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EXHIBIT D TO OCC
ASSET PURCHASE AGREEMENT
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▇▇▇. ▇▇▇▇▇▇' ORIGINAL COOKIES, INC.
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STOCKHOLDERS' AGREEMENT
among
▇▇▇. ▇▇▇▇▇▇' ORIGINAL COOKIES, INC.
and
ITS STOCKHOLDERS AND OTHER SECURITYHOLDERS
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Dated as of September 18, 1996
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STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT (this "Agreement"), dated as of September
18, 1996, among ▇▇▇. ▇▇▇▇▇▇' ORIGINAL COOKIES, INC., a Delaware corporation
(the "Company"), ▇▇▇. ▇▇▇▇▇▇' HOLDING COMPANY, INC., a Delaware corporation
("Holdco"), and CHOCAMERICAN, INC., a Delaware corporation
("Chocamerican"), and such other persons to become
parties to this Agreement as described herein.
W I T N E S S E T H:
WHEREAS, pursuant to an Asset Purchase Agreement dated August 7, 1996,
among ▇▇▇. ▇▇▇▇▇▇ Inc., a Delaware corporation ("MFI"), various subsidiaries of
MFI, the Company and Capricorn Investors II, L.P., a Delaware limited
partnership ("Capricorn"), the Company has as of the date of this Agreement
purchased certain assets specified therein and issued as partial consideration
therefor to designees of MFI senior subordinated notes of the Company
("Convertible Notes") convertible into shares of common stock, par value $.01
per share of the Company (the "Common Stock");
WHEREAS, pursuant to an Asset Purchase Agreement dated as of August 7,
1996, as amended by a First Amendment dated as of September 17, 1996, among
Chocamerican and two subsidiaries of Chocamerican, the Company and Capricorn,
the Company has as of the date of this Agreement purchased the assets specified
therein and as partial consideration therefor issued to one of such subsidiaries
of Chocamerican Convertible Notes;
WHEREAS, it is expected that the Company will adopt a Stock Option Plan
and the grant of options pursuant thereto to employees of the Company will be
conditioned on such employees becoming parties to this Agreement;
WHEREAS, as of the date of this Agreement, Holdco owns all the
outstanding shares of Common Stock and Holdco has acquired the Convertible Notes
issued to designees of MFI;
WHEREAS, the parties hereto deem it in their best interests and in the
best interests of the Company to provide consistent and uniform management for
the Company and desire to enter into this Agreement in order to effectuate that
purpose and to set forth their respective rights and obligations in connection
with their investment in the Company; and
WHEREAS, the parties hereto also desire to restrict the sale,
assignment, transfer, encumbrance or other disposition of the shares of Common
Stock and the Convertible Notes, and to provide for certain rights and
obligations in respect thereto as hereinafter provided;
NOW, THEREFORE, in consideration of the mutual agreements and
understandings set forth herein, the parties hereto hereby agree as follows:
1. Section Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
3. "Affiliate" means as to any Person (a) any Person which directly or
indirectly controls, is controlled by, or is under common control with such
Person, (b) any Person who is a director, officer, partner or principal of such
Person or of any Person which directly or indirectly controls, is controlled by,
or is under common control with such Person, and (c) any individual who is a
member of the immediate family of any Person described in clause (a) or clause
(b) above. For purposes of this definition, "control" of a Person shall mean the
power, direct or indirect, (i) to vote or direct the voting of 5% or more of the
Voting Stock of such Person or (ii) to direct or cause the direction of the
management and policies of such Person whether by ownership of Capital Stock, by
contract or otherwise.
5. "Agreement" means this Agreement as in effect on the date hereof and as
hereafter from time to time amended, modified or supplemented in accordance with
the terms hereof.
7. "Board of Directors" means the Board of Directors of the Company as from
time to time hereafter constituted.
9. "By-Laws" means the By-Laws of the Company in effect on the date hereof,
substantially in the form of Exhibit A hereto, and as hereafter further amended
in accordance with the terms hereof and pursuant to applicable law.
11. "Call Notice" has the meaning specified in Section 6.1.
"Capital Stock" means and includes (i) any and all shares, interests,
participations or other equivalents of or interests in (however designated)
corporate stock of any Person, including, without limitation, shares of
preferred or preference stock, (ii) all partnership interests (whether general
or limited) in any Person which is a partnership, (iii) all membership interests
or limited liability company interests in any limited liability company, and
(iv) all equity or ownership interests in any Person of any other type.
"Cause" means, when used in connection with the termination of a
Management Investor's employment with the Company or any of its Subsidiaries,
(i) the refusal of such Management Investor to implement or adhere to lawful
policies or directives of the Board of Directors consistent with such Management
Investor's employment agreement with the Company; (ii) such Management
Investor's conviction of or entrance of a plea of nolo contendere to (A) a
felony, (B) to any other crime, which other crime is punishable by incarceration
for a period of one year or longer, or (C) other conduct of a criminal nature
that may have an adverse impact on the Company's reputation and standing in the
community; (iii) conduct that is in violation of such Management Investor's
common law duty of loyalty to the Company; (iv) fraudulent conduct by such
Management Investor in connection with the business affairs of the Company,
regardless of whether said conduct is designed to defraud the Company or others;
(v) theft, embezzlement, or other criminal misappropriation of funds by such
Management Investor, whether from the Company or any other person; or (vi) any
breach of or such Management Investor's failure to fulfill any of such
Management Investor's obligations, covenants, agreements, or duties under his
employment agreement with the Company; provided, however, that "Cause" pursuant
to clause (i) or (vi) shall not be deemed to exist unless the Company has given
such Management Investor written notice thereof specifying in reasonable detail
the facts and circumstances alleged to constitute "cause", and 30 days after
such notice such conduct or circumstances has not entirely ceased or been
entirely remedied. Any determination of Cause shall be made by the Board of
Directors, which determination shall be final and binding on a Management
Investor.
"Certificate of Incorporation" means the Certificate of Incorporation
of the Company as in effect on the date hereof, substantially in the form of
Exhibit B hereto, and as hereafter from time to time amended, modified,
supplemented or restated in accordance with the terms hereof and pursuant to
applicable law.
"Commission" means the Securities and Exchange Commission and any
successor commission or agency having similar powers.
"Date of Termination" means, with respect to any Management Investor,
the date such Management Investor ceases to be an employee of the Company or any
of its subsidiaries.
"Exchange Act" means, as of any date, the Securities Exchange Act of
1934, as amended, or any similar Federal statute then in effect and superseding
such act, and any reference to a particular section thereof shall include a
reference to the comparable section, if any, of such similar Federal statute,
and the rules and regulations thereunder.
"Fair Market Value" means the fair market value of shares of Common
Stock as determined from time to time by the Board of Directors as evidenced by
a resolution thereof.
"Management Investor" means, for so long as such Person owns shares of
Common Stock, each employee of the Company or any subsidiary thereof who
purchases Common Stock, or receives options to purchase Common Stock, from the
Company, and each Permitted Transferee of any such Person.
"NASD" means the National Association of Securities Dealers, Inc. and its
successors and assigns.
"Offered Securities" has the meaning specified in Section 4.l(a).
"Permitted Transferee" has the meaning specified in Section 3.2.
"Person" means an individual or a corporation, association, partnership,
limited liability company, joint venture, organization, business, trust or any
other entity or organization, including a government or any subdivision or
agency thereof.
"Pro Rata Portion" means, with reference to any Shareholder at any time, a
fraction, the numerator of which is the number of shares of Common Stock then
issued and outstanding and held by such Shareholder, and the denominator of
which is the aggregate number of shares of Common Stock then issued and
outstanding and held by the Shareholders taken together.
0157584.21-New York Server 1a Draft September 19, 1997 - 4:42 pm
"Registrable Securities" means (i) all shares of Common Stock
outstanding on the date hereof and now or hereafter owned of record or
beneficially by the Shareholders, (ii) any shares of Common Stock issued or
issuable upon the conversion of the Convertible Notes and (iii) any shares of
Capital Stock issued by the Company in respect of any shares of Common Stock
referred to in (i) or (ii) by way of a stock dividend or stock split or in
connection with a combination or subdivision of shares, reclassification,
recapitalization, merger, consolidation or other reorganization of the Company.
As to any particular Registrable Securities that have been issued, such
securities shall cease to be Registrable Securities when (i) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of under such registration statement, (ii) they shall have been distributed to
the public pursuant to Rule 144 under the Securities Act, (iii) they shall have
been otherwise transferred or disposed of, and new certificates therefor not
bearing a legend restricting further transfer shall have been delivered by the
Company, and subsequent transfer or disposition of them shall not require their
registration or qualification under the Securities Act or any similar state law
then in force, (iv) they shall have ceased to be outstanding, or (v) with
respect to the Registrable Securities held by any Person, when such Registrable
Securities, when aggregated with the Registrable Securities held by such
Person's Affiliates, constitute 1% or less of the shares of Common Stock at the
time outstanding.
"Registration Expenses" shall mean any and all out-of-pocket expenses
incident to the Company's performance of or compliance with Section 5 hereof,
including, without limitation, all Commission, stock exchange and NASD
registration and filing fees, all fees and expenses of complying with securities
and blue sky laws (including the reasonable fees and disbursements of
underwriters' counsel in connection with blue sky qualifications and NASD
filings), all fees and expenses of the transfer agent and registrar for the
Registrable Securities, all printing expenses, the fees and disbursements of
counsel for the Company and of its independent public accountants, including the
expenses of any special audits or "cold comfort" letters required by or incident
to such performance and compliance, and one firm of counsel retained by each
Shareholder exercising its rights under Section 5 hereof, but excluding
underwriting discounts and commissions and applicable transfer and documentary
stamp taxes, if any, which shall be borne by the seller of the Registrable
Securities in all cases.
"Securities Act" means, as of any date, the Securities Act of 1933, as
amended, or any similar Federal statute then in effect and superseding such act,
and any reference to a particular section thereof shall include a reference to
the comparable section, if any, of any such similar Federal statute, and the
rules and regulations thereunder.
"Shareholder" means, (i) Chocamerican, (ii) Holdco, (iii) each of the
Management Investors who becomes a party hereto, (iv) any other investor in the
Company who becomes a party hereto (the "Other Investors") and (v) each
Permitted Transferee who becomes a party to or bound by the provisions of this
Agreement in accordance with the terms hereof, in each case for so long as such
person continues to hold shares of Common Stock.
"Subsidiary" means, as to any Person, another Person of which
outstanding Voting Stock having the power to elect a majority of the members of
the board of directors (or comparable body or authority performing similar
functions) of such other Person are at the time owned, directly or indirectly
through one or more intermediaries, or both, by such first Person.
"Underwritten Offering" means a firm commitment underwriting through a
nationally recognized underwriter.
"Voting Stock" means Capital Stock of any class or classes, the holders
of which are ordinarily, in the absence of contingencies, entitled to vote for
the election of corporate directors (or Persons performing similar functions).
1. Section Management.
1.1. Section Board of Directors; Shareholders .
(i) Subject to the terms of this Agreement and the Certificate of
Incorporation and the By-Laws, the business and affairs of the Company shall be
managed by the Board of Directors, which will initially consist of nine
directors designated as follows: Holdco shall be entitled to designate seven
directors (the "Holdco Directors"); and Chocamerican shall be entitled to
designate two directors (the "Chocamerican Directors"). For so long as
Chocamerican owns Convertible Notes or shares of Common Stock, the Board of
Directors shall consist of no fewer than six members and no more than nine
members.
(a) Each Shareholder agrees to vote its shares of Voting Stock of the
Company for the removal of any director upon the request of the person who
designated such director and shall not vote any of its shares of Voting Stock of
the Company for the removal of any director under any other circumstance. In the
event that any director is unwilling or unable (by reason of death, resignation
or otherwise) to serve as such or is removed in accordance with the terms of
this Section 2.1(b), then the Shareholders, prior to the transaction of any
other business by the Shareholders or the Board of Directors, shall elect the
successor or replacement to such director upon the nomination of the person who
designated such director.
(c) A quorum for any meeting of the Board of Directors shall consist of
four directors (a "Quorum of the Board"). No action may be taken by the Board of
Directors at any meeting unless a Quorum of the Board is present at the time
such action is taken. Resolutions of the Board of Directors shall be adopted
only by the affirmative vote of the majority of directors present at a meeting
at which a Quorum of the Board is present. Any action required or permitted to
be taken at any meeting of the Board of Directors or any committee thereof may
be taken without a meeting if all members of the Board of Directors or of such
committee, as the case may be, consent in writing to the taking of such action.
For so long as Chocamerican owns Convertible Notes or shares of Common Stock,
the notice requirements for meetings of the Board of Directors contained in the
By-Laws shall not be amended without the consent of Chocamerican.
1.2. Section Authority of Board of Directors . The Board of Directors
shall have and exercise all of the powers belonging or pertaining to the
Company, excepting only as to such matters as by law, or the Certificate of
Incorporation or the By-Laws, that require the action of the Shareholders.
1.4. Section No Conflict with Agreement . Each Shareholder shall vote
its shares of Voting Stock of the Company, and shall take all actions necessary,
to ensure that the Certificate of Incorporation and By-Laws do not, at any time,
conflict with the provisions of this Agreement.
1. Section Transfers of Shares of Common Stock.
2.1. Section Restrictions on Transfer . Each Shareholder agrees that
such Shareholder will not, directly or indirectly, offer, sell, transfer, assign
or otherwise dispose of (or make any exchange, gift, assignment or pledge of)
(collectively, for purposes of Sections 3 and 4 only, a "transfer") any of its
shares of Common Stock or Convertible Notes, or options, warrants or rights to
subscribe for or purchase shares of Common Stock that may be issued hereafter to
such Shareholder, except as provided in Section 3.2 or other than an exercise of
options, warrants or rights to subscribe for or purchase shares of Common Stock.
In addition to the other restrictions contained in this Section 3, each
Shareholder agrees that it will not, directly or indirectly, transfer any of its
shares of Common Stock or Convertible Notes (or options, warrants or rights that
may be hereafter issued to such Shareholder) except as permitted under the
Securities Act and other applicable securities laws.
1.1. Section Exceptions to Restrictions . The provisions of Section 3.1
shall not apply to any of the following transfers:
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(a) Any transfer from Holdco to any Affiliate of Holdco.
(a) Any transfer from Chocamerican to any Affiliate of
Chocamerican.
(c) Any transfer from a Management Investor to members of
such Management Investor's immediate family or trusts
for their benefit and, upon such Management Investor's
death, such Management Investor's executors,
administrators, testamentary trustees, legatees and
beneficiaries.
(d) Any transfer pursuant to the laws of descent and
distribution or by last will and testament.
(f) Any transfer approved by the Board of Directors (which
approval
shall not be unreasonably withheld, it being understood that the Board of
Directors must provide reasons in writing to the proposed transferor in the
event that it withholds such consent).
(h) Any transfer of shares of Common Stock in accordance
with Section 4, 5 or Section 6 hereof.
(j) Any transfer from an Other Investor to any Affiliate of
such Other Investor.
(l) The exceptions in clauses (a), (b), (c), (d), (e) and (g) above are subject
to the condition that each such Affiliate or other transferee referred to
therein (each a "Permitted Transferee") shall execute the agreement referred to
in Section 3.3(b) hereof. The provisions of this Agreement shall be applied to
the shares of Common Stock acquired by any Permitted Transferee of a Shareholder
in the same manner and to the same extent as such provisions were applicable to
such shares of Common Stock in the hands of such Shareholder. Any reference in
this Agreement to Holdco shall be deemed to include Holdco and its Permitted
Transferees, any reference in this Agreement to Chocamerican shall be deemed to
include Chocamerican and its Permitted Transferees, any reference to an Other
Investor shall be deemed to include such Other Investor and its Permitted
Transferees and any reference to a Management Investor shall be deemed to
include such Management Investor and his Permitted Transferees.
(n) No transfer of any shares of Common Stock to a Permitted Transferee shall be
effective unless such transfer is made (i) pursuant to an effective registration
statement under the Securities Act and is qualified under applicable state
securities or blue sky laws or (ii) without registration under the Securities
Act and qualification under applicable state securities or blue sky laws, as a
result of the availability of an exemption from registration and qualification
under such laws, and such Shareholder shall have furnished to the Company a
certificate or, if reasonably requested by the Company, an opinion of counsel,
in either case reasonably satisfactory in form and substance to the Company and
its counsel, to that effect; provided, however, that no such certificate or
opinion of counsel shall be required in connection with a transfer of shares of
Common Stock pursuant to Sections 4.1, 4.4 or 4.5 hereof and that such opinion
of counsel shall only be required in connection with a transfer of shares of
Common Stock pursuant to Sections 3.2 (a), (b), (c), (d) or (g) hereof if, after
receiving a certificate, the Company reasonably requests that such opinion of
counsel be delivered.
1.1. Section Endorsement of Certificates .
(a) Upon the execution of this Agreement, in addition to any other
legend that the Company may deem advisable under the Securities Act and certain
state securities laws, all certificates representing shares of issued and
outstanding shares of Common Stock that are subject to any of the provisions of
this Agreement shall be endorsed at all times as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO, AND ARE
TRANSFERABLE ONLY UPON COMPLIANCE WITH, THE PROVISIONS OF A
STOCKHOLDERS' AGREEMENT DATED AS OF SEPTEMBER 18, 1996, AMONG THE
COMPANY AND ITS STOCKHOLDERS. A COPY OF THE ABOVE-REFERENCED AGREEMENT
IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT, OR AN EXEMPTION FROM REGISTRATION,
UNDER SAID ACT.
(a) Except as otherwise expressly provided in this Agreement, all
certificates representing shares of Common Stock hereafter issued to or acquired
by any of the Shareholders or their successors or assigns shall bear the legends
set forth above, and the shares of Common Stock represented by such certificates
shall be subject to the applicable provisions of this Agreement. The obligations
of a party hereto shall be binding upon any transferee to whom shares of Common
Stock are transferred by such party, whether or not such transfer is permitted
under the terms of this Agreement. Prior to consummation of any such transfer,
such party shall cause the transferee to execute an agreement in form and
substance reasonably satisfactory to the other parties hereto, providing that
such transferee shall be bound by and shall fully comply with the terms of this
Agreement. Prompt notice shall be given to the Company and each Shareholder by
the transferor of any transfer (whether or not to a Permitted Transferee) of any
shares of Common Stock.
1.2. Section Improper Transfer . Any attempt to transfer or encumber
any shares of Common Stock other than in accordance with the terms of this
Agreement shall be null and void and neither the Company nor any transfer agent
of such securities shall give any effect to such attempted transfer or
encumbrance in its stock records.
2. Section Rights of First Refusal; Drag-Along Rights; Tag-Along
Rights; Transfer of Convertible Notes.
1.1. Section Transfers by Shareholders .
(a) Except for (i) transfers to a Permitted Transferee and (ii) the
sale of securities contemplated by Sections 5 and 6 hereof, if, at any time
following the seventh anniversary of the date hereof, a Shareholder other than
Holdco (the "Selling Shareholder") receives a bona fide offer, which it desires
to accept (a "Transfer Offer"), to purchase any shares of Common Stock or
Convertible Notes (or options, warrants or rights to subscribe for or purchase
shares of Common Stock) owned by it, then the Selling Shareholder shall cause
the Transfer Offer to be reduced to writing and shall deliver written notice of
such Transfer Offer (a "Transfer Notice"), accompanied by a copy of such
Transfer Offer, to the other Shareholders (individually and collectively
referred to as the "Other Shareholders") and the Company, setting forth the
identity of the offeror, the number of shares of Common Stock or Convertible
Notes (or options, warrants, or rights to subscribe for or purchase shares of
Common Stock) proposed to be transferred (the "Offered Securities"), the price
per security contained in the Transfer Offer (the "Transfer Offer Price Per
Security"), and all other terms applicable thereto. The Transfer Notice shall
also contain an irrevocable offer by the Selling Shareholder to sell the Offered
Securities to the Other Shareholders and the Company at a price equal to the
Transfer Offer Price Per Security and upon substantially the same terms as
contained in the Transfer Offer. In the event that the form of consideration
specified in the Transfer Offer is other than cash, the Other Shareholders and
the Company shall have the option of paying the Transfer Offer Price Per
Security in cash in an amount equal to the fair market value of such
consideration unless it is reasonably practicable to deliver substantially
identical consideration, in which case the purchaser may so deliver. Fair market
value shall be determined by a nationally recognized investment banking firm
mutually acceptable to the parties, unless they agree otherwise.
(a) Upon receipt of the Transfer Notice, the Company shall then have
the irrevocable right to accept such offer at the Transfer Offer Price Per
Security and on the other terms specified in the Transfer Offer with respect to
all or any portion of the Offered Securities; provided, however, that in the
event the Company does not purchase any or all of the Offered Securities, the
Other Shareholders shall have the irrevocable right to purchase such unpurchased
Offered Securities (including any such Offered Securities not purchased by such
Other Shareholders hereunder) in proportion to each of such Other Shareholder's
Pro Rata Portion until all of such Offered Securities are purchased or until no
Other Shareholder desires to purchase any more Offered Securities. The rights of
each of the Other Shareholders and the Company pursuant to this Section 4.1(b)
shall be exercisable by the delivery of notice to the Selling Shareholder (the
"Notice of Exercise"), within 30 calendar days from the date of delivery of the
Transfer Notice. The Notice of Exercise shall state the total number of shares
of the Offered Securities as to which each of the Other Shareholders or the
Company, as the case may be, is accepting under the offer, without regard to
whether or not the Company purchases any Offered Securities. A copy of such
Notice of Exercise shall also be delivered by the Other Shareholders to the
Company. The rights of the Other Shareholders and the Company pursuant to this
Section 4.1(b) shall terminate if unexercised 30 calendar days after the date of
delivery of the Transfer Notice.
(c) In the event that the Other Shareholders or the Company exercise
their rights to purchase all of the Offered Securities in accordance with
Section 4.1(b) hereof, then the Selling Shareholder must sell such Offered
Securities to the Other Shareholders or the Company, as the case may be, at the
Transfer Offer Price Per Security and on the other terms specified in the
Transfer Offer.
(e) For purposes of this Section 4, any Person who has failed to give
notice of the election of an option hereunder within the specified time period
will be deemed to have waived its rights with respect thereto on the day
immediately following the last day of such period.
1.2. Section Transfer of Offered Securities to Third Parties . If all
notices required to be given pursuant to Section 4.1 hereof have been duly given
and the Other Shareholders and the Company offer to purchase fewer than all of
the Offered Securities pursuant to the provisions hereof, then the Selling
Shareholder shall have the right, subject to compliance by the Selling
Shareholder with the provisions of Section 3.3(b) hereof for a period of 120
calendar days from the earlier of (i) the expiration of the option period
pursuant to Section 4.1 hereof with respect to such Transfer Offer or (ii) the
date on which the Selling Shareholder receives notice from the Other
Shareholders and the Company that they will not exercise the option granted
pursuant to Section 4.1 hereof, to sell to any third party that is not an
Affiliate of the Selling Shareholder the Offered Securities at a price per
Offered Security of not less than 100% of the Transfer Offer Price Per Security
and on the other terms specified in the Transfer Offer.
1.4. Section Purchase of Offered Securities . The consummation of any
purchase and sale pursuant to Section 4.1 hereof shall take place on such date,
not later than 30 calendar days after the expiration of the option period
pursuant to Section 4.1 hereof with respect to such option, as the Other
Shareholders or the Company, as the case may be, shall select. Prior to the
consummation of any sale pursuant to Section 4.1 hereof, the Selling Shareholder
shall comply with Section 3.3(b) hereof. Upon the consummation of any such
purchase and sale, the Selling Shareholder shall deliver certificates
representing the Offered Securities sold duly endorsed, free and clear of any
liens, against delivery of the Transfer Offer Price Per Security for each of the
Offered Securities purchased by certified or bank check or, in the case of
non-cash consideration, such other manner reasonably acceptable to the parties.
1.1. Section Drag-Along Rights .
(a) If Holdco approves or authorizes a sale or exchange, whether
directly or pursuant to a merger, consolidation or otherwise (the "Company
Sale"), of at least a majority of the then outstanding Common Stock in a bona
fide arm's-length transaction to a third party that is not an Affiliate of
Holdco or of the Company (an "Independent Third Party"), then Holdco shall have
the right, subject to all the provisions of this Section 4.4 (the "Drag-Along
Right"), to require each of the other Shareholders and any holder of Convertible
Notes to (i) if such Company Sale is structured as a sale of stock, sell,
transfer and deliver or cause to be sold, transferred and delivered to such
Independent Third Party all shares of Common Stock and Convertible Notes, and
other transferable options, warrants or rights to subscribe for or purchase
Common Stock, owned by them or (ii) if such Company Sale is structured as a
merger, consolidation or other transaction requiring the consent or approval of
the Company's shareholders, vote such Shareholder's shares of Voting Stock in
favor thereof, and otherwise consent to and raise no objection to such
transaction, and waive any dissenters' rights, appraisal rights or similar
rights that such Shareholder may have in connection therewith; and, in any such
event, except to the extent otherwise provided in subsection (c) of this Section
4.4, each such other Shareholder shall agree to and shall be bound by the same
terms, provisions and conditions (including, without limitation, provisions in
respect of indemnification) in respect of the Company Sale as are applicable to
Holdco; provided, that holders of Convertible Notes shall be entitled to receive
in the Company Sale (i) the consideration they would have received in the
Company Sale had they fully converted such Convertible Notes into shares of
Common Stock immediately prior to the consummation of the Company Sale or (ii)
if of greater value than the consideration available pursuant to clause (i), as
determined in good faith by the Board of Directors, cash in an amount, or
marketable securities with a value, equal to the unpaid principal of and
interest on such Convertible Notes immediately prior to the consummation of the
Company Sale. The provisions of Sections 4.1 through 4.3 hereof, inclusive,
shall not apply to any transactions to which this Section 4.4 applies.
(a) If Holdco desires to exercise Drag-Along Rights, it shall give
written notice to the other Shareholders (the "Drag-Along Notice") of the
Company Sale, setting forth the name and address of the transferee, the date on
which such transaction is proposed to be consummated (which shall be not less
than 30 days after the date such Drag-Along Notice is given), and the proposed
amount and form of consideration and terms and conditions of payment offered by
such transferee, including, without limitation, the material terms of any debt
or equity securities proposed to be included as part of such consideration,
identifying the issuer or issuers thereof. If such consideration includes any
non-cash consideration, such notice shall also state the fair market value of
such non-cash consideration and shall describe in reasonable detail the method
by which such value shall have been determined.
(c) The obligations of the Shareholders in respect of a Company Sale
under this Section 4.4 are subject to the satisfaction of the following
conditions: (i) upon the consummation of the Company Sale, the same form of
consideration and the same portion of the aggregate consideration realized upon
such Company Sale shall be paid or distributed in respect of each share of
Common Stock then issued and outstanding (except as contemplated by the proviso
to Section 4.4 (a) hereof); (ii) if any Shareholder is given an option as to the
form and amount of consideration to be received, each Shareholder will be given
the same option; (iii) each holder of then currently exercisable rights to
acquire shares of Common Stock will be given a reasonable opportunity to
exercise such rights prior to the consummation of the Company Sale and thereby
to participate in such sale as a holder of such Common Stock; (iv) the maximum
liability of any Shareholder for indemnification in respect of all matters
arising pursuant to or in connection with the Company Sale shall not exceed the
net proceeds received by such Shareholder from such Company Sale; and (v) no
Shareholders shall be required to make general representations or warranties
regarding the financial condition, business, assets or affairs of the Company
and its Subsidiaries.
1.1. Section Tag-Along Rights .
(a) Notwithstanding anything in this Agreement to the contrary, except
in the case of (i) transfers by Holdco to a Permitted Transferee referred to in
Section 3.2 (a) hereof, (ii) transactions where Drag-Along Rights are exercised
pursuant to Section 4.4 hereof and (iii) sales pursuant to Section 5 hereof,
Holdco shall refrain from effecting any Company Sale with respect to any of the
Common Stock or the Convertible Notes unless, prior to the consummation thereof,
the other Shareholders shall have been afforded the opportunity to join in such
sale on a pro rata basis, as hereinafter provided in this Section 4.5.
(a) Prior to consummation of such proposed Company Sale, Holdco shall
cause the person or group that proposes to acquire such shares (the "Proposed
Purchaser") to offer in writing (the "Purchase Offer") to purchase shares of
Common Stock (or shares of Common Stock into or for which the Convertible Notes
or any employee stock options are then convertible or exercisable) owned by the
other Shareholders, such that the number of shares of such Common Stock (or
shares of Common Stock into or for which the Convertible Notes or any employee
stock options are then convertible or exercisable) so offered to be purchased
from the other Shareholders shall be equal to the product obtained by
multiplying the aggregate number of shares of Common Stock proposed to be
purchased by the Proposed Purchaser by such other Shareholder's Pro Rata
Portion. If the Purchase Offer is accepted by any other Shareholder, then the
number of shares of Common Stock to be sold to the Proposed Purchaser by Holdco,
shall be reduced by the aggregate number of shares of Common Stock to be
purchased by the Proposed Purchaser from such other Shareholder pursuant
thereto. Such purchase shall be made on the same terms and conditions as the
Proposed Purchaser shall have offered to purchase shares of Common Stock to be
sold by Holdco (net, in the case of any options, warrants or rights, of any
amounts required to be paid by the holder upon exercise thereof). The other
Shareholders shall have 20 days from the date of receipt of the Purchase Offer
during which to accept such Purchase Offer, and the closing of such purchase
shall occur within 30 days after such acceptance or at such other time as the
other Shareholders and the Proposed Purchaser may agree.
1.1. Section Transfer of Convertible Notes. (a) If, at any time or from
time to time following the date hereof, Holdco receives a bona fide offer, which
it desires to accept (a "Convertible Note Transfer Offer"), to purchase any
Convertible Notes owned by it, then Holdco shall cause the Convertible Note
Transfer Offer to be reduced to writing and shall deliver written notice of such
Convertible Note Transfer Offer (a "Convertible Note Transfer Notice"),
accompanied by a copy of such Convertible Note Transfer Offer, to Chocamerican
and the Company, setting forth the identity of the offeror, the principal amount
of Convertible Notes proposed to be transferred (the "Offered Notes"), the price
per $1,000 principal amount of the Convertible Notes contained in the
Convertible Note Transfer Offer (the "Convertible Note Transfer Offer Price"),
and all other terms applicable thereto. (b) Upon receipt of the Convertible Note
Transfer Notice, Chocamerican shall then have the irrevocable right to accept
the Convertible Note Transfer Offer in lieu of Holdco at the Convertible Note
Transfer Offer Price and on the other terms specified in the Convertible Note
Transfer Offer with respect to all of the Offered Notes; provided, however, that
in the event Chocamerican does not accept such offer with respect to any or all
of the Offered Notes, Holdco shall have the irrevocable right to sell all or a
portion of its Convertible Notes at the Convertible Note Transfer Offer Price
and on the other terms specified in the Convertible Note Transfer Offer. The
right of Chocamerican pursuant to this Section 4.6(b) shall be exercisable by
the delivery of notice to Holdco (the "Convertible Note Notice of Exercise"),
within 30 calendar days from the date of delivery of the Convertible Note
Transfer Notice. The Convertible Note Notice of Exercise shall state the total
principal amount of the Offered Notes as to which Chocamerican is accepting
under the Convertible Note Transfer Offer. The rights of Chocamerican pursuant
to this Section 4.6(b) shall terminate if unexercised 30 calendar days after the
date of delivery of the Convertible Note Transfer Notice. If Chocamerican
accepts the Convertible Note Transfer Offer and the offeror fails to close the
acquisition of Chocamerican's Convertible Notes, Holdco shall have no obligation
to Chocamerican as a result of such failure to close but shall not be permitted
to sell any of its Convertible Notes to such offeror or any of its affiliates.
Section Registration Rights .
1.3. Section Demand Registration .
(a) Subject to the conditions and limitations hereinafter set forth in
this Section 5.1, following the one year anniversary of the effectuation of an
initial public offering by the Company of the Common Stock, Chocamerican may
request in writing that the Company effect the registration under the Securities
Act of all or part of Chocamerican's Registrable Securities specifying in the
request the number and type of Registrable Securities to be registered by
Chocamerican and the intended method of disposition thereof (such notice is
hereinafter referred to as a "Chocamerican Request"). A registration requested
pursuant to this Section 5.1(a) is referred to herein as a "Demand
Registration." Upon receipt of such Chocamerican Request, the Company will
promptly give written notice of such requested Demand Registration to all other
holders of Registrable Securities, which other holders shall have the right
(subject to the limitations set forth in Section 5.1(f) hereof) to include the
Registrable Securities held by them in such registration and thereupon the
Company will, as expeditiously as possible, use its best efforts to effect the
registration under the Securities Act of the following:
(i) the Registrable Securities that the Company has been so
requested to register by Chocamerican; and
(i) all other Registrable Securities that the Company has
been requested to register by any other holder thereof
by written request given to the Company within 10
calendar days after the giving of such written notice
by the Company (which request shall specify the
intended method of disposition of such Registrable
Securities), all to the extent necessary to permit the
disposition (in accordance with the intended methods
thereof as aforesaid) of the Registrable Securities so
to be registered.
(a) Subject to the proviso set forth in Section 5.1(e) hereof, (i) the
Company shall not be obligated to effect more than (A) one Demand Registration
pursuant to this Section 5.1 at the request of Chocamerican and (ii) the Company
shall not be obligated to file a registration statement under Section 5.1(a)
hereof unless the Company shall have received requests for such registration
with respect to at least 5% of the outstanding shares of Common Stock.
(c) The Company shall not be obligated to file a registration statement
relating to any Chocamerican Request under Section 5.1(a) hereof within a period
of 12 months after the effective date of any other registration statement filed
by the Company with the Commission.
(e) In connection with any offering pursuant to this Section 5.1, the
only shares that may be included in such offering are (i) Registrable Securities
and (ii) shares of authorized but unissued Common Stock that the Company elects
to include in such offering ("Company Securities").
(g) If the Board of Directors of the Company makes a good faith
determination, certified by the Chief Executive Officer of the Company, that (i)
the filing of a registration statement or the compliance by the Company with its
disclosure obligations in connection with a registration statement would require
the disclosure of material information that the Company has a bona fide business
purpose for preserving as confidential or (ii) such registration would be likely
to have an adverse affect on any proposal or plan by the Company to engage in
any financing transaction, acquisition of assets (other than in the ordinary
course of business) or any merger, consolidation, tender offer or similar
transaction, the Company may delay the filing of a registration statement and
shall not be required to maintain the effectiveness thereof or amend or
supplement a registration statement for a period expiring upon the earlier to
occur of (A) the date on which such material information is disclosed to the
public or ceases to be material, in the case of clause (i), (B) the date on
which such transaction is completed or abandoned, in the case of clause (ii), or
(C) 120 days after the Company makes such good faith determination, in the case
of either clauses (i) or (ii); provided that in such event, the holders of
Registrable Securities initiating the request for such registration will be
entitled to withdraw such request, and if such request is withdrawn such
registration will not count as the permitted registration under this Section 5.1
in such event or in any other event, if in the case of any other event, such
holder reimburses the Company for all Registration Expenses relating to such
withdrawn registration.
(i) If, in connection with any Underwritten Offering, the managing
underwriter shall advise the Company and any holder of Registrable Securities
that has requested registration that, in its judgment, the number of securities
proposed to be included in such offering should be limited due to market
conditions, the Company will so advise each holder of Registrable Securities
that has requested registration, and shares shall be excluded from such offering
in the following order until such limitation has been met: First, the
Registrable Securities requested to be included by the Company shall be excluded
until all such Registrable Securities shall have been so excluded; and
thereafter, the Registrable Securities requested to be included in such offering
pursuant to Section 5.1(a)(i) hereof by Chocamerican or pursuant to Section
5.1(a)(ii) hereof by other Shareholders shall be excluded pro rata, based on the
respective number of Registrable Securities as to which registration has been so
requested by such Shareholders.
(k) A registration requested pursuant to Section 5.1(a) hereof will not
be deemed to have been effected unless it has become effective; provided, that
if after it has become effective, the offering of Registrable Securities
pursuant to such registration is interfered with by any stop order, injunction
or other order or requirement of the Commission or other governmental agency or
court, such registration will be deemed not to have been effected.
(m) If Chocamerican specifies in the Chocamerican Request an
Underwritten Offering, Chocamerican shall have the right, with the approval of
the Company, which approval shall not be unreasonably withheld, to select the
managing underwriter; provided, however, in the event that the Company has
elected to include Company Securities in such offering, the Company shall have
the right, with the approval of a majority of the holders of Registrable
Securities that have requested to be included in such offering, which approval
shall not be unreasonably withheld, to select the managing underwriter.
(o) The Company will pay all Registration Expenses incurred in
connection with any Demand Registration effected by it pursuant to this Section
5.1.
1.1. Section Piggyback Registrations .
(a) If at any time the Company proposes to register any of its equity
securities under the Securities Act (other than a registration on Form S-4 or
S-8 or any successor forms thereto) for the account of another Person or, at any
time following the effectuation of an initial public offering by the Company of
the Common Stock, for its own account, on a form and in a manner that would
permit registration of Registrable Securities for sale to the public under the
Securities Act, it will give written notice to all the holders of Registrable
Securities promptly of its intention to do so, describing such securities and
specifying the form and manner and the other relevant facts involved in such
proposed registration, including, without limitation, (x) the intended method of
disposition of the securities offered, including whether or not such
registration will be effected through an underwriter in an Underwritten Offering
or on a "best efforts" basis, and, in any case, the identity of the managing
underwriter, if any, and (y) the price at which the Registrable Securities are
reasonably expected to be sold. Upon the written request of any holder of
Registrable Securities delivered to the Company within 30 calendar days after
the receipt of any such notice (which request shall specify the Registrable
Securities intended to be disposed of by such holder), the Company will effect
the registration under the Securities Act of all the Registrable Securities that
the Company has been so requested to register; provided, however, that:
(i) if, at any time after giving such written notice of its
intention to register any securities and prior to the effective date of
the registration statement filed in connection with such registration,
the Company shall determine for any reason not to register such
securities, the Company may, at its election, give written notice of
such determination to each holder of Registrable Securities who shall
have made a request for registration as hereinabove provided and
thereupon the Company shall be relieved of its obligation to register
any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses in connection
therewith); and
(i) if such registration involves an Underwritten Offering,
all holders of Registrable Securities requesting to be included in the
Company's registration must sell their Registrable Securities to the
underwriters selected by the Company on the same terms and conditions
as apply to the Company.
(a) The Company shall not be obligated to effect any registration of
Registrable Securities under this Section 5.2 incidental to the registration of
any of its securities in connection with mergers, acquisitions, exchange offers,
dividend reinvestment plans or stock option or other employee benefit plans.
(c) If a registration pursuant to this Section 5.2 involves an
Underwritten Offering and the managing underwriter advises the issuer that, in
its opinion, the number of securities proposed to be included in such
registration should be limited due to market conditions, the Company will so
advise each holder of Registrable Securities that has requested registration
pursuant to Section 5.2(a) hereof, and shares shall be excluded from such
offering pro rata, based on the respective number of Registrable Securities as
to which registration has been so requested by such Shareholders, until all such
Registrable Securities shall have been so excluded; and thereafter, the
securities requested to be registered by the Company shall be excluded.
(e) In connection with any Underwritten Offering with respect to which
holders of Registrable Securities shall have requested registration pursuant to
this Section 5.2, the Company shall have the right to select the managing
underwriter with respect to the offering; provided that such managing
underwriter shall be a nationally recognized investment banking firm.
(g) The Company will pay all Registration Expenses incurred in
connection with each of the registrations of Registrable Securities effected by
it pursuant to this Section 5.2.
1.2. Section Registration Procedures .
(a) If and whenever the Company is required to use its best efforts to
effect or cause the registration of any Registrable Securities under the
Securities Act as provided in Section 5.1 or 5.2 hereof, the Company will, as
expeditiously as possible:
(i) prepare and, in any event within 90 calendar days after
the end of the period within which requests for registration may be
given to the Company, file with the Commission a registration statement
with respect to such Registrable Securities and use its best efforts to
cause such registration statement to become and remain effective;
provided, that the Company may discontinue any registration of its
securities that is being effected pursuant to Section 5.2 hereof at any
time prior to the effective date of the registration statement relating
thereto;
(i) prepare and file with the Commission such amendments
(including post-effective amendments) and supplements to such
registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for
such period as may be requested by the Shareholders not exceeding nine
months and to comply with the provisions of the Securities Act with
respect to the disposition of all the shares of Common Stock covered by
such registration statement during such period in accordance with the
intended methods of disposition by the seller or sellers thereof set
forth in such registration statement;
(i) furnish to each holder of Registrable Securities covered
by the registration statement and to each underwriter, if any, of such
Registrable Securities, such number of copies of a prospectus and
preliminary prospectus for delivery in conformity with the requirements
of the Securities Act, and such other documents, as such Person may
reasonably request, in order to facilitate the public sale or other
disposition of the Registrable Securities;
(i) use its best efforts to register or qualify such
Registrable Securities covered by such registration statement under
such other securities or blue sky laws of such jurisdictions as each
seller shall reasonably request, and do any and all other acts and
things which may be reasonably necessary or advisable to enable such
seller to consummate the disposition of the Registrable Securities
owned by such seller in such jurisdictions, except that the Company
shall not for any such purpose be required (A) to qualify to do
business as a foreign corporation in any jurisdiction where, but for
the requirements of this Section 5.3(a)(iv), it is not then so
qualified, (B) to subject itself to taxation in any such jurisdiction,
or (C) to take any action which would subject it to general or
unlimited service of process in any such jurisdiction where it is then
so subject;
(i) use its best efforts to cause such Registrable Securities
covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof to consummate the
disposition of such Registrable Securities;
(i) immediately notify each seller of Registrable Securities
covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act
within the appropriate period mentioned in Section 5.3(a)(ii) hereof,
if the Company becomes aware that the prospectus included in such
registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing, and, at the
request of any such seller, deliver a reasonable number of copies of an
amended or supplemental prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of
the circumstances then existing;
(i) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission and make generally
available to its security holders, in each case as soon as practicable,
but not later than 45 calendar days after the close of the period
covered thereby (90 calendar days in case the period covered
corresponds to a fiscal year of the Company), an earnings statement of
the Company which will satisfy the provisions of Section 11(a) of the
Securities Act;
(i) use its best efforts in cooperation with the underwriters
to list such Registrable Securities on each securities exchange on
which the shares of Common Stock are then listed or, if the shares of
Common Stock are not then listed on a securities exchange, on each
securities exchange as the underwriters may reasonably designate;
(i) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such
registration statement;
(i) in the event such registration is effected through an
Underwritten Offering, use its best efforts to obtain a "cold comfort"
letter from the independent public accountants for the Company in
customary form and covering such matters of the type customarily
covered by such letters as the holders of Registrable Securities
requesting registration may reasonably request in order to effect an
underwritten public offering of such Registrable Securities; and
(i) execute and deliver all instruments and documents
(including in an Underwritten Offering an underwriting agreement in
customary form) and take such other actions and obtain such
certificates and opinions as the holders of Registrable Securities
requesting registration may reasonably request in order to effect an
underwritten public offering of such Registrable Securities.
(a) It shall be a condition precedent to the obligation of the Company
to take any action pursuant to this Section 5 in respect of Registrable
Securities that each holder requesting registration thereof shall furnish to the
Company such information regarding the Registrable Securities held by such
holder and the intended method of disposition thereof as the Company shall
reasonably request and as shall be required in connection with the action taken
by the Company; provided, however, that the failure of any holder of Registrable
Securities to furnish such information shall not affect the obligations of the
Company pursuant to this Section 5 with respect to any holder of Registrable
Securities who furnishes such information to the Company. Notwithstanding any
provision to the contrary contained herein, no holder of Registrable Securities
(other than any such holder who holds of record or beneficially owns more than
10% of the outstanding Voting Stock of the Company or who is a director, nominee
for director or executive officer of the Company) shall be required (i) to
furnish any information to the Company or the underwriters in connection with
such registration, other than in a writing furnished by such holder expressly
for use in such registration statement which shall be limited to matters
concerning such holder's identity, its beneficial ownership of securities of the
Company, the class and number of such securities it intends to include in such
registration and its intended method of distribution, or (ii) to make any
representations or warranties to the Company, the underwriters or any other
Person (whether in the underwriting agreement or otherwise), except with respect
to the information so furnished.
(c) Each holder of Registrable Securities will, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 5.3(a)(vi) hereof, forthwith discontinue disposition of the Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until such holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 5.3(a)(vi) hereof.
(e) If a registration pursuant to Section 5.1 or 5.2 hereof involves an
Underwritten Offering, each holder of Registrable Securities agrees, whether or
not such holder's Registrable Securities are included in such registration, not
to effect any sale or distribution, including any sale pursuant to Rule 144
under the Securities Act, of any Registrable Securities, or of any security
convertible into or exchangeable or exercisable for any Registrable Securities
(other than as part of such Underwritten Offering), without the consent of the
managing underwriter, during a period commencing seven calendar days before and
ending 180 calendar days (or such lesser number as the managing underwriter
shall designate) after the effective date of such registration; provided, that
such period shall not extend beyond the period during which the Company is
subject to such a restriction.
(g) If a registration pursuant to Section 5.1 or 5.2 hereof involves an
Underwritten Offering, the Company agrees, if so required by the managing
underwriter, not to effect any sale or distribution of any of its equity or debt
securities, as the case may be, or securities convertible into or exchangeable
or exercisable for any of such equity or debt securities, as the case may be,
during a period commencing seven calendar days before and ending 180 calendar
days after the effective date of such registration, except for such Underwritten
Offering or except in connection with a stock option plan, stock purchase plan,
savings or similar plan, or an acquisition, merger or exchange offer.
(i) If a registration pursuant to Section 5.1 or 5.2 hereof involves an
Underwritten Offering, any holder of Registrable Securities requesting to be
included in such registration may elect, in writing, not less than five days
prior to the effective date of the registration statement filed in connection
with such registration, not to register such securities in connection with such
registration, unless such holder has agreed with the Company or the managing
underwriter to limit its rights under this Section 5.3.
(k) It is understood that in any Underwritten Offering in addition to
any shares of Common Stock (the "initial shares") the underwriters have
committed to purchase, the underwriting agreement may grant the underwriters an
option to purchase up to a number of additional authorized but unissued shares
of Common Stock (the "option shares") equal to 15% of the initial shares (or
such other maximum amount as the NASD may then permit), solely to cover
over-allotments. Shares of Common Stock proposed to be sold by the Company and
the other sellers shall be allocated between initial shares and option shares as
agreed or, in the absence of agreement, pursuant to Section 5.1(f) or 5.2(c)
hereof, as the case may be. The number of initial shares and option shares to be
sold by requesting holders shall be allocated pro rata among all such holders on
the basis of the relative number of shares of Registrable Securities each such
holder has requested to be included in such registration.
1.1. Section Indemnification .
(a) In the event of any registration of any securities under the
Securities Act pursuant to Section 5.1 or 5.2 hereof, the Company will, and it
hereby agrees to, indemnify and hold harmless, to the extent permitted by law,
each seller of any Registrable Securities covered by such registration
statement, its directors, officers, employees and agents, each Person who
participates as an underwriter in the offering or sale of such securities and
each other Person, if any, who controls such seller or underwriter within the
meaning of the Securities Act, as follows:
(i) against any and all loss, liability, claim, damage or
expense whatsoever arising out of or based upon an untrue statement or
alleged untrue statement of a material fact contained in any
registration statement (or any amendment or supplement thereto),
including all documents incorporated therein by reference, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading, or arising out of an untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus or
prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to
make the statements therein not misleading;
(i) against any and all loss, liability, claim, damage and
expense whatsoever to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, if such settlement is
effected with the written consent of the Company; and
(i) against any and all expense reasonably incurred by them in
connection with investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid
under clauses (i) or (ii) above;
provided, however, that this indemnity does not apply to any loss, liability,
claim, damage or expense to the extent arising out of an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any such seller or underwriter specifically stating that it is for use
in the preparation of any registration statement (or any amendment thereto) or
any preliminary prospectus or prospectus (or any amendment or supplement
thereto); and provided, further, that the Company will not be liable (A) in the
case of any Underwritten Offering, to any Person who participates as an
underwriter in the offering or sale of Registrable Securities or any other
Person, if any, who controls such underwriter within the meaning of the
Securities Act, or (B) in the case of any offering other than an Underwritten
Offering, to any seller of Registrable Securities covered by such registration
statement or any other Person, if any, who controls such seller within the
meaning of the Securities Act, under the indemnity agreement in this Section
5.4(a) with respect to any preliminary prospectus or final prospectus or final
prospectus as amended or supplemented, as the case may be, to the extent that
any such loss, claim, damage or liability of such underwriter or controlling
Person (or seller or controlling Person, as the case may be) results from the
fact that such underwriter (or seller, as the case may be) sold Registrable
Securities to a Person to whom there was not sent or given, at or prior to the
written confirmation of such sale, a copy of the final prospectus or of the
final prospectus as then amended or supplemented, whichever is most recent, if
the Company has previously furnished copies thereof to such underwriter. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such seller, director, officer, employee, agent,
underwriter or controlling Person, and shall survive the transfer of such
securities by such seller.
(a) The Company may require, as a condition to including any
Registrable Securities in any registration statement filed in accordance with
Section 5.1 or 5.2 hereof, that the Company shall have received an undertaking
reasonably satisfactory to it from the prospective seller of such Registrable
Securities or any underwriter, to indemnify and hold harmless (in the same
manner and to the same extent as set forth in Section 5.4(a) hereof) the Company
and its directors and officers and each other Person, if any, who controls the
Company within the meaning of the Securities Act, with respect to any statement
or alleged statement in or omission or alleged omission from such registration
statement, any preliminary, final or summary prospectus contained therein, or
any such amendment or supplement, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such seller or
underwriter specifically stating that it is for use in the preparation of such
registration statement, preliminary, final or summary prospectus or amendment or
supplement; provided, however, that the maximum liability of any seller of
Registrable Securities for such indemnification shall not exceed the net
proceeds received by such seller from the sale of such Registrable Securities.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any such director, officer
or controlling Person and shall survive the transfer of such securities by such
seller.
(c) Promptly after receipt by an indemnified party hereunder of written
notice of the commencement of any action or proceeding involving a claim
referred to in this Section 5.4, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give written notice
to such indemnifying party of the commencement of such action; provided,
however, that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under this
Section 5.4, except to the extent (not including any such notice of an
underwriter) that the indemnifying party is actually prejudiced by such failure
to give notice. In case any such action is brought against an indemnified party,
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist in respect of such
claim (in which case the indemnifying party shall not be liable for the fees and
expenses of more than one counsel for the sellers of Registrable Securities or
for more than one counsel for the underwriters in connection with any one action
or separate but similar or related actions), the indemnifying party will be
entitled to participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified, to the extent that it may wish,
with counsel reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof.
(e) The Company and each seller of Registrable Securities shall provide
for the foregoing indemnity (with appropriate modifications) in any underwriting
agreement with respect to any required registration or other qualification of
securities under any federal or state law or regulation of any governmental
authority.
1.2. Section Contribution . In order to provide for just and equitable
contribution in circumstances under which the indemnity contemplated by Section
5.4 hereof is for any reason not available, the parties required to indemnify by
the terms thereof shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnity agreement
incurred by the Company, any seller of Registrable Securities and one or more of
the underwriters, except to the extent that contribution is not permitted under
Section 11(f) of the Securities Act. In determining the amounts that the
respective parties shall contribute, there shall be considered the relative
benefits received by each party from the offering of the Registrable Securities
(taking into account the portion of the proceeds of the offering realized by
each), the parties' relative knowledge and access to information concerning the
matter with respect to which the claim was asserted, the opportunity to correct
and prevent any statement or omission and any other equitable considerations
appropriate under the circumstances. The Company and each Person selling
securities agree with each other that no seller of Registrable Securities shall
be required to contribute any amount in excess of the amount such seller would
have been required to pay to an indemnified party if the indemnity under Section
5.4 hereof were available. The Company and each such seller agree with each
other and the underwriters of the Registrable Securities, if requested by such
underwriters, that it would not be equitable if the amount of such contribution
were determined by pro rata or per capita allocation (even if the underwriters
were treated as one entity for such purpose) or for the underwriters' portion of
such contribution to exceed the percentage that the underwriting discount bears
to the initial public offering price of the Registrable Securities. For purposes
of this Section 5.5, each Person, if any, who controls an underwriter within the
meaning of the Securities Act shall have the same rights to contribution as such
underwriter, and each director and each officer of the Company who signed the
registration statement, and each Person, if any, who controls the Company or a
seller of Registrable Securities, shall have the same rights to contribution as
the Company or a seller of Registrable Securities, as the case may be.
1.4. Section Rule 144 . If the Company shall have filed a registration
statement pursuant to the requirements of Section 12 of the Exchange Act or a
registration statement pursuant to the requirements of the Securities Act, the
Company covenants that it will file the reports required to be filed by it under
the Securities Act and the Exchange Act and the rules and regulations adopted by
the Commission thereunder (or, if the Company is not required to file such
reports, it will, upon the request of any holder of Registrable Securities, make
publicly available other information), and it will take such further action as
any holder of Registrable Securities may reasonably request, all to the extent
required from time to time to enable such holder to sell shares of Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (i) Rule 144 under the Securities Act, as such
Rule may be amended from time to time or (ii) any similar rule or regulation
hereafter adopted by the Commission. Upon the request of any holder of
Registrable Securities, the Company will deliver to such holder a written
statement as to whether the Company has complied with such requirements.
1. Section Call Rights of the Company.
(i) Section Call Right; Purchase Price . If a Management Investor's
employment with the Company or any of its subsidiaries is terminated for any
reason prior to equity securities of the Company having been registered under
the Securities Act, the Company shall have the option, for a period of 90 days
after the Date of Termination, to purchase all or any portion of the shares of
Common Stock held by such Management Investor or his Permitted Transferees. The
Company may exercise such option by giving notice thereof (the "Call Notice") to
such Management Investor prior to the expiration of such period. The purchase
price applicable to such shares of Common Stock shall be: if such termination is
other than by the Company for Cause, the Fair Market Value of such shares as of
the Date of Termination; or if such termination is by the Company for Cause, the
lesser of (A) the amount paid by such Management Investor for such shares and
(B) the Fair Market Value of such shares as of the Date of Termination.
1.1. Section Call Notices . The Call Notice shall specify the number of
shares of Common Stock owned by the Management Investor as to which the Company
is exercising its call right pursuant to this Section 6 and shall contain an
irrevocable offer to purchase such shares at a price equal to the price required
to be paid by the Company pursuant to Section 6.1.
1.3. Section Method of Payment . Upon any exercise by the Company of
its call right under Section 6, the Company shall pay the applicable purchase
price by a certified check or checks or in cash; provided, however, that, at the
election of the Company, the purchase price may be paid by a certified check or
checks for 25% of the appropriate amount, plus a note of the Company in the
principal amount of 75% of the purchase price, payable in three equal annual
installments commencing on the first anniversary of the issuance thereof and
bearing interest payable annually at the rate then paid by the Company on its
bank debt or other senior debt as determined by the Board of Directors. If the
Company is prohibited by any agreement from making a payment contemplated by
this Section 6, such payment shall be deferred until such time as the Company is
permitted to make it.
1.5. Section Closing . The closing by the Company of any exercise of
its call right under Section 6.1 shall take place at the offices of the Company,
or such other place as may be mutually agreed, not less than 15 nor more than 30
days after the date such option is exercised, as specified by the Company in its
Call Notice. At such closing, such Management Investor shall deliver
certificates for the shares of Common Stock to be sold to the Company duly
endorsed, or accompanied by written instruments to transfer in form satisfactory
to the Company duly executed, by such Management Investor, free and clear of any
liens, against payment by the Company of the applicable purchase price therefor.
2. Section Miscellaneous.
1.1. Section Inspection Rights . Each Shareholder that holds 5% or more
of the shares of Common Stock at the time outstanding, shall have the right,
upon reasonable prior notice to the Company, to visit and inspect the properties
of the Company and its Subsidiaries and to examine and copy (at its own expense)
their books of record and accounts, and to discuss their affairs, finances, and
accounts with their officers and their current and prior independent public
accountants, all at such times (during normal business hours) as such
Shareholder may reasonably request. The foregoing rights are in addition to, and
are not intended to limit, any rights that the Shareholders may have under the
law of the State of Delaware, including Sections 219 and 220 of the Delaware
General Corporation Law.
1.1. Section Confidentiality . All materials and information obtained
by any Shareholder pursuant to Section 7.1 hereof shall be kept confidential and
shall not be disclosed to any third party except (a) as has become generally
available to the public (other than through disclosure by such Shareholder in
contravention of this Agreement), (b) to such Shareholder's directors, officers,
trustees, partners, employees, agents, and professional consultants on a need to
know basis, (c) to any other holder of shares of Common Stock, (d) to any Person
to which such Shareholder offers to sell or transfer any shares of Common Stock,
provided that the prospective transferee shall agree to be bound by the
provisions of this Section 7.2, (e) in any report, statement, testimony or other
submission to any governmental authority having or claiming to have jurisdiction
over such Shareholder, or (f) in order to comply with any law, rule, regulation,
or order applicable to such Shareholder, or in response to any summons, subpoena
or other legal process or formal or informal investigative demand issued to such
Shareholder in the course of any litigation, investigation or administrative
proceeding.
1.1. Section Successors and Assigns . Except as otherwise provided
herein, all the terms and provisions of this Agreement shall be binding upon,
shall inure to the benefit of and shall be enforceable by the respective
successors and assigns of the parties hereto. No Shareholder may assign any of
its rights hereunder to any Person other than a transferee that has complied in
all respects with the requirements of this Agreement (including, without
limitation, Section 3.3 hereof). The Company may not assign any of its rights
hereunder to any other Person. If any transferee of any Shareholder shall
acquire any shares of Common Stock in any manner, whether by operation of law or
otherwise, such shares shall be held subject to all of the terms of this
Agreement, and by taking and holding such shares such Person shall be entitled
to receive the benefits of and be conclusively deemed to have agreed to be bound
by and to comply with all of the terms and provisions of this Agreement.
1.4. Section Amendment and Modification: Waiver of Compliances; Conflicts .
(a) This Agreement may be amended only by a written instrument duly
executed by all of the Shareholders. In the event of the amendment or
modification of this Agreement in accordance with its terms, the Shareholders
shall cause the Board of Directors to meet within 30 calendar days following
such amendment or modification or as soon thereafter as is practicable for the
purpose of adopting any amendment to the Certificate of Incorporation and
By-Laws that may be required as a result of such amendment or modification to
this Agreement, and, if required, proposing such amendments to the Shareholders
entitled to vote thereon, and the Shareholders agree to vote in favor of such
amendments.
(c) Except as otherwise provided in this Agreement, any failure of any
of the parties to comply with any obligation, covenant, agreement or condition
herein may be waived by the party entitled to the benefits thereof only by a
written instrument signed by the party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
(e) In the event of any conflict between the provisions of this
Agreement and the provisions of any other agreement, the provisions of this
Agreement shall govern and prevail.
(g) Nothing contained in this Agreement shall in any way restrict the
ability of any holder of Convertible Notes to convert such notes into Common
Stock in accordance with the terms thereof.
1.6. Section Notices . All notices and other communications provided
for hereunder shall be in writing and delivered by hand or sent by first class
mail or sent by telecopy (with such telecopy to be confirmed promptly in writing
sent by first class mail), sent as follows:
(i) If to Holdco, addressed to:
c/o Capricorn Investors II, L.P.
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to a Management Investor, addressed to such
shareholder at the address set forth in the stock records of the Company;
(iii) If to the Company, addressed to:
▇▇▇. ▇▇▇▇▇▇' Original Cookies, Inc.
c/o Capricorn Investors II, L.P.
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(iv) If to Chocamerican, addressed to:
Chocamerican, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Sidley & Austin
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or addresses or telecopy number or numbers as any of
the parties hereto may most recently have designated in writing to the other
parties hereto by such notice. All such communications shall be deemed to have
been given or made when so delivered by hand or sent by telecopy, or three
business days after being so mailed.
1.1. Section Entire Agreement: Governing Law .
(a) This Agreement and the other writings referred to herein or
delivered pursuant hereto which form a part hereof contain the entire agreement
among the parties hereto with respect to the subject transactions contemplated
hereby and supersede all prior oral and written agreements and memoranda and
undertakings among the parties hereto with regard to this subject matter. The
Company represents to the Shareholders that the rights granted to the holders
hereunder do not in any way conflict with and are not inconsistent with the
rights granted or obligations accepted under any other agreement (including the
Certificate of Incorporation) to which the Company is a party. Neither the
Company nor any Subsidiary of the Company will hereafter enter into any
agreement with respect to its equity or debt securities which is inconsistent
with the rights granted to any Shareholder under this Agreement without
obtaining the prior written consent of the Shareholder.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT GIVING EFFECT TO THE CHOICE OF
LAW PRINCIPLES THEREOF).
1.2. Section Injunctive Relief . The Shareholders acknowledge and agree
that a violation of any of the terms of this Agreement will cause the
Shareholders irreparable injury for which an adequate remedy at law is not
available. Therefore, the Shareholders agree that each Shareholder shall be
entitled to, an injunction, restraining order or other equitable relief from any
court of competent jurisdiction, restraining any Shareholder from committing any
violations of the provisions of this Agreement.
1.4. Section Availability of Agreement . For so long as this Agreement
shall be in effect, this Agreement shall be made available for inspection by any
Shareholder upon request at the principal executive offices of the Company.
1.6. Section Headings . The section and paragraph headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
1.1. Section Recapitalizations, Exchanges, Etc. Affecting the Shares of
Common Stock; New Issuances . The provisions of this Agreement shall apply, to
the full extent set forth herein with respect to the shares of Common Stock and
to any and all equity or debt securities of the Company or 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 of, such equity or debt securities and shall be appropriately
adjusted for any stock dividends, splits, reverse splits, combinations,
reclassifications, recapitalizations, reorganizations and the like occurring
after the date hereof.
1.1. Section Counterparts . This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
1.1. Section Arbitration .
1.2. (a) Any disagreement, dispute, controversy or claim
arising out of or relating to this Agreement or the transactions contemplated
hereby, including, without limitation, the interpretation hereof and any breach,
termination or invalidity hereof, shall be settled exclusively and finally (i)
through good faith negotiation of the parties for a period not in excess of 30
days and (ii) in the event such negotiations do not yield a settlement within
such 30-day period, by arbitration (irrespective of the magnitude thereof, the
amount in controversy or whether such matter would otherwise be considered
justiciable or ripe by a court or arbitral tribunal).
(b) The arbitration shall be conducted in accordance with the
commercial arbitration rules of the American Arbitration Association (the
"Arbitration Rules"), except as those rules conflict with the provisions of this
Section 7.12, in which event the provisions of this Section 7.12 shall control.
(c) The arbitral tribunal shall consist of three arbitrators
chosen in accordance with the Arbitration Rules. The arbitration shall be
conducted in New York City. Any submission of a matter for arbitration shall
include joint written instructions of the parties requiring the arbitral
tribunal to render a decision resolving the matters submitted within 60 days
following the submission thereof.
(d) Any decision or award of the arbitral tribunal shall be
final and binding upon the parties to the arbitration proceeding. The parties
agree that the arbitral award may be enforced against the parties to the
arbitration proceeding or their assets wherever they may be found and that a
judgment upon the arbitral award may be entered in any court having jurisdiction
thereof.
(e) All out-of-pocket costs and expenses incurred by any party
in connection with the resolution of any disagreement, dispute, controversy or
claim pursuant to this Section 7.12, including, but not limited to, reasonable
attorney's fees and disbursements, shall be borne by the party incurring the
same; provided, however, that the arbitral tribunal shall have the discretion to
declare any party as the "prevailing party" with respect to one or more of the
issues that were the subject of the arbitration and to require the other parties
to the arbitration to reimburse such "prevailing party" for some or all of its
costs and expenses incurred in connection with such proceeding.
(f) The costs of the arbitral tribunal shall be divided evenly
between the parties, unless there is a "prevailing party," in which case the
arbitral tribunal may allocate more or all of such costs to the party thereto
that is not the "prevailing party".
(g) This Section 7.12 shall not prohibit or limit in any way
any party from seeking or obtaining preliminary or interim injunctive or other
equitable relief from a court for a breach or alleged breach of any of the
covenants and agreements of another party contained in this Agreement.
1.1. Section Transactions with Affiliates . Holdco covenants and agrees
with Chocamerican that, for so long as this Agreement shall remain in effect,
Holdco will not cause or permit the Company or any of its Subsidiaries to sell
or transfer any property, assets or securities to, or purchase or acquire any
property, assets or securities from, or otherwise engage in any other
transactions with, any Affiliate of Holdco or its Subsidiaries ("Affiliate
Transactions") except for Affiliate Transactions pursuant to the License
Agreement entered into as of the date of this Agreement by the Company and The
▇▇▇. ▇▇▇▇▇▇' Brand, Inc. or which are on terms that are determined by the
Company's disinterested directors to be no less favorable to the Company or the
relevant Subsidiary than those that would have been obtained in a comparable
transaction by the Company or such Subsidiary with an unrelated Person. For the
purposes of this Section 7.13, "disinterested director" shall mean a director
that is not an employee, officer, director or partner of the Company, Holdco or
Capricorn or any of their affiliates (other than Chocamerican or any current or
former stockholder of Chocamerican). Holdco covenants and agrees with
Chocamerican that it will provide the Board of Directors within 90 days
following the end of each calendar year a statement which sets forth a list of
all Affiliate Transactions which occurred during the prior calendar year.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
▇▇▇. ▇▇▇▇▇▇' ORIGINAL COOKIES, INC.
By:/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name:▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:President
CHOCAMERICAN, INC.
By:/s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Name:▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:Exec. VP-Finance
▇▇▇. ▇▇▇▇▇▇' HOLDING COMPANY,
INC.
By:/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name:▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:President
TABLE OF CONTENTS
(Not Part of Agreement)
Section Heading Page
1. Certain Definitions 2
2. Management 7
2.1. Board of Directors; Shareholders 7
2.2. Authority of Board of Directors 8
2.3. No Conflict with Agreement 8
3. Transfers of Shares of Common Stock 8
3.1. Restrictions on Transfer 8
3.2. Exceptions to Restrictions 8
3.3. Endorsement of Certificates 10
3.4. Improper Transfer 11
4. Rights of First Refusal; Drag-Along Rights; Tag-Along Rights; Transfe
of Convertible Notes 11
4.1. Transfers by Shareholders 11
4.2. Transfer of Offered Securities to Third Parties 13
4.3. Purchase of Offered Securities 13
4.4. Drag-Along Rights 14
4.5. Tag-Along Rights 16
4.6. Transfer of Convertible Notes 17
5. Registration Rights 18
5.1. Demand Registration 18
5.2. Piggyback Registrations 21
5.3. Registration Procedures 22
5.4. Indemnification 27
5.5. Contribution 31
5.6. Rule 144 32
6. Call Rights of the Company 32
6.1. Call Right; Purchase Price 32
6.2. Call Notices 32
6.3. Method of Payment 33
6.4. Closing 33
7. Miscellaneous 33
7.1. Inspection Rights 33
7.2. Confidentiality 34
7.3. Successors and Assigns 34
7.4. Amendment and Modification: Waiver of Compliances;
Conflicts 35
7.5. Notices 35
7.6. Entire Agreement: Governing Law 37
7.7. Injunctive Relief 38
7.8. Availability of Agreement 38
7.9. Headings 38
7.10. Recapitalizations, Exchanges, Etc. Affecting the Shares of
Common Stock; New Issuances 38
7.11. Counterparts 38
7.12. Arbitration 39
7.13. Transactions with Affiliates 40