which are generally entitled to vote in the election of
members of the Board.
SECTION 2. CORPORATE GOVERNANCE.
2.1 BOARD OF DIRECTORS.
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(a) Members. Subject to the provisions of Section 6.10 of the
1996 Securities Purchase Agreement and Section 4.7 of the 2000 Securities
Purchase Agreement, the Board of Directors of the Company (the "Board") shall
consist of nine members, of whom:
(i) one shall be designated by GECC (such person so designated,
and any successor thereto, being referred to herein as the "GECC
Designee");
(ii) one shall be designated by Permal Group (such person so
designated, and any successor thereto, being referred to herein as the
"Permal Designee");
(iii) one shall be ▇▇▇▇▇▇, or, in the event of death or
incapacity of ▇▇▇▇▇▇, shall be ▇▇▇▇ ▇▇▇▇▇▇, or, if ▇▇▇▇ ▇▇▇▇▇▇ is
unavailable to serve as director or ceases to serve as director, then an
individual nominated by the trustee(s) of the ▇▇▇▇▇▇ Trusts, having
qualifications similar to those of ▇▇▇▇ ▇▇▇▇▇▇ or any other director of
the Company shall serve as director under the same terms that would have
applied to ▇▇▇▇ ▇▇▇▇▇▇ hereunder (the "▇▇▇▇▇▇ Designee").
(iv) an E-commerce and/or business to business expert shall be
designated by THLi (the "THLi Internet Designee") and one additional
member shall be designated by THLi (the "THLi Fund Designee" and,
together with the THLi Internet Designee and any successors to either of
them, being referred to herein as the "THLi Designees" );
(v) one shall be unanimously designated by GECC and THLi (such
person so designated, and any successor thereto, being referred to
herein as the "GECC/THLi Designee"); and
(vi) three shall be selected by the vote of the GECC Designee,
the Permal Designee, the THLi Fund Designee and the ▇▇▇▇▇▇ Designee
(such persons so designated, any successors thereto, being referred to
herein as the "Joint Designees" and, together with the GECC Designee,
the Permal Designee, the ▇▇▇▇▇▇ Designee, the THLi Designees and the
GECC/THLi Designee, the "Designees").
At each meeting of the stockholders of the Company held for the purpose
of electing directors, the Stockholders (other than the ▇▇▇▇▇▇ Trusts) shall
take such
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action as shall be necessary to cause the Designees (or any successor to any
such person designated in accordance with paragraph (b) of this Section) to be
elected as directors (including, in the case of GECC, Permal Group and THLi,
causing their respective designees on the Board to nominate, and recommend to
the stockholders of the Company the election of, the Designees to the Board and
opposing, and causing their respective designees on the Board to oppose, any
proposal to remove any Designee at each meeting of the stockholders of the
Company at which the election or removal of members of the Board is on the
agenda), and shall take no action which would diminish the prospects of any
Designee being elected to the Board or increase the prospects of any Designee
being removed from the Board. The Company shall take all necessary action to
reduce the size of the Board to the extent required by the first sentence of
this paragraph and shall cause the current members of the Board to resign from
office as necessary to implement the provisions of the first sentence of this
paragraph.
(b) Vacancies. Each of the GECC Designee, the Permal Designee,
the THLi Designees and the GECC/THLi Designee shall hold office until his death,
resignation or removal or until his successor shall have been duly elected and
qualified. If any GECC Designee shall cease to serve as a director of the
Company for any reason, the vacancy resulting thereby shall be filled by another
person designated by GECC. If any Permal Designee shall cease to serve as a
director of the Company for any reason, the vacancy resulting thereby shall be
filled by another person designated by Permal Group. If any of the THLi
Designees shall cease to serve as a director of the Company for any reason, the
vacancy resulting thereby shall be filled by another person designated by THLi.
If any GECC/THLi Designee shall cease to serve as a director of the Company for
any reason, the vacancy resulting thereby shall be filled by another person
unanimously designated by GECC and THLi. If the ▇▇▇▇▇▇ Designee shall cease to
serve as a director of the Company for any reason, the vacancy resulting thereby
shall be filled by another person unanimously designated by the ▇▇▇▇▇▇ Group. In
the event that at any time there exist vacancies on the Board such that there is
either no GECC Designee, no Permal Designee, no GECC/THLi Designee or less than
two THLi Designees, no action may be taken by the Board until such vacancy is
filled. GECC, Permal Group, the ▇▇▇▇▇▇ Group and THLi agree to use their best
efforts to designate successors to fill any such vacancies as promptly as
practicable.
(c) Removal. No GECC Designee may be removed from office except
by GECC, no Permal Designee may be removed from office except by Permal Group,
no THLi Designee may be removed from office except by THLi, no ▇▇▇▇▇▇
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Designee may be removed from office except by the ▇▇▇▇▇▇ Group; provided that
such limitation shall not apply to the removal of ▇▇▇▇▇▇ as Chairman so long as
▇▇▇▇▇▇ remains a Director, no GECC/THLi Designee may be removed from office
except unanimously by GECC and THLi. GECC shall have the right to remove any
GECC Designee, Permal Group shall have the right to remove any Permal Designee,
THLi shall have the right to remove any THLi Designee, the ▇▇▇▇▇▇ Group shall
have the right to remove any ▇▇▇▇▇▇ Designee and GECC and THLi shall
unanimously have the right to remove any GECC/THLi Designee, with or without
cause, at any time.
(d) Quorum Requirements. Subject to Section 2.2, the quorum which
shall be required for action to be taken by the Board (other than an adjournment
of any meeting of the Board) shall be the GECC Designee, the Permal Designee,
the THLi Fund Designee and the ▇▇▇▇▇▇ Designee. Directors participating by
telephone conference in any meeting of the Board shall be considered in
determining whether a quorum of directors is present.
(e) Committees. The Company shall cause the GECC Designee, the
Permal Designee and at least one THLi Designee to be appointed to each of the
committees of the Board as may be requested at any time or from time to time by
GECC, Permal Group or THLi, as the case may be.
(f) Chairman of the Board. ▇▇▇▇▇▇ shall serve as Chairman of the
Board for as long as he is Chief Executive Officer. GECC, Permal Group and THLi
presently intend to continue to nominate ▇▇▇▇▇▇ to serve as a director and
Chairman of the Board after ▇▇▇▇▇▇ retires as Chief Executive Officer, provided
that ▇▇▇▇▇▇ shall not be obligated to accept such nomination.
(g) Board and Committee Meetings. The Company shall hold regular
meetings of its Board on at least a quarterly basis. The Company agrees, and
shall cause its By-laws to be amended to the extent necessary to provide, that
the GECC Designee, any THLi Designee and the GECC/THLi Designee shall have the
right, upon reasonable notice, to call meetings of the Board and of each
committee of the Board on which he or she is a member.
(h) Duration. The right of each of GECC, Permal Group and THLi to
designate directors pursuant to this Section shall continue only for so long as
GECC and its Affiliates, Permal Group, or THLi and its Affiliates, as the case
may be, beneficially owns at least 2,000,000 shares of Common Stock on a Fully
Diluted
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Basis, as adjusted for stock splits, combinations or similar transactions. The
right of the ▇▇▇▇▇▇ Group to designate directors pursuant to this Section 2.1(h)
shall continue only for so long as the ▇▇▇▇▇▇ Group beneficially owns at least
1,000,000 shares of Common Stock on a Fully Diluted Basis, as adjusted for stock
splits, combinations or similar transactions.
(i) Observation. In addition to THLi's right to designate members
of the Board pursuant to Section 2.1(a), so long as THLi is the owner of any
Stock, it shall have the right to designate an observer to attend meetings of
the Board, but such observer shall not have a vote with respect to any matter
presented to the Board of Directors for action thereon. In connection with such
observer's right, THLi shall receive all notices and information provided to
Board members.
2.2 CERTAIN ACTIONS REQUIRING CONSENT OF THE GECC DESIGNEE AND THE THLI
FUND DESIGNEE. Notwithstanding any other provision of this Agreement, without
the approval, at a meeting of the Board or a committee thereof duly called and
held, (1) for so long as GECC is entitled to designate the GECC Designee, of the
GECC Designee and (2) for so long as THLi is entitled to designate the THLi Fund
Designee, of the THLi Fund Designee, the Company shall not, directly or
indirectly, and shall not permit any of its Subsidiaries to, directly or
indirectly, take any of the following actions (except to the extent any such
action is specifically authorized under this Agreement, the Securities Purchase
Agreements, the Registration Rights Agreement or an annual business plan
previously approved by the GECC Designee and the THLi Fund Designee in
accordance with this Section):
(a) merge with or into or consolidate with any other Person;
(b) voluntarily liquidate, dissolve or wind up or file any
voluntary petition in bankruptcy or for receivership or make any assignment for
the benefit of creditors;
(c) in any transaction or series of transactions, acquire
(including pursuant to a merger or consolidation) all or any substantial portion
of the business or assets of any Person;
(d) enter or commit to enter into any joint venture or
partnership or establish any non-wholly-owned subsidiaries or otherwise make any
debt or equity investment in any Person (other than extensions of credit in the
ordinary course of business);
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(e) expand into new lines of business (it being understood that
"new lines of business" do not include (i) geographic expansion of the retail
operations conducted by the Company and its Subsidiaries as of the date of this
Agreement and (ii) E-Commerce Activities);
(f) assign to any other Person any rights of the Company under
this Agreement, the Registration Rights Agreement or the Securities Purchase
Agreements;
(g) in any transaction or series of transactions, sell, lease or
exchange any assets of the Company and/or any Subsidiary, except for (i) sales
of inventory in the ordinary course of business, (ii) subleasing of vacant
retail space on arm's-length terms and (iii) entering into or terminating leases
in the ordinary course of business pursuant to a procedure adopted by the Board
of Directors and approved by the GECC Designee and the THLi Fund Designee;
(h) adopt or change any material accounting policy of the Company
or any of its Subsidiaries, except as required by generally accepted accounting
principles;
(i) create, incur, assume or suffer to exist any Indebtedness
other than (a) Indebtedness in existence as of the date of this Agreement and
interest thereon, reduced to the extent such amounts are repaid or retired, and
any refinancing of such Indebtedness, (b) Indebtedness under the Loan and
Security Agreement dated as of January 20, 1995 between the Company and Congress
Financial Corporation (Western), as amended to the date of this Agreement,
including premium (if any), and interest thereon, (c) Indebtedness already
approved in accordance with this subsection, reduced to the extent such amounts
are repaid, refinanced or retired, and (d) other Indebtedness not to exceed in
the aggregate $200,000 at any time outstanding;
(j) mortgage, encumber, create, incur or suffer to exist, liens
on its assets (other than liens on assets under Indebtedness outstanding as of
the date hereof and materialmen's, mechanics' and other similar liens arising
for work performed in the ordinary course of business which are not overdue for
more than 30 days);
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(k) pay, declare or set aside any sums for the payment of, any
dividends, or make any distribution on, any shares of its capital stock or
redeem, repurchase or otherwise acquire any outstanding shares of its capital
stock or any other of its outstanding securities or Indebtedness (except for
Indebtedness (other than indebtedness to any Related Party, excluding
indebtedness for expenses incurred in the ordinary course of business on behalf
of the Company and its Subsidiaries) to the extent it becomes due in accordance
with its terms);
(l) make or commit to make (with respect to the Company and all
of its Subsidiaries taken together) during (i) the calendar year ended December
31, 2000, any capital expenditure or capital expenditures in an amount in excess
of $8,000,000 with respect to the Company's retail business and $100,000 with
respect to the Company's E-commerce business and (ii) any other calendar year
any capital expenditure or capital expenditures in an amount in excess of
$100,000;
(m) issue or sell any shares of capital stock or rights, options,
warrants or other securities exercisable for, exchangeable for or convertible
into shares of capital stock of the Company or any of the Company's
Subsidiaries, other than upon the exercise of options or warrants outstanding on
the date of this Agreement or previously approved in accordance with this
Section, or grant, amend or terminate any stock appreciation right or other
stock-based award;
(n) enter into, adopt, amend or terminate any employment or
consulting agreement, or hire or retain any person who will report directly to
the Chief Executive Officer or to whom the Company shall pay total compensation
(including, without limitation, compensation in the form of benefits) in excess
of $150,000 per year, or enter into, adopt, amend or terminate any employee
benefit plan, policy or arrangement, except as required by law or generally
accepted accounting principles; provided that the renewal by the Company in the
ordinary course of its business of benefit plans applicable to employees of the
Company, generally, shall not require consent pursuant to this subparagraph (n);
(o) amend its Certificate or By-laws, including, without
limitation, any change in the number of directors comprising its Board of
Directors, or adopt, amend, redeem or terminate any shareholder rights plan or
similar plan or arrangement;
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(p) amend, modify or waive an provision of this Agreement, the
Securities Purchase Agreements, the Registration Rights Agreement or the
agreements ancillary thereto, or become a party to any agreement which by its
terms restricts the Company's or any of its Subsidiaries', or any Stockholder's,
performance of the terms of any of such agreements;
(q) change its independent certified accountants or actuaries;
(r) register any securities under the Securities Act or grant any
registration rights therefor;
(s) enter into, amend or terminate, or waive any material rights
of the Company and its Subsidiaries under, any contract, arrangement or
transaction involving consideration in excess of $100,000 or which is otherwise
material to the Company or any of its Subsidiaries;
(t) enter into, amend or terminate any contract, arrangement or
transaction with a Related Party, other than (i) any action to terminate the
Consumer Credit Card Agreement by and among ▇▇▇▇▇▇'▇ Sofa Factory, ▇▇▇▇▇▇
Convertible Corporation and Monogram Credit Bank of Georgia, dated as of April
27, 1997, and (ii) the payment of salary and benefits pursuant to employment
arrangements entered into in the ordinary course of business in compliance with
this Agreement;
(u) enter into, adopt, amend (whether by agreement or by conduct
of the business), except as required by law or generally accepted accounting
principles, or terminate any annual business plan;
(v) take any action required by law to be approved by the Board;
or
(w) agree or otherwise commit to take any of the actions set
forth in the foregoing subparagraphs (a) through (v).
2.3 MANAGEMENT.
(a) Chief Executive Officer. Subject to the provisions of this
Agreement and the Employment Agreement, ▇▇▇▇▇▇ shall be the Chief Executive
Officer of the Company. In the event of the death, resignation, removal or other
termination of ▇▇▇▇▇▇'▇ services as Chief Executive Officer, any successor Chief
Executive Officer (and any successor(s) thereto) shall be selected by a majority
of
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the Board; provided that no such person shall be selected without the unanimous
approval of the GECC Designee and the THLi Fund Designee.
(b) Appointment of Management. Subject to Section 2.2 hereof, all
members of management of the Company (other than the Chief Executive Officer)
shall be designated by, their compensation shall be determined by, and they may
be removed, promoted or demoted by, the Chief Executive Officer of the Company;
provided, however, that the designation of, setting of compensation for, or
removal, promotion or demotion of, any person who will report directly to the
Chief Executive Officer or earn total compensation (including benefits) from the
Company and its Subsidiaries of $150,000 or more per year shall be subject to
the prior approval of the Board.
2.4 DIRECTORS' INDEMNIFICATION.
(a) The Company shall obtain and cause to be maintained in
effect, with financially sound insurers, a policy of directors' and officers'
liability insurance covering the Designees (and their respective successors) in
an amount of at least $15,000,000 or such other amount the Board shall specify
(as such amount shall be increased from time to time at the request of GECC or
THLi).
(b) The Certificate, By-laws and other organizational documents
of the Company and each of its Subsidiaries shall at all times, to the fullest
extent permitted by law, provide for indemnification of, advancement of expenses
to, and limitation of the personal liability of, the members of the Board and
the members of the boards of directors or other similar managing bodies of each
of the Company's Subsidiaries and such other persons, if any, who, pursuant to a
provision of such Certificates, By-laws or other organizational documents,
exercise or perform any of the powers or duties otherwise conferred or imposed
upon members of the Board or the boards of directors or other similar managing
bodies of each of the Company's Subsidiaries. Such provisions may not be
amended, repealed or otherwise modified in any manner adverse to any member of
the Board or any member of the boards of directors or other similar managing
bodies of any of the Company's Subsidiaries, until at least six years following
the termination of this Agreement.
(c) Each of the Designees is intended to be a third-party
beneficiary of the obligations of the Company pursuant to this Section 2.4, and
the obligations of the Company pursuant to this Section 2.4 shall be enforceable
by the Designees.
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2.5 EXPENSES. The Company shall pay the reasonable out-of-pocket
expenses incurred by each of the GECC designee, the Permal Designee, the THLi
Designees, the GECC/THLi Designees and the Joint Designees in connection with
performing his or her duties, including without limitation the reasonable
out-of-pocket expenses incurred by such person attending meetings of the Board
or any committee thereof or meetings of any board of directors or other similar
managing body (and any committee thereof) of any subsidiary of the Company.
2.6 COOPERATION. Each Stockholder (other than the ▇▇▇▇▇▇ Trusts) shall
vote all of its voting shares and shall take all other necessary or desirable
actions within its control (including, without limitation, attending all
meetings in person or by proxy for purposes of obtaining a quorum, executing all
written consents in lieu of meetings and voting to remove members of the Board
or to amend the Certificate, as applicable), and the Company shall take all
necessary and desirable actions within its control (including, without
limitation, calling special Board and stockholder meetings and voting to remove
members of the Board or to amend the Certificate, as applicable), to (a)
effectuate the provisions of Section 2.1 and (b) cause the Company to have a
sufficient number of authorized and unissued shares of Company Stock reserved
for issuance solely for the purpose of effecting conversion of outstanding
Series A Preferred Stock.
SECTION 3. RESTRICTIONS ON TRANSFERS OF STOCK.
(a) Notwithstanding anything to the contrary contained herein, no
Stockholder shall Transfer any Stock, except for Sales in bona fide transactions
for value complying with the provisions of this Section 3 and Permitted
Transfers. The Company shall not reflect on its books any Sale of Stock, unless
(a) the Sale is pursuant to an effective registration statement under the
Securities Act and under any applicable state securities or blue sky laws, or
(b) the Selling Stockholder shall have furnished the Company with evidence
reasonably satisfactory to the Company that no such registration is required
because of the availability of an exemption from registration under the
Securities Act and under applicable state securities or blue sky laws. A written
opinion of counsel of recognized standing to the effect set forth in clause (b)
of the preceding sentence shall satisfy the requirements of such clause.
(b) Any Transfer or attempted Transfer of Stock in violation of
any provision of this Agreement shall be void, and the Company shall not record
such Transfer on its books or treat any purported transferee of such Stock as
the owner of such Stock for any purpose.
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SECTION 4. RIGHTS OF FIRST OFFER.
(a) If any Stockholder (other than the ▇▇▇▇▇▇ Trusts) intends to
Sell any Stock (other than (1) Sales pursuant to a registered public offering or
(2) Sales on a national securities exchange which, when aggregated with all
other Sales under this clause (2) by such Stockholder or, if such Stockholder is
a member of a Stockholder Group, all other Sales under this clause (2) by the
members of such Stockholder Group from and after the date of this Agreement,
would represent, in the aggregate, not more than 1,000,000 shares of Common
Stock on a Fully Diluted Basis, as adjusted for stock splits, combinations or
similar transactions):
(i) The Stockholder intending to transfer such Stock (the
"Proposing Seller") shall give each other Stockholder (each an
"Offeree") written notice of its intent to Sell such Stock, specifying
the number of securities to be sold and the minimum price and terms and
conditions of such sale and offering to Sell to such Offeree, at such
minimum price and on such terms and conditions, its pro rata share of
such Stock (based on the number of shares of Common Stock beneficially
owned by each Offeree on a Fully Diluted basis); provided that any
Offeree may, by written notice to the Proposing Seller, elect to
purchase, in addition to its pro rata share of such Stock, all or any
portion of the Stock (if any) with respect to which any other Offeree
fails to exercise its right of first offer under this Section 4, and
such additional Stock shall be pro-rated among such Offerees in the
manner described above to the extent such additional Stock is
oversubscribed;
(ii) if any Offeree shall not, within 15 days after receipt of
the notice given pursuant to clause (i) above, accept such offer in
writing with respect to the Stock specified in such notice, then the
Proposing Seller shall be free to Sell the Stock specified in the notice
to such Offeree (but only those securities covered by the notice of
intention to Sell which no other Offeree shall have agreed to purchase)
at a price equal to or above the minimum price and on other terms and
conditions no less favorable to the Proposing Seller than those
specified in such notice, at any time within 90 days of the expiration
of such 15-day period;
(iii) if the Proposing Seller shall not have consummated the
proposed Sale within 90 days after the expiration of the 15-day period
referred to in
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clause (ii) above, then the Proposing Seller may not thereafter Sell
such Stock without complying with the provisions of this Section 4; and
(iv) if any Offeree shall accept such offer within 15 days after
the notice given pursuant to clause (i) above, then such Offeree shall
purchase the Stock specified in such notice as promptly as is reasonably
practicable, but in any event within 45 days after the notice given
pursuant to clause (i) above or such later date as the Proposing Seller
may designate within the 90-day period referred to in clause (iii)
above.
(b) THLi, GECC and each of the members of the ▇▇▇▇▇▇ Group, each
in favor of the others, covenants that if any of them (for purposes of this
Section, a "Permal Offeree") has the opportunity to purchase any Common Stock
("Offered Shares") owned by any member of the Permal Group, whether by offer to
the Permal Offeree from a member of the Permal Group or due to a solicitation by
the Permal Offeree, or otherwise, the Permal Offeree shall promptly notify the
parties subject to (and entitled to the benefits of) this Section 4(b)(v) of the
opportunity and shall allow them the right to participate in such purchase and
acquire Offered Shares. The number of Offered Shares that may be purchased by
each of them, respectively, shall be (i) as among GECC, THLi and all of the
members of the ▇▇▇▇▇▇ Group together, in proportion to the number of shares of
Common Stock owned by GECC, THLI or the ▇▇▇▇▇▇ Group, respectively, as a
percentage of the aggregate number of shares of Common Stock then owned by GECC,
THLi and all members of the ▇▇▇▇▇▇ Group together, and (ii) as among the members
of the ▇▇▇▇▇▇ Group, in proportion to the number of shares of Common Stock owned
by such member as a percentage of the number of shares of Common Stock then
owned by all ▇▇▇▇▇▇ Group members electing to purchase Common Stock hereunder.
The rights in this Section 4(b) are in addition to and subordinate to the other
provisions of this Stockholders Agreement. Any failure to exercise the rights
in the Section within 15 days of receipt of notice shall be deemed a waiver of
such rights.
SECTION 4A. ▇▇▇▇▇▇ TRUST STOCK RIGHTS OF FIRST OFFER. If any of the
▇▇▇▇▇▇ Trusts intends to sell any Stock (other than (1) Sales pursuant to a
registered public offering or (2) Sales on a national securities exchange which,
when aggregated with all other Sales under this clause (2) by the ▇▇▇▇▇▇ Group
from and after the date of this Agreement, would represent, in the aggregate,
not more than 1,000,000 shares of Common Stock on a Fully Diluted Basis, as
adjusted for stock splits, combinations or similar transactions):
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(i) the ▇▇▇▇▇▇ Trust intending to transfer such Stock (the
"▇▇▇▇▇▇ Trust Seller") shall give the Company, GECC, THLi and the Permal
Group written notice (the "▇▇▇▇▇▇ Trust Seller Notice") of its intent to
Sell such Stock, specifying the number of securities to be sold and the
minimum price and terms and conditions of such sale, and offering to
Sell to the Company, GECC, THLi and the Permal Group, at such minimum
price and on such terms and conditions. The Company shall provide a copy
of any ▇▇▇▇▇▇ Trust Seller Notice to each Stockholder within two days
after receipt by it of the ▇▇▇▇▇▇ Trust Seller Notice. The Company shall
have the right to purchase all or any part of such Stock by giving
written notice to the ▇▇▇▇▇▇ Trust Seller, GECC, THLi and the Permal
Group within two days after receipt by it of the ▇▇▇▇▇▇ Trust Seller
Notice, specifying the number of shares of such Stock to be so purchased
by the Company. If the Company elects to purchase none of, or less than
all, the Stock that is the subject of the proposed Transfer by the
▇▇▇▇▇▇ Trust Seller, then GECC, THLi and the Permal Group shall have the
right to purchase their pro rata share of any or all of the available
Stock (and, if either elects not to purchase its full pro rata share,
the Stock not so purchased) by giving written notice to the ▇▇▇▇▇▇ Trust
Seller and the Company within seven days after receipt by it of the
▇▇▇▇▇▇ Trust Seller Notice (the "Notice Period"); provided that any
other Stockholder (each, an "Electing Stockholder") may, by written
notice to GECC, THLi and the Permal Group prior to the expiration of the
Notice Period elect to purchase its pro rata share of the available
Stock, and any such Electing Stockholder may elect to purchase, in
addition to its pro rata share of the available Stock, all or any
portion of the Stock (if any) with respect to which GECC, THLi, the
Permal Group or any other Stockholder fails to exercise its right under
this Section 4A, and such additional Stock shall be pro-rated among such
Electing Stockholders in the manner described above to the extent such
additional Stock is oversubscribed;
(ii) GECC shall act as agent for the Electing Stockholders in
connection with any exercise by an Electing Stockholder of its rights
under this Section and the ▇▇▇▇▇▇ Trust Seller shall not be obligated to
deal with any Stockholder other than GECC in connection with any
purchase and sale under this Section 4A; provided that GECC shall have
no liability to the ▇▇▇▇▇▇ Trust Seller if GECC fails to purchase any
Stock which GECC disclosed in writing to the ▇▇▇▇▇▇ Trust Seller at the
time of delivery of GECC's election to purchase was being purchased by
GECC solely as agent for one or more
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Electing Stockholders; and GECC shall have no liability to any other
Stockholder for any act or omission by GECC under this Section 4A;
(iii) if the Company, GECC, THLi and the Permal Group fail to
elect to purchase all the Stock specified in the ▇▇▇▇▇▇ Trust Seller
Notice, then the ▇▇▇▇▇▇ Trust Seller shall be free to sell, pursuant to
a Shelf Registration Statement, the portion of such Stock as to which no
election to purchase has been made by the Company, GECC, THLi or the
Permal Group at a price equal to or above the minimum price and on other
terms and conditions no less favorable to the ▇▇▇▇▇▇ Trust Seller than
those specified in the ▇▇▇▇▇▇ Trust Seller Notice, at any time within 90
days of the expiration of the seven-day period referred to in clause (i)
above;
(iv) if the ▇▇▇▇▇▇ Trust Seller shall not have consummated the
proposed Transfer within 90 days after the expiration of the seven-day
period referred to in clause (ii) above, then the ▇▇▇▇▇▇ Trust Seller
may not thereafter Transfer such Stock without complying with the
provisions of this Section 4A;
(v) any Electing Stockholder shall provide to GECC all funds
required, and shall execute and deliver to GECC all documents reasonably
requested by GECC, in connection with the purchase by GECC of any Stock
as agent for such Electing Stockholder, and GECC shall deliver
certificates representing the Stock acquire by such Electing Stockholder
to such Stockholder promptly following the consummation of any purchase
under this Section 4A and the satisfaction by such Electing Stockholder
of his obligations under this clause (v).
SECTION 5. TAG-ALONG RIGHTS.
(a) If GECC, any member of Permal Group, or THLi whether acting
alone or in concert with any other Stockholder (collectively, the "Selling
Stockholders") pursuant to a common plan, understanding or arrangement, shall
enter into an agreement to Sell or otherwise propose to Sell to any Person or
Group (other than pursuant to a registered public offering) (such Person or
Group, the "Tag-along Transferee"), in one transaction or a series of related
transactions, any Stock, such that immediately following the consummation of
such Sale, the Selling Stockholders would have Sold to such Person or Group in
the aggregate Stock representing in excess of 3,000,000 shares of Common Stock
on a Fully Diluted Basis, as adjusted
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for stock splits, combinations or similar transactions (a "Tag-along Sale")
(such number of shares of Stock being referred to herein as the "Tag-along
Number"), then each of the other Stockholders (each a "Tag-along Offeree") shall
have the right to participate in such Tag-Along Sale by selling a number of
shares of Common Stock equal to such Stockholder's Proportionate Share, as part
of the Tag-Along Sale by the Selling Stockholders, on the same terms as those
applicable to the Tag-Along Sale (except that, if the Tag-Along Sale involves
Common Stock Equivalents, the economic terms of such Sale shall be appropriately
adjusted to reflect that the Tag-Along Offerees are selling Common Stock).
(b) The Selling Stockholders shall provide to each Tag-Along
Offeree written notice of any Tag-Along Sale (the "Tag-along Notice"), not more
than 45 and not less than 15 days prior to the Tag-Along Sale, setting forth the
terms of the Tag-Along Sale and specifically identifying the Tag-Along
Transferee of the Stock, and shall give each Tag-Along Offeree at least 10 days
after delivery of the Tag-Along Notice within which to exercise its rights
contained in this Section 5, by written notice thereof to the Selling
Stockholder.
SECTION 6. CONFLICTING AGREEMENTS. Each Stockholder represents and
warrants that such Stockholder has not granted and is not a party to any proxy,
voting trust or other agreement which is inconsistent with or conflicts with any
provision of this Agreement, and no holder of Stock shall grant any proxy or
become party to any voting trust or other agreement which is inconsistent with
or conflicts with any provision of this Agreement.
SECTION 7. LEGEND. (a) Each Stockholder and the Company shall take all
such action necessary (including exchanging with the Company certificates
representing shares of Stock issued prior to the date hereof) to cause each
certificate representing outstanding shares of Stock (other than shares which
have been registered under the Securities Act, to which the first paragraph of
such legends shall not apply) to bear legends substantially in the form as
follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR
SUCH LAWS."
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"THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED BY A STOCKHOLDERS AGREEMENT BY AND AMONG ▇▇▇▇▇▇'▇ FURNITURE, INC.
(THE "COMPANY") AND THE STOCKHOLDERS PARTIES THERETO (THE "STOCKHOLDERS
AGREEMENT"), A COPY OF WHICH IS ON FILE AT THE OFFICES OF THE COMPANY."
"IN ADDITION TO THE RESTRICTIONS SET FORTH IN THE STOCKHOLDERS
AGREEMENT, THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
RESTRICTIONS SET FORTH IN A SECURITIES PURCHASE AGREEMENT BETWEEN THE COMPANY
AND GENERAL ELECTRIC CAPITAL CORPORATION AND A SECURITIES PURCHASE AGREEMENT BY
AND AMONG THE COMPANY AND THE PURCHASERS LISTED ON THE SIGNATURE PAGES THERETO,
A COPY OF EACH OF WHICH IS ON FILE AT THE OFFICES OF THE COMPANY."
The first paragraph of the legends shall be removed from certificates
for shares transferred pursuant to Rule 144 under the Securities Act or when
such shares are transferred in any other transaction, in each case if the seller
delivers to the Company an opinion of its counsel, which counsel and opinion
shall be reasonably satisfactory to the Company, or a "no-action" letter from
the staff of the Securities and Exchange Commission, in either case to the
effect that such legend is no longer necessary in order to protect the Company
against a violation by it of the Securities Act upon any Sale or other
disposition of such shares without registration thereunder. The requirement that
the above legend regarding this Agreement be placed upon certificates evidencing
shares of Stock shall cease and terminate upon the Sale of such shares, other
than pursuant to a Permitted Transfer. Upon the consummation of any event
requiring the removal of a legend hereunder, the Company, upon the surrender of
certificates containing such legend, shall, at its own expense, deliver to the
holder of any such shares as to which the requirement for such legend shall have
terminated, one or more new certificates evidencing such shares not bearing such
legend.
(b) Any provision herein to the contrary notwithstanding,
certificates for up to 1,000,000 shares of Common Stock held by the ▇▇▇▇▇▇
Trusts shall not be required to bear legends required by this Agreement so long
as such shares may sold under Rule 144(k) under the Securities Act or are not
"restricted securities" within the meaning of Rule 144 under the Securities Act.
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SECTION 8. REPRESENTATIONS AND WARRANTIES.
(a) Each party hereto represents and warrants to the other
parties hereto as follows:
(i) it has full power and authority to execute, deliver and
perform its obligations under this Agreement;
(ii) this agreement has been duly and validly authorized,
executed and delivered by it, and constitutes a valid and binding
obligation of it, enforceable against it in accordance with its terms
except to the extent that enforceability may be limited by bankruptcy,
insolvency or other similar laws affecting creditors' rights generally;
(iii) the execution, delivery and performance of this Agreement
by it does not (x) violate, conflict with, or constitute a breach of or
default under its organizational documents, if any, or any agreement to
which it is a party or by which it is bound or (y) violate any law,
regulation, order, writ, judgment, injunction or decree applicable to
it;
(iv) no consent or approval of, or filing with, any governmental
or regulatory body is required to be obtained or made by it in
connection with the transactions contemplated hereby; and
(v) it is not a party to any agreement which is inconsistent with
the rights of any party hereunder or otherwise conflicts with the
provisions hereof.
(b) each Signatory Stockholder severally represents and warrants
to GECC and THLi with respect only to GECC and THLi and not any other
Stockholder as follows:
(i) Schedule B hereto sets forth a list of all securities of the
Company (including, without limitation, shares of capital stock,
convertible securities, debentures, etc.) held of record or beneficially
owned by it immediately after the date hereof; and
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(ii) except as set forth on Schedule B hereto and other than this
Agreement and the Registration Rights Agreement, it is not a party to
any contract or agreement, written or oral, with respect to the voting
or transfer of securities of the Company (including, without limitation,
any voting agreement, voting trust, stockholder's agreement,
registration rights agreement, etc.).
SECTION 9. DURATION OF AGREEMENT. Subject to the last sentence of this
Section, the rights and obligations of a Stockholder under this Agreement shall
terminate at such time as such Stockholder no longer is the beneficial owner of
any shares of Stock. As to any of GECC's rights or obligations under this
Agreement, this Agreement shall terminate at such time as GECC no longer is the
beneficial owner of 2,000,000 or more of the outstanding shares of Common Stock
on a Fully Diluted Basis, subject to adjustment for stock splits, combinations
or similar transactions, or at such earlier time as may be agreed by GECC,
Permal Group and THLi (or, if applicable, THLi's transferee pursuant to Section
14(ii)).
As to any of THLi's rights or obligations under this Agreement, this
Agreement shall terminate at such time as THLi (and any transferee's assigned
rights under this Agreement pursuant to Section 14) no longer beneficially owns
2,000,000 or more of the outstanding shares of Common Stock on a Fully Diluted
Basis, subject to adjustment for stock splits, combinations or similar
transactions, or at such earlier time as may be agreed by GECC, Permal Group and
THLi (or such transferee, if applicable).
This Agreement (other than Section 4A), shall terminate as to any member
of the ▇▇▇▇▇▇ Group six months after ▇▇▇▇▇▇ ceases to be a Director of the
Company.
Any provision herein to the contrary notwithstanding, the
provisions of Sections 3, 4, 4A, 5 and 7 of this Agreement shall not be
applicable to any shares of Stock first acquired by any member of the ▇▇▇▇▇▇
Group after August 26, 1996 or by any member of the Permal Group, GECC or THLi
after the date hereof.
SECTION 10. FURTHER ASSURANCES. At any time or from time to time after
the date hereof, the parties agree to cooperate with each other, and at the
request of any other party, to execute and deliver any further instruments or
documents and to take all such further action as the other party may reasonably
request in order to evidence or effectuate the consummation of the transactions
contemplated hereby and to otherwise carry out the intent of the parties
hereunder.
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SECTION 11. AMENDMENT AND WAIVER. Except as otherwise provided herein,
no modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or any Stockholder unless such modification,
amendment or waiver is approved in writing by the Company, Stockholders holding
at least a majority of the Common Stock, and, so long as it holds any shares of
Stock, by GECC or THLi. The failure of any party to enforce any of the
provisions of this Agreement shall in no way be construed as a waiver of such
provisions and shall not affect the right of such party thereafter to enforce
each and every provision of this Agreement in accordance with its terms.
SECTION 12. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision or any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
SECTION 13. ENTIRE AGREEMENT. Except as otherwise expressly set forth
herein, this document and the other documents dated the date hereof executed in
connection herewith embody the complete agreement and understanding among the
parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
SECTION 14. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and each Stockholder and their respective
successors, assigns, heirs and personal representatives, so long as they hold
Stock. No Stockholder shall have the right to assign its rights and obligations
under this Agreement, except pursuant to (i) a Permitted Transfer or (ii) a
transfer by THLi of more than 50% of the Stock (calculated as if all shares of
Series A Preferred Stock had been converted into shares of Common Stock as of
the date of such calculation) held by THLi as of the date of this Agreement (in
which case the transferee shall be entitled to exercise all rights, and shall be
bound by all obligations, of its transferor under this Agreement).
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SECTION 15. COUNTERPARTS. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
SECTION 16. REMEDIES. Each Stockholder shall be entitled to enforce its
rights under this Agreement specifically to recover damages by reason of any
breach of any provision of this Agreement and to exercise all other rights
existing in their favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that each party may in its sole discretion apply to any court of
law or equity of competent jurisdiction for specific performance and/or
injunctive relief (without posting a bond or other security) in order to enforce
or prevent any violation of the provisions of this Agreement.
SECTION 17. NOTICES AND OTHER COMMUNICATIONS. All notices, consents,
requests, instructions, approvals, financial statements, proxy statements,
reports and other communications provided for herein shall be in writing and
shall be delivered personally, by facsimile or sent by prepaid overnight courier
service, to the Company and to each Stockholder as set forth below and to any
subsequent holder of Stock subject to this Agreement at such address as
indicated by the Company's records, or at such address or to the attention of
such other person as the recipient party has specified by written notice to the
sending party:
The Company:
▇▇▇▇▇▇'▇ Furniture, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile #: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with copies to:
▇▇▇▇▇▇'▇ Furniture, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile #: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
26
30
and
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile #: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
To each Stockholder:
At the address for such Stockholder set forth on Schedule
B attached hereto.
with a copy to:
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile #: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇ ▇▇▇▇, Esq.
and
Stroock & Stroock & ▇▇▇▇▇ LLP
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile #: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
and
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile #: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
27
31
SECTION 18. GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall
be governed by and construed in accordance with the laws of the State of New
York, including, without limitation, Sections 5-1401 and 5-1402 of the New York
General Obligations Law and New York Civil Practice Laws and Rules 327(b). Each
of the parties hereto hereby irrevocably and unconditionally consents to submit
to the exclusive jurisdiction of the courts of the State of New York and of the
United States of America, in each case located in the County of New York, for
any action, proceeding or investigation in any court or before any governmental
authority ("litigation") arising out of or relating to this Agreement and the
transactions contemplated hereby (and agrees not to commence any litigation
relating thereto except in such courts), and further agrees that service of any
process, summons, notice or document by U.S. Registered Mail to its respective
address set forth in this Agreement shall be effective service of process for
any litigation brought against it in any such court. Each of the parties hereto
hereby irrevocably and unconditionally waives any objection to the laying of
venue of any litigation arising out of this Agreement or the transactions
contemplated hereby in the courts of the State of New York or the United States
of America, in each case located in the County of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such litigation brought in any such court has been brought
in an inconvenient forum. Each of the parties irrevocably and unconditionally
waives, to the fullest extent permitted by applicable law, any and all rights to
trial by jury in connection with any litigation arising out of or relating to
this Agreement or the transactions contemplated hereby.
SECTION 19. DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
SECTION 20. CONSTRUCTION. Where specific language is used to clarify by
example a general statement contained herein, such specific language shall not
be deemed to modify, limit or restrict in any manner the construction of the
general statement to which it relates. The language used in this Agreement shall
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
party.
28
32
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement on the day and year first above written.
▇▇▇▇▇▇'▇ FURNITURE, INC.
By:____________________________________
Name:
Title:
33
GE CAPITAL EQUITY INVESTMENTS, INC.
By:____________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
Title: Senior Vice President
GENERAL ELECTRIC CAPITAL CORPORATION
By:____________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
Title: Department Operations Manager
34
PERMAL CAPITAL MANAGEMENT, INC.
By:________________________________
Name:
Title:
PERMAL SERVICES, INC.
By:________________________________
Name:
Title:
PERMAL CAPITAL PARTNERS, L.P.
By: PERMAL MANAGEMENT CORPORATION,
its Investment Manager
By:________________________________
Name:
Title:
PERMAL ASSET MANAGEMENT
By:________________________________
Name:
Title:
PERMAL SPECIAL OPPORTUNITIES, LTD.
By:________________________________
Name:
35
Title:
JAPAN OMNIBUS LTD.
By:________________________________
Name:
Title:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:________________________________
▇▇▇▇▇ ▇▇▇▇▇▇ SOUEDE
By:________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By:________________________________
▇▇▇▇▇▇ ▇. AND ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By:________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By:________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
UNITED GULF BANK (B.S.C.) E.C.
36
By:________________________________
Name:
Title:
KUWAIT INVESTMENT PROJECTS COMPANY
By:________________________________
Name:
Title:
ATCO HOLDINGS, LTD.
By:________________________________
Name:
Title:
ATCO DEVELOPMENT, INC.
By:________________________________
Name:
Title:
37
PILOT HOLDINGS, L.P.
By: SHED INVESTMENTS, LLC,
its General Partner
By:________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Member
38
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ TRUST I
By:________________________________
Name:
Title:
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ TRUST I
By:________________________________
Name:
Title:
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ TRUST I
By:________________________________
Name:
Title:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ TRUST I
By:________________________________
Name:
Title:
▇▇▇▇▇▇ FAMILY TRUST
By:________________________________
Name:
Title:
39
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
By:________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By:________________________________
40
TH ▇▇▇.▇▇▇▇▇▇ INTERNET PARTNERS, L.P.
By: TH ▇▇▇.▇▇▇▇▇▇ INTERNET FUND
ADVISORS, L.P., its General Partner
By: TH ▇▇▇.▇▇▇▇▇▇ INTERNET FUND
ADVISORS, LLC, its General Partner
By:________________________________
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇
Title: Vice President
TH ▇▇▇.▇▇▇▇▇▇ INTERNET PARALLEL
PARTNERS, L.P.
By: TH ▇▇▇.▇▇▇▇▇▇ INTERNET FUND
ADVISORS, L.P., its General Partner
By: TH ▇▇▇.▇▇▇▇▇▇ INTERNET FUND
ADVISORS, LLC,
its General Partner
By:________________________________
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇
Title: Vice President
41
ASCEND PARTNERS, L.P.
By:________________________________
Name:
Title:
▇▇▇▇▇ ▇▇▇▇▇
By:________________________________
▇▇▇▇▇▇▇ REVOCABLE TRUST
By:________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Trustee
By:________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Trustee
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇
By:________________________________
Name:
Title:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
By:________________________________
▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇, ▇▇
By:________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Custodian
▇▇▇▇▇ ▇. ▇▇▇▇▇, UTMA, CA
By:________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Custodian
▇▇▇▇ ▇. ▇▇▇
By:________________________________
▇▇▇▇ ▇▇▇▇▇▇
By:________________________________
DIAMOND A. PARTNERS, L.P.
By:________________________________
Name:
Title:
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
43
By:________________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ - ▇▇▇
By:________________________________
Name:
Title:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ - ▇▇▇
By:________________________________
Name:
Title:
▇▇▇▇▇▇▇ ▇. AND ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By:________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By:________________________________
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇
FAMILY TRUST
By:________________________________
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Trustee
By:________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
44
Title: Trustee
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By:________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By:________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By:________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇
By:________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ TRUST
By:________________________________
Name:
Title:
▇▇▇▇▇ ▇▇▇▇▇▇▇
45
By:________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By:________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By:________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ PROFESSIONAL
CORPORATION DEFINED BENEFIT
PLAN
By:________________________________
Name:
Title:
▇▇▇▇ ▇▇▇▇▇▇▇
By:________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇
By:________________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
46
By:________________________________
▇▇▇▇▇ ▇▇▇▇
By:________________________________
▇▇▇▇▇▇ LONDON
By:________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By:________________________________
THE MUHL FAMILY TRUST
By:________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Trustee
By:________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Trustee
PACIFIC SECURITY GROUP, INC.
By:________________________________
47
By:________________________________
Name:
Title:
POINTE INVESTMENTS CAPITAL, LTD.
By:________________________________
Name:
Title:
POLLAT, ▇▇▇▇▇ & CO., INC.
By:________________________________
Name:
Title:
▇▇▇▇▇ AND ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
By:________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
By:________________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
By:________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
By:________________________________
48
G. ▇▇▇▇▇ ▇▇▇▇▇▇▇.
By:________________________________
LORD ▇▇▇▇▇ ▇▇▇▇▇▇▇
By:________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
By:________________________________
WAVE ENTERPRISES, INC.
By:________________________________
Name:
Title:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇
By:________________________________
▇.▇. ▇▇▇▇▇
By:________________________________
49
ZAXIS PARTNERS, L.P.
By:________________________________
Name:
Title:
50
SCHEDULE A
▇▇▇▇▇▇ GROUP CONSISTS OF:
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Trust I
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Trust I
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Trust I
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Trust I
▇▇▇▇▇▇ Family Trust
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
A - 1
51
SCHEDULE B
STOCKHOLDER INFORMATION
B-1
52
SCHEDULE C
PERMAL GROUP CONSISTS OF:
Permal Capital Management, Inc.
Permal Services, Inc.
Permal Capital Partners, L.P.
Permal Asset Management
Permal Special Opportunities, Ltd.
Japan Omnibus Ltd.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. & ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
United Gulf Bank (B.S.C.) E.C.
Kuwait Investment Projects
ATCO Holdings Ltd.
ATCO Development, Inc.
C-1