EXHIBIT 10.5
STOCKHOLDER AGREEMENT
among
P.N.Y. ELECTRONICS, INC.,
GS CAPITAL PARTNERS II, L.P.
AND AFFILIATED PARTIES
and
▇▇▇▇ ▇▇▇▇▇
Dated as of August 4, 1995
TABLE OF CONTENTS
PAGE
SECTION 1. Certain Definitions............................................................................................1
1.1. Affiliate............................................................................................1
1.2. Associate............................................................................................1
1.3. Beneficially Own or Beneficial Ownership.............................................................1
1.4. Capitalized Lease Obligations........................................................................1
1.5. ▇▇▇▇▇ Affiliates.....................................................................................2
1.6. ▇▇▇▇▇ Parties........................................................................................2
1.7. Common Stock.........................................................................................2
1.8. Common Stock Equivalents.............................................................................2
1.9. Control Transaction..................................................................................2
1.10. Current Indebtedness.................................................................................2
1.11. Designated Parties...................................................................................2
1.12. Dividend Remittitur and Pledge Agreement.............................................................2
1.13. EBIT.................................................................................................2
1.14. Exchange Act.........................................................................................2
1.15. Fair Market value....................................................................................3
1.16. Funded Indebtedness..................................................................................3
1.17. GSCP Affiliates......................................................................................3
1.18. GSCP Parties.........................................................................................3
1.19. Interest Charges.....................................................................................3
1.20. Management Stockholder Agreement.....................................................................4
1.21. Net Earnings.........................................................................................4
1.22. Notes................................................................................................4
1.23. Other Stockholders...................................................................................4
1.24. Person...............................................................................................4
1.25. Pro Forma Interest Charges...........................................................................4
1.26. Public Sale..........................................................................................5
1.27. Qualified IPO........................................................................................5
1.28. Registration Rights Agreement........................................................................5
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PAGE
1.29. Securities Act.......................................................................................5
1.30. Sell.................................................................................................5
1.31. Senior Debt..........................................................................................5
1.32. Stock................................................................................................5
1.33. Stockholders.........................................................................................5
1.34. Ten Percent Sale.....................................................................................5
SECTION 2. Methodology for Calculations...................................................................................6
SECTION 3. Limitations on Sales of Stock..................................................................................6
SECTION 4. Rights of First Offer..........................................................................................7
SECTION 5. Tag-Along and Change of Control Rights........................................................................10
SECTION 6. Bring-Along Rights............................................................................................11
SECTION 7. Preemptive Rights.............................................................................................12
SECTION 8. Corporate Governance..........................................................................................13
8.1. Board of Directors Prior to Qualified IPO...........................................................13
8.2. Board of Directors In General.......................................................................15
8.3. Vacancies...........................................................................................15
8.4. Committees; Subsidiaries............................................................................15
8.5. Removal.............................................................................................15
8.6. Directors' Indemnification..........................................................................15
8.7. Expenses............................................................................................16
8.8. Attendance..........................................................................................16
8.9. Voting Arrangement..................................................................................16
SECTION 9. Major Transactions...........................................................................................16
SECTION 10. Representations and Warranties...............................................................................20
SECTION 11. No Inconsistent Agreements...................................................................................20
SECTION 12. Further Assurances...........................................................................................21
SECTION 13. Duration of Agreement........................................................................................21
SECTION 14. Legends......................................................................................................21
SECTION 15. Severability.................................................................................................22
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PAGE
SECTION 16. Governing Law...............................................................................................22
SECTION 17. Successors and Assigns......................................................................................22
SECTION 18. Notices.....................................................................................................23
SECTION 19. Amendments..................................................................................................24
SECTION 20. Headings....................................................................................................24
SECTION 21. Nouns and Pronouns..........................................................................................25
SECTION 22. Entire Agreement............................................................................................25
SECTION 23. Third Parties...............................................................................................25
SECTION 24. Counterparts................................................................................................26
Schedules
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1.11(a) Pre-IPO Designated Parties
1.11(b) Post-IPO Designated Parties
7 Outstanding Securities
10 Representations
iii
FORM OF STOCKHOLDER AGREEMENT
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STOCKHOLDER AGREEMENT, dated as of August 4, 1995, among
P.N.Y. ELECTRONICS, INC., a Delaware corporation (the "Corporation"), GS CAPITAL
PARTNERS II, L.P., a Delaware limited partnership ("GSCP"), GS CAPITAL PARTNERS
II OFFSHORE, L.P., ▇▇▇▇▇▇▇, SACHS & CO. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, L.P. and BRIDGE STREET FUND 1995, L.P. (collectively referred to as the
"GSCP Investors") and ▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Corporation, GSCP, the GSCP Investors and
▇▇▇▇▇ are parties to that certain Preferred Stock and Warrant Purchase
Agreement, dated as of the date hereof (the "Purchase Agreement"), pursuant to
which GSCP and the GSCP Investors have purchased shares of Series A Convertible
Preferred Stock, par value $.01 per share (the "Preferred Stock"), and warrants
to purchase shares of the Corporation's Common Stock, par value $.01 per share
("Warrants"); and
WHEREAS, the Purchase Agreement contemplates that the
parties hereto will enter into this Stockholder Agreement and the parties hereto
deem it to be in their best interests to establish and set forth their agreement
with respect to certain rights and obligations associated with ownership of
shares of Stock (as hereinafter defined);
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and obligations hereinafter set forth, the parties hereto
hereby agree as follows:
SECTION 1. Certain Definitions. As used herein, the
-------------------
following terms shall have the following meanings (terms used herein and not
defined herein shall have the meaning assigned each such term in the Purchase
Agreement):
1.1. Affiliate shall mean, (i) with respect to any Person, any
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other Person directly or indirectly controlling or
controlled by or under direct or indirect common control
with such specified Person and (ii) with respect to any
individual, shall also mean the spouse, child or parent of
such Person or any trust or similar entity of which there
are no principal beneficiaries other than such Person
and/or one or more of such relatives. Notwithstanding the
foregoing, neither the Corporation nor any Person
controlled by the Corporation shall be deemed to be an
Affiliate of ▇▇▇▇▇ or an Affiliate of GSCP for purposes of
this Agreement.
1.2. Associate shall have the meanings ascribed to such term in
---------
Rule 12b-2 of the General Rules and Regulations under the
Exchange Act.
1.3. Beneficially Own or Beneficial Ownership shall have the
---------------- --------------------
meaning set forth in Rule l3d-3 under the Exchange Act.
1.4. Capitalized Lease Obligations 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 any lease or any other
agreement for the use of property which, in accordance
with generally accepted accounting principles, should be
capitalized on the lessee's or user's balance sheet.
1.5. ▇▇▇▇▇ Affiliates shall mean Affiliates of ▇▇▇▇▇.
----------------
1.6. ▇▇▇▇▇ Parties shall mean ▇▇▇▇▇, together with the ▇▇▇▇▇
-------------
Affiliates.
1.7. Common Stock shall mean any shares of Common Stock, par
------------
value $.01 per share, of the Corporation.
1.8. Common Stock Equivalents shall mean securities convertible
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into, or exchangeable or exercisable for, shares of Common
Stock.
1.9. Control Transaction shall mean a Sale by ▇▇▇▇▇ or any
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▇▇▇▇▇ Affiliate, as a result of which Sale (i) the ▇▇▇▇▇
Parties cease to Beneficially Own at least 50% of the
outstanding Stock of the Corporation (on a fully diluted
basis) and (ii) the transferee in such Sale (considered
together with its Affiliates) becomes the Beneficial
Owner, directly or indirectly, of 30% or more of the
outstanding Stock of the Corporation (on a fully diluted
basis).
1.10. Current Indebtedness of any Person shall mean the
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indebtedness of such Person for borrowed money (including
Capitalized Lease Obligations) which does not constitute
Funded Indebtedness.
1.11. Designated Parties shall mean (i) prior to a Qualified
------------------
IPO, any Person set forth or described on Schedule 1.11(a)
hereto and any Affiliate of any such Person and (ii)
following a Qualified IPO, any Person set forth or
described on Schedule 1.11(b) hereto and any Affiliate of
any such Person.
1.12. Dividend Remittitur and Pledge Agreement shall mean the
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Dividend Remittitur and Pledge Agreement, dated as of the
business date immediately prior to the date hereof,
between ▇▇▇▇▇ and the Corporation.
1.13. EBIT of any Person shall mean, for any period for which
----
the amount thereof is to be determined, the Net Earnings
of such Person for such period, plus the aggregate amounts
deducted in determining such Net Earnings in respect of
(i) Interest Charges and (ii) income taxes and other taxes
measured by income taxes or profits in respect of such
Person for such period.
1.14. Exchange Act shall mean the Securities Exchange Act of
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1934, as amended.
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1.15. Fair Market Value shall mean the average of the closing
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sale prices during the 30-day period immediately preceding
the date in question of a share of such stock on the
Composite Tape for New York Stock Exchange-Listed Stocks,
or, if such stock is not quoted on the Composite Tape, on
the New York Stock Exchange, or, if such stock is not
listed on such Exchange, on the principal United States
securities exchange registered under the Exchange Act on
which such stock is listed, or, if such stock is not
listed on any such exchange, the average of the closing
bid quotations with respect to a share of such stock
during the 30-day period preceding the date in question on
the National Association of Securities Dealers, Inc.
Automated Quotations System or any system then in use.
1.16. Funded Indebtedness of any Person shall mean, as of any
-------------------
date as of which the amount thereof is to be determined,
all indebtedness for borrowed money (including Capitalized
Lease Obligations) of such Person, whether secured or
unsecured, which by its terms has a final maturity,
duration or payment date more than one year from the date
on which Funded Indebtedness is to be determined (other
than that portion of the principal of such Funded
Indebtedness due within one year from such date of
determination, but including any indebtedness of such
Person having a final maturity, duration or payment date
within one year from such date which, pursuant to the
terms of a revolving credit or similar agreement or
otherwise may be renewed or extended at the option of such
Person for more than one year from such date, whether or
not theretofore renewed or extended).
1.17. GSCP Affiliates shall mean (a) prior to a Qualified IPO,
---------------
Affiliates of GSCP and (b) after a Qualified IPO, one or
more partnerships, corporations, trusts or other
organizations which are controlled by, control or are
under common control with GSCP or one or more of the then
current, former or future partners of GSCP to the extent
that they receive Stock as a distribution in kind on a pro
rata basis upon or after a Qualified IPO.
1.18. GSCP Parties shall mean GSCP, together with the GSCP
------------
Affiliates.
1.19. Interest Charges of any Person shall mean, for any period
----------------
for which the amount thereof is to be determined, the sum
of (i) all interest paid or prepaid or scheduled to be
paid by such Person on Current or Funded Indebtedness
during such period, plus (ii) all rentals imputed as
interest paid or scheduled to be paid on Capitalized Lease
Obligations during such period by such Person, plus (iii)
all fees paid, or scheduled to be paid with respect to
Current or Funded Indebtedness during such period by such
Persons, plus (iv) all debt discount and expense amortized
in respect of Current or Funded Indebtedness or scheduled
to be amortized in respect of Current or Funded
Indebtedness during such period by such Person. For the
purpose of this definition, the rate of interest payable
3
during any period on Current or Funded Indebtedness
bearing interest at a variable rate or at different fixed
rates, or on Current or Funded Indebtedness on which
interest does not become payable until a specified date
more than twelve (12) months after the date of
determination, shall be the interest rate per annum then
payable on such Current or Funded Indebtedness.
1.20. Management Stockholder Agreement shall mean an agreement
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to be entered into by and among the Corporation, some or
all of the members of key management of the Corporation
named therein ("Management"), GSCP and ▇▇▇▇▇, as
contemplated by Section 4.3 of the Purchase Agreement.
1.21. Net Earnings of any Person shall mean, for any period for
------------
which the amount thereof is to be determined, the net
earnings of such Person for such period, as determined by
Ernst & Young, LLP in accordance with generally accepted
accounting principles consistently applied (or any
successor accounting firm which is a nationally recognized
accounting firm).
1.22. Notes shall mean (a) the Subordinated Note of the
-----
Corporation, dated August 3, 1995, in the initial
principal amount of $5,140,000 payable to ▇▇▇▇▇ (the
"$5,140,000 Note") and (b) the Subordinated Note of the
Corporation, dated August 3, 1995, in the amount of
$15,000,000 payable to ▇▇▇▇▇.
1.23. Other Stockholders, with respect to any selling
------------------
Stockholder, shall mean the Stockholders other than the
selling Stockholder or its Affiliates.
1.24. Person shall mean 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.
1.25. Pro Forma Interest Charges of any Person shall mean, as of
--------------------------
any date as of which the amount thereof is to be
determined, the sum of (i) all Interest Charges on Funded
Indebtedness payable during the twelve (12) month period
immediately succeeding the date of any determination
hereunder, after giving effect to Interest Charges on
Funded Indebtedness proposed to be created on such date
and to the concurrent retirement of any other Funded
Indebtedness, plus (ii) all Interest Charges on Current
Indebtedness for the most recently completed twelve (12)
month period, after eliminating the Interest Charges on
any such Current Indebtedness which was actually retired
during such period or which is actually being retired on
such date out of the proceeds of any Funded Indebtedness
the Interest Charges on which are included in the amount
determined pursuant to clause (i).
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1.26. Public Sale shall mean a Sale pursuant to a bona fide
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underwritten public offering pursuant to an effective
registration statement filed under the Securities Act or
pursuant to Rule 144 under the Securities Act.
1.27. Qualified IPO shall mean a bona fide, firm commitment,
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underwritten public offering pursuant to an effective
registration statement under the Securities Act resulting
in at least $15,000,000 of gross proceeds to the sellers
(including the Corporation) before deducting underwriting
discounts and commissions and offering expenses.
1.28. Registration Rights Agreement shall mean the Registration
-----------------------------
Rights Agreement, dated as of the date hereof, among the
Corporation, GSCP and ▇▇▇▇▇.
1.29. Securities Act shall mean the Securities Act of 1933, as
--------------
amended.
1.30. Sell, as to any Stock, shall mean to sell, or in any other
----
way directly or indirectly transfer, assign, distribute,
encumber or otherwise dispose of, either voluntarily or
involuntarily, Beneficial Ownership of such Stock; and the
terms Sale and Sold shall have meanings correlative to the
foregoing.
1.31. Senior Debt shall mean borrowings pursuant to that certain
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Accounts Financing Agreement, dated January 29, 1993, as
amended, with Congress Financial Corporation and any
renewal, extension or replacement thereof.
1.32. Stock shall mean (i) any shares of Common Stock and (ii)
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any Common Stock Equivalents, in either case, whether
owned on the date hereof or acquired hereafter (and the
Common Stock issuable or purchasable upon the conversion,
exchange or exercise of such Common Stock Equivalents).
For purposes of this Agreement, all references to the
amount of Stock owned or held by any Stockholder shall,
with respect to a Stockholder who owns or holds Common
Stock Equivalents, be deemed to be a reference to the
number of shares of Common Stock into which the Common
Stock Equivalents owned or held by such Stockholder are
then convertible. Any percentage of the outstanding Stock
as of a specified date referred to herein shall be
computed on the basis that each Common Stock Equivalent
represents the number of shares of Common Stock into which
it is then convertible in accordance with its terms.
1.33. Stockholders shall mean the parties to this Agreement
------------
(other than the Corporation) and any other holder of Stock
who is required to execute and agree to be bound by the
terms of this Agreement.
1.34. Ten Percent Sale shall mean a Sale of Stock by any
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Stockholder, other than a Sale which is a Public Sale or a
Sale to an Affiliate of such Stockholder, pursuant to
which any Person (other than a ▇▇▇▇▇ Party) would, to the
actual knowledge of the selling Stockholder, after due
5
inquiry, become the Beneficial Owner of 10% or more of the
outstanding shares of Stock (on a fully diluted basis).
SECTION 2. Methodology for Calculations. For purposes of
----------------------------
this Agreement, the Sale of a Common Stock Equivalent shall be treated as the
Sale of the shares of Common Stock into which such Common Stock Equivalent can
be converted, exchanged or exercised. Except as otherwise provided in this
Agreement, all calculations under this Agreement (including, without limitation,
calculations to determine the Beneficial Ownership of Stock of any Stockholder,
the percentage of outstanding Stock Beneficially Owned by any Stockholder, and
the percentage of Stock Beneficially Owned by any Stockholder) shall be made in
accordance with Regulation 13D under the Exchange Act, except that for purposes
of any such calculation all Common Stock Equivalents (regardless of the holder
thereof) shall be treated as having been converted, exchanged or exercised.
SECTION 3. Limitations on Sales of Stock. (a) Subject to
-----------------------------
subsections (b), (c), (d) and (e) below, the GSCP Parties shall not Sell any
Stock, other than:
(i) by Sale in accordance with Sections 4, 5 and 6
hereof;
(ii) by Sale to another GSCP Party; or
(iii) in a Public Sale.
(b) In addition to the restrictions set forth in paragraph
(a) above, the GSCP Parties shall not Sell any Stock for a period of two (2)
years from the date hereof (the "Mandatory Holding Period"); provided, however,
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that the foregoing restriction shall not apply to any Sale by the GSCP Parties
(i) to another GSCP Party, (ii) in connection with the GSCP Parties' exercise of
Tag-Along Rights (as defined in Section 5 hereof), (iii) as a result of any
required Sale pursuant to Section 6 hereof or (iv) with respect to which all of
the following conditions are met: (a) the Sale of such Stock is a sale of Common
Stock pursuant to an underwritten public offering registered under the
Securities Act in accordance with the terms of the Registration Rights
Agreement; and (b) immediately following such Sale, the GSCP Parties continue to
own shares of Stock (excluding for this purpose any Warrants and any Common
Stock issuable upon exercise of such Warrants) representing at least 50% of the
shares of Common Stock (treating for this purpose the Preferred Stock as having
been converted into Common Stock) purchased by the GSCP Parties on the date
hereof.
(c) Except as specifically contemplated hereby, no
Stockholder shall grant any proxy or enter into or agree to be bound by any
voting trust with respect to any Stock or enter into any stockholder agreements
or arrangements of any kind with any Person (other than Affiliates of such
Stockholder) with respect to any Stock which would result in any action which is
inconsistent with the provisions of this Agreement, including, but not limited
to, agreements or arrangements with respect to the acquisition, disposition or
voting of Stock, nor shall any Stockholder act, for any reason, as a member of a
group or in concert with any other Persons (other than Affiliates of such
Stockholder) in connection with the acquisition, disposition or voting of Stock
in any manner which would result in any action which is inconsistent with the
provisions of this Agreement.
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(d) Notwithstanding any other provision of this Agreement
to the contrary, other than pursuant to a Public Sale or with the prior written
consent of the Corporation, no Stockholder (other than any ▇▇▇▇▇ Party) shall
Sell any Stock to any Person unless, after due inquiry, such Person is not known
to such Stockholder to be a Direct Competitor.
(e) Notwithstanding any other provision of this Agreement
to the contrary, and except in the case of a Public Sale, no Stockholder shall
Sell any Stock to any Person, including any Affiliate (all Persons acquiring
Stock from a Stockholder other than pursuant to a Public Sale, regardless of the
method of transfer, being referred to herein collectively as "Transferees" and
individually as a "Transferee"), unless:
(i) the certificates representing such Stock bear legends
as provided in Section 14 hereof; and
(ii) such Transferee shall have executed and delivered to
the Corporation, as a condition precedent to any acquisition of
Stock, an instrument in form and substance satisfactory to the
Corporation confirming that such Transferee takes such Stock subject
to all the terms and conditions of this Agreement and Section 4.14 of
the Purchase Agreement, and agrees to be bound by the terms of this
Agreement and such terms and conditions of the Purchase Agreement.
(f) In the case of any Sale of Stock to a ▇▇▇▇▇ Party or a
GSCP Party, the Transferee of such Stock shall have the rights of, and be
subject to the obligations of, a ▇▇▇▇▇ Party or a GSCP Party, respectively,
under this Agreement. In the case of any other Sale of Stock by any Stockholder,
the Transferee of such Stock shall have the rights of, and be subject to the
obligations of, a Stockholder under this Agreement.
(g) Notwithstanding any other provision of this Agreement
to the contrary, following a Qualified IPO, there shall be no restrictions on
Sales by the GSCP Parties except (i) as set forth in Sections 3(b), 3(c), 3(d)
and 3(e) and (ii) Ten Percent Sales, which shall require compliance with Section
4 of this Agreement.
SECTION 4. Rights of First Offer. In addition to and not in
---------------------
limitation of any other restrictions on Sales of Stock contained in this
Agreement, any Sale by a Stockholder shall be solely for cash consideration (or
publicly-traded securities, valued at Fair Market Value) and shall be
consummated only in accordance with the following procedures:
(a) The selling Stockholder wishing to Sell Stock shall
first deliver to the Corporation a written notice (a "Section 4 Offer
Notice"), which shall (i) state the selling Stockholder's intention
to Sell Stock to one or more Persons, the amount and type of Stock
intended to be Sold (the "Subject Stock"), the proposed purchase
price therefor and a summary of the other material terms of the
proposed Sale and (ii) offer the Corporation the option to acquire
all or a portion of such Subject Stock upon the terms and subject to
the conditions of the proposed Sale as set forth in the Section 4
Offer Notice (the "Section 4 Offer"), provided that such Section 4
Offer may provide that it must be accepted by the Corporation and the
7
other Stockholders on an all or nothing basis (an "All or Nothing
Sale"). The Section 4 Offer shall remain open and irrevocable for the
periods set forth below (and, to the extent the Section 4 Offer is
accepted during such periods, until the consummation of the Sale
contemplated by the Section 4 Offer). The Corporation, acting only
through a majority of the members of the Board of Directors of the
Corporation who were not designated by the selling Stockholder or its
or his Affiliates pursuant to Section 8 of this Agreement shall have
the right and option, for a period of 60 days after delivery of the
Section 4 Offer Notice (the "Section 4(a) Acceptance Period"), to
accept all or any part of the Subject Stock at the purchase price, in
cash, and on the terms stated in the Section 4 Offer Notice;
provided, however, that, if the Section 4 Offer contemplated an All
or Nothing Sale, the Corporation may accept, during
the Section 4(a) Acceptance Period, all, but not less than all of the
Subject Stock, at the purchase price and on the terms stated in the
Section 4 Offer Notice. The Corporation shall have the right to
assign its rights to purchase the Subject Stock pursuant to a Section
4 Offer to any other Person. If a Section 4 Offer is accepted,
notwithstanding any assignment pursuant to the preceding sentence,
the Corporation shall be irrevocably obligated to consummate (or to
have its assignees consummate) the purchase as set forth in Section
4(d) below. Such acceptance shall be made by delivering a written
notice to the selling Stockholder and each of the Other Stockholders
within the Section 4(a) Acceptance Period.
(b) If the Corporation shall fail to accept, or shall
reject in writing, all of the Subject Stock offered for Sale pursuant
to the Section 4 Offer, then, upon the earlier of the expiration of
the Section 4(a) Acceptance Period or the receipt of a written notice
of rejection by the Corporation, each Other Stockholder shall have
the right and option, for a period of 10 days thereafter (the
"Section 4(b) Acceptance Period"), to accept all or any part of the
Subject Stock so offered and not accepted by the Corporation (the
"Refused Stock") at the purchase price, in cash, and on the terms
stated in the Section 4 Offer Notice. Such acceptance shall be made
by delivering a written notice to the Corporation and the selling
Stockholder within the Section 4(b) Acceptance Period specifying the
maximum number of shares such Other Stockholder will purchase (the
"First Offer Shares"). If, upon the expiration of the Section 4(b)
Acceptance Period, the aggregate amount of First Offer Shares exceeds
the amount of Refused Stock, the Refused Stock shall be allocated
among the Other Stockholders as follows: (i) First, each Stockholder
shall be entitled to purchase up to its Proportionate Percentage of
Refused Stock; (ii) Second, if any shares of Refused Stock have not
been allocated for purchase pursuant to (i) above (the "Remaining
Shares"), each Stockholder (an "Oversubscribed Stockholder") which
had offered to purchase a number of shares of Refused Stock in excess
of the amount of Stock allocated for purchase to it in accordance
with previous allocations, shall be entitled to purchase an amount of
Remaining Shares equal to up to its Proportionate Percentage
(treating only Oversubscribed Stockholders as Stockholders for these
purposes) of the Remaining Shares; and (iii) Third, the process set
forth in (ii) above shall be repeated with respect to any shares of
Refused Stock not allocated for purchase until all shares of Refused
Stock are allocated for purchase.
8
(c) If effective acceptance shall not be received pursuant
to Sections 4(a) and 4(b) above with respect to all of the Subject
Stock offered for Sale pursuant to the Section 4 Offer Notice, then
the selling Stockholder may Sell all or any portion of the Stock so
offered for Sale and not so accepted, at a price not less than the
price, and on terms not more favorable to the purchaser thereof than
the terms, stated in the Section 4 Offer Notice at any time within 90
days after the expiration of the Section 4(b) Acceptance Period (the
"Sale Period"). To the extent the selling Stockholder Sells all or a
portion of the Stock so offered for Sale during the Sale Period, the
selling Stockholder shall promptly notify the Corporation, and the
Corporation shall promptly notify the Other Stockholders, as to (i)
the number of shares of Stock, if any, that the selling Stockholder
then owns, (ii) the number of shares of Stock that the selling
Stockholder has Sold, (iii) the terms of such Sale and (iv) the
identity of the purchaser(s) of any shares of Stock Sold. In the
event that all of the Stock is not Sold by the Selling Stockholder
during the Sale Period, the right of the selling Stockholder to Sell
such Stock shall expire and the obligations of this Section 4 shall
be reinstated; provided, however, that, in the event that the selling
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Stockholder determines, at any time during the Sale Period, that the
Sale of all of the Stock on the terms set forth in the Section 4
Offer Notice is impractical, the selling Stockholder may terminate
the offer and reinstate the procedure provided in this Section 4
without waiting for the expiration of the Sale Period; and provided
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further, however, that the selling Stockholder shall not give a
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Section 4 Offer Notice with respect to a transaction which would
require compliance with this Section 4 for a period of at least 75
days from the first day of the Sale Period.
(d) All Sales of Subject Stock to the Corporation or to
one or more Other Stockholders subject to any one Section 4 Offer
Notice shall be consummated at the offices of the Corporation on the
later of (i) a mutually satisfactory business day within 20 days
after the expiration of the Section 4(b) Acceptance Period or (ii)
the fifth business day following the expiration or termination of all
waiting periods under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended ("HSR"), applicable to such sales, or at such
other time and/or place as the parties to such sales may agree. The
delivery of certificates or other instruments evidencing such Subject
Stock duly endorsed for transfer shall be made on such date against
payment of the purchase price for such Subject Stock.
(e) Anything contained herein to the contrary
notwithstanding, the selling Stockholder shall, in addition to
complying with the provisions of this Section 4 in the event of a
proposed Sale of Stock, comply with the provisions of Section 5
hereof applicable to such Sale of Stock.
(f) The requirements of this Section 4 shall not apply to
(i) any Sale of Stock by a Stockholder to an Affiliate of such
Stockholder, (ii) any Sale of Stock by a ▇▇▇▇▇ Party, (iii) any Sale
of Stock pursuant to Sections 5 or 6 of this Agreement, (iv) any Sale
of Stock which is a Public Sale, (v) any Sale of Stock following the
completion of a Qualified IPO, unless such Sale is a Ten Percent
9
Sale, and (vi) any other Sale as to which the Corporation, GSCP and
▇▇▇▇▇ waive compliance with this Section 4.
SECTION 5. Tag-Along and Change of Control Rights. (a) In
--------------------------------------
the event that, following compliance with the provisions of Section 4 hereof (if
applicable), one or more of the ▇▇▇▇▇ Parties or the GSCP Parties proposes to
Sell (other than pursuant to a Public Sale) any Stock to a Person other than an
Affiliate of such Stockholder and other than a Person who is a ▇▇▇▇▇ Party or a
GSCP Party (a "Purchaser") (a "Disposition"), such party(ies) (the "Proposing
Holder(s)") shall provide notice (a "Proposal Notice") of such proposed
Disposition to the Other Stockholders no later than twenty (20) days prior to
the proposed closing of such Disposition (which 20 day period may run
concurrently with the periods set forth in Section 4, to the extent applicable).
Each Proposal Notice shall describe in reasonable detail the proposed terms of
the proposed Disposition (which 20 day period may run concurrently with the
periods set forth in Section 4, to the extent applicable, including, without
limitation, (i) the identity and address of the Purchaser, (ii) the proposed
amount to be paid by the Purchaser to the Proposing Holder(s), (iii) the amount
and type of Stock proposed to be Sold and (iv) any other material terms or
conditions of such proposed Disposition, and shall include a statement to the
effect that the Purchaser has been informed of the Tag-Along Rights (as defined
herein) and an acknowledgment by the Purchaser indicating that it has been so
informed and agrees to such terms. A copy of the Proposal Notice shall promptly
be sent to the Corporation.
(b) With respect to each proposed Disposition, the
Stockholders shall have the following right (the "Tag-Along Right"):
(i) subject to Section 5(f) hereof, in the case
in which the Proposing Holder(s) is one or more of the
▇▇▇▇▇ Parties, each Other Stockholder shall have the right
to require the Purchaser to purchase from such Other
Stockholder and at the Disposition Price (as defined
below) all or a portion of the number of shares of Common
Stock which, in accordance with Section 2 hereof,
represents the number of shares of Common Stock obtained
by multiplying (A) a fraction, the numerator of which is
the number of shares of Common Stock represented by the
Stock proposed to be sold (as indicated in the Proposing
Notice) and the denominator of which is the number of
shares of Common Stock Beneficially Owned by the ▇▇▇▇▇
Parties as of the date of the Proposal Notice, times (B)
the number of shares of Common Stock Beneficially Owned by
the Other Stockholder as of the date of the Proposal
Notice; and
(ii) in the case in which the Proposing
Holder(s) is one or more of the GSCP Parties, each ▇▇▇▇▇
Party shall have the right to require the Purchaser to
purchase from such ▇▇▇▇▇ Party and at the Disposition
Price a number of shares of Common Stock which represents
the product of (a) the aggregate number of shares of Stock
proposed to be sold by the GSCP Parties by (b) a fraction,
the numerator of which is (i) the number of shares of
Stock Beneficially Owned by such ▇▇▇▇▇ Party and the
denominator of which is (ii) the number of shares of Stock
Beneficially Owned by all ▇▇▇▇▇ Parties.
10
(c) For purposes of this Agreement, the following terms
shall have the meanings set forth below:
"Disposition Price" shall mean (i) with respect to a share
of Common Stock, the Per Share Price and (ii) with respect to a Common Stock
Equivalent, an amount substantially equal to the Per Share Price taking into
account any other relevant factors with respect to such Common Stock Equivalent.
"Per Share Price" shall mean an amount equal to the
quotient obtained by dividing (i) the number of shares of Common Stock
(including shares of Common Stock obtainable upon the conversion or exercise of
Common Stock Equivalents) proposed to be sold by the Proposing Holder as set
forth in the Proposal Notice by (ii) the aggregate purchase price to be paid by
the Purchaser in respect of such Stock.
(d) Each Stockholder electing to exercise its or his
Tag-Along Rights shall give written notice of its or his election to the
Proposing Holder(s) no later than ten (10) days after its receipt of a Proposal
Notice (the "Expiration Date").
(e) All Sales of Stock to the Purchaser shall be
consummated contemporaneously at the offices of the Corporation on the later of
(i) a mutually satisfactory business day as soon as practicable, but in no event
more than 60 days after the Expiration Date or (ii) the fifth business day
following the expiration or termination of all waiting periods under HSR
applicable to such sales, or at such other time and/or place as the parties to
such sales may agree. The delivery of certificates or other instruments
evidencing such Stock duly endorsed for transfer shall be made on such date
against payment of the purchase price for such Stock.
(f) Notwithstanding the other provisions of this Section 5,
in the case of a Disposition proposed by one or more of the ▇▇▇▇▇ Parties which,
if consummated, would be a Control Transaction, the Tag-Along Right of the Other
Stockholders shall be a right to require the Purchaser to purchase from the
Other Stockholders all of the Common Stock Beneficially Owned by the Other
Stockholders at a per share purchase price equal to the average of the per share
prices paid over the preceding 18 months and proposed to be paid in the
Disposition by the Purchaser to the ▇▇▇▇▇ Parties for Stock.
SECTION 6. Bring-Along Rights. (a) If, at any time prior to
------------------
the completion of a Qualified IPO, the ▇▇▇▇▇ Parties shall, whether alone or in
concert with any other Stockholder, propose to Sell to any Person or Persons who
are not, and following such Sale will not be, affiliated with any of such
Stockholder(s) (collectively, a "Buying Stockholder"), in a bona fide
arm's-length transaction or series of transactions, including by way of a
purchase agreement, tender offer, merger or other business combination
transaction or otherwise, 50% or more in aggregate of the then outstanding
Common Stock on a fully diluted basis (any such transaction being referred to
herein as an "Exit Sale"), then the ▇▇▇▇▇ Parties may elect to require all other
Stockholders to Sell all shares of Stock Beneficially Owned by each of them
concurrently with such Exit Sale to such Buying Stockholder at the same purchase
price per share (and, in the case of Common Stock Equivalents, such purchase
price per share multiplied by the number of shares of Common Stock issuable upon
the conversion, exchange or exercise of such Common Stock Equivalent) and upon
the same terms and subject to the conditions of the Exit Sale, provided that the
11
▇▇▇▇▇ Parties may make such election only if all other holders of Stock other
than Stockholders are similarly required to Sell all shares of Stock
Beneficially Owned by each of them concurrently with the Exit Sale.
(b) The rights set forth in Section 6(a) shall be exercised
by giving written notice (the "Section 6 Notice") to each Stockholder setting
forth in detail the terms of the proposed Sale and the proposed closing date of
the Exit Sale, which proposed date shall not be less than 15 or more than 60
days after such Section 6 Notice is delivered to the Stockholders.
(c) All Sales of Stock to the Buying Stockholder pursuant
to this Section 6 shall be consummated contemporaneously at the offices of the
Corporation on the later of (i) a business day not less than 15 or more than 60
days after the Section 6 Notice is delivered to the Stockholders or (ii) the
fifth business day following the expiration or termination of all waiting
periods under HSR applicable to such sales, or at such other time and/or place
as the parties to such sales may agree. The delivery of certificates or other
instruments evidencing such Stock duly endorsed for transfer shall be made on
such date against payment of the purchase price for such Stock.
(d) Anything contained herein to the contrary
notwithstanding, if ▇▇▇▇▇ proposes to Sell Stock in a Sale that would be subject
to this Section 6, ▇▇▇▇▇ shall, in addition to complying with the provisions of
this Section 6, comply with the provisions of Section 5 hereof.
SECTION 7. Preemptive Rights. Subject to the terms and
-----------------
conditions specified in this Section 7, prior to the completion of a Qualified
IPO, in the event that the Corporation proposes to offer any shares of Common
Stock or any Common Stock Equivalents (a "Preemptive Issuance"), the Corporation
shall make an offering of such securities to each of the Stockholders in
accordance with the following provisions:
(a) The Corporation shall deliver a notice (the "Notice")
to each of the Stockholders stating (i) its bona fide intention to offer such
securities, (ii) the number of such securities to be offered and (iii) the price
and terms, if any, upon which it proposes to offer such securities.
(b) By written notification received by the Corporation,
within fifteen (15) calendar days after giving of the Notice, each of the
Stockholders may elect to purchase or obtain, at the price (the "Price") and on
the terms specified in the Notice, up to that number or amount of such new
Common Stock or Common Stock Equivalents, such that (x) the percentage of the
outstanding Stock Beneficially Owned by such Stockholder and its Affiliates
after the Preemptive Issuance (assuming full conversion of all convertible
securities, but not taking into account with respect to any Preemptive Issuance
any unexercised Warrants with an exercise price greater than the Price and after
giving effect to any adjustments in the number of shares of Common Stock
12
issuable upon exchange or conversion of any Common Stock Equivalent which will
result from the Preemptive Issuance), equals (y) the percentage of the
outstanding Stock Beneficially Owned by such Stockholder and its Affiliates
immediately prior to the Preemptive Issuance (assuming full conversion of all
convertible securities, but not taking into account with respect to any
Preemptive Issuance any unexercised Warrants with an exercise price greater than
the Price, and after giving effect to any adjustments in the number of shares of
Common Stock issuable upon exchange or conversion of any Common Stock Equivalent
which will result from the Preemptive Issuance). Any Stockholder may assign his
or its right to purchase Common Stock or Common Stock Equivalents hereunder to
his or its respective Affiliates.
(c) If all securities referred to in the Notice which the
Stockholders are entitled to purchase pursuant to subsection (b) are not elected
to be purchased as provided in subsection (b), the Corporation may, during the
one hundred twenty (120) day period following the expiration of the twenty (20)
day period provided in subsection (b) hereof, offer the remaining unsubscribed
portion of such securities to any Person or Persons at a price not less than the
Price, and upon terms no more favorable to the offeree than those specified in
the Notice. If the Corporation does not enter into an agreement for the sale of
such securities within such period, or if such agreement is not consummated
within sixty (60) days of the execution thereof, the right provided thereunder
shall be deemed to be revived and such securities shall not be offered unless
first reoffered in accordance with this Section 7.
(d) This Section 7 shall not be applicable with respect to:
(i) Common Stock and/or Common Stock
Equivalents issuable or issued to employees or outside
directors of the Corporation directly or pursuant to a
stock option plan, restricted stock plan or similar
employee plan or agreement (including any employment
agreement) approved by the Board in accordance with
Section 9 hereof, the primary purpose of which is not to
raise additional equity capital for the Corporation;
(ii) Common Stock issued or issuable upon
conversion or exercise of any securities outstanding on
the date hereof and set forth on Schedule 7 hereto, upon
conversion or exercise of the Common Stock Equivalents
referred to in clauses (i), (iii), (iv) or (v) hereof or
upon exercise of securities issued or issuable pursuant to
this Agreement:
(iii) Common Stock and/or Common Stock
Equivalents issued or issuable as direct consideration for
the acquisition by the Corporation of capital stock or
assets of another business entity or in connection with a
merger or consolidation;
(iv) Common Stock and/or Common Stock
Equivalents issued in any registered public offering of
the Corporation's securities; or
(v) Preferred Stock issued or issuable to key
members of management, as contemplated by the Purchase
Agreement, the total number of such shares not to exceed
1% of the number of shares of Common Stock outstanding
(the "Management Shares").
SECTION 8. Corporate Governance.
--------------------
8.1. Board of Directors Prior to Qualified IPO. (a) (i)
-----------------------------------------
Except as otherwise set forth in this Section 8, pursuant to the By-Laws of the
Corporation, prior to a Qualified IPO, the number of members of the Board of
13
Directors of the Corporation shall be four (4), of whom three (3) shall be
designated by ▇▇▇▇▇ (the "▇▇▇▇▇ Directors") and one (1) shall be designated by
GSCP. Simultaneously with the execution and delivery of this Agreement, the
Stockholders have elected ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as the designee of GSCP to the Board
of Directors of the Corporation (the "Board").
(ii) Subject to subsections (iii), (iv) and (v) below, for
so long as the GSCP Parties shall Beneficially Own at least 5% of the
outstanding Common Stock of the Corporation ("Minimum Ownership"), (A) GSCP
shall be entitled to nominate one person to serve as a director at each meeting
of stockholders of the Corporation for the election of directors of the
Corporation and (B) in addition, GSCP shall have the right to designate an
additional representative to attend and observe Board of Directors meetings.
(iii) Pursuant to the By-Laws of the Corporation, the
initial quorum required for action by the Board of Directors of the Corporation
shall be a majority of the entire Board of Directors; provided, however, that at
-------- -------
least one GSCP Designee shall be present (in person or by telephone) at any
meeting of the Board of Directors of the Corporation to constitute a quorum.
GSCP shall be entitled to waive the requirements of this Section 8.1(a)(iii),
retroactively or prospectively, with respect to any particular meeting of the
Board of Directors.
(iv) GSCP and ▇▇▇▇▇ acknowledge that it would be beneficial
for the Corporation to add two (2) independent directors to the Board of
Directors and agree to cooperate with each other to select such additional
directors for addition to the Board of Directors at such time as GSCP and ▇▇▇▇▇
shall agree (each such director, an "Independent Director"). Each Independent
Director shall be designated by ▇▇▇▇▇ and consented to by GSCP, which consent
will not be unreasonably withheld. In the event that two Independent Directors
are added to the Board of Directors, the number of members of the Board of
Directors of the Corporation shall be increased from four (4) to seven (7) and
the number of directors that ▇▇▇▇▇ shall be entitled to designate shall increase
from three (3) to four (4); provided, however, that, in the event that GSCP and
-------- -------
▇▇▇▇▇ are able to agree upon the appointment of one Independent Director but not
two Independent Directors, the number of members of the Board of Directors of
the Corporation shall be increased from four (4) to five (5) and the number of
directors that ▇▇▇▇▇ shall be entitled to designate shall not increase.
(v) Notwithstanding the foregoing, in the event that ▇▇▇▇▇
shall no longer serve as Chief Executive Officer of the Corporation or ▇▇▇▇▇
ceases to have the sole right to vote in the aggregate at least 25% of the
number of shares of Common Stock Beneficially Owned by the ▇▇▇▇▇ Parties as of
the date hereof, or the ▇▇▇▇▇ Parties cease to Beneficially Own in the aggregate
at least 50% of the number of shares of Common Stock Beneficially Owned by the
▇▇▇▇▇ Parties as of the date hereof: (x) GSCP shall be entitled to designate two
(2) directors; and (y)(A) if two Independent Directors were elected to the Board
prior thereto, pursuant to subsection (iv) above, the size of the Board of
Directors shall remain at seven (7), and ▇▇▇▇▇ shall thereafter be entitled to
designate three (3) directors, (B) if one Independent Director was elected to
the Board prior thereto, pursuant to subsection (iv) above, the size of the
Board shall remain at five (5), and ▇▇▇▇▇ shall thereafter be entitled to
designate two (2) directors, and (C) if Independent Directors were not yet
elected to the Board prior thereto, the size of the Board of Directors shall
remain at four (4), and ▇▇▇▇▇ shall be entitled to designate two (2) directors,
14
and ▇▇▇▇▇ and GSCP shall expeditiously cooperate to select two Independent
Directors agreeable to both of them, at which time ▇▇▇▇▇ shall be entitled to
designate three (3) directors and the size of the Board shall be increased to
seven (7).
(b) The provisions of this Section 8.1 shall terminate upon
the completion of a Qualified IPO or at such time as the GSCP Parties shall
cease to have Minimum Ownership.
8.2. Board of Directors In General. Notwithstanding any
-----------------------------
termination of the provisions of Section 8.1 pursuant to Section 8.1(b) above,
for a period of two years from the date hereof, GSCP shall designate one nominee
and the Corporation shall nominate such nominee of GSCP to be elected to the
Board. GSCP's designee(s) to the Board pursuant to Section 8.1 or this Section
8.2 are referred to as the "GSCP Designees." GSCP agrees that each GSCP Designee
shall be a partner or employee of ▇▇▇▇▇▇▇, Sachs & Co. and shall otherwise be,
at the time he or she is designated by GSCP, reasonably acceptable to ▇▇▇▇▇. Any
GSCP Designees shall have access to all information which is available to other
members of the Board of Directors in their capacity as such.
8.3. Vacancies. So long as GSCP is entitled to nominate one
---------
or more directors pursuant to Sections 8.1 or 8.2 of this Agreement, each GSCP
Designee shall hold his office until his death or resignation or until his
successor shall have been duly elected and qualified. If any GSCP Designee shall
cease to serve as a director of the Corporation for any reason, the vacancy
resulting thereby shall be filled by another person designated by GSCP.
8.4. Committees; Subsidiaries. For so long as a GSCP
------------------------
Designee shall serve on the Board of Directors of the Corporation:
(a) The Corporation shall cause a GSCP Designee determined
by GSCP or the sole GSCP Designee, as applicable, to be appointed to each of the
committees of the Board (other than any special Committee formed for the purpose
of acting with respect to transactions between the Corporation and GSCP or any
of its Affiliates) and to the Board of Directors of each subsidiary of the
Corporation.
(b) If the GSCP Designee serving on any such committee or
any such Board of Directors of a subsidiary shall cease to serve as a director
of the Corporation for any reason or otherwise is unable to fulfill his or her
duties on any such committee or Board of Directors, he or she shall be succeeded
by a GSCP Designee determined by GSCP.
8.5. Removal. The Corporation and each Stockholder agrees
-------
that no GSCP Designee shall be removed from office without the consent of GSCP.
8.6. Directors' Indemnification. (a) The Corporation shall
--------------------------
obtain and cause to be maintained in effect, with financially sound insurers, a
policy of directors' and officers' liability insurance upon such terms and in
such amount as is reasonably acceptable to GSCP.
(b) The Corporation's Certificate of Incorporation or
By-Laws, or both, shall provide for indemnification of, and advancement of
expenses to, the directors of the Corporation to the fullest extent permitted by
law, which provisions shall not be amended, repealed or otherwise modified in
15
any manner adverse to the directors until at least 6 years following the date
that GSCP is no longer entitled to nominate directors pursuant to this Section
8.
8.7. Expenses. The Corporation shall pay all reasonable
--------
travel expenses and other out-of-pocket disbursements incurred by any GSCP
Designee or any observer appointed by GSCP to attend meetings of the Board of
Directors or any ▇▇▇▇▇ Director in connection with attending meetings of the
Board of Directors of the Corporation.
8.8. Attendance. GSCP shall use its reasonable best efforts
----------
to cause any GSCP Designee to be present (in person or via telephone) at every
meeting of the Board of Directors and of each committee established by the
Board.
8.9. Voting Arrangement. So long as GSCP is entitled to
------------------
nominate one or more persons to serve as directors pursuant to Sections 8.1 and
8.2 hereof, each Stockholder agrees to vote all shares of capital stock of the
Corporation Beneficially Owned by it with respect to the election or removal, to
or from the Board of Directors of the Corporation, of the ▇▇▇▇▇ Designees and
the GSCP Designees in a manner to effectuate the provisions of this Section 8.
SECTION 9. Major Transactions. (a) So long as GSCP shall
------------------
have the right, pursuant to Section 8.1, to nominate one or more persons to
serve as directors of the Corporation, and until the completion of a Qualified
IPO, the Corporation shall not, and shall cause its subsidiaries (if any) not
to, directly or indirectly, take any of the following actions without the prior
written approval of at least 51% of the Board of Directors of the Corporation,
which must include the approval of at least one GSCP Designee (except as
expressly permitted by this Agreement and except that the taking of the
following actions shall not require such approval if such actions are
specifically approved as part of an annual budget of the Corporation as to which
such consent has been given):
(i) consolidate or merge into or with any other
Person, or enter into any other similar business
combination transaction;
(ii) liquidate, dissolve or wind up, either
voluntarily or involuntarily;
(iii) purchase, acquire or obtain any capital
stock or other proprietary interest, directly or
indirectly, in any other entity or all or substantially
all of the business or assets of another Person for
consideration (including assumed liabilities) in excess of
$1,000,000 (other than any such acquisition effected for
the sole purpose of acquiring supplies or inventories and
in which no material liabilities are assumed, directly or
indirectly, by the Corporation);
(iv) enter into any material joint ventures or
partnerships or establish any non-wholly-owned
subsidiaries, in each case where the contribution or
investment by the Corporation is in excess of $1,000,000
in cash or assets;
(v) expand into new lines of business
subtantially unrelated to the Corporation's existing lines
of business, other than any such expansion as does not
involve expenditures by the Corporation, or the incurrence
of obligations or commitments by the Corporation, of an
16
aggregate amount in excess of $100,000 in any twelve (12)
month period;
(vi) sell, lease, transfer or otherwise dispose
of any asset or group of assets (other than sales of
inventory to customers in the ordinary course of
business), in one transaction or a series of related
transactions, for consideration in excess of $1,000,000 in
any twelve (12) month period;
(vii) create, incur, assume or suffer to exist
any indebtedness of the Corporation for borrowed money
(which shall include for purposes hereof Capitalized Lease
Obligations and guarantees or other contingent obligations
for indebtedness for borrowed money), (A) unless such
indebtedness constitutes (x) Senior Debt of the
Corporation, (y) Capitalized Lease Obligations of the
Corporation not in excess of $1 million or short-term
Capitalized Lease Obligations of the Corporation in any
amount or (z) the Notes or any notes issued to holders of
Preferred Stock in respect of dividend obligations; (B) if
as a result thereof the aggregate amount of Senior Debt of
the Corporation outstanding would exceed 200% of EBIT of
the Corporation for the period of the twelve (12) then
most recently completed months; or (C) if as a result
thereof EBIT of the Corporation for the period of the
twelve (12) then most recently completed months would be
less than 300% of the Pro Forma Interest Charges of the
Corporation;
(viii) mortgage, encumber, or create or incur
liens on, its assets, except in connection with any
indebtedness permitted under subclause (vii) or as may be
imposed by operation of law;
(ix) enter into or materially amend any
contract (other than any purchase order or any contract
the purchase obligation pursuant to which does not extend
over a period of more than 30 days) with a vendor which
relates, together with all other contracts (other than
those referred to in the previous parenthetical) with such
vendor, to 25% or more of the Corporation's annual supply
or inventory of computer chips, or any material license
agreement as to which the Corporation is the licensee and
which involves payments in excess of $300,000 or more in
any twelve (12) month period;
(x) pay, or set aside any sums for the payment
of, any dividends (other than payments made or proposed to
be made with respect to the Dividend, as defined in the
Purchase Agreement), 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 debt
for borrowed money (including capital leases) (except for
indebtedness to the extent it becomes due in accordance
with its terms or except as contemplated or permitted by
this Agreement or any stock-based employee plan) or issue,
sell or grant any capital stock or other securities (other
than the Management Shares, upon conversion of the
Preferred Stock or exercise of the Warrants or pursuant to
previously approved employee benefit, compensation or
incentive plans or agreements) except for dividends or
17
other distributions payable on the Common Stock solely in
the form of additional shares of Common Stock and except
for (A) the purchase of shares of capital stock from
former members of key management of the Corporation who
acquired such shares directly from the Corporation, if
each such purchase is made pursuant to contractual rights
or obligations of the Corporation relating to the
termination of employment of such former employee, (B) the
issuance to a member of key management of the Corporation
of shares of capital stock previously repurchased by the
Corporation from any other key management stockholder or
(C) any substantial concurrent purchase of shares of
capital stock from a management stockholder and sale of
the shares so repurchased to one or more other members of
key management of the Corporation;
(xi) make or commit to make capital
expenditures in excess of $1,000,000 per occurrence or
capital expenditures in any twelve (12) month period in an
aggregate amount in excess of $4,000,000;
(xii) register any securities under the
Securities Act (other than Management Shares or pursuant
to registration rights granted under the Registration
Rights Agreement or any employee benefit, compensation or
incentive plan or agreement), or grant any registration
rights (other than registration rights granted under the
Registration Rights Agreement or any employee benefit,
compensation or incentive plan or agreement);
(xiii) enter into any transaction with ▇▇▇▇▇ or
any ▇▇▇▇▇ Affiliate (other than transactions in the
ordinary course of business with respect to less than
$50,000 annually or pursuant to the terms of existing
contracts or instruments contemplated by or referred to in
the Purchase Agreement or disclosed in the Schedules
thereto);
(xiv) amend the Corporation's Certificate of
Incorporation (or file any Certificate of Designation) or
By-Laws, the Notes or the Dividend Remittitur and Pledge
Agreement, amend, modify or waive any provision of this
Agreement or the Registration Rights Agreement which
adversely affects the rights of GSCP Parties, or become a
party to any agreement which by its terms restricts the
Corporation's performance of, the terms of this Agreement,
the Registration Rights Agreement or any other material
documentation relating hereto the Notes, the Dividend
Remittitur and Pledge Agreement, the Certificate of
Incorporation or the By-Laws, including, without
limitation, any change in the number of directors
comprising the Board of Directors;
(xv) change the independent certified
accountants of the Corporation;
(xvi) approve the Corporation's annual budget;
(xvii) adopt or make any material amendment to
any employee benefit plan of the Corporation; provided,
however, that, other than with respect to any
stock-related employee benefit plan, such approval will
not be required unless such adoption or amendment
18
materially increases the aggregate compensation-related
costs of the Corporation;
(xviii) increase the total annual cash
compensation of ▇▇▇▇▇ to in excess of $1,000,000;
(xix) appoint or remove any person to or from
the positions of Chief Executive Officer (other than
▇▇▇▇▇), President, Chief Financial Officer, Chief
Operating Officer or General Counsel of the Corporation,
or enter into an employment agreement with any person
selected for, or holding, any such office, it being
understood that such approval will not be required for any
determination regarding the rate, amount or form of
compensation or benefits (other than stock-based
compensation or benefits) payable to any such employee,
other than as set forth in such employment agreement; or
(xx) optionally prepay either of the Notes.
Notwithstanding the above, no approval otherwise required by this Section 9(a)
shall be required for (A) any action or transaction which will not become
effective until or following the consummation of a Qualified IPO, to the extent
that such action or transaction does not (i) adversely affect in any material
respect the Corporation's ability to consummate a Qualified IPO or (ii)
adversely affect a GSCP Party's rights under the Registration Rights Agreement
or (B) the Corporation to agree to an increase or decrease of the interest rate
payable under the $5,140,000 Note.
(b) Following the completion of a Qualified IPO, for so
long as the GSCP Parties own any Stock of the Corporation, without the approval
of two-thirds of the Board members not affiliated with ▇▇▇▇▇ or not employed by
the Corporation, the Corporation shall not, and shall cause its subsidiaries (if
any), not to, enter into (i) any sale, lease, exchange, mortgage, pledge, grant
of a security interest, transfer or other disposition (in one transaction or a
series of transactions) of assets of the Corporation (including, without
limitation, any voting securities of a subsidiary) or any subsidiary to or from
any ▇▇▇▇▇ Party (other than pursuant to this Agreement), (ii) any merger or
consolidation of the Corporation or a subsidiary with any ▇▇▇▇▇ Affiliate, (iii)
the issuance or transfer by the Corporation or any subsidiary (in one
transaction or a series of transactions) of any securities of the Corporation or
any subsidiary, or both, to or from any ▇▇▇▇▇ Party, (iv) the adoption of any
plan or proposal for the liquidation or dissolution of the Corporation, or (v)
any reclassification of securities (including any reverse stock split), or
recapitalization of the Corporation, or any merger or consolidation of the
Corporation with any of its subsidiaries or any other transaction with any ▇▇▇▇▇
Party which has the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of equity or
convertible securities of the Corporation or any subsidiary directly or
indirectly beneficially owned by ▇▇▇▇▇ or an Affiliate of ▇▇▇▇▇.
(c) Notwithstanding any provision hereof to the contrary,
(i) all references to the Corporation in this Section 9 shall be deemed to be
references to the Corporation and its direct and indirect subsidiaries
considered on a consolidated basis, (ii) any transactions, agreements or
arrangements between or among the Corporation and/or direct or indirect
wholly-owned subsidiaries of the Corporation shall not be subject to any of the
19
approvals contemplated by this Section 9, and (iii) for purposes of the
foregoing, PNY Electronics Europe S.A. shall be deemed to be a wholly-owned
subsidiary of the Corporation.
(d) The Corporation shall, at the request of a GSCP
Designee, give notice to ▇▇▇▇▇ of the extension of the maturity date of the Note
pursuant to Section 1.4 of the $5,140,000 Note.
SECTION 10. 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 material
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.
(b) ▇▇▇▇▇ represents and warrants to GSCP and the GSCP
Investors as follows:
(i) Schedule 10 hereto sets forth a list of all
securities of the Corporation (including, without
limitation, shares of capital stock, convertible
securities, debentures, etc.) held of record or
Beneficially Owned by him as of the date hereof.
(ii) Except as set forth on Schedule 10 hereto,
he is not a party to any contract or agreement, written or
oral, (i) with respect to the securities of the
Corporation (including, without limitation, any voting
agreement, voting trust, stockholder's agreement,
registration rights agreement, etc.) or (ii) otherwise
with or relating to the Corporation.
SECTION 11. No Inconsistent Agreements. Neither the
--------------------------
Corporation nor any Stockholder shall take any action or enter into any
agreement which is inconsistent with the rights of any party hereunder or
otherwise conflicts with the provisions hereof.
20
SECTION 12. Further Assurances. (a) At any time or from
------------------
time to time, 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.
(b) At any time or from time to time, the parties agree to
take all action including, without limitation, voting to approve any amendment
to the Articles of Incorporation or the By-Laws, required to increase the
authorized number of shares of Common Stock, if necessary to permit the
conversion of all outstanding shares of Series A Preferred Stock, or to reflect
changes in the size of the Board of Directors pursuant to Section 8 hereof.
SECTION 13. Duration of Agreement. (a) Subject to Sections
---------------------
13(b), (c) and (d) and to Section 8.2, the rights and obligations of each
Stockholder under this Agreement shall terminate as to such Stockholder upon the
earlier to occur of (a) such Stockholder no longer being the Beneficial Owner of
any shares of Stock, and (b) the twenty-first anniversary of the date hereof
(subject to extension if and to the extent permitted under applicable state
law).
(b) The rights and obligations of the parties hereto under
Sections 6, 7 and 9(a) of this Agreement shall terminate upon the closing of the
sale of shares of Common Stock in a Qualified IPO.
(c) In the event that the GSCP Parties cease to have
Minimum Ownership, the rights and obligations of the parties hereto under
Sections 7, 8 and 9 of this Agreement shall terminate.
(d) In the event that (i) ▇▇▇▇▇ ceases to have the sole
right to vote in the aggregate at least 25%, or the ▇▇▇▇▇ Parties cease to
Beneficially Own in the aggregate at least 50%, of the number of shares of
Common Stock Beneficially Owned by the ▇▇▇▇▇ Parties as of the date hereof or
(ii) ▇▇▇▇▇ ceases to serve as the Chief Executive Officer of the Corporation,
all of the restrictions on Sales of Stock applicable to GSCP Parties under
Sections 3, 4, 5 and 6 of this Agreement, except the restrictions set forth in
Sections 3(d) and 3(e), shall terminate as to the GSCP Parties.
SECTION 14. Legends. Each certificate representing Warrants
-------
or shares of Preferred Stock or, upon exercise of Warrants, Common Stock issued
thereunder held by a Stockholder shall bear a legend containing the following
words:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT IN COMPLIANCE WITH SUCH ACT."
"IN ADDITION, THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE RESTRICTIONS ON TRANSFER
AND CERTAIN VOTING REQUIREMENTS SET FORTH IN THE PREFERRED
21
STOCK AND WARRANT PURCHASE AGREEMENT, DATED AS OF AUGUST
4, 1995, AND IN THE STOCKHOLDER AGREEMENT, DATED AS OF
AUGUST 4, 1995, BY AND AMONG P.N.Y. ELECTRONICS, INC.,
▇▇▇▇ ▇▇▇▇▇, G.S. CAPITAL PARTNERS II, L.P., GS CAPITAL
PARTNERS II OFFSHORE, L.P., ▇▇▇▇▇▇▇, SACHS & CO.
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, L.P. AND BRIDGE
STREET FUND 1995, L.P., COPIES OF WHICH ARE ON FILE IN THE
OFFICE OF P.N.Y. ELECTRONICS, INC."
The requirement that the above legend be placed upon
certificates evidencing any such securities shall cease and terminate upon the
earliest of the following events: (i) when such shares are transferred in an
underwritten public offering, (ii) when such shares are transferred pursuant to
Rule 144 under the Securities Act and (iii) the termination of this Agreement.
Upon the occurrence of such event, the Corporation, 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.
SECTION 15. Severability. Whenever possible, each provision
------------
of this Agreement shall be interpreted in such manner as to be effective and
valid, but if any provision of this Agreement is held to be invalid or
unenforceable in any respect, such invalidity or unenforceability shall not
render invalid or unenforceable any other provision of this Agreement.
SECTION 16. Governing Law. This Agreement shall be governed
-------------
by and construed in accordance with the laws of the State of New York without
giving effect to the principles of conflicts of law. 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.
SECTION 17. Successors and Assigns. This Agreement shall
----------------------
inure to the benefit of and shall be binding upon the parties hereto and their
respective successors, heirs, personal representatives and permitted assigns.
Except pursuant to a Sale of Stock by a Stockholder to an Affiliate of such
Stockholder, no Stockholder shall have the right to assign its rights and
obligations under this Agreement without the consent of the GSCP Parties, the
22
▇▇▇▇▇ Parties and the Corporation. The parties further acknowledge that any GSCP
Party and any ▇▇▇▇▇ Party, as the case may be, may transfer and assign all or a
part of its rights and obligations (to the extent legally permissible) under
this Agreement to one or more other GSCP Parties or ▇▇▇▇▇ Parties, respectively,
without the consent of the Corporation or any other Stockholder; upon any such
assignment, such assignee shall have and be able to exercise those rights of the
assigning Stockholder so assigned.
SECTION 18. Notices. All notices, requests, consents and
-------
other communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or by telecopy, nationally
recognized overnight courier or first class registered or certified mail, return
receipt requested, postage prepaid, addressed to such party at the address set
forth below or such other address as may hereafter be designated in writing by
such party to the other parties:
(i) if to the Corporation, to:
P.N.Y. Electronics, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇
with copies to:
▇▇▇▇▇ & Hill
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇, Esq.
and
Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(ii) if to GSCP or any GSCP Party, to:
GS Capital Partners II, L.P.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
23
with a copy to:
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
(iii) if to ▇▇▇▇▇ or any ▇▇▇▇▇ Party, to:
▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
with copies to:
▇▇▇▇▇ & Hill
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇, Esq.
and
Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
All such notices, requests, consents and other communications shall be deemed to
have been given when received.
SECTION 19. Amendments. The terms and provisions of this
----------
Agreement may be modified or amended, or any of the provisions hereof waived,
temporarily or permanently, pursuant to the written consent of the parties
hereto or, in the case of a waiver by a particular party of any specific right
of such party hereunder, pursuant to a written waiver or consent executed by
such party and delivered to the Corporation. In addition, to the extent any
modification, amendment or waiver does not adversely affect any other
Stockholder, the terms and provisions of this Agreement may be modified or
amended, or any of the provisions hereof waived, temporarily or permanently,
pursuant to the written consent of GSCP and ▇▇▇▇▇.
SECTION 20. Headings. The headings of the Sections of this
--------
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement.
24
SECTION 21. Nouns and Pronouns. Whenever the context
------------------
requires, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of names and pronouns shall
include the plural and vice-versa.
SECTION 22. Entire Agreement. 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 matter hereof and supersede all prior and contemporaneous agreements and
understandings with respect thereto.
SECTION 23. Third Parties. Except as specifically set forth
-------------
or referred to herein, nothing herein expressed or implied is intended or shall
be construed to confer upon or give to any person or corporation, other than the
parties hereto and their successors or permitted assigns, any rights or remedies
under or by reason of this Agreement.
SECTION 24. Counterparts. This Agreement may be executed in
------------
any number of counterparts, and each such counterpart shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement.
25
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
P.N.Y. ELECTRONICS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
--------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇, President and Chief
Executive Officer
GS CAPITAL PARTNERS II, L.P.
By: GS Advisors, L.P., its general partner
By: GS Advisors, Inc., its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, attorney-in-fact
GS CAPITAL PARTNERS II OFFSHORE, L.P.
By: GS Advisors, II (Cayman), L.P., its general partner
By: GS Advisors II, Inc., its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, attorney-in-fact
▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO. VERWALTUNGS GmbH
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, attorney-in-fact
and
By: /s/ ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇
--------------------------------------------------------
▇▇▇▇▇▇▇ ▇'▇▇▇▇▇, Managing Director
STONE STREET FUND 1995, L.P.
By: Stone Street Value Corp., General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, attorney-in-fact
▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, L.P.
By: Stone Street Value Corp., Managing General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, attorney-in-fact
/s/ ▇▇▇▇ ▇▇▇▇▇
-------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇
27
SCHEDULE 1.11(a)
Pre-IPO Designated Parties
--------------------------
1. Kingston Technology
Fountain Valley, Calif.
2. Micron Semiconductor, Inc.
3. Texas Instruments
4. Samsung
5. Hyundai
SCHEDULE 1.11(b)
Post-IPO Designated Parties
---------------------------
1. Kingston Technology
Fountain Valley, Calif.
2. Micron Semiconductor, Inc.
3. Texas Instruments
4. Samsung
5. Hyundai
6. Any other company or other entity that is engaged in or is about to
become engaged, directly or indirectly, in a business or operation
which is engaged in the marketing, manufacture, production, service
or other use of memory modules or memory upgrades or other brokerage
of any semi-conductor chip or is otherwise in competition with, or in
the same line or lines of business as, the Corporation.
SCHEDULE 7
Outstanding Securities
----------------------
▇▇▇▇ ▇▇▇▇▇ - 86,000 shares of Common Stock
GSCP and Affiliates - 13,000 shares of Preferred Stock and
Warrants to Purchase 4,875 shares of
Common Stock
SCHEDULE 10
Representations
---------------
(i) 86,000 shares of Common Stock
(ii) Stockholder Agreement, dated as of August 4, 1995
Registration Rights Agreement, dated as of August 4, 1995
$15,000,000 Subordinated Note
$5,140,000 Subordinated Note
Dividend Remittitur and Pledge Agreement
Loan Account with the Corporation