Exhibit 10.4
SECURITIES PURCHASE AND HOLDERS AGREEMENT
Dated as of
March 27, 1997
among
B COMPANIES HOLDINGS CORP.
BRUCKMANN, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & CO., L.P.
and
MANAGEMENT INVESTORS
TABLE OF CONTENTS
Page
----
Background.................................................................. 1
Terms....................................................................... 2
ARTICLE I PURCHASE OF SECURITIES........................................ 2
1.1 Sale and Purchase of Common Stock and Preferred Stock.............. 2
1.2 Closing; Termination............................................... 2
1.3 Conditions to Investor's Obligations............................... 3
1.4 Conditions to Holdings Corp.'s Obligations......................... 3
ARTICLE II REPRESENTATIONS, WARRANTIES AND
COVENANTS OF HOLDINGS CORP.......................... 4
2.1 Representations, Warranties and Covenants of
Holdings Corp..................................................... 4
ARTICLE III REPRESENTATIONS, WARRANTIES AND
COVENANTS OF EACH INVESTOR.......................... 5
3.1 Representations, Warranties and Covenants of Each Investor......... 5
3.2 Legend............................................................. 6
3.3 Management Investor Representations and Warranties................. 7
3.4 Representations and Warranties of BRS.............................. 7
3.5 Provisions Regarding Transfers of Securities....................... 7
3.6 Notation........................................................... 9
3.7 Limitation on Repurchase of Securities............................. 9
3.8 Reliance........................................................... 9
ARTICLE IV OTHER COVENANTS AND REPRESENTATIONS............................. 9
4.1 Financial Statements and Other Information......................... 9
4.2 Sale of Holdings Corp. or any of the Companies..................... 10
4.3 Tag-Along Rights................................................... 11
4.4 Covenant Not to Compete............................................ 14
ARTICLE V CORPORATE ACTIONS................................................ 15
5.1 Certificate of Incorporation and By-Laws........................... 15
5.2 Directors.......................................................... 15
5.3 Right to Remove Certain of Holdings Corp.'s Directors.............. 15
5.4 Right to Fill Certain Vacancies in Holdings Corp.'s Board.......... 15
5.5 Subsidiaries Governance............................................ 16
5.6 Management Rights.................................................. 16
5.7 Confidentiality.................................................... 17
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ARTICLE VI ADDITIONAL RESTRICTIONS ON TRANSFERS OF
SECURITIES HELD BY MANAGEMENT INVESTORS....................... 18
6.1 Certain Definitions................................................ 18
6.2 Restrictions on Transfer........................................... 21
6.3 Purchase Option.................................................... 22
6.4 Right of First Refusal on Transfer of Management Investor
Securities......................................................... 26
6.5 Purchaser Representative........................................... 27
6.6 Section 83(b) Elections............................................ 28
6.7 Involuntary Transfers.............................................. 28
6.8 Lapse.............................................................. 30
ARTICLE VII REGISTRATION RIGHTS............................................ 30
ARTICLE VIII MISCELLANEOUS.................................................. 31
8.1 Amendment and Modification......................................... 31
8.2 Survival of Representations and Warranties......................... 31
8.3 Successors and Assigns; Entire Agreement........................... 31
8.4 Separability....................................................... 32
8.5 Notices............................................................ 32
8.6 Governing Law...................................................... 33
8.7 Headings........................................................... 33
8.8 Counterparts....................................................... 33
8.9 Further Assurances................................................. 33
8.10 Remedies........................................................... 33
8.11 Party No Longer Owning Securities.................................. 33
8.12 No Effect on Employment............................................ 33
8.13 Pronouns........................................................... 34
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SECURITIES PURCHASE AND HOLDERS AGREEMENT
SECURITIES PURCHASE AND HOLDERS AGREEMENT, dated as of March 27, 1997
(the "Agreement"), by and among (1) B COMPANIES HOLDINGS CORP., a Delaware
corporation ("Holdings Corp."), (2) BRUCKMANN, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & CO., L.P., a
Delaware limited partnership ("BRS"), the individuals listed on Exhibit A hereto
as the BRS Co-Investors (the "BRS Co-Investors" and, together with BRS and their
respective BRS Permitted Transferees, the "BRS Entities") and (3) the
individuals listed on Exhibit A hereto as "Management Investors" (such
individuals, together with their Permitted Transferees, the "Management
Investors"). The BRS Entities and the Management Investors are sometimes
referred to hereinafter individually as an "Investor" and collectively as the
"Investors."
BACKGROUND
A. Holdings Corp. desires to sell, and each of the BRS Entities
desires to purchase, the number of shares of 13% Series A Cumulative Preferred
Stock, par value $.01 per share ("Preferred Stock"), of Holdings Corp. set forth
opposite its name on Exhibit A.
B. The Board of Directors of Holdings Corp. wishes to grant to the
Management Investors the opportunity to make an investment in Holdings Corp.,
and thereby to acquire an increased personal and proprietary interest in
Holdings Corp.'s and the Companies' (as defined below) success and progress
through the purchase of Securities (as defined below) pursuant to this
Agreement. Each of the Management Investors shall make an investment in (i) the
number of shares of Common Stock, par value $.01 per share ("Common Stock"), of
Holdings Corp. set forth opposite its name on Exhibit A, and (ii) the number of
shares of Preferred Stock of Holdings Corp. set forth opposite its name on
Exhibit A, by delivering cash.
C. As used herein, the term "Companies" shall mean, collectively,
(i) ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, Inc., a Delaware corporation, (ii) B&G Foods, Inc., a
Delaware corporation, (iii) Roseland Manufacturing, Inc., a Delaware corporation
and (iv) ▇▇▇▇▇ & ▇▇▇▇▇▇, Inc., a Delaware corporation, and the term "Company"
shall be construed accordingly. As used herein, the term "Securities" shall
mean the Common Stock and the Preferred Stock held by any party hereto,
including shares of Common Stock, Preferred Stock and all other securities of
Holdings Corp. (or a successor to Holdings Corp.) received on account of
ownership of the Common Stock or the Preferred Stock including all securities
issued in connection with any merger, consolidation, stock
dividend, stock distribution, stock split, reverse stock split, stock
combination, recapitalization, reclassification, subdivision, conversion or
similar transaction in respect thereof. A reference to any class of Securities
shall be deemed to include reference to all Securities issued in respect
thereof.
D. The Investors and Holdings Corp. wish to set forth certain
agreements regarding their future relationships and their rights and obligations
with respect to the Securities.
TERMS
In consideration of the mutual representations, warranties and
covenants contained herein, and intending to be legally bound hereby, the
parties hereto agree as follows:
ARTICLE I
PURCHASE OF SECURITIES
1.1 SALE AND PURCHASE OF COMMON STOCK AND PREFERRED STOCK. Subject
to the terms and conditions set forth herein, at the Closing (as defined in
Section 1.2), Holdings Corp. will (i) issue and sell to each of the BRS Entities
on Exhibit A, and each of the BRS Entities on Exhibit A will purchase, the
number of shares of Preferred Stock set forth opposite the applicable name of
the BRS Entity on Exhibit A, and (ii) issue and sell to each of the Management
Investors on Exhibit A, and each of the Management Investors on Exhibit A will
purchase, the number of shares of Common Stock and Preferred Stock set forth
opposite the applicable name of the Management Investor on Exhibit A. The
purchase price for the Common Stock and Preferred Stock, together with the
aggregate purchase price to be paid by each Investor pursuant to this Section
1.1, is set forth opposite each Investor's name on Exhibit A.
1.2 CLOSING; TERMINATION. The closing (the "Closing") of the
purchase and sale of the Securities will take place on March 27, 1997, or at
such other time or on such other date as may be agreed by the parties hereto
(the "Closing Date").
(a) At the Closing, Holdings Corp. will deliver to each BRS
Entity on Exhibit A certificates evidencing the number of shares of Preferred
Stock to be purchased by such BRS Entity as set forth opposite each such BRS
Entity's name on Exhibit A, registered in such BRS Entity's name, against
payment of the purchase price therefor in cash, by certified bank, cashier's or
personal check or by federal wire transfer of immediately available funds, with
confirmed receipt (collectively, "Cash").
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(b) At the Closing, Holdings Corp. will deliver to each
Management Investor on Exhibit A certificates evidencing the number of shares of
Common Stock and Preferred Stock to be purchased by each such Management
Investor as set forth opposite each such Management Investor's name on Exhibit
A, registered in such Management Investor's name, against payment of the
purchase price therefor in Cash.
1.3 CONDITIONS TO INVESTOR'S OBLIGATIONS. The obligation of each
Investor to purchase and pay for the Common Stock and/or Preferred Stock at the
Closing is subject to the satisfaction on or prior to the Closing Date of the
following conditions:
(a) The representations and warranties of Holdings Corp. set
forth in Article II shall be true and correct in all material respects on and as
of the Closing Date as though then made, and all covenants of Holdings Corp. set
forth in Article II required to be performed on or prior to the Closing shall
have been performed in all material respects.
(b) Holdings Corp. shall have delivered to each of the Investors
certificates for the Common Stock and/or the Preferred Stock required pursuant
to Section 1.2.
(c) No preliminary or permanent injunction or order, decree or
ruling of any nature issued by any court or governmental agency of competent
jurisdiction, nor any statute, rule, regulation or executive order promulgated
or enacted by any United States federal, state or local governmental authority,
shall be in effect, that would prevent the consummation of the transactions
contemplated by this Agreement.
(d) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not violate Holdings
Corp.'s Amended and Restated Certificate of Incorporation ("Certificate of
Incorporation") or its Amended and Restated By-Laws ("By-Laws"), any applicable
laws or orders, regulations, rules or requirements of a court, public body or
authority by which Holdings Corp. is bound.
1.4 CONDITIONS TO HOLDINGS CORP.'S OBLIGATIONS. The obligations of
Holdings Corp. to issue and sell the Common Stock and the Preferred Stock to
each Investor as set forth herein at the Closing are subject to the satisfaction
on or prior to the Closing Date of the following conditions:
(a) The representations and warranties of each Investor set
forth in Article III shall be true and correct in all material respects at and
as of the Closing Date as though then made, and all covenants of each Investor
set forth in Article III
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required to be performed at or prior to the Closing shall have been performed in
all material respects.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not violate any
applicable laws or orders, regulations, rules or requirements of a court, public
body or authority by which any Investor is bound.
(c) The conditions set forth in subparagraph (c) of Section 1.3
hereof shall have been satisfied.
(d) Each of the Investors shall have paid or shall pay
concurrently the purchase price for the Securities required to be paid by it
pursuant to this Article I.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF HOLDINGS CORP.
2.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF HOLDINGS CORP.
Holdings Corp. represents and warrants to, and covenants and agrees with, each
of the Investors as follows:
(a) Holdings Corp. is a corporation validly existing and in good
standing under the laws of the State of Delaware.
(b) Holdings Corp. has full corporate power and corporate
authority to make, execute, deliver and perform this Agreement and to carry out
all of the transactions provided for herein.
(c) Holdings Corp. has taken such corporate action as is
necessary or appropriate to enable it to perform its obligations hereunder,
including, but not limited to, the issuance and sale of the Common Stock and the
Preferred Stock to be issued by it, and this Agreement constitutes the legal,
valid and binding obligation of Holdings Corp., enforceable against Holdings
Corp. in accordance with the terms hereof.
(d) The Securities, when issued in compliance with the
provisions of this Agreement, will be validly issued, fully paid and
non-assessable.
(e) As of the Closing, the authorized capital stock of Holdings
Corp. will consist of (i) 250,000 shares of Common Stock, of which 100,000
shares will be issued and outstanding and (ii) 50,000 shares of preferred stock,
par value $.01 per share, of which 12,000 shares will be designated as Preferred
Stock, all of
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which Preferred Stock will be issued and outstanding immediately after the
Closing. Except as provided in this Agreement, in the foregoing sentence or set
forth in the terms of the authorized capital stock of Holdings Corp., as of the
Closing Date (x) there will be no rights, subscriptions, warrants, options,
conversion rights, or agreements of any kind outstanding to purchase from
Holdings Corp., or otherwise require Holdings Corp. to issue, any shares of
capital stock of Holdings Corp. or securities or obligations of any kind
convertible into or exchangeable for any shares of capital stock of Holdings
Corp.; (y) Holdings Corp. will not be subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
capital stock; and (z) the Securities will constitute all of the outstanding
shares of Holdings Corp.'s capital stock.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF EACH INVESTOR
3.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF EACH INVESTOR. Each
of the Investors severally represents and warrants to, and covenants and agrees
with, Holdings Corp. that:
(a) Such Investor has full legal right, capacity, power and
authority (including the due authorization by all necessary corporate action in
the case of corporate Investors) to enter into this Agreement and to perform
such Investor's obligations hereunder without the need for the consent of any
other person or entity; and this Agreement has been duly authorized, executed
and delivered and constitutes the legal, valid and binding obligation of such
Investor enforceable against such Investor in accordance with the terms hereof.
(b) The Securities being acquired hereunder are being acquired by
such Investor for investment and not with a view to any distribution thereof
that would violate the Securities Act of 1933, as amended (the "Securities
Act"), or the applicable state securities laws of any state; and such Investor
will not distribute the Securities in violation of the Securities Act or the
applicable securities laws of any state.
(c) Such Investor understands that the Securities being acquired
hereunder have not been registered under the Securities Act or the securities
laws of any state and must be held indefinitely unless transfer thereof is
subsequently registered under the Securities Act and any applicable state
securities laws or unless an exemption from such registration becomes or is
available.
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(d) Such Investor is financially able to hold the Securities
being acquired hereunder for long-term investment, believes that the nature and
amount of the Securities being purchased are consistent with such Investor's
overall investment program and financial position, and recognizes that there are
substantial risks involved in the purchase of the Securities.
(e) Each Investor acquiring Securities hereunder confirms that
(i) such Investor is familiar with the proposed business of Holdings Corp.,
(ii) such Investor has had the opportunity to ask questions of the officers and
directors of Holdings Corp. and to obtain (and that such Investor has received
to its satisfaction) such information about the business and financial condition
of Holdings Corp. as it has reasonably requested, and (iii) such Investor,
either alone or with such Investor's purchaser representative (as defined in
Rule 501(h) promulgated under the Securities Act), if any, has such knowledge
and experience in financial and business matters such that such Investor is
capable of evaluating the merits and risks of the prospective investment in the
Securities.
3.2 LEGEND. The certificates representing the Securities, including
certificates issued upon any voluntary or involuntary transfer of such
Securities, unless such transfer is pursuant to a registered public offering of
the Securities or the conditions specified in Section 3.5 hereof are satisfied,
shall bear the following legend in addition to any other legend required under
applicable law:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE TRANSFERRED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL, SATISFACTORY TO B COMPANIES
HOLDINGS CORP., THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO THE
TERMS AND CONDITIONS OF A SECURITIES PURCHASE AND HOLDERS AGREEMENT BY AND
AMONG B COMPANIES HOLDINGS CORP. AND THE HOLDERS SPECIFIED THEREIN, A COPY
OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF B COMPANIES
HOLDINGS CORP. THE SALE, TRANSFER OR OTHER DISPOSITION OF THE SECURITIES
IS SUBJECT TO THE TERMS OF SUCH AGREEMENT AND THE SECURITIES ARE
TRANSFERABLE ONLY UPON PROOF OF COMPLIANCE THEREWITH.
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3.3 MANAGEMENT INVESTOR REPRESENTATIONS AND WARRANTIES. Each
Management Investor severally represents and warrants to Holdings Corp. that:
(a) Such Management Investor's residence address and social
security number are as set forth below such Management Investor's signature to
this Agreement.
(b) In formulating a decision to enter into this Agreement, such
Management Investor has relied solely upon an independent investigation of
Holdings Corp.'s business and upon consultations with such Management Investor's
legal and financial advisors (including, if any, such Management Investor's
purchaser representative) with respect to this Agreement and the nature of such
Management Investor's investment; and that in entering into this Agreement, no
reliance was placed upon any representations or warranties other than those
contained in this Agreement.
3.4 REPRESENTATIONS AND WARRANTIES OF BRS.
(a) Each of the BRS Entities on Exhibit A represents and warrants
to Holdings Corp. that he or it qualifies as an "accredited investor" within the
meaning of Rule 501(a) of Regulation D under the Securities Act, and has such
knowledge and experience in financial and business matters that make him or it
capable of evaluating the merits and risks of his or its purchase of the
Preferred Stock.
(b) The execution, delivery and performance of this Agreement by
each BRS Entity do not contravene or violate any laws, rules or regulations
applicable to him or it.
3.5 PROVISIONS REGARDING TRANSFERS OF SECURITIES.
The following provisions shall apply with respect to the Transfer
(as hereinafter defined) of any Securities owned by any Management Investor:
(a) Except as provided in Sections 4.3 and 6.2 hereof and the
provisions set forth below in this Section 3.5, each Management Investor is
prohibited from Transferring any of his or its Securities except in the
following circumstances: (i) to Permitted Transferees (as hereinafter defined),
(ii) pursuant to an Approved Sale (as hereinafter defined) and in accordance
with Section 4.2 hereof, and (iii) pursuant to an effective registration
statement under the Securities Act following exercise of the Management
Investor's registration rights under the Registration Rights Agreement (as
defined in Article VII); PROVIDED, HOWEVER, that, in the case of any such
Transfer, except in the case of an Approved Sale or sale pursuant to an
effective registration statement, each such transferee shall take such
Securities subject to and be fully bound by the terms of this Agreement
applicable to
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it with the same effect as if it were a party hereto; and PROVIDED, FURTHER,
that no Transfer shall be effected except in compliance with the registration
requirements of the Securities Act (and applicable state securities laws) or
pursuant to an available exemption therefrom.
(b) No Transfer shall, in any event, be made by any Management
Investor unless in connection with such Transfer, the applicable transferee has
complied with the terms and provisions of this Agreement. No Management
Investor or transferee may effect any Transfer of Securities, whether to a
Permitted Transferee or otherwise, unless the transferee executes an agreement
pursuant to which such transferee agrees to be bound by the terms and provisions
of this Agreement applicable to the transferor (except in the case of an
Approved Sale, a sale pursuant to an effective registration statement under the
Securities Act or as otherwise specifically provided herein). Any purported
Transfer in violation of this covenant shall be null and void and of no force
and effect and the purported transferee shall have no rights or privileges in or
with respect to Holdings Corp. As used herein, "Transfer" means the making of
any sale, exchange, assignment, hypothecation, gift, security interest, pledge
or other encumbrance, or any contract therefor, any voting trust or other
agreement or arrangement with respect to the transfer of voting rights
(including any proxy or similar arrangement (whether or not revocable)) or any
other beneficial interest in any of the Securities, the creation of any other
claim thereto or any other transfer or disposition whatsoever, whether voluntary
or involuntary, affecting the right, title, interest or possession in or to such
Securities.
Prior to any proposed Transfer of any Securities, the holder
thereof shall give written notice to Holdings Corp. describing the manner and
circumstances of the proposed Transfer accompanied, if requested by Holdings
Corp., by a written opinion of legal counsel reasonably satisfactory to Holdings
Corp., addressed to Holdings Corp. and the transfer agent, if other than
Holdings Corp., and reasonably satisfactory in form and substance to each
addressee, to the effect that the proposed Transfer of the Securities may be
effected without registration under the Securities Act and applicable state
securities laws. Each certificate evidencing the Securities transferred shall
bear the legend set forth in Section 3.2, except that such certificate shall not
bear such legend if the opinion of counsel referred to above is to the further
effect that such legend is not required in order to establish compliance with
any provision of the Securities Act or applicable state securities laws.
(c) As used herein, "Permitted Transferee" shall mean in the
case of any Management Investor (a "Transferor Investor"), (A) Holdings Corp. or
any BRS Entity, (B) any spouse or lineal descendant of a Management Investor, or
any heir, executor, administrator, testamentary trustee, legatee or beneficiary
of a
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Management Investor or any of the foregoing persons referred to in this clause
(B) (collectively, "Transferor Investor Associates") and (C) any trust, the
beneficiaries of which, or any corporation, limited liability company or
partnership, the stockholders, members or general and limited partners of which
include only such Transferor Investors and their respective Transferor Investor
Associates, provided that, such beneficiary shall be deemed to be a "Management
Investor" within this clause (C) solely for the purpose of determining the
definition of "Permitted Transferee" pursuant to this Section 3.5(c).
(d) As used herein, "Affiliate" of any person means any person,
directly or indirectly, controlling, controlled by or under common control with
such person, and includes any person who is an officer, director or employee of
such person and any person who would be deemed to be an "affiliate" or an
"associate" of such person, as those terms are defined in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended. As used in this definition, "controlling" (including, with its
correlative meanings, "controlled by" and "under common control with") means
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities, partnership or
other ownership interests, by contract or otherwise).
3.6 NOTATION. A notation will be made in the appropriate transfer
records of Holdings Corp. with respect to the restrictions on transfer of the
Securities referred to in this Agreement.
3.7 LIMITATION ON REPURCHASE OF SECURITIES. Each Management Investor
understands that Holdings Corp. has entered into certain financing agreements
which contain prohibitions, restrictions and limitations on the ability of
Holdings Corp. to purchase any of the Securities and to pay dividends on the
Common Stock and Preferred Stock.
3.8 RELIANCE. Each Investor acknowledges that Holdings Corp. and
each of the other Investors is entering into this Agreement in reliance upon
such Investor's representations and warranties and other covenants and
agreements contained herein.
ARTICLE IV
OTHER COVENANTS AND REPRESENTATIONS
4.1 FINANCIAL STATEMENTS AND OTHER INFORMATION. So long as BRS owns
any of the Securities, Holdings Corp. shall deliver to BRS:
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(a) as soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of Holdings
Corp., consolidated balance sheets of Holdings Corp. and its subsidiaries as of
the end of such period, and consolidated statements of income and cash flows of
Holdings Corp. and its subsidiaries for the period then ended prepared in
conformity with generally accepted accounting principles applied on a consistent
basis, except as otherwise noted therein, and subject to the absence of
footnotes and to year-end adjustments; and
(b) as soon as available and in any event within 90 days after
the end of each fiscal year of Holdings Corp., a consolidated balance sheet of
Holdings Corp. and its subsidiaries as of the end of such year, and consolidated
statements of income and cash flows of Holdings Corp. and its subsidiaries for
the year then ended prepared in conformity with generally accepted accounting
principles applied on a consistent basis, except as otherwise noted therein,
together with an auditor's report thereon of a firm of established national
reputation.
4.2 SALE OF HOLDINGS CORP. OR ANY OF THE COMPANIES.
(a) If the Board of Directors of Holdings Corp. and holders of
at least a majority of Holdings Corp.'s Common Stock then outstanding approve
the sale of Holdings Corp. or any of the Companies to an unaffiliated third
person (whether by merger, consolidation, reorganization, sale of all or
substantially all of its assets or sale of a majority of the outstanding capital
stock) (an "Approved Sale"), each Investor and his or its transferees (including
Permitted Transferees, but excluding transferees who receive such shares of
Common Stock unrestricted as to transfer under the Securities Act)
("Transferees") will consent to, vote for, and raise no objections against, and
waive dissenters and appraisal rights (if any) with respect to, the Approved
Sale, and will sell all of his or its Securities in such Approved Sale upon the
terms and conditions approved by the Board of Directors of Holdings Corp. and
the holders of a majority of the Common Stock then outstanding, provided that
all Investors receive the same form and amounts of consideration per share of
the applicable Securities. Each Investor and Transferee will take all necessary
and desirable actions in connection with the consummation of an Approved Sale.
(b) The obligations of each of the Investors and the Transferees
with respect to an Approved Sale are subject to the satisfaction of the
conditions that: (i) upon the consummation of the Approved Sale, all of the
Investors and the Transferees will receive the same form and amount of
consideration per share of the applicable Securities, or if any holder of
Securities is given an option as to the form and amount of consideration to be
received, all Investors and Transferees will be given the same option and (ii)
the terms of the Approved Sale shall not include any
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provisions subjecting an Investor or its Transferees to any indemnification
obligation or other liability beyond the value of the consideration received in
the Approved Sale by such Investor or Transferees.
4.3 TAG-ALONG RIGHTS.
(a) Except as otherwise provided in Section 4.3(e), and subject
in all instances to the provisions of Section 3.5, each of the BRS Entities
covenants and agrees with the other Investors and their Transferees and assigns
that he, she or it will not effect a Transfer of shares of Common Stock and/or
Preferred Stock in, or otherwise participate in, any transaction that constitute
a "Significant Transfer" (as hereinafter defined) unless all other Investors and
their Transferees and assigns (collectively, the "Tag-Along Rightholders") are
offered an equal opportunity (the "Tag-Along Right") to participate in such
transaction or transactions on a pro rata basis (based on the number of shares
of Common Stock or Preferred Stock outstanding on a fully-diluted basis) and on
identical terms. As used herein, a "Significant Transfer" means a Transfer,
which either alone or taken together with all prior Transfers by any BRS Entity
to any person or persons other than a BRS Permitted Transferee (as hereinafter
defined), aggregate to one-half (1/2) or more of the total number of shares of
Common Stock or Preferred Stock held by such Investor on the Closing Date. A
"BRS Permitted Transferee" shall mean, (A) any other BRS Entity or other
Investor, (B) any general partner of a BRS Entity (a "BRS Partner") and any
corporation, partnership or other entity that is an Affiliate (as hereinafter
defined) of any BRS Entity or BRS Partner (collectively, "BRS Affiliates"), (C)
any managing director, director, general partner, limited partner, officer or
employee of any BRS Entity or any BRS Affiliate, or any spouse, lineal
descendant or immediate family member of any BRS Entity or any heir, executor,
administrator, testamentary trustee, legatee or beneficiary of a BRS Entity or
any of the foregoing persons described in this clause (C) PROVIDED, HOWEVER,
that no BRS Affiliate that becomes such an entity primarily for the purpose of
effecting a transfer of Securities shall be considered a Permitted Transferee
(collectively, "BRS Associates"), (D) any trust, the beneficiaries of which, or
any corporation, limited liability company or partnership, the stockholders,
members or general and limited partners of which include only BRS Entities, BRS
Affiliates, or BRS Associates, and (E) any other transferee of Common Stock from
any BRS Entity PROVIDED, that the aggregate number of shares of Common Stock
transferred to such transferee, together with all other transfers made by all
BRS Entities since the Closing Date to Permitted Transferees specified in this
clause (E), shall not exceed 33% of the number of shares of Common Stock
originally purchased by the BRS Entities on the Closing Date; and
(b) Prior to any sale of Common Stock and/or Preferred Stock
subject to the provisions of Section 4.3(a), the
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seller (the "Tag-Along Seller") shall notify Holdings Corp. in writing of the
proposed sale. Such notice (the "Tag-Along Sale Notice") shall set forth:(i)
the number of shares of Common Stock and/or Preferred Stock subject to the
proposed sale;(ii) the name and address of the proposed purchaser; and (iii) the
proposed amount of consideration and terms and conditions of payment offered by
such proposed purchaser. Holdings Corp. shall promptly, and in any event within
ten days, mail or hand deliver or cause to be mailed or hand delivered the
Tag-Along Sale Notice to the Tag-Along Rightholders. Each Tag-Along Rightholder
may exercise the Tag-Along Right by delivery of a written notice (the "Tag-Along
Acceptance Notice") to the Tag-Along Seller within fifteen days of the date
Holdings Corp. mailed or caused to be mailed the Tag-Along Sale Notice. The
Tag-Along Acceptance Notice shall state the number of shares of Common Stock
and/or Preferred Stock that the Tag-Along Rightholder proposes to include in the
proposed sale. If no Tag-Along Acceptance Notice is received during the
fifteen-day period referred to above, the Tag-Along Seller shall have the right
for a 90-day period to effect the proposed sale of shares of Common Stock and/or
Preferred Stock on terms and conditions no more favorable than those stated in
the Tag-Along Sale Notice. Any Investor delivering a Tag-Along Acceptance
Notice shall participate in the proposed transaction as set forth in Section
4.3(a). Concurrently with the consummation of the Significant Transfer, the
Tag-Along Seller shall (i) notify each Tag-Along Rightholder who has delivered a
Tag-Along Acceptance Notice (an "Accepting Tag-Along Holder"), (ii) remit to the
Accepting Tag-Along Holder the aggregate consideration for the shares of Common
Stock and/or Preferred Stock to be sold by the Accepting Tag-Along Holders in
the Significant Transfer as contemplated pursuant to Section 4.3(a) hereof, and
(iii) furnish such other evidence of the completion and time of completion of
the Significant Transfer and the terms thereof as may be reasonably requested by
the Accepting Tag-Along Holders.
(c) (i) Notwithstanding the other requirements of this Section
4.3, a Tag-Along Seller may sell Common Stock and/or Preferred Stock at any time
without complying with the requirements of Section 4.3(b) so long as the
Tag-Along Seller deposits into escrow with a nationally recognized financial
institution at the time of sale that amount of consideration received in the
sale equal to the "Escrow Amount." As used herein, the "Escrow Amount" shall
equal that amount of consideration that all Tag-Along Rightholders would have
been entitled to receive if they had the opportunity to participate in the sale
on a pro rata basis, determined as if each Tag-Along Rightholder (A) delivered a
Tag-Along Acceptance Notice to the Tag-Along Seller in the time period set forth
in Section 4.3(b) and (B) proposed to include all of her, his or its shares of
Common Stock and/or Preferred Stock in such sale.
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(ii) The Tag-Along Seller shall notify Holdings Corp. in
writing of the proposed sale pursuant to this Section 4.3(c) no later than the
date of such sale. Such notice (the "Escrow Notice") shall set forth the
information required in the Tag-Along Sale Notice, and in addition, such notice
shall state the name of the escrow agent and, if the consideration (in whole or
in part) for the sale was cash, then the account number of the escrow account.
Holdings Corp. shall promptly, and in any event within ten days, mail or cause
to be mailed the Escrow Notice to each Tag-Along Rightholder. Such Tag-Along
Rightholder may exercise the Tag-Along Right by delivery to the Tag-Along
Seller, within fifteen days of the date Holdings Corp. mailed or caused to be
mailed the Escrow Notice, of (A) a written notice specifying the number of
shares of Common Stock and/or Preferred Stock it proposes to sell and (B) the
certificates for such Common Stock and/or Preferred Stock, with stock powers
duly endorsed in blank and with signatures guaranteed.
(iii)Promptly after the expiration of the fifteenth day
after Holdings Corp. has mailed or caused to be mailed the Escrow Notice, (A)
the Tag-Along Seller shall purchase that number of shares of Common Stock and/or
Preferred Stock as the Tag-Along Seller would have been required to include in
the sale had the Tag-Along Seller complied with the provisions of Section
4.3(b), (B) all shares of Common Stock and/or Preferred Stock not required to be
purchased by the Tag-Along Seller shall be returned to the Tag-Along
Rightholders thereof and (C) all funds and other consideration held in escrow
shall be released to the Tag-Along Seller. If the Tag-Along Seller received
consideration other than cash in his, her or its sale, the Tag-Along Seller
shall purchase the shares of Common Stock and/or Preferred Stock tendered by
paying to the Tag-Along Rightholders the same non-cash consideration and cash in
the same proportion as received by the Tag-Along Seller in the sale. The
Tag-Along Seller shall pay all costs and expenses of the escrow agent, and any
interest on the Escrow Amount shall accrue to the benefit of Holdings Corp.
(d) The Tag-Along Rights provided pursuant to this Section 4.3
shall terminate upon an Initial Public Offering, or upon a distribution by BRS
of all the Securities to its partners. An "Initial Public Offering" shall mean
the sale by Holdings Corp. pursuant to an effective registration statement under
the Securities Act of Common Stock for gross offering proceeds of at least $20
million.
(e) Notwithstanding anything to the contrary, a Tag-Along Seller
may make any of the following sales without offering the Tag-Along Rightholders
the opportunity to participate: (a) sales by a Tag-Along Seller to any
Affiliate or Permitted Transferee, PROVIDED that the proposed purchaser agrees
in writing to be bound by the provisions of this Agreement; (b) sales pursuant
13
to an effective registration statement under the Securities Act; and (c) sales
pursuant to an Approved Sale.
4.4 COVENANT NOT TO COMPETE. Each Management Investor hereby agrees
that during the term of his employment by any of the Companies and for a period
of six (6) months after the Management Investor has incurred a Termination Date
(as defined in Section 6.3(a)) for any reason other than termination without
Cause (as defined in Section 6.1) (the "Restriction Period"), such Management
Investor shall not, directly or indirectly, own, manage, operate, join, control
or participate in the ownership, management, operation or control of, or be
connected as an officer, director, employee, consultant, stockholder, partner or
otherwise with, any component of a business which at any relevant time during
such period directly or indirectly competes with any of the Companies or their
Affiliates in the Covered Business (as hereafter defined) in the States of New
York, New Jersey, Maryland, Michigan or Delaware or any other state in the
United States in which any of the Companies or their Affiliates are conducting
business during the term of his employment. For purposes hereof, the term
"Covered Business" shall mean the purchase, manufacture, marketing or selling of
the products and the raw materials with respect to such products as to which the
Management Investor has assisted the Companies or their Affiliates in
purchasing, manufacturing, marketing or selling during the term of the
employment of the Management Investor, together with any use or modification of
any such products for the same, new or additional purposes or applications. The
restrictive covenant contained in this Section 4.4 is a covenant independent of
any other provision of this Agreement, and the existence of any claim which such
Management Investor may allege against any of the Companies, whether based on
this Agreement or otherwise, shall not prevent the enforcement of this covenant.
Each of the Management Investors agrees that a breach by him of this Section 4.4
shall cause irreparable harm to the Companies and their Affiliates and that the
Companies' and Holdings Corp.'s remedies at law for any breach or threat of
breach by any of the Management Investors of the provisions of this Section 4.4
shall be inadequate, and that the Companies or Holdings Corp. shall be entitled
to an injunction or injunctions to prevent breaches of this Section 4.4 and to
enforce specifically the terms and provisions hereof, in addition to any other
remedy to which the Companies may be entitled at law or in equity. The length
of time for which this covenant not to compete shall be in force shall not
include any period of violation or any other period required for litigation
during which any of the Companies seeks to enforce this covenant. In the event
that this covenant not to compete shall be determined by any court of competent
jurisdiction to be unenforceable by reason of its extending for too long a
period of time or over too large a geographical area or by reason of its being
too extensive in any other respect, it shall be interpreted to extend only over
the longest period of time for which it may be enforceable, and/or over the
largest geographical area as to which
14
it may be enforceable and/or to the maximum extent in all other aspects as to
which it may be enforceable, all as determined by such court in such action.
ARTICLE V
CORPORATE ACTIONS
5.1 CERTIFICATE OF INCORPORATION AND BY-LAWS. Each Investor has
reviewed the Certificate of Incorporation and By-Laws of Holdings Corp. in the
forms attached hereto as Exhibits B-1 and B-2, respectively, and hereby approves
and ratifies the same.
5.2 DIRECTORS.(a) Each Investor and Permitted Transferee agrees that
it shall take, at any time and from time to time, all action necessary
(including voting the Common Stock owned by him, her or it, calling special
meetings of stockholders and executing and delivering written consents) to
ensure that the Board of Directors of Holdings Corp. is composed at all times of
such number of persons as the Board of Directors shall determine and that the
Board of Directors shall be composed of at least the following persons: one
individual designated by the Management Investors holding a majority of the
Common Stock owned by the Management Investors (who shall be, subject to the
rights of the Management Investors under Section 5.3, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ for so
long as he is President of BGH Holdings, Inc., a Delaware corporation); and two
individuals designated by BRS.
(b) Each Investor approves and ratifies the election of the
following persons as the directors of Holdings Corp. following the Closing:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
5.3 RIGHT TO REMOVE CERTAIN OF HOLDINGS CORP.'S DIRECTORS. Each of
BRS and the Management Investors, as the case may be, may request that any
director designated by it be removed (with or without cause) by written notice
to the other Investors, and, in any such event, each Investor shall promptly
consent in writing or vote or cause to be voted all shares of Common Stock now
or hereafter owned or controlled by it for the removal of such person as a
director. In the event any person ceases to be a director, such person shall
also cease to be a member of any committee of the Board of Directors of Holdings
Corp.
5.4 RIGHT TO FILL CERTAIN VACANCIES IN HOLDINGS CORP.'S BOARD. In
the event that a vacancy is created on Holdings Corp.'s Board of Directors at
any time by the death, disability, retirement, resignation or removal (with or
without cause) of a
15
director designated by BRS or the Management Investors, as the case may be, or
if otherwise there shall exist or occur any vacancy on Holdings Corp.'s Board of
Directors in a directorship subject to designation by BRS or the Management
Investors, as the case may be, such vacancy shall not be filled by the remaining
members of Holdings Corp.'s Board of Directors, but each Investor hereby agrees
promptly to consent in writing or vote or cause to be voted all shares of Common
Stock now or hereafter owned or controlled by it to elect that individual
designated to fill such vacancy and serve as a director, as shall be designated
by BRS or the Management Investors, as the case may be.
5.5 SUBSIDIARIES GOVERNANCE. Each Investor agrees that the board of
directors of each of BGH Holdings, Inc., a Delaware corporation, BRH Holdings,
Inc., a Delaware corporation, and the Companies shall be comprised of one
individual designated by BRS (so long as the BRS Entities continue to own at
least 50% of the Common Stock held by BRS Entities on the Closing Date). Each
Investor agrees to vote all of its Securities and to cause its representatives
on the Board of Directors of Holdings Corp., subject to their fiduciary duties,
to vote and take other appropriate action to effectuate the agreement set forth
in this Sections 5.5 in respect of each of BGH Holdings, Inc., BRH Holdings,
Inc. and the Companies.
5.6 MANAGEMENT RIGHTS. For so long as BRS Entities own in the
aggregate at least 2% of the outstanding Securities on a fully diluted basis and
there has not been an Initial Public Offering:
(a) RIGHT OF CONSULTATION. BRS shall have the right, and
Holdings Corp. shall cause each of the Companies to grant to BRS the right, to
consult with and advise the management of Holdings Corp. and its subsidiaries,
at any time or from time to time, on all matters relating to the operation of
Holdings Corp. and its subsidiaries, including, without limitation, significant
changes in management personnel and compensation or employee benefits, the
introduction of new products or new lines of business, important acquisitions or
dispositions of plant and equipment, significant research and development
programs, the purchase or sale of important patents, trademarks, licenses and
concessions, and the proposed compromise of any significant litigation.
(b) OBSERVATION RIGHTS. BRS shall have the right, and Holdings
Corp. shall cause each of the Companies to grant to BRS the right, to have its
representatives (in addition to its representatives that are directors) attend
meetings of the Board of Directors (and committees thereof) of Holdings Corp.
and each of the Companies. Holdings Corp. shall give, or shall cause each of
the Companies to give, as appropriate, to BRS (i) at least three days' notice of
each regular meeting of the Board of Directors of
16
Holdings Corp. and each of the Companies, (ii) such notice as is necessary under
the circumstances to enable BRS's representatives to attend each special or
emergency meeting of the Board of Directors of Holdings Corp. and each of the
Companies, (iii) on or prior to the date of each meeting of the Board of
Directors of Holdings Corp. and each of the Companies all information given to
the directors at such meeting and (iv) within 90 days following each meeting of
the Board of Directors of Holdings Corp. and each of the Companies, copies of
the minutes of such meeting.
(c) INSPECTION AND ACCESS. In addition to the reporting
requirements set forth in Section 4.1 hereof, Holdings Corp. shall provide to
BRS Entities true and correct copies of all quarterly and annual financial
reports of each of the Companies and budgets prepared by or on behalf of
Holdings Corp. and of each of the Companies, and such other documents, reports,
financial data and other information as BRS Entities may reasonably request.
Holdings Corp. shall permit any authorized representatives designated by BRS
Entities to visit and inspect any of the properties of Holdings Corp. or any of
its subsidiaries, including its and their books of account (and to make copies
and take extracts therefrom), and to discuss its and their affairs, finances and
accounts with its and their officers and their current and prior independent
public accountants (and by this provision Holdings Corp. authorizes such
accountants to discuss with such representatives the affairs, finances and
accounts of Holdings Corp. and its subsidiaries, whether or not a representative
of Holdings Corp. is present), all at such reasonable times and as often as BRS
Entities may reasonably request.
5.7 CONFIDENTIALITY. (a) Each Investor hereby agrees that
Confidential Information (as defined below) has been and will be made available
to him or it in connection with such Investor's interest in Holdings Corp. and
its subsidiaries. Each Investor agrees that he or it will not use the
Confidential Information in any way that is reasonably likely to result in a
material detriment to the business of Holdings Corp. and its subsidiaries. Each
Investor further acknowledges and agrees that he or it will not disclose any
Confidential Information to any person; PROVIDED that Confidential Information
may be disclosed (i) to such Investor's Representatives (as defined below) in
the normal course of the performance of their duties, (ii) to the extent
required by applicable statute, law, rule or regulation (including complying
with any oral or written questions, interrogatories, requests for information or
documents, subpoena, civil investigative demand or similar process to which an
Investor is subject) or by generally accepted accounting principles, (iii) to
any third party to whom such Investor is contemplating a transfer of his or its
Securities, PROVIDED that such transfer would not be in violation of the
provisions of this Agreement and as long as such third party is advised of the
confidential nature of such information and agrees to be bound by a
confidentiality agreement in form and substance
17
satisfactory to Holdings Corp. and substantially similar to the provisions
hereof or (iv) if the prior consent of the Board of Directors of Holdings Corp.
shall have been obtained. Nothing contained herein shall prevent the use of
Confidential Information in connection with the assertion or defense of any
claim by or against Holdings Corp. or any Investor.
(b) "Confidential Information" means any information concerning
Holdings Corp., its financial condition, business, subsidiaries, operations or
prospects in the possession of or to be furnished to any Investor in his or its
capacity as a shareholder of Holdings Corp. or by virtue of his or its present
or former position as, or right to designate, a director of Holdings Corp.;
PROVIDED that the term "Confidential Information" does not include information
which (a) was or becomes generally available publicly other than as a result of
a disclosure by an Investor or his or its partners, directors, officers,
employees, agents, counsel, investment advisers, consultants or representatives
(all such persons being collectively referred to as "Representatives") in
violation of this Section 5.7 or (b) was or becomes available to such Investor
on a nonconfidential basis from a source other than Holdings Corp., any
regulatory entity or an Investor or his or its Representatives, PROVIDED that
such source is or was (at the time of receipt of the relevant information) not,
to the best of such Investor's knowledge, bound by a confidentiality agreement
with Holdings Corp. or another person.
ARTICLE VI
ADDITIONAL RESTRICTIONS ON TRANSFERS OF
SECURITIES HELD BY MANAGEMENT INVESTORS
6.1 CERTAIN DEFINITIONS. The terms defined below shall have the
following meanings when used in this Article VI:
(a) "Accumulated Dividends" mean, with respect to any share of
Preferred Stock, the dividends that have accumulated on such share as of such
specific date for dividend periods ending on or prior to such date and that have
not previously been paid in cash;
(b) "Adjusted Cost Price" for each share of Common Stock or
Preferred Stock means the lower of (i) the relevant Fair Market Value Price and
(ii) (X) in the case of the Common Stock, the original purchase price per share
for the Management Investor's Common Stock (adjusted for any stock dividend
payable upon, or subdivision or combination of, the Common Stock) and (Y) in the
case of the Preferred Stock, $1,000.00 (adjusted for any subdivision or
combination of the Preferred Stock);
18
(c) "Cause", when used in connection with the termination of a
Management Investor's employment with any of the Companies, means that the
Management Investor shall have, in the judgment of a majority of the board of
directors of the relevant Company: (i) committed a felony, or committed an act
of fraud, embezzlement or theft in connection with his duties with such Company
or in the course of his employment with such Company; (ii)wrongfully caused
significant damage to property of such Company; (iii) engaged in conduct which
constitutes a material violation of published corporate policy of such Company,
(iv) been convicted of a criminal offense (whether felony or a misdemeanor) the
nature of which renders him unfit to serve in his present capacity with such
Company; or (v) persistently failed to adequately perform his duties and
responsibilities assigned in connection with his employment with such Company by
either the board of directors or a superior executive officer of such Company,
provided that in the case of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ such duties and responsibilities
shall be determined by the Board of Directors of Holdings Corp. and shall not
require ▇▇. ▇▇▇▇▇▇▇ to devote more than 100 days per year to the performance of
such duties and responsibilities (and it is understood that ▇▇. ▇▇▇▇▇▇▇ has
other responsibilities and conflicts that may require reasonable reconciliation
with his duties and responsibilities to the Companies; provided that, the
foregoing considerations in no way shall limit ▇▇. ▇▇▇▇▇▇▇'▇ obligations under
Section 4.4 hereof);
(d) "Consolidated Net Earnings" mean, for any period, the
consolidated net income of Holdings Corp. during such period determined in
accordance with generally accepted accounting principles, but excluding
therefrom all extraordinary and/or nonrecurring items of income or loss;
(e) "EBITDA" means, for any period, an amount equal to the sum
of (i) the Consolidated Net Earnings of Holdings Corp. for such period, plus
(ii) all amounts deducted in the computation thereof on account of (a) taxes,
(b) amortization and depreciation and (c) Interest Charges;
(f) "Fair Market Value Price" for each share of Common Stock or
Preferred Stock at any particular date of determination means (i) in the case of
the Common Stock, the price per share for the Management Investor's Common Stock
based on (a) multiplying Holdings Corp.'s EBITDA during the 12 full calendar
months immediately preceding such date by the number six (6), (b) subtracting
from the product obtained pursuant to clause (a) all Indebtedness for Borrowed
Money of Holdings Corp. and its subsidiaries outstanding on such date and the
aggregate liquidation preference (plus accrued and unpaid dividends) of all
shares of preferred stock, par value $.01, of Holdings Corp. and its
subsidiaries outstanding on such date and (c) dividing the difference of the
foregoing clauses (a) and (b) (such difference being referred to herein as the
"Enterprise Value") by the total
19
number of outstanding shares of Common Stock; PROVIDED, that if any of the
Common Stock is traded on a national securities exchange or quoted on the
National Association of Securities Dealers, Inc. Automated Quotation System,
then the "Fair Market Value Price" shall equal for each share of Common Stock
the closing price per common share on such exchange, or as so quoted, on the
Management Investor's Termination Date; and (ii) in the case of the Preferred
Stock, the lesser of (a) the Liquidation Preference (plus an amount equal to a
pro rated dividend from the end of the last dividend period to the particular
date of determination) of each share of Preferred Stock and (b) the price per
share for the Management Investor's Preferred Stock calculated by dividing the
Enterprise Value (calculated without deducting the aggregate Liquidation
Preference of the outstanding Preferred Stock) by the number of outstanding
shares of Preferred Stock;
(g) "Indebtedness" includes all obligations, contingent and
otherwise, which in accordance with generally accepted accounting principles
should be classified upon the obligor's balance sheet as liabilities, or to
which reference should be made by footnotes thereto, including without
limitation, in any event and whether or not so classified: (i) all debt and
similar monetary obligations, whether direct or indirect; (ii) all liabilities
secured by any mortgage, pledge, security interest, lien, charge, or other
encumbrance existing on property owned or acquired subject thereto, whether or
not the liability secured thereby shall have been assumed; (iii) all guaranties,
endorsements and other contingent obligations whether direct or indirect in
respect of Indebtedness of others, including any obligation to supply funds to
or in any manner to invest in, directly or indirectly, the debtor, to purchase
Indebtedness, or to assure the owner of Indebtedness against loss, through an
agreement to purchase goods, supplies, or services for the purpose of enabling
the debtor to make payment of the Indebtedness held by such owner or otherwise;
and (iv) obligations to reimburse issuers of any letters of credit;
(h) "Indebtedness for Borrowed Money" means (i) all Indebtedness
of Holdings Corp. and its subsidiaries for borrowed money, whether current or
funded, or secured or unsecured, (ii) all Indebtedness of Holdings Corp. and its
subsidiaries for the deferred purchase price of property or services represented
by a note or other security, (iii) all Indebtedness of Holdings Corp. and its
subsidiaries created or arising under any conditional sale or other title
retention agreement with respect to property acquired by Holdings Corp. or its
subsidiaries (even though the rights and remedies of the seller or lender under
such agreement in the event of default are limited to repossession or sale of
such property), (iv) all Indebtedness of Holdings Corp. and its subsidiaries
secured by a purchase money mortgage or other lien to secure all or part of the
purchase price of property subject to such mortgage or lien, (v) all obligations
under leases which shall have
20
been or should be, in accordance with generally accepted accounting principles,
recorded as capital leases in respect of which Holdings Corp. or its
subsidiaries are liable as lessee, (vi) any liability of Holdings Corp. or its
subsidiaries in respect of banker's acceptances or letters of credit, and (vii)
all Indebtedness referred to in clause (i), (ii), (iii), (iv), (v) or (vi) above
which is directly or indirectly guaranteed by Holdings Corp. or any of its
subsidiaries or which Holdings Corp. or any of its subsidiaries has agreed
(contingently or otherwise) to purchase or otherwise acquire or in respect of
which it has otherwise assured a creditor against loss;
(i) "Interest Charges" mean, for any period, the expenses of
Holdings Corp. and its subsidiaries for such period for interest on Indebtedness
(including the current portion thereof) and for commitment fees, agency fees,
facility fees, balance deficiency fees and similar expenses in connection with
the borrowing of money;
(j) "Liquidation Preference" means, on any specific date, with
respect to any share of Preferred Stock, the sum of (i) $1,000 per share plus
(ii) the Accumulated Dividends with respect to such share; and
(k) "Purchase Option Period" means, as to a particular
Management Investor, (i) in the event such Management Investor does not incur a
Termination Date (as defined in Section 6.3(a)) on or prior to the fifth
anniversary of the Closing Date, the period beginning on the Closing Date and
ending on (and including) the fifth anniversary of the Closing Date, and (ii) in
the event such Management Investor incurs a Termination Date on or prior to the
fifth anniversary of the Closing Date, the period beginning on the Closing Date
and ending on (and including) the date which is 165 days after the later of such
Termination Date or the date Holdings Corp. receives the notice of termination
of such Management Investor referred to in Section 6.3(a).
6.2 RESTRICTIONS ON TRANSFER. In addition to complying with the
conditions to Transfer imposed by Section 3.3, and notwithstanding anything to
the contrary contained herein, during the Purchase Option Period, no Management
Investor nor his Permitted Transferees shall effect a Transfer of any Securities
other than (i) pursuant to Section 4.2 in connection with an Approved Sale,(ii)
pursuant to Section 4.3 in connection with the exercise of Tag-Along
Rights,(iii) pursuant to the Registration Rights Agreement (as defined in
Article VII),(iv) pursuant to Section 6.3 in connection with the Purchase Option
(as hereinafter defined),(v) with the consent of Holdings Corp. (as evidenced by
a resolution duly adopted by at least a majority of the non-employee members of
Holdings Corp.'s Board of Directors) or (vi) to a Permitted Transferee of the
Transferor Investor in question. Following the Purchase Option Period, each
Management Investor and
21
his Permitted Transferees agree that none of them will effect a Transfer of any
Securities without first complying with the provisions of Section 6.4 hereof, if
then in effect.
In exercising the consent and approval provided for in clause (v)
above, Holdings Corp. may employ its sole discretion in evaluating the nature of
the proposed transferee and Holdings Corp. may impose such conditions on
Transfer as it deems appropriate in its sole discretion, including, but not
limited to, requirements that the transferee be an employee of Holdings Corp. or
its subsidiaries and that the transferee purchase the Management Investor's (or
his Permitted Transferee's) Securities as a "Management Investor" subject to the
restrictions of this Agreement and, in particular, Section 3.3 and this Article
VI. In the event any Transfer is authorized pursuant to clause (v) above to an
employee of Holdings Corp. or its subsidiaries as a "Management Investor," such
employee shall execute an agreement, in form and substance satisfactory to
Holdings Corp., pursuant to which such employee shall agree to be bound by the
terms and conditions of this Agreement and such other provisions as Holdings
Corp. may determine, and upon such execution such employee shall be entitled to
the benefit of such provisions hereof and such other provisions as Holdings
Corp. determines and are set forth in such agreement. Any purported Transfer in
violation of this Agreement shall be null and void and of no force and effect
and the purported transferees shall have no rights or privileges in or with
respect to Holdings Corp. Notwithstanding the foregoing provisions, each
Management Investor agrees that he or it will not effect a Transfer of any
Securities prior to the lapse of such period of time following acquisition
thereof as may be required to comply with applicable state securities laws.
6.3 PURCHASE OPTION.
(a) GENERAL TERMS. In the event that on or prior to the fifth
anniversary of the Closing Date, any Management Investor shall cease to be
employed by any of the Companies for any reason (including, but not limited to,
death, temporary or permanent disability, retirement, resignation or termination
by such Company with or without Cause), other than by reason of a leave of
absence approved by such Company, such Management Investor or such Management
Investor's Permitted Transferees (or, in the case of death, his or their estate)
shall give prompt notice to Holdings Corp. of such termination of employment,
and Holdings Corp., or one or more designee(s) selected by a majority of the
members of the Board of Directors of Holdings Corp., shall have the right and
option (the "Purchase Option") at any time within 120 days after the later of
the effective date of such termination of employment (the "Termination Date") or
the date of Holdings Corp.'s receipt of the aforesaid notice, to purchase from
such Management Investor, or such Management Investor's Permitted Transferees,
as the case may be, any or all of the Securities then owned by such
22
Management Investor and such Management Investor's Permitted Transferees at the
Option Purchase Price (as hereinafter defined). Holdings Corp. or its
designee(s) shall give notice to the terminated Management Investor (or such
Management Investor's Permitted Transferees) of its intention to purchase the
Securities not later than within 120 days after the later of the Termination
Date or the date of Holdings Corp.'s receipt of the aforesaid notice. The
Termination Date for a Permitted Transferee shall be the Termination Date with
respect to the Management Investor who first acquired the Securities held by
such Permitted Transferee pursuant to this Agreement.
(i) EXERCISE OF PURCHASE OPTION. The Purchase Option shall
be exercised by written notice to the terminated Management Investor and
Permitted Transferees signed by an officer of Holdings Corp. on behalf of
Holdings Corp. or by its designee(s), as the case may be, prior to the end of
the 120-day period. Such notice shall set forth the number of shares of Common
Stock and Preferred Stock desired to be purchased and shall set forth a time and
place of closing which shall be no earlier than 10 days and no later than 60
days after the date such notice is sent. At such closing, the seller shall
deliver the certificates evidencing the number of shares of Common Stock and
Preferred Stock to be purchased by Holdings Corp. and/or its designee(s),
accompanied by stock powers duly endorsed in blank or duly executed instruments
of transfer, and any other documents that are necessary to transfer to Holdings
Corp. and/or its designee(s) good title to the Securities to be transferred,
free and clear of all pledges, security interests, liens, charges, encumbrances,
equities, claims and options of whatever nature other than those imposed under
this Agreement, and concurrently with such delivery, Holdings Corp. and/or its
designee(s) shall deliver to the seller the full amount of the Option Purchase
Price for such Securities in cash or by certified or bank cashier's check.
In the event that Holdings Corp. (or its designee(s))
does not send the notice described above within such 120-day period or does not
exercise the Purchase Option with respect to all of the Securities subject to
the Purchase Option, Holdings Corp. (or if Holdings Corp. fails to give such
notice, the terminated Management Investor) shall give notice of such failure to
the other Investors, and the other Investors shall thereupon have the right and
option to purchase the Securities not to be purchased by Holdings Corp. (or its
designee(s)) and may give notice of such intention at any time not later than 45
days after the date on which the notice is sent to the other Investors. The
notice to the Investors shall set forth the number and kind of Securities
available for purchase by such Investors and the applicable purchase prices.
If the other Investors elect to purchase an aggregate
number of Common Stock and/or Preferred Stock in
23
excess of the number of Common Stock and Preferred Stock that are ultimately
determined to be available for purchase by them, such Common Stock and/or
Preferred Stock shall be allocated among the other Investors who desire to
purchase such Common Stock and/or Preferred Stock in proportion to the number of
Common Stock and/or Preferred Stock (on a fully diluted basis) owned by each of
them; provided that no such other Investor shall become bound to purchase a
number of offered Common Stock and Preferred Stock greater than the number of
shares of such Common Stock and/or Preferred Stock it or he had elected to
purchase. If the foregoing allocation procedure does not allocate all the
Common Stock and Preferred Stock (because one or more Investors would otherwise
have been allocated more than the number of shares of Common Stock and/or
Preferred Stock it or he elected to purchase), then the remaining such shares of
Common Stock and Preferred Stock shall be allocated among the other Investors
who desire to purchase such Common Stock and/or Preferred Stock in proportion to
the number of shares of Common Stock and/or Preferred Stock (on a fully diluted
basis) owned by each of them, and such allocation procedure shall continue until
all such Common Stock and Preferred Stock shall have been allocated. Promptly
upon determining the number and kind of shares of Common Stock and/or Preferred
Stock which each purchasing Investor will purchase and the purchase prices
therefor, Holdings Corp. shall send notices thereof to the terminated Management
Investor and each of the purchasing Investors. Such notices shall also set
forth a time and place of closing for the purchases by the other Investors,
which closing shall be no earlier than 10 days and no later than 60 days after
the date such notices are sent.
(ii)OPTION PURCHASE PRICE. If the Management Investor shall
be terminated by any of the Companies without Cause or shall cease to be
employed by any of the Companies by reason of death, temporary or permanent
disability, the "Option Purchase Price" for the Common Stock and/or Preferred
Stock to be purchased from such Management Investor or such Management
Investor's Permitted Transferees pursuant to the Purchase Option (such number of
shares of Common Stock and/or such number of shares of Preferred Stock, each
being referred to as the "Purchase Number") shall equal the price calculated as
set forth in the table below opposite the applicable Termination Date of such
Management Investor:
Option
If the Termination Date Occurs: Purchase Price
------------------------------- --------------
On or prior to the first Adjusted Cost Price
anniversary of the Closing multiplied by the
Date Purchase Number
24
After the first anniversary Adjusted Cost
of the Closing Date, and on or Price multiplied by
prior to the second anniversary 80% of the Purchase
of the Closing Date Number, plus Fair Market
Value Price multiplied by 20%
of the Purchase Number
After the second anniversary of Adjusted Cost Price multiplied
the Closing Date, and on or by 60% of the Purchase Number,
prior to the third anniversary plus Fair Market Value Price
of the Closing Date multiplied by 40% of the
Purchase Number
After the third anniversary of Adjusted Cost Price
the Closing Date, and on or multiplied by 40% of the
prior to the fourth anniversary Purchase Number, plus
of the Closing Date Fair Market Value Price
multiplied by 60% of the Purchase Number
After the fourth anniversary of Adjusted Cost Price
the Closing Date, and on or prior multiplied by 20% of the
to the fifth anniversary of the Purchase Number, plus
Closing Date Fair Market Value Price
multiplied by 80% of the Purchase Number
Notwithstanding anything to the contrary contained
herein, if the Management Investor shall cease to be employed by any of the
Companies for any reason other than those set forth in the first sentence of
this Section 6.3(a)(ii) (including, but not limited to, termination for Cause),
the Option Purchase Price for all shares of Common Stock and/or Preferred Stock
to be purchased from the Management Investor (and such Management Investor's
Permitted Transferees) pursuant to the Purchase Option shall equal the Adjusted
Cost Price multiplied by the Purchase Number.
The Purchase Option will lapse upon the earlier to
occur of (i) an Initial Public Offering, (ii) an Approved Sale and (iii) a
transfer of Securities by BRS as to which Tag-Along Rights apply.
(iii)SALE IN PUBLIC OFFERING. Common Stock sold pursuant to
an effective registration statement under the Securities Act will be sold free
of the restrictions contained in this Article VI, but this Article VI shall
continue to apply in accordance with its terms to all Common Stock not sold in
such offering. If less than all of a Management Investor's shares of Common
Stock are sold in such an offering, for purposes of any subsequent calculation
hereunder of the Option Purchase Price for the Common Stock, the Option Purchase
Price for the Common Stock
25
shall equal: (a) the Adjusted Cost Price multiplied by the product of the
Adjusted Cost Price Percentage and the Adjusted Purchase Number (as hereinafter
defined); PLUS (b) the Fair Market Value Price multiplied by the product of the
Fair Market Value Price Percentage and the Adjusted Purchase Number, LESS (c)
the product of the Publicly-Sold Stock (as hereinafter defined) and the Fair
Market Value Price, where: (w) "Publicly-Sold Stock" means the total number of
shares of Common Stock previously sold by the respective Management Investor in
a public offering, (x) "Adjusted Purchase Number" means the sum of the Purchase
Number and the Publicly-Sold Stock, (y) "Fair Market Value Price Percentage"
means 20% multiplied by the number of full years elapsed since the Closing Date,
and (z) "Adjusted Cost Price Percentage" means 100% minus the Fair Market Value
Price Percentage. Notwithstanding the foregoing, the Option Purchase Price for
the Common Stock at all times shall equal or exceed the product of the Adjusted
Cost Price and the Purchase Number.
6.4 RIGHT OF FIRST REFUSAL ON TRANSFER OF MANAGEMENT INVESTOR
SECURITIES.
(a) RIGHT OF FIRST REFUSAL. In the event that any time after
the expiration of the Purchase Option Period, a Management Investor (or his
Permitted Transferees) receives a bona fide offer (a "Transfer Offer") to
purchase any or all of the Securities (the "Transfer Securities") then owned by
the Management Investor (or his Permitted Transferees) from any person (the
"Offeror") which the Management Investor (or his Permitted Transferees) wishes
to accept, then the Management Investor (and his Permitted Transferees) shall
give Holdings Corp. and the other Investors written notice thereof ("Transfer
Notice"), which Transfer Notice shall state in reasonable detail all material
terms of such proposed sale or other transfer, the identity of the Offeror, the
price or other consideration for which the Securities are proposed to be sold or
transferred, and the number of Securities to be sold or transferred, and shall
also contain an irrevocable offer to sell the Transfer Securities to Holdings
Corp. at the price and on the terms contained in the Transfer Offer. After its
receipt of the Transfer Notice, Holdings Corp. and/or its designee(s) shall have
the right and option to purchase all, but not less than all (unless other
Investors purchase the remainder), of the Transfer Securities at the price and
on the terms of the Transfer Offer set forth in the Transfer Notice. Within 45
days after receipt of the Transfer Notice, Holdings Corp. and/or its designee(s)
shall notify such Management Investor (or his Permitted Transferees) whether or
not it wishes to purchase the Transfer Securities and, if so, indicating the
number of Transfer Securities desired to be purchased.
In the event that Holdings Corp. and/or its designee(s) does
not elect to purchase all such Transfer Securities, the selling Management
Investor (or his Permitted
26
Transferees) shall give notice of such failure to the other Investors, and the
other Investors shall thereupon have the right and option to purchase in the
aggregate all, but not less than all, the Transfer Securities not to be
purchased by Holdings Corp. and/or its designee(s) and may give notice to the
selling Management Investor (or his Permitted Transferees) (with a copy to
Holdings Corp.) of such intention at any time not later than 45 days after the
date on which such notice is sent by the selling Management Investor (or his
Permitted Transferees) to such other Investors. Each electing Investor's notice
shall indicate the number of Transfer Securities it desires to purchase. If the
other Investors elect to purchase an aggregate number of Transfer Securities in
excess of the number of Transfer Securities which Holdings Corp. and/or its
designee(s) did not elect to purchase, the Transfer Securities shall be
allocated among the other Investors who desire to purchase such Transfer
Securities in accordance with the allocation provisions which are set forth in
Section 6.3(a)(i). Promptly upon determining the number of the selling
Management Investor's Securities which each purchasing Investor will purchase
and the purchase price therefor, Holdings Corp. shall send notices thereof to
the selling Management Investor and each of the purchasing Investors.
(b) EXERCISE AND NONEXERCISE OF RIGHT OF FIRST REFUSAL.
Exercise of the option provided for in Section 6.4(a) shall be effected by the
giving of written notice to the Management Investor (and his Permitted
Transferees) by Holdings Corp. (on its own behalf and/or on behalf of its
designee(s), as the case may be), signed by an officer of Holdings Corp., and,
if applicable, the other Investors, prior to the end of the period during which
the option is exercisable (and such notice shall be effective when given). If
Holdings Corp. or Holdings Corp. and the other Investors in the aggregate elect
to purchase all of the Transfer Securities, the closing of the purchase and sale
of the Transfer Securities pursuant to any such option exercise shall be held at
such place and such date to be established by Holdings Corp. in the later of its
notice to the selling Management Investor in response to the Transfer Notice and
its notice to the other Investors of the allocation of the number of Transfer
Securities which such Investors are to purchase, which in no event shall be
earlier than 10 days or later than 60 days from the date of such notice.
In the event Holdings Corp. and/or its designees and the
other Investors fail to exercise the purchase option provided for in Section
6.4(a), then, subject to the other provisions of this Agreement, for a period of
30 days, the Transfer Securities may be sold or transferred by or an behalf of
the Management Investor (or his Permitted Transferees) to the Offeror specified
in the Transfer Notice at a price not less than the price per Securities
specified therein and otherwise on terms no less favorable to the Management
Investor and no more favorable to the Offeror than those contained in the
Transfer Notice.
27
6.5 PURCHASER REPRESENTATIVE. If Holdings Corp. or any Investor
enters into any negotiation or transaction for which Rule 506 (or any similar
rule then in effect) promulgated by the Securities and Exchange Commission under
the Securities Act may be available with respect to such negotiation or
transaction (including a merger, consolidation or other reorganization), each
Investor will, at the request of Holdings Corp., appoint a purchaser
representative (as such term is defined in Rule 501(h) promulgated by the
Securities and Exchange Commission under the Securities Act) reasonably
acceptable to Holdings Corp. If any Investor appoints the purchaser
representative designated by Holdings Corp., Holdings Corp. will pay the fees of
such purchaser representative, but if any Investor declines to appoint the
purchaser representative designated by Holdings Corp., such Investor will
appoint, at his own expense, another purchaser representative (reasonably
acceptable to Holdings Corp.).
6.6 SECTION 83(B) ELECTIONS. Each Management Investor shall make the
election to include in his income, in the year he purchases the Common Stock and
the Preferred Stock, the excess, if any, of the fair market value of the Common
Stock and the Preferred Stock at that time over the Management Investor's
original purchase price for such Securities, pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, in the manner and within the time
period specified by the regulations promulgated thereunder. Unless required by
law or by any taxing authority, each party to this Agreement agrees to file its
income tax returns on the basis that: (i) the fair market value of the Common
Stock at the time of its purchase by a Management Investor pursuant to this
Agreement is equal to such Management Investor's original purchase price for the
Common Stock, and (ii) the fair market value of the Preferred Stock at the time
of its purchase by a Management Investor pursuant to this Agreement is equal to
such Management Investor's original purchase price for the Preferred Stock.
Unless required by law or by any taxing authority, Holdings Corp. will not seek
an income tax deduction for compensation for the services of a Management
Investor on the basis that: (i) the fair market value of the Common Stock at the
time of its purchase by a Management Investor pursuant to this Agreement exceeds
such Management Investor's original purchase price for the Common Stock, or (ii)
the fair market value of the Preferred Stock at the time of its purchase by a
Management Investor pursuant to this Agreement exceeds such Management
Investor's original purchase price for the Preferred Stock.
6.7 INVOLUNTARY TRANSFERS.
(a) OPTION TO PURCHASE. In the event that the Securities owned
by a Management Investor (or his Permitted Transferees) shall be subject to sale
or other transfer by reason of any of the following events (a "Nonvolitional
Event"): (i) bankruptcy or insolvency proceedings, whether voluntary or
28
involuntary, or (ii) a divorce (whether in connection with a settlement of the
divorce or entry of a decree or judgment of divorce), or (iii) distraint, levy,
execution or other involuntary transfer, then the Management Investor (and his
Permitted Transferees) shall give Holdings Corp. written notice thereof
("Involuntary Transfer Notice") promptly upon the occurrence of such
Nonvolitional Event, which Involuntary Transfer Notice shall state the terms of
such proposed sale or other transfer, the identity of the proposed purchaser or
other transferee, the price or other consideration, if readily determinable, for
which the Securities are proposed to be sold or transferred, and the number of
Securities to be sold or transferred (the "Involuntarily Transferred
Securities"). After its receipt of the Involuntary Transfer Notice or, failing
such receipt, after Holdings Corp. otherwise obtains actual knowledge of such a
proposed sale or other transfer, Holdings Corp. and/or its designee(s) shall
have the right and option to purchase all, but not less than all, of the
Involuntarily Transferred Securities, such option to be exercisable at any time
within 120 days after receipt of the Involuntary Transfer Notice or, failing
such receipt, after Holdings Corp. otherwise obtains actual knowledge of such a
proposed sale or other transfer.
In the event that Holdings Corp. and/or its designee(s) does
not elect to purchase all such Involuntarily Transferred Securities, the
Management Investor (or his Permitted Transferees) shall give notice of such
failure to the other Investors, and the other Investors shall thereupon have the
right and option to purchase in the aggregate all, but not less than all, the
Involuntarily Transferred Securities not to be purchased by Holdings Corp.
and/or its designee(s) and may give notice to the Management Investor (or his
Permitted Transferees) (with a copy to Holdings Corp.) of such intention at any
time not later than 45 days after the date on which such notice is sent by the
selling Management Investor (or his Permitted Transferees) to such other
Investors. Each electing Investor shall indicate the number of Involuntarily
Transferred Securities it desires to purchase. If the other Investors elect to
purchase an aggregate number of Involuntarily Transferred Securities in excess
of the number of Involuntarily Transferred Securities which Holdings Corp.
and/or its designee(s) did not elect to purchase, the Involuntarily Transferred
Securities shall be allocated among the other Investors who desire to purchase
such Involuntarily Transferred Securities in accordance with the allocation
provisions which are set forth in Section 6.3(a)(i). Promptly upon determining
the number of the Involuntarily Transferred Securities which each purchasing
Investor will purchase and the purchase price thereof, Holdings Corp. shall send
notices thereof to the Management Investor and each of the purchasing Investors.
(b) PURCHASE PRICE. Any purchase pursuant to the foregoing
option contained in Section 6.7(a) shall be at the lower
29
of (i) the price applicable to such proposed sale or transfer or (ii) on or
before the fifth anniversary of the Closing Date, the Adjusted Cost Price
multiplied by the number of Involuntarily Transferred Securities and, following
the fifth anniversary of the Closing Date, the Fair Market Value Price
multiplied by the number of Involuntarily Transferred Securities.
(c) EXERCISE AND NONEXERCISE OF OPTION. Exercise of the option
provided for in Section 6.7(a) shall be effected by the giving of written notice
to the Management Investor (and his Permitted Transferees) and the proposed
purchaser or transferee by Holdings Corp. (on its own behalf and/or on behalf of
its designee(s), as the case may be), signed by an officer of Holdings Corp.,
and, if applicable, by the purchasing Investors prior to the end of the period
during which the option is exercisable (and such notice shall be effective when
given). The closing of the purchase and sale of the Involuntarily Transferred
Securities pursuant to any such option exercise shall be held at such place and
such date to be established by Holdings Corp., which in no event shall be less
than 10 or more than 60 days from the date of such notice.
In the event Holdings Corp. and/or its designee(s) or the
other Investors fail to exercise the purchase option provided for in Section
6.7(a), then the Involuntarily Transferred Securities may be sold or transferred
by or on behalf of the Management Investor (and his Permitted Transferees) on
the terms contained in the Involuntary Transfer Notice, but the transferee or
purchaser shall be subject to all of the obligations contained in this Agreement
which were applicable to the Management Investor in respect of the Involuntarily
Transferred Securities and, without limiting the generality of the foregoing, if
the Management Investor incurs a Termination Date on or prior to the fifth
anniversary of the Closing Date the Purchase Option contained in Section 6.3
hereof shall apply to the Involuntarily Transferred Securities at the applicable
Option Purchase Price.
6.8 LAPSE. The provisions of Article VI shall terminate (i)
immediately after consummation of an Approved Sale or (ii) upon the consummation
of an Initial Public Offering.
ARTICLE VII
REGISTRATION RIGHTS
The Investors shall have registration rights with respect to the
Common Stock as set forth in the Registration Rights Agreement attached hereto
as Exhibit C (the "Registration Rights Agreement"). Each of the Investors
agrees not to effect any public sale or distribution of any securities of
Holdings Corp. during the periods specified in the Registration Rights
Agreement, except as permitted thereby, and each such Investor agrees to be
bound by the
30
rights of priority to participate in offerings as set forth therein. Each of
the BRS Entities and Holdings Corp. acknowledges and agrees that the
Registration Rights Agreement attached hereto as Exhibit C shall amend and
supersede in its entirety the Registration Rights Agreement set forth in the
Securities Purchase Agreement dated December 27, 1996 between the BRS Entities
and Holdings Corp.
ARTICLE VIII
MISCELLANEOUS
8.1 AMENDMENT AND MODIFICATION. This Agreement may be amended or
modified, or any provision hereof may be waived, provided that such amendment,
modification or waiver is set forth in a writing executed by (i) Holdings Corp.,
(ii) BRS (so long as the BRS Entities own in the aggregate at least 5% of the
outstanding Common Stock on a fully diluted basis), (iii) the holders of a
majority of the Common Stock held by the Management Investors and (iv) the
holders of a majority of the outstanding Common Stock on a fully diluted basis
(including Common Stock owned by the BRS Entities, but not including Common
Stock held by holders not a party hereto or hereafter made a party hereto).
Notwithstanding the foregoing, no amendment or waiver of Sections 3.3, 4.1, 5.6,
this Section 8.1 and the Registration Rights Agreement will be effective against
any Investor that would be adversely affected by such amendment or waiver unless
such Investor consents to such amendment or waiver. No course of dealing
between or among any persons having any interest in this Agreement will be
deemed effective to modify, amend or discharge any part of this Agreement or any
rights or obligations of any person under or by reason of this Agreement.
8.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties set forth in Section 3.1 of this Agreement will survive the
execution and delivery of this Agreement, the Closing Date and the consummation
of the transactions contemplated hereby, regardless of any investigation made by
an Investor or on its behalf. No other representations, warranties or covenants
set forth herein shall so survive.
8.3 SUCCESSORS AND ASSIGNS; ENTIRE AGREEMENT. This Agreement and all
of the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns and
executors, administrators and heirs; PROVIDED, HOWEVER, that except as set forth
in this Agreement no party may assign, delegate or otherwise transfer any of its
rights or obligations under this Agreement, except that at any time prior to the
Closing, any BRS Entity may assign any or all of its rights or obligations
hereunder to any other BRS Entity so long as such BRS Entity agrees to be bound
by the provisions of this Agreement and upon such assignment, the assigning BRS
Entity
31
shall have no further liability or obligation hereunder. This Agreement
(including the Registration Rights Agreement) sets forth the entire agreement
and understanding among the parties as to the subject matter hereof and merges
and supersedes all prior discussions, agreements and understandings of any and
every nature among them.
8.4 SEPARABILITY. In the event that any provision of this Agreement
or the application of any provision hereof is declared to be illegal, invalid or
otherwise unenforceable by a court of competent jurisdiction, the remainder of
this Agreement shall not be affected except to the extent necessary to delete
such illegal, invalid or unenforceable provision unless that provision held
invalid shall substantially impair the benefits of the remaining portions of
this Agreement.
8.5 NOTICES. All notices provided for or permitted hereunder shall
be made in writing by hand-delivery, registered or certified first-class mail,
telex, telecopier or air courier guaranteeing overnight delivery to the other
party at the following addresses (or at such other address as shall be given in
writing by any party to the others):
If to Holdings Corp., to:
B Companies Holdings Corp.
c/o Bruckmann, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Co., Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
with a required copy to:
Dechert Price & ▇▇▇▇▇▇
4000 ▇▇▇▇ Atlantic Tower
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to any BRS Entity, to:
Bruckmann, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Co., Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
32
with a required copy to:
Dechert Price & ▇▇▇▇▇▇
4000 ▇▇▇▇ Atlantic Tower
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to the Management Investors or any of them, to their addresses
as listed in the books of Holdings Corp. or the relevant Company.
All such notices shall be deemed to have been duly given: when
delivered by hand, if personally delivered; five business days after being
deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt acknowledged, if telecopied; and on the next business day,
if timely delivered to an air courier guaranteeing overnight delivery.
8.6 GOVERNING LAW. The validity, performance, construction and effect
of this Agreement shall be governed by and construed in accordance with the
internal law of New York, without giving effect to principles of conflicts of
law, except to the extent that Delaware law shall be mandatorily applicable.
8.7 HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not constitute a part of this Agreement, nor shall they
affect its meaning, construction or effect. Unless otherwise specified, section
references herein refer to sections of this Agreement and schedules and exhibits
refer to schedules and exhibits attached hereto.
8.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same instrument.
8.9 FURTHER ASSURANCES. Each party shall cooperate and take such
action as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
8.10 REMEDIES. In the event of a breach or a threatened breach by any
party to this Agreement of its obligations under this Agreement, any party
injured or to be injured by such breach, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The
parties agree that the provisions of this Agreement shall be specifically
enforceable, it being agreed by the parties that the remedy at law, including
monetary damages, for breach of such provision will be
33
inadequate compensation for any loss and that any defense in any action for
specific performance that a remedy at law would be adequate is waived.
8.11 PARTY NO LONGER OWNING SECURITIES. If a party hereto ceases to
own any Securities, such party will no longer be deemed to be an Investor or
Management Investor for purposes of this Agreement.
8.12 NO EFFECT ON EMPLOYMENT. Nothing herein contained shall confer
on any Management Investor the right to remain in the employ of Holdings Corp.
or any of the Companies or any of its subsidiaries or Affiliates.
8.13 PRONOUNS. Whenever the context may require, any pronouns used
herein shall be deemed also to include the corresponding neuter, masculine or
feminine forms.
34
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
B COMPANIES HOLDINGS CORP.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Vice President
BRUCKMANN, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & CO., L.P.
By: BRS Partners, Limited Partnership, the general
partner,
By: BRSE Associates, Inc., its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President
BRS CO-INVESTORS
*
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
SS#: ###-##-####
Residence Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
*
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇
SS#: ###-##-####
Residence Address:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
35
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
SS#: ###-##-####
Residence Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
*
----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
SS#: ###-##-####
Residence Address:
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
*
----------------------------------
H. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
SS#: ###-##-####
Residence Address:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
*
----------------------------------
▇▇▇▇▇ ▇▇▇▇▇
SS#: ###-##-####
Residence Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
*
----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
SS#: ###-##-####
Residence Address:
▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
BCB PARTNERSHIP
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, General Partner
By: *
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: General Partner
36
NAZ PARTNERSHIP
By: ▇▇▇▇▇ ▇▇▇▇▇, General Partner
By: *
-------------------------------
Name:
Title:
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇
& ▇▇▇▇▇ INCORPORATED, CUSTODIAN FBO
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By: *
-------------------------------
Name:
Title:
* By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Attorney-in-Fact
37
MANAGEMENT INVESTORS
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
SS#:
Residence Address:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
SS#:
Residence Address:
/s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
SS#:
Residence Address:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
SS#:
Residence Address:
/s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
SS#:
Residence Address:
EXHIBIT A
Shares of
-------------------------------------------------------
Common Preferred Aggregate
Stock Stock Purchase Price
------------- ----------------- ----------------
BRUCKMANN, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & CO., L.P. 117.18 $117,192.54
("BRS") (at $1,000/share)
BRS CO-INVESTORS
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 2.44 $2,447.40
(at $1,000/share)
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇ 0.48 $476.76
(at $1,000/share)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 2.44 $2,447.40
(at $1,000/share)
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 0.32 $317.80
(at $1,000/share)
H. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1.59 $1,588.98
(at $1,000/share)
▇▇▇▇▇ ▇▇▇▇▇ 0.10 $95.38
(at $1,000/share)
BCB Partnership 0.14 $136.71
(at $1,000/share)
NAZ Partnership 0.07 $65.97
(at $1,000/share)
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 0.12 $115.53
(at $1,000/share)
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇▇,
custodian FBO ▇▇▇▇ 0.12 $115.53
D. ▇▇▇▇▇▇▇▇ ▇▇▇ (at $1,000/share)
MANAGEMENT INVESTORS
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 3,000.00 145.00 $175,000.00
(at $10/share) (at $1,000/share)
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 3,000.00 20.00 $50,000.00
(at $10/share) (at $1,000/share)
▇▇▇▇▇ ▇▇▇▇▇ 3,000.00 20.00 $50,000.00
(at $10/share) (at $1,000/share)
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 3,000.00 20.00 $50,000.00
(at $10/share) (at $1,000/share)
▇▇▇▇▇ ▇▇▇▇▇ 3,000.00 20.00 $50,000.00
(at $10/share) (at $1,000/share)
3