EXHIBIT 10.12
HF HOLDINGS, INC.
STOCKHOLDERS AGREEMENT
Dated as of September 27, 1999
TABLE OF CONTENTS
1. DEFINITIONS ........................................................................... 2
1.1. Certain Definitions ........................................................ 2
1.2. Certain Matters of Construction ............................................ 9
1.3. Cross Reference Table ...................................................... 10
2. [RESERVED] ............................................................................ 11
3. VOTING AGREEMENT ...................................................................... 12
3.1. Election of Directors. ..................................................... 12
3.2. Removal of Directors ....................................................... 12
3.3. Successors ................................................................. 12
3.4. Certain Transactions ....................................................... 13
3.5. Committees ................................................................. 13
3.6. Special Rule for Fund Designated Directors ................................. 13
3.7. Proxy; the Company ......................................................... 14
3.8. Period ..................................................................... 15
4. CERTAIN TRANSFER RIGHTS AND RESTRICTIONS .............................................. 16
4.1. Securities ................................................................. 16
4.2. Period ..................................................................... 17
4.3. Status in Hands of Certain Transferees ..................................... 18
4.4. Lock-Up. ................................................................... 18
5. CSFB AND JUNIOR MANAGEMENT OPTIONS .................................................... 18
5.1. Junior Management. ......................................................... 18
5.2. CSFB ....................................................................... 21
6. "TAKE ALONG" RIGHTS ................................................................... 23
6.1. Procedure. ................................................................. 23
6.2. Certain Legal Requirements ................................................. 24
6.3. Further Assurances; Management Roll-over ................................... 25
6.4. Closing. ................................................................... 26
6.5. Fairness Opinions in Certain Circumstances ................................. 26
6.6. Special Approval Right ..................................................... 27
6.7. Period ..................................................................... 27
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7. CO-SALE RIGHTS ......................................................................... 28
7.1. Tag Along. .................................................................. 28
7.2. Certain Legal Requirements .................................................. 30
7.3. Further Assurances; Management Roll-Over .................................... 31
7.4. Closing. .................................................................... 32
7.5. Excluded Transactions. ...................................................... 32
7.6. Period ...................................................................... 33
8. REGISTRATION RIGHTS .................................................................... 33
8.1. Piggyback Registration Rights. .............................................. 33
8.2. Demand Registration Rights .................................................. 35
8.3. Certain Other Provisions .................................................... 38
8.4. Indemnification and Contribution ............................................ 40
8.5. Lock-up. .................................................................... 43
9. CERTAIN FUTURE EQUITY FINANCINGS OF THE COMPANY ........................................ 43
9.1. Right of Participation ...................................................... 44
9.2. Termination. ................................................................ 47
10. DETERMINATION OF FAIR MARKET VALUE .................................................... 47
11. REMEDIES .............................................................................. 48
11.1. Generally .................................................................. 48
11.2. Deposit .................................................................... 48
12. LEGENDS ............................................................................... 48
12.1. Securities Act Legend ...................................................... 49
12.2. Stockholders Agreement Legend .............................................. 49
12.3. Option-Eligible Shares Legend .............................................. 49
13. AMENDMENT, TERMINATION, ETC ........................................................... 50
13.1. No Oral Modifications ...................................................... 50
13.2. Written Modifications ...................................................... 50
14. MISCELLANEOUS ......................................................................... 51
14.1. Authority; Effect .......................................................... 51
14.2. Notices .................................................................... 51
14.3. Binding Effect, etc ........................................................ 53
14.4. Descriptive Headings. ...................................................... 53
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14.5. Counterparts. .............................................................. 53
14.6. Severability. .............................................................. 54
14.7. Joint and Several Liability of the Company and ICON ........................ 54
14.8. Third Party Beneficiaries .................................................. 54
14.9. Termination of Equity Commitment Letter .................................... 54
14.10. Limitation on CSFB Acquisitions ............................................ 54
15. GOVERNING LAW ......................................................................... 55
15.1. Governing Law .............................................................. 55
15.2. Consent to Jurisdiction .................................................... 55
15.3. WAIVER OF JURY TRIAL. ...................................................... 55
15.4. Reliance ................................................................... 56
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STOCKHOLDERS AGREEMENT
This Stockholders Agreement (the "Agreement") is made as of September 27, 1999
by and among:
(i) HF Holdings, Inc., a Delaware corporation (the "Company"),
(ii) ICON Health & Fitness, Inc. a Delaware corporation ("ICON"),
(iii) each of ▇▇▇▇ Capital Fund IV, L.P., ▇▇▇▇ Capital Fund IV-B, L.P.,
BCIP Associates and BCIP Trust Associates, L.P. (collectively, the "Bain
Initial Investors," and each a "Bain Initial Investor"),
(iv) HF Investment Holdings, LLC, a Delaware limited liability company
(the "LLC"),
(v) Credit Suisse First Boston Corporation, a Massachusetts corporation
(together with its affiliates, "CSFB"),
(vi) each of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (together, the "Senior
Management Initial Investors," and each a "Senior Management Initial
Investor"), and
(vii) each of Inverness/Phoenix Capital LLC, a Delaware limited liability
company, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and any other parties signing a counterpart
signature page hereto as of the date hereof (collectively, the "Other
Initial Investors," and each an "Other Initial Investor").
Recitals
1. Pursuant to a Subscription and Stock Purchase Agreement dated as of the
date hereof, as listed on Schedule I hereto (the "LLC Purchase Agreement"), the
LLC has agreed to purchase shares of Common Stock, par value $.001 per share
(the "Common Stock") of the Company. Simultaneously therewith, the Bain Initial
Investors, CSFB, the Senior Management Initial Investors and the Other Initial
Investors have agreed to purchase membership units in the LLC.
2. Pursuant to a Securities Purchase Agreement dated as of the date
hereof, as listed on Schedule I hereto (the "CSFB Purchase Agreement"), CSFB has
agreed to purchase shares of Common Stock and notes convertible into shares of
Common Stock. In addition, pursuant to the Exchange Offers (as defined herein),
CSFB is acquiring warrants to purchase shares of Common Stock. For the avoidance
of doubt, such warrants shall not constitute Non-CSFB Warrants (as defined
below) and shall constitute CSFB Securities (as defined below) for all purposes
of this Agreement.
3. Pursuant to the Exchange Offers, the former bondholders of ICON, IHF
Holdings, Inc. and ICON Fitness Corporation who participate in the Exchange
Offers (the "Non-CSFB Initial Warrantholders") are acquiring warrants to
purchase shares of Common Stock (the "Non-CSFB Warrants").
4. Concurrent with the closings under the LLC Purchase Agreement and CSFB
Purchase Agreement, the Senior Management Initial Investors are receiving shares
of Common Stock. In addition, subsequent to the closings under the LLC Purchase
Agreement and CSFB Purchase Agreement, certain members of the junior management
of ICON who execute a Joinder and Supplement to this Stockholders Agreement (the
"Junior Management Initial Investors") will be granted options to purchase
shares of Common Stock under the Company's 1999 Junior Management Stock Option
Plan.
5. The parties believe that it is in the best interests of the Company and
the Investors to: (i) provide that certain shares of Common Stock shall be
transferable only upon compliance with the terms hereof; (ii) provide the
Company with certain rights and obligations with respect to the purchase of
shares of Common Stock under certain circumstances; (iii) provide for certain
rights and obligations of the Bain Investors and the Other Investors with
respect to the election of directors of the Company; and (iv) set forth their
agreements on certain other matters.
Agreement
Now therefore, in consideration of the foregoing and the mutual agreements
set forth below, the parties hereto, each intending to be legally bound, hereby
agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
1.1. Certain Definitions. The following terms shall have the following
meanings:
1.1.1. "Affiliate" shall mean, with respect to any specified
Person, any Person that, directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under common control
with, the Person specified.
1.1.2. "Affiliated Buyer" shall mean any Proposed Buyer which is
(i) any Bain Investor or Affiliated Fund or (ii) any Person in which
any Bain Investor or Affiliated Fund holds any shares of stock (or in
the case of a Person which is not a corporation, equivalent class of
beneficial interest), other than shares of stock (or equivalent
beneficial interest) to be received in exchange for Securities pursuant
to the Sale.
1.1.3. "Affiliated Fund" shall mean any limited partnership or other
Person formed for the purpose of investing in other companies or businesses and
for which ▇▇▇▇ Capital Investors, Inc., a Delaware corporation, or any of its
Affiliates, acts as a general partner or otherwise has the right to direct the
voting of shares of corporations in which such limited partnership or other
Person invests.
1.1.4. "Bain Investor" shall mean (i) after the LLC Liquidation, any Bain
Initial Investor and any Affiliated Fund, any transferee pursuant to Section
7.5(a) or (b) or any holder of Class B Units of the LLC which, from time to
time, acquires Shares or Options and becomes party to this Agreement by
executing and delivering to the Company an instrument in form satisfactory to
the Company pursuant to which such stockholder agrees to be bound by the terms
of this Agreement to the same extent as a Bain Initial Investor and (ii) prior
to the LLC Liquidation, the LLC.
1.1.5. "Bain Majority Holders" shall mean, as of any date, the holders of
a majority of the Bain Securities outstanding on such date.
1.1.6. "Bain Securities" shall mean (a) all shares of Common Stock
originally issued to, or issued with respect to shares originally issued to, or
held by, the Bain Investors, whenever issued, including, without limitation, all
shares of Common Stock issued pursuant to the exercise or conversion of any
Options and (b) all Options originally granted or issued to a Bain Investor
(treating such Options as a number of Shares equal to the number of Equivalent
Shares represented by such Options for all purposes of this Agreement except as
otherwise specifically set forth herein).
1.1.7. "Board" shall mean the Board of Directors of the Company.
1.1.8. "CSFB Investors" shall mean CSFB and any transferee pursuant to
Section 4.1.5 which, from time to time, acquires Shares or Options and becomes
party to this Agreement by executing and delivering to the Company an instrument
in form satisfactory to the Company pursuant to which such person agrees to be
bound by the terms of this Agreement to the same extent as CSFB.
1.1.9. "CSFB Majority Holders" shall mean, as of any date, the holders of
a majority of the CSFB Securities outstanding on such date.
1.1.10. "CSFB Securities" shall mean (a) all shares of Common Stock
originally issued to, or issued with respect to shares originally issued to, or
held by, CSFB, whenever issued, including, without limitation, all shares of
Common Stock issued pursuant to the exercise or conversion of any Options and
(b) all Options originally granted or issued to CSFB (treating such Options as a
number of Shares equal to the number of Equivalent Shares represented by such
Options for all purposes of this Agreement except as otherwise specifically set
forth herein).
1.1.11. "Equivalent Shares" shall mean as to any outstanding shares of
Common Stock, such number of shares of Common Stock, and as to any outstanding
Options, the maximum number of shares of Common Stock for which or into which
such Options may at the time be exercised or converted.
1.1.12. "Exchange Act" shall mean Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder, all as from time to time in effect.
1.1.13. "Exchange Offers" shall mean the exchange offers effected with
respect to ICON's 13% Senior Subordinated Notes due 2002, IHF Holdings, Inc.'s
15% Senior Secured Discount Notes due 2004 and ICON Fitness Corporation's 14%
Senior Discount Notes due 2006 as described in the Company's and ICON's Exchange
Offer and Consent Solicitation Statement, dated July 30, 1999, as amended and
supplemented from time to time.
1.1.14. "Fair Market Value" shall mean, as of any date, the fair value of
any Security or other securities as of the applicable date, as determined
pursuant to Section 10.
1.1.15. "Financial Buyer" shall mean an entity controlled directly or
indirectly by one or more institutional investors.
1.1.16. "Independent Investment Banking Firm" means any nationally
recognized investment banking firm listed on Schedule 1.1.18 hereto which is not
the Beneficial Owner of any equity interest in (i) the Company, (ii) any
shareholder of the Company, (iii) any Bain Investor or Affiliated Fund or (iv)
any Affiliate of any Bain Investor or Affiliated Fund.
1.1.17. "Initial Public Offering" shall mean the first public offering of
shares of Common Stock registered on form ▇-▇, ▇-▇ or S-3 (or any successor
form) under the Securities Act.
1.1.18. "Investor" shall mean any Bain Investor or Other Investor.
1.1.19. "Junior Management Investor" shall mean any Junior Management
Initial Investor and any other officer or employee of the Company or any of its
subsidiaries designated by the Board to be a Junior Management Investor
hereunder and any transferee pursuant to Section 4.1.2, 4.1.3 or 4.1.4 who, from
time to time, acquires Shares or Options and becomes party to this Agreement by
executing and delivering to the Company an instrument in form satisfactory to
the Company pursuant to which such person agrees to be bound by the terms of
this Agreement to the same extent as a Junior Management Investor.
1.1.20. "Junior Management Securities" shall mean (a) all shares of
Common Stock originally issued to, or issued with respect to shares originally
issued to, or held by, the Junior Management Investors, whenever issued,
including, without limitation, all shares of Common Stock issued pursuant to the
exercise or conversion of any Options and (b) all Options originally granted or
issued to a Junior Management Investor (treating such Options as a number of
Shares equal to the number of Equivalent Shares represented by such Options for
all purposes of this Agreement except as otherwise specifically set forth
herein).
1.1.21. "Liquidity Event" shall mean the occurrence of (i) the
consummation by the Company of an Initial Public Offering with gross proceeds
greater than $50 million, (ii) the merger or consolidation of the Company or
ICON with or into another entity, or sale of stock of the Company or ICON, in
which the holders of outstanding voting securities of the Company as of the date
hereof (including for such purpose the holders of membership interests in the
LLC) cease to own, directly or indirectly, greater than 51% of the outstanding
voting securities of the entity surviving such merger or consolidation or sale
or (iii) the sale of all or substantially all of the assets of the Company or
ICON.
1.1.22. "LLC Liquidation" shall mean the distribution of substantially
all of the assets of the LLC to its members.
1.1.23. "Management Initial Investor" shall mean any Senior Management
Initial Investor or Junior Management Initial Investor.
1.1.24. "Management Investor" shall mean any Senior Management Investor
or Junior Management Investor.
1.1.25. "Management Majority Holders" shall mean, as of any date, the
holders of a majority of the Management Securities outstanding on such date.
1.1.26. "Management Securities" shall mean the Senior Management
Securities and the Junior Management Securities.
1.1.27. "Members of the Immediate Family" shall mean, with respect to any
individual, each spouse, parent, brother, sister or child of such individual,
each spouse of any such Person, each child of any of the aforementioned Persons,
each trust created solely for the benefit of one or more of the aforementioned
Persons and each custodian or guardian of any property of one or more of the
aforementioned Persons in his capacity as such custodian or guardian.
1.1.28. "Non-CSFB Warrantholder" shall mean the Non-CSFB Initial
Warrantholders, and any other Person which, from time to time, acquires Non-CSFB
Warrant Securities and thereby becomes entitled to the benefits of certain
provisions of this Agreement.
1.1.29. "Non-CSFB Majority Warrantholders" shall mean, as of any date,
the holders of a majority of the Non-CSFB Warrant Securities outstanding on such
date.
1.1.30. "Non-CSFB Warrant Securities" shall mean all Non-CSFB Warrants
originally issued to the Non-CSFB Warrantholders (treating such Non-CSFB
Warrants as a number of Shares equal to the number of Equivalent Shares
represented by such Non-CSFB Warrants for all purposes of this Agreement except
as otherwise specifically set forth herein) and all Shares issued upon exercise
or conversion of Non-CSFB Warrants (or issued upon conversion of or otherwise
with respect to Shares issued upon exercise or conversion of Non-CSFB Warrants),
whenever issued.
1.1.31. "Option-Eligible Shares" shall mean the Shares originally issued
to (or issued upon conversion of or otherwise with respect to the Shares
originally issued to) the LLC on the date hereof, which Shares shall remain
Option-Eligible Shares in the hands of any transferee until termination of the
Junior Management Options and the CSFB Option set forth in Section 5.
1.1.32. "Options" shall mean (i) any options or warrants or other rights
to subscribe for, purchase or otherwise acquire Common Stock, other than rights
to acquire Shares pursuant to this Agreement, and (ii) any evidence of
indebtedness, shares of stock (other than Common Stock) or other securities
which are directly or indirectly convertible or exchangeable for shares of
Common Stock, but shall exclude the Non-CSFB Warrants, the Junior Management
Options, the CSFB Option and any call rights in respect of shares issued to
employees of the Company or its subsidiaries.
1.1.33. "Other Investor" shall mean any Other Initial Investor, CSFB
Investor, Management Investor, or any other holder of Class C Units of the LLC
who receives Shares from the LLC upon the LLC Liquidation and any other Person
which, from time to time, acquires Shares and becomes party to this Agreement by
executing and delivering to the Company an instrument in form satisfactory to
the Company pursuant to which such Person agrees to be bound by the terms of
this Agreement to the same extent as an Other Investor.
1.1.34. "Other Majority Holders" shall mean, as of any date, the holders
of a majority of the Other Securities outstanding on such date.
1.1.35 "Other Securities" shall mean (a) all shares of Common Stock
originally issued to, or issued with respect to shares originally issued to, or
held by, the Other Investors, whenever issued, including, without limitation,
all shares of Common Stock issued pursuant to the exercise or conversion of any
Options and (b) all Options originally granted or issued to an Other Investor
(treating such Options as a number of Shares equal to the number of Equivalent
Shares represented by such Options for all purposes of this
Agreement except as otherwise specifically set forth herein). For avoidance of
doubt, the Other Securities shall not include the Non-CSFB Warrant Securities.
1.1.36. "Permitted Management Transferee" shall mean, as to each
Management Security, a transferee of such Management Security in compliance with
Section 4.1.2, 4.1.3 or 4.1.4.
1.1.37. "Person" shall mean any individual, partnership, corporation,
company, association, trust, joint venture, unincorporated organization or
entity, or any government, governmental department or agency or political
subdivision thereof.
1.1.38. "Registrable Securities" shall mean (i) all shares of Common
Stock, (ii) all shares of Common Stock issuable upon exercise or conversion of
any Option or of any Non-CSFB Warrant, and (iii) all shares of Common Stock
directly or indirectly issued or issuable with respect to the securities
referred to in clauses (i) or (ii) above by way of stock dividend or stock split
or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization, in each case included in the Securities
or the Non-CSFB Warrant Securities. As to any particular Registrable Securities,
such shares shall cease to be Registrable Securities when (a) they have been
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering them, (b) they have been distributed to
the public through a broker, dealer or market maker pursuant to Rule 144 or (c)
the holder thereof may sell all of its Shares under Rule 144 within a three
month period, provided such holder owns less than 1% of the outstanding shares
of Common Stock, in each case in compliance with any applicable provisions of
this Agreement.
1.1.39. "Rule 144" shall mean Rule 144, as from time to time in effect,
promulgated by the Securities and Exchange Commission under the Securities Act
(including without limitation clause (k) thereof).
1.1.40. "Securities" shall mean all Shares and all Options included in
the Bain Securities or the Other Securities, but shall not include the Non-CSFB
Warrant Securities.
1.1.41. "Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder, all as from time to time in effect.
1.1.42. "Senior Management Investor" shall mean any Senior Management
Initial Investor, any transferee pursuant to Section 4.1.2, 4.1.3 or 4.1.4 or
any holder of Class A Units of the LLC who, from time to time, acquires Shares
or Options and becomes party to this Agreement by executing and delivering to
the Company an instrument in form satisfactory to the Company pursuant to which
such person agrees to be bound by the terms of this Agreement to the same extent
as a Senior Management Initial Investor.
1.1.43. "Senior Management Majority Holders" shall mean, as of any date,
the holders of a majority of the Senior Management Securities outstanding on
such date.
1.1.44. "Senior Management Securities" shall mean (a) all shares of
Common Stock originally issued to, or issued with respect to shares originally
issued to, or held by, the Senior Management Investors, whenever issued,
including, without limitation, all shares of Common Stock issued pursuant to the
exercise or conversion of any Options and (b) all Options originally granted or
issued to a Senior Management Investor (treating such Options as a number of
Shares equal to the number of Equivalent Shares represented by such Options for
all purposes of this Agreement except as otherwise specifically set forth
herein).
1.1.45. "Shares" shall mean all shares of Common Stock.
1.1.46. "Significant Public Float" shall be deemed to exist on and after
(i) the date of closing of the Initial Public Offering of Common Stock of the
Company if as of such date there shall be outstanding shares having an aggregate
market value (calculated on the basis of the offering price to the public in
such Public Offering) of $200,000,000 or more and (ii) if a Significant Public
Float (as defined in clause (i) above) shall not have existed as of the date of
closing of the Initial Public Offering, the first date thereafter on which there
shall be outstanding shares having an aggregate market value (calculated on the
basis of the average of the published best bid and ask or published closing
price, through NASDAQ or on a registered exchange, on the five immediately
preceding trading days) of $200,000,000 or more.
1.1.47. "Transfer" shall mean any sale, pledge, assignment, encumbrance
or other transfer or disposition of any Securities to any other Person, whether
directly, indirectly, voluntarily, involuntarily, by operation of law, pursuant
to judicial process or otherwise.
1.1.48. "Voting Shares" shall mean, with respect to any matter to be
voted upon, all Shares included in the Securities entitled to vote with respect
to such matter.
1.2. Certain Matters of Construction. In addition to the definitions referred to
as set forth in the Section 1.1:
(a) The words "hereof", "herein", "hereunder" and words of similar
import shall refer to this Agreement as a whole and not to any particular
Section or provision of this Agreement, and reference to a particular Section of
this Agreement shall include all subsections thereof;
(b) References to a Section, Schedule or Exhibit are to a Section of,
or Schedule or Exhibit to, this Agreement;
(c) Definitions shall be equally applicable to both the singular and
plural forms of the terms defined;
(d) The masculine, feminine and neuter genders shall each include the
other;
(e) Except as otherwise provided herein, any Person who holds Options
or Non-CSFB Warrants shall be deemed to be the holder of the Registrable
Securities obtainable upon exercise or conversion of the Options or
Non-CSFB Warrants in connection with the transfer thereof or otherwise
regardless of any restriction or limitation on the exercise or conversion
of the Options or Non-CSFB Warrants; and
(f) Whenever a percentage of one or more types of Securities is
specified, such percentage shall be calculated on the basis on the number
of R egistrable Securities represented by such one or more types.
1.3. Cross Reference Table. The following terms defined elsewhere in this
Agreement in the Sections set forth below shall have the respective meanings
therein defined:
Term Definition
"Agreement" Preamble
"Bain Designated Director" Section 3.1
"Bain Initial Investor" Preamble
"Come Along Notice" Section 6.1
"Common Stock" Recitals
"Company" Preamble
"Covered Person" 8.4.1
"CSFB" Preamble
"CSFB Closing" Section 5.2.3
"CSFB Designated Directors" Section 3.1
"CSFB Option" Section 5.2
"CSFB Option-Eligible Shares" Section 5.2
"CSFB Purchase Agreement" Recitals
"Exercising Purchaser" Section 5.1.3
"Fair Market Value" Section 10
"General Representations" Section 6.3
"ICON" Preamble
"Individual Representations" Section 6.3
"Individual Underwriting Agreement Representations" Section 8.1.1
"Initiating Holders" Section 8.2.
"Investor" Preamble
"Issuance" Section 9
"Junior Management Closing" Section 5.1.5
"Junior Management Initial Investor" Preamble
"Junior Management Option" Section 5.1
"Junior Management Option-Eligible Shares" Section 5.1
"Liquidity Event Notice" Section 5.1.1; 5.2.1
"LLC" Preamble
"LLC Designated Directors" Section 3.1
"LLC Purchase Agreement" Recitals
"Majority Initiating Holders" Section 8.2.3
"Management Designated Directors" Section 3.1
"Non-Complying Investor" Section 11.2
"Non-CSFB Warrant" Recitals
"Non-CSFB Initial Warrantholders" Recitals
"Option-Eligible Share Sellers" Section 5.1.3; 5.2.2
"Other Offered Securities" Section 9.1.4
"Participating Buyer" Section 9.1.2
"Participating Seller" Section 6.1; 7.1.2
"Preemption Notice" Section 9.1
"Preemptive Portion" Section 9.1
"Preemptive Purchaser Offerees" Section 9.1
"Proposed ▇▇▇▇ Seller" Section 6; 7.1
"Proposed Buyer" Section 6; 7.1; 9.1
"Public Offering" Section 8.1.1
"Purchase Price" Section 5.1; 5.2
"Sale" Section 6; 7.1
"Sale Percentage" Section 6; 7.1
"Section 382" Section 2
"Section 6.5 Opinion" Section 6.5.1
"Section 6.5 Request Date" Section 6.5.1
"Senior Management Initial Investor" Preamble
"Subject Securities" Section 9
"Tag Along Notice" Section 7.1
"Tag Along Offerees" Section 7.1
"Transfer" Section 4.1
2. [RESERVED].
3. VOTING AGREEMENT.
3.1. Election of Directors. Each holder of Voting Shares hereby agrees
to cast all votes to which such holder is entitled in respect of the Voting
Shares now or hereafter owned by such holder, whether at any annual or special
meeting of stockholders, by written consent or otherwise, to:
(i) fix the number of directors constituting the Board at nine (9);
(ii) elect as a director of the Company each of two individuals (the
"CSFB Designated Directors") that may be designated by the CSFB
Majority Holders for election;
(iii) if an LLC Liquidation has not occurred, elect as the other
members of the Board such other individuals as may be
designated by the LLC for election (the "LLC Designated
Directors");
(iv) if an LLC Liquidation has occurred, (A) and so long as they are
employed as the Chief Executive Officer and the President and
Chief Operating Officer of the Company, respectively, elect as
a director of the Company each of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇▇▇▇▇ (the "Management Designated Directors"),
notwithstanding anything to the contrary contained in Section
3.8, and (B) elect as the other members of the Board such other
individuals as may be designated by the ▇▇▇▇ Majority Holders
for election (the "▇▇▇▇ Designated Directors").
3.2. Removal of Directors. Any director may be removed with or
without cause by decision of two-thirds (2/3) of the other directors; provided,
however, that no director shall be removed without cause except with the consent
of the holders of a majority of the Shares held by the class of Investors
entitled to designate such director pursuant to Section 3.1.
3.3. Successors. In the event a director shall cease to serve for
any reason, then, (i) in the case of a CSFB Designated Director, the CSFB
Majority Holders shall have the right to nominate a successor CSFB Designated
Director, (ii) in the case of an LLC Designated Director, the LLC shall have the
right to nominate a successor LLC Designated Director, (iii) in the case of a
Management Designated Director, the Senior Management Majority Holders shall
have the right to nominate a successor Management Designated Director, and (iv)
in the case of any ▇▇▇▇ Designated Director, the ▇▇▇▇ Majority Holders shall
have the right to nominate a successor ▇▇▇▇ Designated Director; provided,
however, that no director removed for cause shall be renominated or reelected.
Each holder of Voting Shares shall, upon receipt of notice identifying such
nominee, promptly take all action necessary to cause the appointment of such
nominee to the Board pursuant to the Company's By-laws and Certificate of
Incorporation, each as amended and in effect from time to time.
3.4. Certain Transactions. Each holder of Other Securities agrees to
vote, or consent with respect to, the Shares included in such Other Securities,
and, subject to fiduciary obligations imposed by applicable law, to cause any
directors designated by such Investor pursuant to Section 3.1 or 3.3 to vote, or
consent with respect to, in the manner specified by the ▇▇▇▇ Majority Holders
with respect to: (i) any offering of securities of the Company; (ii) any sale of
a substantial portion of the assets of the Company or any of its subsidiaries to
a Person which is not an Affiliate of any ▇▇▇▇ Investor; (iii) any merger or
consolidation involving the Company or any of its subsidiaries with a Person
which is not an Affiliate of any ▇▇▇▇ Investor; (iv) any transaction
constituting a change in control of the Company to a Person not an Affiliate of
any ▇▇▇▇ Investor; any merger or consolidation of the Company with any one or
more of its direct and indirect subsidiaries and no other Person; and (v) any
transaction to which Section 6 (subject to Section 6.6) or Section 7 applies.
3.5. Committees. Each committee of the Board shall be composed so
that the representation thereon of CSFB Designated Directors, LLC Designated
Directors, Management Designated Directors and ▇▇▇▇ Designated Directors shall
be in the same proportion, as nearly as may be, as the representation of such
directors on the whole Board, except as consented to by the Majority Holders
entitled to designate the directors to be excluded; provided, however, that no
Management Designated Director shall sit on the audit committee or any committee
charged with the consideration of matters related to compensation, employee
stock options, or the like; and provided, further, that the ▇▇▇▇ Designated
Directors (or the LLC Designated Directors, if an LLC Liquidation has not
occurred) shall at all time constitute a majority of all of the directors on
each such committee.
3.6. Special Rule for Fund Designated Directors. In the case of ▇▇▇▇
Designated Directors, the holders of a majority of the shares specified below
shall be entitled to designate the portion specified below of the number of ▇▇▇▇
Designated Directors then to be designated:
Shares Number
Shares Originally Issued One half of the number to be
To ▇▇▇▇ Capital Fund IV, L.P. designated plus one half, rounded
up to the nearest whole number.
Shares Originally Issued One half of the number to be
to ▇▇▇▇ Capital Fund IV-B, L.P. designated minus one half, rounded
down to the nearest whole number.
3.7. Proxy; the Company.
3.7.1. Proxy. In order to assist in the implementation of the
foregoing provisions of this Section 3, each holder of Voting Shares hereby
constitutes and appoints:
(i) ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇ ▇▇▇▇, and each of them, as attorneys
and proxies, with full power of substitution, to receive
all notices, and to represent, vote and consent, with
respect to all Voting Shares held by such holder, without
any notice to such holder (such notice being expressly
waived by such holder), whether or not said
representation, vote or consent benefits the interests of
any of said proxies, but only with respect to any and all
of the matters specified in, and only in the manner
contemplated by, clauses (i) and (iii) of Section 3.1,
clause (ii) of Section 3.3 and Section 3.4;
(ii) ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇ ▇▇▇▇, and each of them, as attorneys
and proxies, with full power of substitution, to receive
all notices, and to represent, vote and consent, with
respect to all Voting Shares held by such holder, without
any notice to such holder (such notice being expressly
waived by such holder), whether or not said
representation, vote or consent benefits the interests of
any of said proxies, but only with respect to any and all
of the matters specified in, and only in the manner
contemplated by, clauses (i) and (iv)(B) of Section 3.1,
clause (iv) of Section 3.3 and Section 3.4;
(iii) [insert names of initial CSFB directors], and each of
them, as attorneys and proxies, with full power of
substitution, to receive all notices, and to represent,
vote and consent, with respect to all Voting Shares held
by such holder, without any notice to such holder (such
notice being expressly waived by such holder), whether or
not said representation, vote or consent benefits the
interests of any of said proxies, but only with respect
to any and all of the matters specified in, and only in
the manner contemplated by, clause (ii) of Section 3.1
and clause (i) of Section 3.3; and
(iv) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, and each of them, as
attorneys and proxies, with full power of substitution,
to receive all notices, and to represent, vote and
consent, with respect to all Voting Shares held by such
holder, without any notice to such holder (such notice
being expressly waived by such holder), whether or not
said representation, vote or consent benefits the
interests of any of said proxies, but only with respect
to any and all of the matters specified in, and only in
the manner contemplated by, clause (iv)(A) of Section 3.1
and clause (iii) of Section 3.3.
The foregoing proxy is irrevocable, is coupled with an interest in the
Company generally and shall remain in full force and effect
notwithstanding the passage of time (including without limitation the
three-year period specified in Section 212(b) of the Delaware
Corporation Law) until terminated in accordance with the provisions of
Section 3.8.
3.7.2. Company to Allow no Inconsistent Action. The Company
agrees not to give effect to any action by any holder of Shares which is in
contravention of this Section 3.
3.8. Period. The foregoing provisions of this Section 3 shall expire on
the earliest of: (i) the date of termination of this Agreement; (ii) prior to
the LLC Liquidation, the first date on which the LLC owns less than fifty
percent (50%) of all Securities owned by it immediately after the closing under
the LLC Purchase Agreement; (iii) after the LLC Liquidation, the first date on
which the ▇▇▇▇ Investors own less than fifty percent (50%) of all Securities
owned by them immediately following the LLC Liquidation; (iv) upon the closing
of the Initial Public Offering if, in the written opinion of the managing
underwriter for the Initial Public Offering, the continued effectiveness of this
Section 3 would be detrimental to the sale of securities in the Initial Public
Offering or the price to be received for such securities; (v) one year after the
date, if any, after the Initial Public Offering on which the ▇▇▇▇ Investors
shall distribute all ▇▇▇▇ Securities pursuant to Section 7.5(b) or (vi) the date
on which there shall exist a Significant Public Float; provided, however, that
(a) the provisions of clause (ii) of Section 3.1, clause (i) of the first
sentence of Section 3.3 and clause (iii) of the first sentence of Section 3.7.1
shall expire on any earlier date that the CSFB Investors own less than fifty
percent (50%) of all Securities owned by them immediately after the closing
under the CSFB Purchase Agreement, (b) the provisions of clause (iv)(A) of
Section 3.1, clause (iii) of the first sentence of Section 3.3, and clause (iv)
of the first sentence of Section 3.7.1. shall expire on any earlier date that
the Senior Management Investors own less than fifty percent (50%) of all
Securities owned by them immediately after the LLC Liquidation and (c) the
provisions of Section 3.4 (other than clause (v) thereof) shall expire upon the
LLC Liquidation if on the sixtieth (60th) day following the date of this
Agreement the ▇▇▇▇ Initial Investors own membership interests in the LLC
representing less than $10 million (at cost).
4. CERTAIN TRANSFER RIGHTS AND RESTRICTIONS.
4.1 Securities. No holder of any Other Security shall sell, pledge,
assign, grant a participation interest in, encumber or otherwise transfer or
dispose of any of such Other Securities to any other Person, whether directly,
indirectly, voluntarily, involuntarily, by operation of law, pursuant to
judicial process (including, without limitation, divorce decree) or otherwise (a
"Transfer"), except as permitted by this Section 4.1 but not otherwise
prohibited by Section 8.5. Any attempted Transfer of Other Securities not
permitted by this Section 4.1 shall be null and void, and the Company shall not
in any way give effect to any such impermissible Transfer.
4.1.1. Transfers under this Agreement, etc. Any Investor may
Transfer any or all Other Securities held by such Investor: (i) to the
Company or any subsidiary of the Company in one or more transactions
approved by the Board, (ii) to any ▇▇▇▇ Investor in a transaction
approved by the Board, (iii) on the terms and subject to the conditions
of Sections 5, 6, 7 or 8, or (iv) to the public through a broker, dealer
or market maker pursuant to Rule 144 after the Initial Public Offering.
4.1.2. Transfers of Management Securities to Immediate Family. Any
individual holder of Management Securities may Transfer any or all of
such Securities to a Member of the Immediate Family of such holder;
provided, however, that no such Transfer shall be effective until such
Member of the Immediate Family has delivered to the Company a written
acknowledgment and agreement in form and substance reasonably
satisfactory to the Company that the Securities to be received by such
Member of the Immediate Family are subject to all the provisions of this
Agreement and that such Member of the Immediate Family is bound hereby
and a party hereto to the same extent as a Senior Management Initial
Investor or Junior Management Initial Investor, as the case may be; and
provided, further, that any transfer of an Option shall be subject to
all of the terms and conditions of such Option, or the plan under which
such Option was issued, in addition to the terms and conditions hereof.
4.1.3. Transfers of Management Securities Upon Death. Upon the death
of any individual holder of Management Securities, the Securities held
by such holder may be distributed by will or other instrument taking
effect at death or by applicable laws of descent and distribution to
such holder's estate, executors, administrators and personal
representatives, and then to such holder's heirs, legatees or
distributees, whether or not such recipients are Members of the
Immediate Family of such holder; provided, however, that no such
Transfer shall be effective until the recipient has delivered to the
Company a written acknowledgment and agreement in form and substance
reasonably satisfactory to the Company that the Securities to be
received by such recipient are subject to all the provisions of this
Agreement and that such recipient is bound hereby and a party hereto to
the same extent as a Senior Management Initial Investor or Junior
Management Initial Investor, as the case may be; and provided, further,
that any transfer of an Option shall be subject to all of the terms and
conditions of such Option, or the plan under which such Option was
issued, in addition to the terms and conditions hereof.
4.1.4. Transfers of Management Securities to Charities. Any holder
of Management Securities may Transfer as a charitable gift any or all of
such Securities to any Person which is described in Section 501(c)(3) of
the Internal Revenue Code of 1986, as from time to time in effect;
provided, however, that no such Transfer shall be effective until such
transferee has delivered to the Company a written acknowledgment and
agreement in form and substance reasonably satisfactory to the Company
that the Securities to be received by such transferee are subject to all
the provisions of this Agreement and that such transferee is bound
hereby and a party hereto to the same extent as a Senior Management
Initial Investor or Junior Management Initial Investor, as the case may
be; and provided, further, that any transfer of an Option shall be
subject to all of the terms and conditions of such Option, or the plan
under which such Option was issued, in addition to the terms and
conditions hereof.
4.1.5. Transfers of Other Securities to Entities Under Common
Control. Any holder of Other Securities which is an institutional
investor may Transfer any or all of such Securities to a Person under
common control with such holder in a bona fide transfer not part of a
transaction or series of transactions that results in the direct or
indirect transfer of such Securities to a Person not under common
control with such holder; provided, however, that (i) no such Transfer
shall be effective until such transferee under common control has
delivered to the Company a written acknowledgment and agreement in form
and substance reasonably satisfactory to the Company that the Securities
to be received by such transferee are subject to all the provisions of
this Agreement and that such transferee is bound hereby and a party
hereto to the same extent as the transferor of such Securities and (ii)
any transfer of an Option shall be subject to all of the terms and
conditions of such Option, or the plan under which such Option was
issued, in addition to the terms and conditions hereof.
4.2. Period. The foregoing provisions of this Section 4 shall expire on
the first date on which the earlier of the following shall have occurred: (i)
there shall exist a Significant Public Float or (ii) (A) prior to the LLC
Liquidation, the LLC owns less than fifty percent (50%) of all Securities owned
by it immediately after the closing under the LLC Purchase Agreement or (B)
after the LLC Liquidation, the ▇▇▇▇ Investors own less than fifty percent (50%)
of all Securities owned by them immediately after the LLC Liquidation.
4.3. Status in Hands of Certain Transferees. Notwithstanding any other
provision of this Agreement, (a) Securities Transferred pursuant to and in
compliance with Sections 6 or 7 hereof shall in the hands of the Proposed Buyer
not constitute Securities for any purpose of this Agreement; (b) Securities or
Non-CSFB Warrant Securities Transferred (i) pursuant to and in compliance with
Section 8 hereof or (ii) in compliance with this Agreement in any public
offering or under Rule 144 shall in the hands of the recipient not constitute
Securities or Non-CSFB Warrant Securities for any purpose of this Agreement; (c)
Securities acquired in accordance with the provisions of this Agreement by any
Investor from another Investor shall upon such acquisition be deemed for all
purposes hereof to be ▇▇▇▇ Securities, CSFB Securities, Senior Management
Securities, Junior Management Securities or Other Securities hereunder, as the
case may be, of like kind with the other Securities held by such acquiring
Investor; and (d) Securities Transferred as described in Section 7.5(d) shall
upon acquisition be deemed for all purposes hereof to be Junior Management
Securities.
4.4. Lock-Up. Notwithstanding any provision to the contrary contained in
this Section 4, no Transfer may be made pursuant to this Section 4 except in
compliance with the provisions of Section 8.5 hereof.
5. CSFB AND JUNIOR MANAGEMENT OPTIONS. CSFB and the Junior Management
Investors shall have the option to purchase certain of the Option-Eligible
Shares on the terms and conditions set forth in this Section 5.
5.1 Junior Management. Subject to the provisions of this Section 5.1
and effective upon their execution of a Joinder and Supplement to this
Stockholders Agreement, the LLC hereby grants to each Junior Management Initial
Investor an irrevocable option (the "Junior Management
Options") to purchase up to the aggregate number of Option-Eligible Shares set
forth on Schedule 5.1 hereto (the "Junior Management Option-Eligible Shares") at
a per share purchase price (the "Purchase Price") of $5.83, upon the occurrence
of the initial Liquidity Event. Upon execution of the Joinder and Supplement by
each Junior Management Initial Investor, Schedule 5.1 shall be amended to set
forth the number of Option-Eligible Shares subject to the Junior Management
Option of such Junior Management Initial Investor.
5.1.1. Notice. Not fewer than ten (10) business days prior to the
consummation of the Liquidity Event, a notice (the "Liquidity Event
Notice") shall be furnished by the Company to each holder of
Option-Eligible Shares and to each Junior Management Initial Investor. The
Liquidity Event Notice shall include (i) the proposed date of consummation
of the Liquidity Event and (ii) the number of vested Junior Management
Option-Eligible Shares that each Junior Management Initial Investor is
entitled to purchase.
5.1.2. Vesting. The Junior Management Options shall be subject to
vesting according to the following schedule:
Percentage of Shares Vested Date
--------------------------- ----
25% Immediately
50% September 27, 2000
75% September 27, 2001
100% September 27, 2002
Upon the occurrence of the Liquidity Event, the foregoing schedule shall be
accelerated in respect of any Junior Management Initial Investor who
remains employed by the Company or one of its Affiliates such that 100% of
the Option-Eligible Shares subject to his or her Junior Management Option
shall become immediately vested. No Junior Management Initial Investor who
is not employed by the Company or one of its Affiliates at the time of
consummation of the Liquidity Event may exercise his or her Junior
Management Option with respect to any unvested Junior Management
Option-Eligible Shares.
5.1.3. Exercise. Each Junior Management Initial Investor desiring to
exercise its Junior Management Option shall send a written commitment
within three (3) business days after the furnishing of the Liquidity Event
Notice to the Company and to each holder of Option-Eligible Shares (the
"Option-Eligible Share Sellers") specifying the number of Junior Management
Option-Eligible Shares which such Junior Management Initial Investor
desires to purchase (each Junior Management Initial Investor who so elects
to exercise the Junior Management Option being referred to herein as an
"Exercising Purchaser"). Each Junior Management Initial Investor who has
not so elected to exercise his or her Junior Management Option shall be
deemed to have waived all of his or her rights with respect to such Junior
Management Option, and his or her Junior Management Option shall terminate
upon consummation of the Liquidity Event. In the event that an Exercising
Purchaser elects to purchase less than the total number of Junior
Management Option- Eligible Shares which are subject to his or her Junior
Management Option, such Junior Management Investor shall be deemed to have
waived all of his or her rights with respect to the remaining Junior
Management Option-Eligible Shares, and his or her Junior Management Option
shall terminate as to the remaining Junior Management Option- Eligible
Shares upon consummation of the Liquidity Event.
The exercise by each Exercising Purchaser shall be irrevocable except
as hereinafter provided, and each such Exercising Purchaser shall be bound
and obligated to acquire such amount of Junior Management Option-Eligible
Shares as such Exercising Purchaser shall have specified in such Exercising
Purchaser's written commitment. If at the end of the one hundred twentieth
(120th) day following the date on which the Liquidity Event Notice was
given the Liquidity Event has not been consummated, each Exercising
Purchaser shall be released from his or her obligations under the written
commitment, the Liquidity Event Notice shall be null and void, the Junior
Management Options shall remain in full force and effect and it shall be
necessary for a separate Liquidity Event Notice to have been furnished, and
the terms and provisions of this Section 5.1 separately complied with, in
order to consummate a Liquidity Event, unless the failure to consummate the
Liquidity Event resulted from any failure by any Junior Management Investor
to comply in any material respect with the terms of this Section 5.1.
5.1.4. Certain Legal Requirements. In the event the participation by
any Junior Management Investor as an Exercising Purchaser would require
under applicable law (i) the registration or qualification of any
securities or of any person as a broker or dealer or agent with respect to
such securities or (ii) the provision to any participant in the transaction
of any information other than such information as would be required under
Regulation D of the Securities and Exchange Commission or similar rule then
in effect in an offering made pursuant to said Regulation D solely to
"accredited investors" as defined in said Regulation D, the Option-Eligible
Share Sellers shall be obligated only to use their reasonable best efforts
to cause such requirements to have been complied with to the extent
necessary to permit such Exercising Purchaser to receive such securities.
Notwithstanding any provisions of this Section 5.1.4, if use of reasonable
best efforts shall not have resulted in such requirements being complied
with to the extent necessary to permit such Exercising Purchaser to receive
such securities, the Option-Eligible Share Sellers may exclude such
Exercising Purchaser from participation in the transaction. The obligation
of the Option- Eligible Share Sellers to use reasonable best efforts to
cause such requirements to have been complied with to the extent necessary
to permit an Exercising Purchaser to receive such securities shall be
conditioned on such Exercising Purchaser executing such documents and
instruments, and taking such other actions (including without limitation,
if required by the Option-Eligible Share Sellers on advice of their
counsel, agreeing to be represented during the course of such transaction
by a "purchaser representative" (as defined in Regulation D) in connection
with evaluating the merits and risks of the prospective investment and
acknowledging that he was so represented), as the Option- Eligible Share
Sellers shall reasonably request in order to permit such requirements to
have been complied with. Each Exercising Purchaser agrees to take such
actions as the Option-Eligible Share Sellers shall reasonably request in
order to permit such requirements to have been complied with.
5.1.5. Payment and Delivery of Certificates. The closing of the
purchase pursuant to the Junior Management Option (the "Junior Management
Closing") shall occur contemporaneously with and subject to the
consummation of the Liquidity Event. At the Junior Management Closing, (a)
each Option-Eligible Share Seller shall deliver the certificates evidencing
the Junior Management Option-Eligible Shares to be sold by such
Option-Eligible Share Seller, duly endorsed, or with stock powers or other
appropriate instruments duly endorsed, for transfer with signature
guaranteed, free and clear of any liens, encumbrances or adverse claims,
with any stock transfer tax stamps affixed; and (b) each Exercising
Purchaser shall deliver an amount equal to the Purchase Price multiplied by
the number of Junior Management Option-Eligible Shares to be purchased by
such Exercising Purchaser through a wire transfer to the credit of an
account designated by each Option-Eligible Share Seller to the Exercising
Purchasers in writing not less than two (2) business days prior to the date
of the Junior Management Closing.
5.1.6. Certain Adjustments. In the event of any change in the number
of issued and outstanding shares of Common Stock by reason of any stock
dividend, split-up or combination of shares, the number and kind of shares
subject to the Junior Management Options, and the Purchase Price, shall be
appropriately adjusted.
5.1.7. Notice of Transfer. Upon any transfer of Option-Eligible Shares
other than upon exercise of a Junior Management Option, the transferring
holder shall provide to the Junior Management Initial Investors and the
Company a statement setting forth the number of Option-Eligible Shares
transferred and the name and address of the transferee and a statement
signed by the transferee acknowledging that the transferred Option-Eligible
Shares shall continue to be subject to the Junior Management Options
hereunder.
5.1.8. Termination. The Junior Management Options shall terminate on
the earlier of (i) the twelfth anniversary of the date hereof and (ii)
immediately following the consummation of the initial Liquidity Event.
5.2. CSFB. Subject to the provisions of this Section 5.2, the LLC hereby
grants to CSFB an irrevocable option (the "CSFB Option") to purchase up to the
aggregate number of Option-Eligible Shares set forth on Schedule 5.2 hereto (the
"CSFB Option-Eligible Shares") at a per share purchase price (the "Purchase
Price") of $14.56, upon the occurrence of the initial Liquidity Event.
5.2.1. Notice. Not fewer than ten (10) business days prior to the
consummation of the Liquidity Event, a notice (the "Liquidity Event
Notice") shall be furnished by the Company to each holder of
Option-Eligible Shares and to CSFB. The Liquidity Event Notice shall
include (i) the proposed date of consummation of the Liquidity Event and
(ii) the number of CSFB Option-Eligible Shares that CSFB is entitled to
purchase.
5.2.2. Exercise. If CSFB desires to exercise the CSFB Option, it shall
send a written commitment no more than five (5) business days after the
furnishing of the Liquidity Event Notice to the Company and to each holder
of Option-Eligible Shares (the "Option-Eligible Share Sellers") specifying
the amount of CSFB Option-Eligible Shares which CSFB desires to purchase.
If CSFB does not elect to exercise its CSFB Option, CSFB shall be deemed to
have waived all of its rights with respect to the CSFB Option, and the CSFB
Option shall terminate upon consummation of the Liquidity Event. If CSFB
elects to purchase less than the total number of CSFB Option-Eligible
Shares which are subject to the CSFB Option, CSFB shall be deemed to have
waived all of its rights with respect to the remaining CSFB Option-Eligible
Shares, and the CSFB Option shall terminate as to the remaining CSFB
Option-Eligible Shares upon consummation of the Liquidity Event.
The exercise by CSFB shall be irrevocable except as hereinafter
provided, and CSFB shall be bound and obligated to acquire such amount of
CSFB Option-Eligible Shares as it shall have specified in its written
commitment. If at the end of the one hundred twentieth (120th) day
following the date on which the Liquidity Event Notice was given the
Liquidity Event has not been consummated, CSFB shall be released from its
obligations under the written commitment, the Liquidity Event Notice shall
be null and void, the CSFB Option shall remain in full force and effect and
it shall be necessary for a separate Liquidity Event Notice to have been
furnished, and the terms and provisions of this Section 5.2 separately
complied with, in order to consummate a Liquidity Event, unless the failure
to consummate the Liquidity Event resulted from any failure by CSFB to
comply in any material respect with the terms of this Section 5.2.
CSFB shall purchase the CSFB Option-Eligible Shares from the
Option-Eligible Share Sellers pro rata, on the basis of the number of
Option-Eligible Shares beneficially owned by each Option-Eligible Share
Seller.
5.2.3. Payment and Delivery of Certificates. The closing of the
purchase pursuant to the CSFB Option (the "CSFB Closing") shall occur
contemporaneously with and subject to the consummation of the Liquidity
Event. At the CSFB Closing, (a) each Option-Eligible Share Seller shall
deliver the certificates evidencing the CSFB Option-Eligible Shares to be
sold by such Option-Eligible Share Seller, duly endorsed, or with stock
powers or other appropriate instruments duly endorsed, for transfer with
signature guaranteed, free and clear of any liens, encumbrances or adverse
claims, with any stock transfer tax stamps affixed; and (b) CSFB shall
deliver an amount equal to the Purchase Price multiplied by the number of
CSFB Option-Eligible Shares to be purchased by CSFB through a wire transfer
to the credit of an account designated by each Option-Eligible Share Seller
to CSFB in writing not less than two (2) business days prior to the date of
the CSFB Closing.
5.2.4. Certain Adjustments. In the event of any change in the number
of issued and outstanding shares of Common Stock by reason of any stock
dividend, split-up or combination of shares, the number and kind of shares
subject to the CSFB Option, and the Purchase Price, shall be appropriately
adjusted.
5.2.5. Termination. The CSFB Option shall terminate on the earlier of
(i) the twelfth anniversary of the date hereof and (ii) immediately
following the consummation of the Liquidity Event.
5.2.6. Notice of Transfer. Upon any transfer of Option-Eligible Shares
other than upon exercise of the CSFB Option, the transferring holder shall
provide to CSFB and the Company a statement setting forth the number of
Option-Eligible Shares transferred and the name and address of the
transferee and a statement signed by the transferee acknowledging that the
transferred Option-Eligible Shares shall continue to be subject to the CSFB
Option hereunder.
6. "TAKE ALONG" RIGHTS. Each holder of Securities hereby agrees, if
requested by the ▇▇▇▇ Majority Holders, to Transfer for value (for purposes of
this Section 6, a "Sale") a specified percentage (for purposes of this Section
6, the "Sale Percentage") of the Securities then owned by such holder to any
Person (for purposes of this Section 6, the "Proposed Buyer") in the manner and
on the terms set forth in this Section 6 in connection with the Sale by one or
more holders of ▇▇▇▇ Securities (collectively, the "Proposed ▇▇▇▇ Seller") of
the Sale Percentage of the total number of ▇▇▇▇ Securities held by all holders
of ▇▇▇▇ Securities on a fully diluted basis to the Proposed Buyer; provided,
however, that no holder of Securities shall have any obligations under this
Section 6 with respect to a particular Transfer if the Sale Percentage with
respect to such Transfer is less than 10%.
6.1. Procedure. If the ▇▇▇▇ Majority Holders elect to exercise their rights
under this Section 6, a notice (the "Come Along Notice") shall be furnished by
the Proposed ▇▇▇▇ Seller to each holder of Securities. The Come Along Notice
shall set forth the principal terms of the proposed Sale insofar as it relates
to the Securities, including the number of Securities to be purchased from the
Proposed ▇▇▇▇ Seller, the Sale Percentage, the maximum and minimum purchase
price, the name and address of the Proposed Buyer and (if the Proposed Buyer is
not subject to the periodic reporting requirements of the Exchange Act) the name
of each director of the Proposed Buyer and of each Person which is the
beneficial owner of more than twenty percent (20%) of the common stock of the
Proposed Buyer. If the ▇▇▇▇ Majority Holders consummate the Sale referred to in
the Come Along Notice, each other holder of Securities (each a "Participating
Seller") shall be bound and obligated to Sell the Sale Percentage of the
Securities in the Sale on the same terms and conditions (subject to all of the
provisions of this Agreement and it being understood that, without limiting the
foregoing, for such purposes the terms applicable to Shares of Common Stock
shall be identical in all respects), with respect to each Security Sold, as the
Proposed ▇▇▇▇ Seller shall Sell each ▇▇▇▇ Security in the Sale, and, in the case
of Options, have the opportunity to either (i) exercise or convert such Options
(if then exercisable or convertible) and participate in such sale as holders of
Common Stock issuable upon such exercise or conversion or (ii) upon the
consummation of the Sale, receive in exchange for such Options (to the extent
exercisable or convertible at the time of such Sale) consideration equal to the
amount determined by multiplying (1) the same amount of consideration per Share
received by the holders of the Common Stock of the same class of Common Stock
for which the Option is exercisable or into which the Option is convertible in
connection with the Sale less the exercise or conversion price per share of such
Option by (2) the number of shares of Common Stock of such class represented by
such Option. If at the end of the ninetieth (90th) day following the date of the
effectiveness of the Come Along Notice the Proposed ▇▇▇▇ Seller has not
completed the Sale, each Participating Seller shall be released from his
obligation under the Come Along Notice, the Come Along Notice shall be null and
void, and it shall be necessary for a separate Come Along Notice to have been
furnished and the terms and provisions of this Section 6 separately complied
with, in order to consummate such Sale pursuant to this Section 6, unless the
failure to complete such Sale resulted from any failure by any Participating
Seller to comply in any material respect with the terms of this Section 6.
6.2. Certain Legal Requirements. In the event the consideration to be paid
in exchange for Securities in the proposed Sale pursuant to Section 6.1 includes
any securities and the receipt thereof by any Investor as a Participating Seller
would require under applicable law (i) the registration or qualification of such
securities or of any person as a broker or dealer or agent with respect to such
securities or (ii) the provision to any participant in the Sale of any
information other than such information as would be required under Regulation D
of the Securities and Exchange Commission or similar rule then in effect in an
offering made pursuant to said Regulation D solely to "accredited investors" as
defined in said Regulation D, the Proposed ▇▇▇▇ Seller shall be obligated only
to use its reasonable best efforts to cause such requirements to have been
complied with to the extent necessary to permit such Participating Seller to
receive such securities. Notwithstanding any provisions of this Section 6, if
use of reasonable best efforts shall not have resulted in such requirements
being complied with to the extent necessary to permit such Participating Seller
to receive such securities, the Proposed ▇▇▇▇ Seller shall cause to be paid to
such Participating Seller in lieu thereof, against surrender of the Securities
(in accordance with Section 6.4 hereof) which would have otherwise been Sold by
such Participating Seller to the Proposed Buyer in the Sale, an amount in cash
equal to the Fair Market Value of the securities which such Participating Seller
would otherwise receive. The obligation of the Proposed ▇▇▇▇ Seller to use
reasonable best efforts to cause such requirements to have been complied with to
the extent necessary to permit a Participating Seller to receive such securities
shall be conditioned on such Participating Seller executing such documents and
instruments, and taking such other actions (including without limitation, if
required by the Proposed ▇▇▇▇ Seller on advice of its counsel, agreeing to be
represented during the course of such transaction by a "purchaser
representative" (as defined in Regulation D) in connection with evaluating the
merits and risks of the prospective investment and acknowledging that he was so
represented), as the Proposed ▇▇▇▇ Seller shall reasonably request in order to
permit such requirements to have been complied with. Each Participating Seller
agrees to take such actions as the Proposed ▇▇▇▇ Seller shall reasonably request
in order to permit such requirements to have been complied with, and no
Participating Seller shall have the right to require that such Participating
Seller receive cash in lieu of securities on grounds that such requirements have
not been complied with.
6.3 Further Assurances; Management Roll-over. Each Participating Seller,
and each Investor to whom the Securities held by such Participating Seller were
originally issued, shall, whether in his capacity as a Participating Seller,
stockholder, officer or director of the Company, or otherwise, take or cause to
be taken all such actions (subject as to entering into agreements to the
provisions of the next sentence hereof) as may be reasonably requested in order
expeditiously to consummate each Sale pursuant to Section 6.1; provided,
however, that no Management Initial Investor party to an employment agreement
with the Company or any of its subsidiaries shall be required hereunder to
extend the term thereof. In addition, notwithstanding any contrary provision
contained in this Agreement, in the event that the proposed Sale is a Liquidity
Event, at the option of the ▇▇▇▇ Majority Investors and on no more than one
occasion under this Agreement, if (A) a Management Investor is currently
employed by the Company or was so employed at any time during the 12 preceding
months without any material diminution of his or her responsibilities and (B)
the Proposed Buyer is a Financial Buyer, such Management Investor and each other
holder of Securities previously held by, or distributed or issued in respect of
Securities or membership interests of the LLC previously held by, such
Management Investor (other than any Person which is described in Section
501(c)(3) of the Internal Revenue Code of 1986, as from time to time in effect)
may be required to retain, or exchange for equity in the
Proposed Buyer or one of its Affiliates or the surviving entity, up to 25%, in
the case of Senior Management Investors, or 15%, in the case of Junior
Management Investors, of their Securities. Each Participating Seller or Investor
agrees to execute and deliver such agreements as may be necessary for the
Participating Seller to be subject to the same terms and conditions with respect
to the Sale as apply to the Proposed ▇▇▇▇ Seller, including, without limitation,
an agreement by such Participating Seller (i) to be subject to such purchase
price escrow, indemnity or adjustment provisions as may apply to Investors
generally, (ii) to be liable in respect of any individual representations or
warranties to be given by selling Investors in the Sale regarding such matters
as legal capacity or due organization of such Participating Seller, authority to
participate in the Sale, compliance by such selling Investor with laws and
agreements applicable to it, and ownership (free and clear of liens, charges,
encumbrances and adverse claims) of Securities to be sold by such Participating
Seller ("Individual Representations") (insofar as such Individual
Representations relate to such Participating Seller) and (iii) to be liable in
respect of any general representations or warranties to be given by selling
Investors in the Sale regarding such matters as the liabilities (contingent and
otherwise), assets, agreements and business of the Company and its subsidiaries,
the compliance of the Sale with laws and contracts, and the adequacy of
disclosure ("General Representations"); provided, however, that (a) the
Management Initial Investors shall make no representations or warranties
pursuant to such agreement other than Individual Representations but shall be
liable as indemnitors with respect to the General Representations made by other
selling Investors in the Sale, and (b) except with respect to Individual
Representations the aggregate amount of the liability of each Participating
Seller in the Sale shall not exceed the lesser of (i) such Participating
Seller's pro rata portion of any such liability, in accordance with such
Participating Seller's portion of the total number of Securities included in the
Sale and (ii) the net proceeds received by such Participating Seller from the
Sale.
6.4. Closing. The closing of a Sale pursuant to Section 6.1 shall take
place at such time and place as the ▇▇▇▇ Majority Holders shall specify by
notice to each Participating Seller. At the closing of any Sale under this
Section 6, each Participating Seller shall deliver the certificates evidencing
the Securities to be sold by such Participating Seller, duly endorsed, or with
stock powers or other appropriate instruments duly endorsed, for transfer with
signature guaranteed, free and clear of any liens, encumbrances or adverse
claims, with any stock transfer tax stamps affixed, against delivery of the
applicable consideration.
6.5. Fairness Opinions in Certain Circumstances.
6.5.1. Opinion. In the case of a proposed Sale pursuant to Section 6.1
to a Proposed Buyer which is an Affiliated Buyer, in the event that the
CSFB Majority Holders or the Management Majority Holders give notice (the
date of such notice being the "Section 6.5 Request Date") to the Proposed
▇▇▇▇ Seller of a request for a fairness opinion under this Section 6.5
within ten (10) days after the earlier of the effectiveness of the Come
Along Notice with respect thereto or such date as the Proposed ▇▇▇▇ Seller
may provide a separate written notice of such Sale, then such Sale shall
not be effected pursuant to the provisions of Section 6.1 unless the
Company or the Proposed ▇▇▇▇ Seller shall furnish the holders so requesting
(with a copy thereof to any holder of Other Securities that may so request)
a notice which includes a written opinion of an Independent Investment
Banking Firm to the effect that the Sale is fair to the holders of the
requesting type of Securities from a financial point of view (a "Section
6.5 Opinion"). In rendering such Section 6.5 Opinion, such Independent
Investment Banking Firm shall consider (i) the form and amount of
consideration to be received pursuant to such Sale in respect of Shares by
holders of Shares other than holders of the requesting type of Securities,
(ii) the form and amount of consideration to be received pursuant to such
Sale in respect of Shares by the holders of the requesting type of
Securities, and (iii) other factors it may deem relevant.
6.5.2. Selection of Investment Banking Firm. The Independent
Investment Banking Firm to provide the Section 6.5 Opinion shall be
selected by agreement of the CSFB Majority Holders and the Management
Majority Holders. Absent such agreement by the Section 6.5 Request Date,
the CSFB Majority Holders shall, within two (2) business days of the
Section 6.5 Request Date, furnish the Management Majority Holders with a
list of three (3) independent investment banking firms, and within ten (10)
calendar days of the Section 6.5 Request Date the Management Majority
Holders shall select one of such firms to render the Section 6.5 Opinion.
In the event such firm shall decline to serve, the Management Majority
Holders shall, within three (3) business days of notice to that effect,
select another firm from such three. All fees and costs of such Independent
Investment Banking Firm shall be paid by the Company.
6.6. Special Approval Right. If on the sixtieth (60th) day following the
date of this Agreement the ▇▇▇▇ Initial Investors own membership interests in
the LLC representing less than $10 million (at cost), the right of the ▇▇▇▇
Majority Holders to require the Sale shall be subject to the approval of the
holders of a majority of the Securities issued in the LLC Liquidation to holders
of voting units of the LLC.
6.7. Period. The foregoing provisions of this Section 6 shall expire on the
earliest of: (i) prior to the LLC Liquidation, the first date on which the LLC
owns less than fifty percent (50%) of all Securities owned by it immediately
after the closing under the LLC Purchase Agreement; (ii) after the LLC
Liquidation, the first date on which the ▇▇▇▇ Investors own less than fifty
percent (50%) of all Securities owned by them immediately following the LLC
Liquidation; (iii) upon the closing of the Initial Public Offering if, in the
written opinion of the managing underwriter for the Initial Public Offering, the
continued effectiveness of this Section 6 would be detrimental to the sale of
securities in the Initial Public Offering or the price to be received for such
securities; or (iv) the date on which there exists a Significant Public Float;
provided, however, that with respect to clause (iv) hereof, in the event a Come
Along Notice shall have become effective within ninety (90) days prior to such
date, the foregoing provisions of this Section 6 shall expire upon the earlier
of (i) the consummation of the closing of the Sale to which the Come Along
Notice relates and (ii) the ninetieth (90th) day following the effectiveness of
the Come Along Notice.
7. CO-SALE RIGHTS.
7.1. Tag Along. No holder or holders of ▇▇▇▇ Securities (for purposes of
this Section 7, collectively, the "Proposed ▇▇▇▇ Seller") shall Transfer (for
purposes of this Section 7, a "Sale") any ▇▇▇▇ Securities to any other Person
(the "Proposed Buyer") except in the manner and on the terms set forth in this
Section 7, and attempted Transfers in violation of this Section 7 shall be null
and void.
7.1.1. Offer. A written notice (the "Tag Along Notice") shall be
furnished by the Proposed ▇▇▇▇ Seller to each holder of Other Securities
(the "Tag Along Offerees") at least ten (10) business days prior to a
Transfer. The Tag Along Notice shall include:
(a) The principal terms of the proposed Sale insofar as it
relates to the Securities, including the number of Securities to be
purchased from the Proposed ▇▇▇▇ Seller, the percentage on a
fully-diluted basis of the total number of ▇▇▇▇ Securities held by all
holders of ▇▇▇▇ Securities which such number of Securities constitutes
(for purposes of this Section 7, the "Sale Percentage"), the maximum
and minimum purchase price, the name and address of the Proposed
Buyer, and (if the Proposed Buyer is not subject to the periodic
reporting requirements of the Exchange Act) the name of each director
of the Proposed Buyer and of each Person which is the beneficial owner
of more than twenty percent (20%) of the Common Stock of the Proposed
Buyer; and
(b) An offer by the Proposed ▇▇▇▇ Seller to include, at the
option of each Tag Along Offeree, in the Sale to the Proposed Buyer
such number of Securities (not in any event to exceed the Sale
Percentage of the total number of Securities held by such Tag Along
Offeree) owned by each Tag Along Offeree determined in accordance with
Section 7.1.2 hereof, on the same terms and conditions (subject to all
of the provisions of this Agreement), with respect to each Security
Sold, as the Proposed ▇▇▇▇ Seller shall Sell each of its Securities.
7.1.2. Exercise. Each Tag Along Offeree desiring to accept the offer
contained in the Tag Along Notice shall send a written commitment to the
Proposed ▇▇▇▇ Seller specifying the number of Securities (not in any event
to exceed the Sale Percentage of the total number of Securities held by
such Tag Along Offeree) which such Tag Along Offeree desires to have
included in the Sale within ten (10) business days after the effectiveness
of the Tag Along Notice (each a "Participating Seller"). Each Tag Along
Offeree who has not so accepted such offer shall be deemed to have waived
all of his or her rights with respect to the Sale, and the Proposed ▇▇▇▇
Seller and the Participating Sellers shall thereafter be free to Sell to
the Proposed Buyer, at a price no greater than the maximum price set forth
in the Tag Along Notice and otherwise on terms not more favorable in any
material respect to them than those set forth in the Tag Along Notice,
without any further obligation to such non-accepting Tag Along Offerees.
If, prior to consummation, the terms of such proposed Sale shall change
with the result that the price shall be greater than 105% of the maximum
price set forth in the Tag Along Notice or the other terms shall be more
favorable in any material respect than as set forth in the Tag Along
Notice, it shall be necessary for a separate Tag Along Notice to have been
furnished, and the terms and provisions of this Section 7 separately
complied with, in order to consummate such proposed Sale pursuant to this
Section 7; provided, however, that in the case of such a separate Take
Along Notice, the applicable period referred to in Section 7.1.1 and this
Section 7.1.2 shall be five (5) business days.
The acceptance of each Participating Seller shall be irrevocable
except as hereinafter provided, and each such Participating Seller shall be
bound and obligated to Sell in the Sale, on the same terms and conditions
specified in the Tag Along Notice with respect to each Share of Common
Stock Sold, as the Proposed ▇▇▇▇ Seller (subject to all of the provisions
of this Agreement), such number of Securities as such Participating Seller
shall have specified in such Participating Seller's written commitment,
and, in the case of Options, have the opportunity to either (i) exercise or
convert such Options (if then exercisable or convertible) and participate
in such sale as holders of Common Stock issuable upon such exercise or
conversion or (ii) upon the consummation of the Sale, receive in exchange
for such Options (to the extent exercisable or convertible at the time of
such Sale) consideration equal to the amount determined by multiplying (1)
the same amount of consideration per Share received by the holders of the
Common Stock of the same class of Common Stock for which the Option is
exercisable or into which the Option is convertible in connection with the
Sale less the exercise or conversion price per share of such Option by (2)
the number of shares of Common Stock of such class represented by such
Option. In the event the Proposed ▇▇▇▇ Seller shall be unable (otherwise
than by reason of the circumstances described in Section 7.2) to obtain the
inclusion in the Sale of all Securities which the Proposed ▇▇▇▇ Seller and
each Participating Seller desires to have included in the Sale (as
evidenced in the case of the Proposed ▇▇▇▇ Seller by the Tag Along Notice
and in the case of each Participating Seller by such Participating Seller's
written commitment), the number of Securities to be sold in the Sale by the
Proposed ▇▇▇▇ Seller and each Participating Seller shall be reduced on a
pro rata basis according to the proportion which the number of Securities
which each such Seller desires to have included in the Sale bears to the
total number of Securities desired by all such Sellers to have included in
the Sale.
If at the end of the one hundred eightieth (180th) day following the
date of the effectiveness of the Tag Along Notice the Proposed ▇▇▇▇ Seller
has not completed the Sale as provided in the foregoing provisions of this
Section 7.1, each Participating Seller shall be released from his
obligations under his written commitment, the Tag Along Notice shall be
null and void, and it shall be necessary for a separate Tag Along Notice to
have been furnished, and the terms and provisions of this Section 7
separately complied with, in order to consummate such Sale pursuant to this
Section 7, unless the failure to complete such Sale resulted from any
failure by any Tag Along Offeree to comply in any material respect with the
terms of this Section 7.
7.2 Certain Legal Requirements. In the event the consideration to be
paid in exchange for Securities in the proposed Sale pursuant to Section 7.1
includes any securities and the receipt thereof by any Investor as a
Participating Seller would require under applicable law (i) the registration or
qualification of such securities or of any person as a broker or dealer or agent
with respect to such securities or (ii) the provision to any participant in the
Sale of any information other than such information as would be required under
Regulation D of the Securities and Exchange Commission or similar rule then in
effect in an offering made pursuant to said Regulation D solely to "accredited
investors" as defined in said Regulation D, the Proposed ▇▇▇▇ Seller shall be
obligated only to use its reasonable best efforts to cause such requirements to
have been complied with to the extent necessary to permit such Participating
Seller to receive such securities. Notwithstanding any provisions of this
Section 7, if use of reasonable best efforts shall not have resulted in such
requirements being complied with to the extent necessary to permit such
Participating Seller to receive such securities, the Proposed ▇▇▇▇ Seller shall
cause to be paid to such Participating Seller in lieu thereof, against surrender
of the Securities (in accordance with Section 7.4 hereof) which would have
otherwise been Sold by such Participating Seller to the Proposed Buyer in the
Sale, an
amount in cash equal to the Fair Market Value of the securities which such
Participating Seller would otherwise receive. The obligation of the Proposed
▇▇▇▇ Seller to use reasonable best efforts to cause such requirements to have
been complied with to the extent necessary to permit a Participating Seller to
receive such securities shall be conditioned on such Participating Seller
executing such documents and instruments, and taking such other actions
(including without limitation, if required by the Proposed ▇▇▇▇ Seller on advice
of its counsel, agreeing to be represented during the course of such transaction
by a "purchaser representative" (as defined in Regulation D) in connection with
evaluating the merits and risks of the prospective investment and acknowledging
that he was so represented), as the Proposed ▇▇▇▇ Seller shall reasonably
request in order to permit such requirements to have been complied with. Each
Participating Seller agrees to take such actions as the Proposed ▇▇▇▇ Seller
shall reasonably request in order to permit such requirements to have been
complied with, and no Participating Seller shall have the right to require that
such Participating Seller receive cash in lieu of securities on grounds that
such requirements have not been complied with.
7.3. Further Assurances; Management Roll-Over. Each Participating
Seller, and each Investor to whom the Securities held by such Participating
Seller were originally issued, shall, whether in his capacity as a Participating
Seller, stockholder, officer or director of the Company, or otherwise, take or
cause to be taken all such actions (subject as to entering into agreements to
the provisions of the next sentence hereof) as may be reasonably requested in
order expeditiously to consummate each Sale pursuant to Section 7.1; provided,
however, that no Management Initial Investor party to an employment agreement
with the Company or any of its subsidiaries shall be required hereunder to
extend the term thereof. In addition, notwithstanding any contrary provision
contained in this Agreement, in the event that the proposed Sale is a Liquidity
Event, at the option of the ▇▇▇▇ Majority Investors and on no more than one
occasion under this Agreement, if (A) a Management Investor is currently
employed by the Company or was so employed at any time during the 12 preceding
months without any material diminution of his or her responsibilities and (B)
the Proposed Buyer is a Financial Buyer, such Management Investor and each other
holder of Securities previously held by, or distributed or issued in respect of
Securities or membership interests of the LLC previously held by, such
Management Investor (other than any Person which is described in Section
501(c)(3) of the Internal Revenue Code of 1986, as from time to time in effect)
may be required to retain, or exchange for equity in the Proposed Buyer or one
of its Affiliates or the surviving entity, up to 25%, in the case of Senior
Management Investors, or 15%, in the case of Junior Management Investors, of
their Securities. Each Participating Seller or Investor agrees to execute and
deliver such agreements as may be necessary for the Participating Seller to be
subject to the same terms and conditions with respect to the Sale as apply to
the Proposed ▇▇▇▇ Seller, including, without limitation, an agreement by such
Participating Seller (i) to be subject to such purchase price escrow, indemnity
or adjustment provisions as may apply to Investors generally, (ii) to be liable
in respect of any Individual Representations to be given by selling Investors in
the Sale (insofar as such Individual Representations relate to such
Participating Seller) and (iii) to be liable in respect of any General
Representations to be given by selling Investors in the Sale; provided, however,
that (a) the Management Initial Investors shall make no representations or
warranties pursuant to such agreement other than Individual Representations but
shall be liable as indemnitors with respect to the General Representations made
by other selling Investors in the Sale, and (b) except with respect to
Individual Representations, the aggregate amount of the liability of each
Participating Seller shall not exceed the lesser of (i) such Participating
Seller's pro rata portion of any such liability, in accordance with such
Participating Seller's portion of the total number of Securities included in the
Sale and (ii) the net proceeds received by such Participating Seller from the
Sale.
7.4. Closing. The closing of a Sale pursuant to Section 7.1 shall take
place at such time and place as the ▇▇▇▇ Majority Holders shall specify by
notice to each Participating Seller. At the closing of any Sale under this
Section 7, each Participating Seller shall deliver the certificates evidencing
the Securities to be sold by such Participating Seller, duly endorsed, or with
stock powers or other appropriate instruments duly endorsed, for transfer with
signature guaranteed, free and clear of any liens, encumbrances or adverse
claims, with any stock transfer tax stamps affixed, against delivery of the
applicable consideration.
7.5. Excluded Transactions. Notwithstanding any provisions of this
Section 7 to the contrary and subject to the provisions of Section 8 below, the
preceding provisions of this Section 7 shall not restrict any Transfer pursuant
to the provisions of Section 6 or 8 of this Agreement; and no holder of Other
Securities shall have pursuant to the provisions of this Section 7 any right of
participation or otherwise with respect to any Transfer of ▇▇▇▇ Securities:
(a) to a ▇▇▇▇ Investor or an Affiliated Fund; or
(b) to any trust established for the benefit of partners of a
▇▇▇▇ Investor or an Affiliated Fund or pro rata to the partners of a ▇▇▇▇
Investor or an Affiliated Fund; or
(c) in a public offering or under Rule 144; or
(d) to any director, officer or employee of the Company or its
subsidiaries; provided, however, that the aggregate number of shares of
Common Stock transferred under this clause (d) shall not exceed an
aggregate of ten percent (10%) of the outstanding number of shares of
Common Stock (calculated on a fully diluted basis as of immediately after
giving effect to the transfer in question).
Notwithstanding the provisions of the immediately preceding sentence, no
Transfer of ▇▇▇▇ Securities pursuant clause (a), (b) or (d) of such sentence
shall be effective until the recipient has delivered to the Company a written
acknowledgment and agreement in form and substance reasonably satisfactory to
the Company that all ▇▇▇▇ Securities to be received by such recipient are
subject to all of the provisions of this Agreement and that such recipient is
bound hereby and a party hereto to the same extent as a ▇▇▇▇ Initial Investor or
Junior Management Initial Investor, as the case may be.
7.6 Period. The foregoing provisions of this Section 7 shall expire on
the earliest of: (i) prior to the LLC Liquidation, the first date on which the
LLC owns less than fifty percent (50%) of all Securities owned by it immediately
after the closing under the LLC Purchase Agreement; (ii) after the LLC
Liquidation, the first date on which the ▇▇▇▇ Investors own less than fifty
percent (50%) of all Securities owned by them immediately following the LLC
Liquidation; (iii) upon the closing of the Initial Public Offering if, in the
written opinion of the managing underwriter for the Initial Public Offering, the
continued effectiveness of this Section 7 would be detrimental to the sale of
securities in the Initial Public Offering or the
price to be received for such securities; or (iv) the date on which there exists
a Significant Public Float; provided, however, that with respect to clause (iv)
hereof, in the event a Take Along Notice shall have become effective within one
hundred twenty (120) days prior to such date, the foregoing provisions of this
Section 7 shall expire on the earlier of (i) the consummation of the closing of
the Sale to which the Take Along Notice relates and (ii) the one hundred
twentieth (120th) day following the effectiveness of the Take Along Notice.
8. REGISTRATION RIGHTS. The Company will perform and comply, and
cause each of its subsidiaries to perform and comply, with such of following
provisions as are applicable to it. Each holder of Securities or Non-CSFB
Warrant Securities will perform and comply with such of the following provisions
as are applicable to such holder.
8.1. Piggyback Registration Rights.
8.1.1. Election. Whenever the Company proposes to register (other
than a registration pursuant to Section 8.3.3) on form ▇-▇, ▇-▇ or S-3 (or
any successor form) any shares of Common Stock for its own or others'
account under the Securities Act for a public offering (each a "Public
Offering"), the Company shall furnish each holder of Registrable Securities
prompt notice of its intent to do so. Upon the request of any such holder
given by notice to the Company within twenty (20) days after the
effectiveness of such notice from the Company, the Company will use its
reasonable best efforts to cause to be included in such registration all of
the Registrable Securities which such holder requests.
8.1.2. Further Assurances. Holders of Registrable Securities
participating in any Public Offering shall take all such actions and
execute all such documents and instruments that are reasonably requested by
the Company to effect the sale of their Registrable Securities in such
Public Offering, including without limitation being parties to the
underwriting agreement entered into by the Company and any other selling
shareholders in connection therewith and being liable in respect of any
representations and warranties being made by each selling shareholder and
any indemnification agreements and "lock-up" agreements made by each
selling shareholder for the benefit of the underwriters in such
underwriting agreement; provided, however, that (i) no Management Initial
Investor party to an employment agreement with the Company or any of its
subsidiaries shall be required hereunder to extend the term thereof; and
(ii) except with respect to individual representations and warranties
regarding such matters as legal capacity or due organization of such
participating holder, authority to participate in the Public Offering,
compliance by such selling shareholder with laws and agreements applicable
to it, ownership (free and clear of liens, charges, encumbrances and
adverse claims) of Registrable Securities to be sold by such selling
shareholder and accuracy of information with respect to such selling
shareholder furnished for inclusion in any disclosure document relating to
each Public Offering ("Individual Underwriting Agreement Representations"),
the aggregate amount of the liabilities of such participating holder of
Registrable Securities pursuant to such underwriting agreement shall not
exceed the lesser of (a) such participating holder's pro rata portion of
any such liability, in accordance with such participating holder's portion
of the total number of Registrable Securities included in the Public
Offering or (b) the net proceeds received by such participating holder from
the Public Offering. In the case any Management Initial Investor holding
Registrable Securities shall request participation in any Public Offering
pursuant to this Section 8.1, the Company shall use its reasonable best
efforts to induce the managing underwriter of the securities being offered
to permit such Management Initial Investor to make no representations or
warranties in the underwriting agreement other than Individual Underwriting
Agreement Representations, but to be liable as indemnitors with respect to
any other representations or warranties made by other selling holders in
such underwriting agreement, but in the event the managing underwriter
shall not accede to such request, such Management Initial Investor shall,
within five (5) days of notice to that effect from the managing underwriter
or its counsel, either elect to make such other representations and
warranties in the underwriting agreement as shall be made by other
participating holders or to withdraw from participation.
8.1.3. Expenses. The Company shall pay all expenses of the holders
of Registrable Securities participating in any Public Offering pursuant to
this Section 8.1, other than (i) underwriting discounts and commissions, if
any, attributable to the Registrable Securities being sold by such holder,
(ii) applicable transfer taxes, if any, and (iii) fees and charges of any
attorneys or other advisors (other than attorneys and advisors retained by
the Company to advise it in connection with such Public Offering and one
counsel retained to advise all holders of Registrable Securities in
connection with such Public Offering) retained by any such holders.
8.1.4. Excluded Transactions. Notwithstanding the preceding
provisions of this Section 8.1, no holder of Registrable Shares shall have
any right of participation or otherwise with respect to the following
Public Offerings:
(a) Any Public Offering relating solely to employee
benefit plans, or
(b) Any Public Offering the proceeds of which are used
principally to finance the acquisition after the date hereof by
the Company or any of its subsidiaries of any acquired businesses
or any Public Offering constituting an exchange of securities for
securities of any such acquired businesses.
8.2. Demand Registration Rights.
8.2.1 Registration on Request of Holders of ▇▇▇▇ Securities. One
or more holders of ▇▇▇▇ Securities that wish to register securities
representing at least twenty-five percent (25%) of the total amount of ▇▇▇▇
Securities then outstanding (as to such registration, the "Initiating
Holders") may, by notice to the Company specifying the intended method or
methods of disposition, request that the Company effect the registration
under the Securities Act of all or a specified part of the Registrable
Securities held by such Initiating Holders. Promptly after receipt of such
notice, the Company will give notice of such requested registration to all
other holders of Registrable Securities. The Company will then use its
reasonable best efforts to effect the registration under the Securities Act
of the Registrable Securities which the Company has been requested to
register by such Initiating Holders, and, subject to all of the provisions
of this Section
8, all other Registrable Securities which the Company has been requested
to register pursuant to Section 8.1.1 by notice delivered to the Company
within twenty (20) days after the giving of such notice by the Company
(which request shall specify the intended method of disposition of such
Registrable Securities), all to the extent requisite to permit the
disposition (in accordance with the intended methods thereof as
aforesaid) of the Registrable Securities which the Company has been so
requested to register. No holder of ▇▇▇▇ Securities shall present any
request for registration pursuant to this Section 8.2.1 (i) at any time
within one hundred eighty (180) days after either the furnishing by the
Company of any notice of proposed registration under Section 8.1 or 8.2
hereof (unless abandoned by notice from the Company or the Majority
Initiating Holders, as applicable) or the consummation of any other
Public Offering, without the prior consent of the Company or (ii) if the
Company has previously effected three registrations of Registrable
Securities under this Section 8.2.1.
8.2.2. Registration on Request of Holders of CSFB and Senior
Management Securities and Non-CSFB Warrant Securities.
8.2.2.1. Senior Management Investors. At any time not
earlier than one hundred eighty (180) days after the closing of
the first registered secondary offering following the Initial
Public Offering, the Senior Management Majority Holders (as to
such registration, the "Initiating Holders") may, by notice to
the Company specifying the intended method or methods of
disposition, request that the Company effect the registration
under the Securities Act of all or a specified part of the
Registrable Securities held by such Initiating Holders. The
demand registration rights granted pursuant to this Section
8.2.2.1 may not be exercised if the Company has previously
effected a registration of Registrable Securities under this
Section 8.2.2.1.
8.2.2.2. CSFB. At any time not earlier than one hundred
eighty (180) days after the closing of the first registered
secondary offering following the Initial Public Offering, the
CSFB Majority Holders (as to such registration, the "Initiating
Holders") may, by notice to the Company specifying the intended
method or methods of disposition, request that the Company effect
the registration under the Securities Act of all or a specified
part of the Registrable Securities held by such Initiating
Holders. The demand registration rights granted pursuant to this
Section 8.2.2.2 may not be exercised if the Company has
previously effected a registration of Registrable Securities
under this Section 8.2.2.2.
8.2.2.3. Non-CSFB Warrantholders. At any time not
earlier than one hundred eighty (180) days after the closing of
the first registered secondary offering following the Initial
Public Offering, the holders of Non-CSFB Warrant Securities
(other than the Company, the ▇▇▇▇ Investors or the Other
Investors) representing an aggregate of at least 25% of the
Non-CSFB Warrant Securities then outstanding (as to such
registration, the "Initiating Holders") may, by notice to the
Company specifying the intended method or methods of disposition,
request that the Company effect the registration under the
Securities Act of all or a specified part of the Registrable
Securities held by such Initiating Holders. The demand
registration rights granted pursuant to this Section 8.2.2.3 may
not be exercised if the Company has previously effected two
registrations of Registrable Securities under this Section
8.2.2.3.
8.2.2.4. Certain Provisions. No holder of Other
Securities or Non-CSFB Warrant Securities shall present any
request for registration pursuant to this Section 8.2.2 at any
time within one hundred eighty (180) days after either the
furnishing by the Company of any notice of proposed registration
under Section 8.1 or 8.2 hereof (unless abandoned by notice from
the Company or the Majority Initiating Holders, as applicable) or
the consummation of any other Public Offering, without the prior
consent of the Company. Promptly after receipt of any notice
requesting registration of Registrable Securities pursuant to
this Section 8.2.2, the Company will give notice of such
requested registration to all other holders of Registrable
Securities. The Company will then use its reasonable best efforts
to effect the registration under the Securities Act of the
Registrable Securities which the Company has been requested to
register by the holders requesting pursuant to this Section
8.2.2, and, subject to all of the provisions of this Section 8,
all other Registrable Securities which the Company has been
requested to register pursuant to Section 8.1.1 by notice
delivered to the Company within 20 days after the giving of such
notice by the Company (which request shall specify the intended
method of disposition of such Registrable Securities), all to the
extent requisite to permit the disposition (in accordance with
the intended methods thereof as aforesaid) of the Registrable
Securities which the Company has been so requested to register.
8.2.3. Form. Each registration requested pursuant to this Section
8.2 shall be effected by the filing of a registration statement on Form S-1
(or any other form which includes substantially the same information as
would be required to be included in a registration statement on such form
as currently constituted), unless the use of a different form has been
agreed to in writing by holders of at least a majority of the Registrable
Securities held by the Initiating Holders (the "Majority Initiating
Holders").
8.2.4. Registrations Pursuant to Section 8.2. In the case of a
registration pursuant to Section 8.2, whenever the Majority Initiating
Holders shall request that such registration shall be effected pursuant to
an underwritten offering, such registration shall be so effected, and all
Registrable Securities to be included in such registration shall be
included in such underwritten offering, subject to the cutback provisions
of Section 8.3.1. If requested by such underwriters, the Company will enter
into an underwriting agreement with such underwriters for such offering
containing such representations and warranties by the Company and such
other terms and provisions as are customarily contained in underwriting
agreements with respect to secondary distributions, including, without
limitation, customary indemnity and contribution provisions.
8.2.5. Expenses. The Company shall pay all expenses of the holders
of Registrable Securities participating in any Public Offering pursuant to
this Section 8.2, other than (i) underwriting discounts and commissions, if
any, (ii) applicable transfer taxes, if any, and (iii) fees and charges of
any attorneys or other advisors (other than attorneys and advisors retained
by the Company to advise it in connection with such Public Offering and one
counsel retained to advise all holders of Registrable Securities in
connection with such Public Offering) retained by any such holders.
8.3. Certain Other Provisions.
8.3.1. Cutbacks. Notwithstanding the foregoing provisions of this
Section 8, if the Company is advised in good faith by any managing underwriter
of securities being offered pursuant to any Public Offering under this Section 8
that the number of shares requested to be sold in such Public Offering is
greater than the number of such shares which can be included in such Public
Offering without materially adversely affecting such Public Offering, the shares
to be included in such offering shall be reduced to the extent requested by such
managing underwriter as provided in this Section 8.3.1:
8.3.1.1. Company Registration or IPO. Upon registration by the
Company of securities for its own account as contemplated by Section
8.1.1 or in the case of an Initial Public Offering, shares to be
included in such offering shall be reduced in the following order and
fashion:
(i) first, Registrable Securities requested to be included in the
Public Offering by Persons other than the Company, if any, with respect
to such Public Offering shall be reduced pro rata (based on the number
of shares requested to be included by such Persons); and
(ii) second, securities proposed to be included by the Company
shall be reduced.
8.3.1.2 Demand Registration Rights. Upon the exercise of demand
registration rights by the Initiating Holders pursuant to Section 8.2
(except in the case of an Initial Public Offering, which shall be
governed by Section 8.3.1.1), the shares to be included in such offering
shall be reduced in the following order and fashion:
(i) first, securities other than Registrable Securities proposed
to be included shall be reduced pro rata (based on the number of such
securities proposed to be included); and
(ii) second, Registrable Securities requested to be included by
Persons other than the Company, if any, with respect to such Public
Offering shall be reduced pro rata (based on the number of shares
requested to be included by such Persons).
8.3.1.3. Special Management Cut-Back. Notwithstanding any
contrary provision contained in this Agreement, in the event that the
Public Offering is a Liquidity Event or a subsequent secondary Public
Offering, at the option of the ▇▇▇▇ Majority Investors and on no more
than one occasion under this Agreement, if a Management Investor is
currently employed by the Company or was so employed at any time during
the 12 preceding months without any material diminution of his or her
responsibilities, such Management Investor and each other holder of
Securities previously held by, or distributed or issued in respect of
Securities or membership interests of the LLC previously held by, such
Management Investor (other than any Person which is described in Section
501(c)(3) of the Internal Revenue Code of 1986, as from time to time in
effect) may be required to retain, rather than sell, up to 25%, the case
of Senior Management Investors, or 15%, in the case of Junior Management
Investors, of their Securities.
8.3.2. Number of Requests, Minimum IPO Size, etc. In the event the
number of shares requested to be included in a Public Offering by the Initiating
Holders with respect thereto is reduced by operation of the provisions of
Section 8.3.1, such demand shall be excluded in determining the number of
demands exercisable by such Initiating Holders. No demand may be made unless the
Initiating Holders with respect thereto hold Registrable Securities constituting
at least five percent (5%) of the aggregate outstanding number of shares of
Common Stock (or, in the case of Section 8.2.2.3, at least the lesser of (x)
five percent (5%) of the aggregate outstanding number of shares of Common Stock
and (y) thirty-three percent (33%) of the then outstanding Registrable
Securities subject to Section 8.2.2.3). In the event a proposed demand would
result in the Initial Public Offering, the Company shall not be obligated to
effect such registration unless the proceeds (net of underwriters' discount and
commission) therefrom exceed $50 million, and any such demand which does not
result in an effective registration by operation of this sentence shall not
count for purposes of determining the number of demands exercisable by the
Initiating Holders in question.
8.3.3. Resale Shelf Registration for Non-CSFB Warrant Securities. In
addition to the registration rights granted pursuant to Section 8.1 and 8.2
above, upon the request of the Non-CSFB Majority Warrantholders, the Company
will at its own expense, not later than three hundred and ninety five (395) days
after the effectiveness of the first underwritten Public Offering, file, and use
its reasonable best efforts to cause to become and remain effective, a shelf
registration statement under the Securities Act covering the Registrable
Securities included in the Non-CSFB Warrant Securities until such time as may be
consented to by the Non-CSFB Majority Warrantholders; provided, however, that
(i) the rights provided by this Section 8.3.3 shall expire on such date, if any,
as all Non-CSFB Warrant Securities are freely tradeable under clause (k) of Rule
144 and no holder of Non- CSFB Warrant Securities holds more than one percent
(1%) of all outstanding shares of Common Stock and (ii) the Company shall not be
required to file any registration statement pursuant to this Section 8.3.3 at
any time within one hundred eighty (180) days after either the furnishing by the
Company of any notice of proposed registration under Section 8.1 or 8.2 hereof
(unless abandoned by notice from the Company or the Majority Initiating Holders,
as applicable) or the consummation of any other Public Offering.
8.3.4. Selection of Managing Underwriters. In the case of any
registration proposed by the Company for the Public Offering of securities for
its own account, the managing underwriters, if any, with respect thereto shall
be selected by the Company. In the case of any registration pursuant to Section
8.2 hereof, the holders of a majority of the Registrable Securities requested to
be included therein hereunder
shall select the managing underwriters, if any, with respect thereto.
Notwithstanding the foregoing provisions of this Section 8.3.4, in the case of
the Initial Public Offering, the managing underwriter with respect thereto shall
be selected by the ▇▇▇▇ Majority Holders.
8.3.5. Selection of Counsel. Counsel to the Company in connection with any
Public Offering shall be selected by the Company, and counsel to the selling
holders of Registrable Securities shall be selected by the holders of a majority
of the Registrable Securities requested pursuant to the provisions hereof to be
included therein.
8.4. Indemnification and Contribution.
8.4.1. Indemnities of the Company. In the event of any registration of any
Registrable Securities or other debt or equity securities under the Securities
Act, and in connection with any registration statement or any other disclosure
document produced by or on behalf of the Company and any of its subsidiaries
pursuant to which securities of the Company and any of its subsidiaries are sold
(whether or not for the account of the Company) or any other disclosure document
produced by or on behalf of the Company and any of its subsidiaries, including
without limitation reports required or other documents filed under the Exchange
Act, the Company will, and hereby does, and will cause its subsidiaries, jointly
and severally to, indemnify and hold harmless each seller of Registrable
Securities, any other holder of Securities or Non-CSFB Warrant Securities who is
or might be deemed to be a controlling Person of the Company and any of its
subsidiaries within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, their respective direct and indirect partners, advisory
board members, directors, officers and shareholders, and each other Person, if
any, who controls any such seller or any such holder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act (each such
person being referred to herein as a "Covered Person"), against any losses,
claims, damages or liabilities, joint or several, to which such Covered Person
may be or become subject under the Securities Act, the Exchange Act, any other
securities or other law of any jurisdiction, common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained or incorporated by
reference in any registration statement under the Securities Act, any
preliminary prospectus or final prospectus included therein, or any related
summary prospectus, or any amendment or supplement thereto, or any document
incorporated by reference therein, or any other such disclosure document or
other document or report, (ii) any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading or (iii) any violation by the Company and any
of its subsidiaries of any federal, state or common law rule or regulation
applicable to the Company and to any of its subsidiaries and relating to action
or inaction in connection with any such registration, disclosure document or
other document or report, and will reimburse such Covered Person for any legal
or any other expenses incurred by it in connection with investigating or
defending any such loss, claim, damage, liability, action or proceeding;
provided, however, that neither the Company nor any of its subsidiaries shall be
liable to any Covered Person in any such case to the extent that any such loss,
claim, damage, liability, action or proceeding arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement, incorporated document
or other such disclosure document or other document or report, in reliance upon
and in conformity with written information furnished to the Company or to any of
its subsidiaries through an instrument duly executed by such Covered Person
specifically stating that it is for use in the preparation thereof. The
indemnities of the Company and of its subsidiaries contained in this Section
8.4.1 shall remain in full force and effect regardless of any investigation made
by or on behalf of such Covered Person and shall survive any transfer of
securities.
8.4.2. Indemnities to the Company. The Company and any of its subsidiaries
may require, as a condition to including any securities in any registration
statement filed pursuant to this Section 8, that the Company and any of its
subsidiaries shall have received an undertaking satisfactory to it from the
prospective seller of such securities, to indemnify and hold harmless the
Company and any of its subsidiaries, each director of the Company or any of its
subsidiaries, each officer of the Company or any of its subsidiaries who shall
sign such registration statement and each other Person (other than such seller),
if any, who controls the Company and any of its subsidiaries within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act, with
respect to any statement in or omission from such registration statement, any
preliminary prospectus or final prospectus included therein, or any amendment or
supplement thereto, or any document incorporated therein, if such statement or
omission was made in reliance upon and in conformity with written information
furnished to the Company or to any of its subsidiaries through an instrument
executed by such seller specifically stating that it is for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement, or incorporated
document. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company, any of its subsidiaries, or
any such director, officer or controlling Person and shall survive any transfer
of securities.
8.4.3. Contribution. If the indemnification provided for in Sections 8.4.1
or 8.4.2 hereof is unavailable to a party that would have been an indemnified
party under any such Section in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each party that would have been an indemnifying party thereunder shall, in
lieu of indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative fault of such indemnifying party on the
one hand and such indemnified party on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof). The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by such indemnifying
party or such indemnified party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The parties agree that it would not be just or equitable if
contribution pursuant to this Section 8.4.3 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the preceding sentence. The amount
paid or payable by a contributing party as a result of the losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) referred
to above in this Section 8.4.3 shall include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or
claim. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
8.4.4. Limitation on Liability of Holders of Registrable
Securities. The liability of each holder of Registrable Securities in
respect of all indemnification and contribution obligations of such
holder arising under this Section 8.4 shall not in any event exceed an
amount equal to the net proceeds to such holder (after deduction of all
underwriters' discounts and commissions and all other expenses paid by
such holder in connection with the registration in question) from the
disposition of the Registrable Securities disposed of by such holder
pursuant to such registration.
8.5. Lock-up. Without the prior written consent of the Company, for
a period beginning seven days immediately preceding and ending on the 180th day
following the effective date of the registration statement used in connection
with such offering, no holder of Bain Securities or Other Securities (whether or
not a selling shareholder pursuant to such registration statement) shall (a)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise Transfer, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for such Common Stock or (b) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of Common Stock, whether any such transaction described in clause (a)
or (b) above is to be settled by delivery of such Common Stock or such other
securities, in cash or otherwise; provided, however, that the foregoing
restrictions shall not apply to (i) transactions relating to shares of Common
Stock or other securities acquired in open market transactions after the
completion of the Initial Public Offering, (ii) Transfers among any Affiliates,
provided that the transferee Affiliate agrees to be bound by the terms of this
Agreement, including this Section 8.5, (iii) Transfers to the Company or any
subsidiary of the Company in one or more transactions approved by the Board or
(iv) Transfers constituting the exercise of the Junior Management Options or the
CSFB Option in accordance with the provisions of Section 5.
9. CERTAIN FUTURE EQUITY FINANCINGS OF THE COMPANY. The Company
shall not issue or sell any shares of any of its capital stock or any securities
convertible into or exchangeable for any shares of its capital stock, issue or
grant any rights (either preemptive or other) to subscribe for or to purchase,
or any options or warrants for the purchase of, or enter into any agreements
providing for the issuance (contingent or otherwise) of, any of its capital
stock or any stock or securities convertible into or exchangeable for any shares
of its capital stock, or grant stock appreciation or other equity equivalent
rights, in each case to any Bain Initial Investor or to any Person in which any
Bain Initial Investor beneficially owns, directly or indirectly, 5% or more of
any class of outstanding capital stock of such Person (each an "Issuance" of
"Subject Securities"), except in compliance with the following provisions of
this Section 9; provided, however, that the provisions of this Section 9 shall
not apply to any such issuance or sale pursuant to options, warrants or rights
for, or securities convertible into, other securities, in each case if such
options, warrants, rights or convertible securities either (i) were outstanding
as of the date hereof, (ii) were issued after the date hereof and the provisions
of this Section 9 were complied with in connection with the issuance of such
securities, or (iii) were issued after the date hereof and the provisions of
this Section 9 did not apply to the issuance of such securities.
9.1. Right of Participation.
9.1.1. Offer. Not fewer than twenty (20) days prior to the
consummation of the Issuance, a notice (the "Preemption Notice") shall
be furnished by the Company to each holder of Other Securities
(collectively, the "Preemptive Purchaser Offerees"). The Preemption
Notice shall include:
(i) The principal terms of the proposed Issuance,
including without limitation the amount and kind of Subject
Securities to be included in the Issuance, the percentage of
the total number of shares of Common Stock outstanding as of
immediately prior to giving effect to such Issuance (calculated
on a fully diluted basis) which the number of shares of Common
Stock held by such Preemptive Purchaser Offeree constitutes
(the "Preemptive Portion"), the maximum price per unit of the
Subject Securities, the name and address of the Persons to whom
the Subject Securities will be Issued (the "Proposed Buyers")
and the other principal terms of the proposed Issuance; and
(ii) An offer by the Company to Issue, at the option
of each Preemptive Purchaser Offeree, to such Preemptive
Purchaser Offeree such portion of the Subject Securities to be
included in the Issuance as may be requested by such Preemptive
Purchaser Offeree (not to exceed the Preemptive Portion of the
total amount of Subject Securities to be included in the
Issuance) determined as provided in Section 9.1.2, on the same
terms and conditions, with respect to each unit of Subject
Securities issued to the Preemptive Purchaser Offerees, as each
of the Proposed Buyers shall be Issued each of his, her or its
units of Subject Securities.
9.1.2. Time and Manner of Exercise by Offerees. Each Preemptive
Purchaser Offeree desiring to accept the offer contained in the
Preemption Notice shall send a written commitment to the Company
specifying the amount of Subject Securities (not in any event to
exceed the Preemptive Portion of the total amount of Subject
Securities to be included in the Issuance) which such Preemptive
Purchaser Offeree desires to be issued within twenty (20) days after
effectiveness of the Preemption Notice (each Preemptive Purchaser
Offeree who so accepts theoffer contained in the Preemption Notice
being referred to herein as a"Participating Buyer"). Each Preemptive
Purchaser Offeree who has not so accepted such offer shall be deemed
to have waived all of his rights with respect to the Issuance, and
the Company shall thereafter be free to Issue in the Issuance to the
Proposed Buyers, at a price no less than 95% of the maximum price
set forth in the Preemption Notice and on otherwise substantially no
more favorable terms than as set forth in the Preemption Notice,
without any further obligation to include such non-accepting
Preemptive Purchaser Offerees in the Issuance. If, prior to
consummation, the terms of such
proposed Issuance shall change with the result that the price shall be
less than 95% of the maximum price set forth in the Preemption Notice or
the other principal terms shall be substantially more favorable than as
set forth in the Preemption Notice, it shall be necessary for a separate
Preemption Notice to have been furnished, and the terms and provisions
of this Section 9.1 separately complied with, in order to consummate
such proposed Issuance pursuant to this Section 9.1; provided, however,
that in the case of such a separate Preemption Notice, the applicable
period referred to in Sections 9.1.1 shall be seven (7) days and the
applicable period referred to in Section 9.1.2 shall be three (3)
business days.
The acceptance of each Participating Buyer shall be
irrevocable except as hereinafter provided, and each such Participating
Buyer shall be bound and obligated to acquire in the Issuance on the
same terms and conditions, with respect to each unit of Subject
Securities Issued, as the Proposed Buyers, such amount of Subject
Securities as such Participating Buyer shall have specified in such
Participating Buyer's written commitment.
If at the end of the one hundred twentieth (120th) day
following the date on which the Preemption Notice was given the Company
has not completed the Issuance as provided in the foregoing provisions
of this Section 9, each Participating Buyer shall be released from his
obligations under the written commitment, the Preemption Notice shall be
null and void, and it shall be necessary for a separate Preemption
Notice to have been furnished, and the terms and provisions of this
Section 9.1 separately complied with, in order to consummate an Issuance
pursuant to this Section 9.1, unless the failure to complete the
Issuance resulted from any failure by any Preemptive Purchaser Offeree
to comply in any material respect with the terms of this Section 9.
9.1.3. Certain Legal Requirements. In the event the
participation by any Preemptive Purchaser Offeree as a Participating
Buyer would require under applicable law (i) the registration or
qualification of any securities or of any person as a broker or dealer
or agent with respect to such securities or (ii) the provision to any
participant in the Issuance of any information other than such
information as would be required under Regulation D of the Securities
and Exchange Commission or similar rule then in effect in an offering
made pursuant to said Regulation D solely to "accredited investors" as
defined in said Regulation D, the Company shall be obligated only to use
its reasonable best efforts to cause such requirements to have been
complied with to the extent necessary to permit such Participating Buyer
to receive such securities. Notwithstanding any provisions of this
Section 9, if use of reasonable best efforts shall not have resulted in
such requirements being complied with to the extent necessary to permit
such Participating Buyer to receive such securities, the Company may
exclude such Participating Buyer from participation in the Issuance. The
obligation of the Company to use reasonable best efforts to cause such
requirements to have been complied with to the extent necessary to
permit a Participating Buyer to receive such securities shall be
conditioned on such Participating Buyer executing such documents and
instruments, and taking such other actions (including without
limitation, if required by the Company on advice of its counsel,
agreeing to be represented during the course of such transaction by a
"purchaser representative" (as defined in Regulation D) in connection
with evaluating the merits and risks of the prospective investment and
acknowledging that he was so represented), as the Company shall
reasonably request in order to permit such requirements to have been
complied with. Each Participating Buyer agrees to take such actions as
the Company shall reasonably request in order to permit such
requirements to have been complied with.
9.1.4. Special Rule in Certain Circumstances. In the event
that the participation of each Proposed Buyer in an Issuance is
conditioned upon the purchase by such Proposed Buyer of any securities
(including without limitation debt securities) other than Subject
Securities ("Other Offered Securities"), the Company may require as a
condition to the participation in the Issuance by the Preemptive
Purchaser Offerees that such Preemptive Purchaser Offerees acquire in
the Issuance, together with the Subject Securities to be acquired by
them, Other Offered Securities in the same proportion to the Subject
Securities to be acquired by them as Other Offered Securities are
acquired by each Proposed Buyer in proportion to the Subject Securities
acquired in the Issuance by such Proposed Buyer, on the same terms and
conditions (except as specifically otherwise provided in this Section
9.1) as to each unit of Subject Securities and Other Offered Securities
issued to the Preemptive Purchaser Offerees, as each of the Proposed
Buyers shall be issued each of his, her or its units of Subject
Securities and Other Offered Securities.
9.1.5. Closing. Each Participating Buyer shall take such
actions and execute such documents and instruments as shall be
reasonably necessary or desirable in order to consummate the Issuance
expeditiously and on the same terms as the Proposed Buyers; provided,
--------
however, that in the event the consideration payable by the Proposed
-------
Buyers in the Issuance for Subject Securities (or, if applicable, Other
offered Securities) includes any securities or other property other than
cash, at the option of each Participating Buyer, such Participating
Buyer may deliver, in lieu of such securities or other property other
than cash, cash in the amount equal to the then Fair Market Value of
such consideration constituting securities or other property other than
cash. For purposes of this Section 9.1.5, Fair Market Value shall be
determined in good faith by the Board as of the date of the Issuance in
question.
At the closing of any Issuance under this Section 9.1, each of
the Participating Buyers shall be delivered the notes, certificates or
other instruments evidencing the Subject Securities (and, if applicable,
Other Offered Securities) to be Issued to such Participating Buyer,
registered in the name of such Participating Buyer or his or its
designated nominee, free and clear of any Liens, with any transfer tax
stamps affixed, against delivery by such Participating Buyer of the
applicable consideration.
9.2. Termination. The foregoing provisions of this Section 9 shall
terminate immediately following the closing of the Issuance of
Common Stock by the Company pursuant to the Initial Public Offering.
10. DETERMINATION OF FAIR MARKET VALUE. The term "Fair Market
Value" shall mean, the fair value of the applicable Security or other securities
as of the applicable date on the basis of a sale of such Security or securities
in an arms length private sale between a willing buyer and a willing seller,
neither acting under compulsion (or, in the case of an Option, the fair value of
the Shares that may then be purchased or received by the holder of such Option
upon exercise or conversion thereof, determined as described in this Section 10,
minus the
exercise or conversion price applicable thereto). In determining such Fair
Market Value, no discount shall be taken for constituting a minority interest
and no upward adjustment or discount shall be taken relating to the fact that
the Securities in question are subject to the restrictions and entitled to the
rights provided hereunder. For purposes of Sections 6 or 7 of this Agreement,
such Fair Market Value shall be determined: (i) in the case of any Securities or
other securities to be valued representing less than 10% of the then outstanding
Registrable Securities, in good faith by the Board and (ii) in the case of any
Securities or other securities to be valued representing more than 10% of the
then outstanding Registrable Securities, absent any agreement between the
Company and the holders of a majority of the Securities in question regarding
such valuation, by an Independent Investment Banking Firm retained by the
Company (the fees and expenses of which shall be shared in one-half shares by
the Company, on the one hand, and the holders of Securities subject to such Fair
Market Value determination, on the other hand) selected as follows. The Board
shall select three Independent Investment Banking Firms none of whom shall be an
Affiliate of any Investor, and the Independent Investment Banking Firm to
perform the calculation shall be selected from such list of three by the holders
of a majority of the Securities subject to such Fair Market Value determination.
11. REMEDIES.
11.1. Generally. The Company and all holders of Securities and Non-CSFB
Warrant Securities shall have all remedies available at law, in equity or
otherwise in the event of any breach or violation of this Agreement or any
default hereunder by the Company, any holder of Securities or any holder of
Non-CSFB Warrant Securities. The parties acknowledge and agree that in the event
of any breach of this Agreement, in addition to any other remedies which may be
available, each of the parties hereto shall be entitled to specific performance
of the obligations of the other parties hereto and, in addition, to such other
equitable remedies (including, without limitation, preliminary or temporary
relief) as may be appropriate in the circumstances.
11.2. Deposit. Without limiting the generality of Section 11.1, if any
Investor (a "Non-Complying Investor") fails to deliver any certificate or
certificates evidencing Securities that may be required to be sold pursuant to
any provision of this Agreement in accordance with the terms hereof, the Company
or other Person entitled to purchase or require the sale of such securities may,
at its option, in addition to all other remedies it may have, deposit the
purchase price for such Securities with any national bank or trust company
having combined capital, surplus and undivided profits in excess of one hundred
million dollars ($100,000,000) and which has agreed to act as escrow agent in
the manner contemplated by this Section 11.2 and shall furnish or make available
to all interested Persons satisfactory evidence of such deposit and thereupon
the Company shall cancel on its books the certificate or certificates
representing such Securities and, in the case of any such purchase of Securities
by a Person other than the Company issue, in lieu thereof and in the name of
such Person, a new certificate or certificates representing such Securities and
thereupon all of the Non-Complying Investor's rights in and to such Securities
shall terminate. Thereafter, upon delivery to the Company by such Non-Complying
Investor of the certificate or certificates evidencing such Securities (duly
endorsed, or with stock powers or other appropriate instruments of transfer duly
endorsed, for transfer, with signature guaranteed, free and clear of any liens
or encumbrances, and with any stock transfer tax stamps affixed), the Company
shall instruct the escrow agent referred to above to deliver the purchase price
(without any interest from the date of the closing to the date of such delivery,
any such interest to accrue to the Person who deposited the purchase price for
such Securities) to such Non-Complying Investor.
12. LEGENDS.
12.1. Securities Act Legend. Each certificate representing Securities or
Non-CSFB Warrant Securities shall have the following legend endorsed
conspicuously thereupon:
"The securities represented by this certificate were issued in a
private placement, without registration under the Securities Act
of 1933, as amended (the "Act"), and may not be sold, assigned,
pledged or otherwise transferred in the absence of an effective
registration under the Act covering the transfer or an opinion of
counsel, satisfactory to the issuer, that registration under the
Act is not required."
The legend required by this Section 12.1 shall cease to be required as to
any particular Securities (i) when, in the opinion of Ropes & ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇▇▇ or other counsel reasonably acceptable to the Company, such
restrictions are no longer required in order to assure compliance with the
Securities Act or (ii) when such Securities shall have been registered under the
Securities Act or transferred pursuant to Rule 144 thereunder. Whenever (x) such
requirement shall cease and terminate as to any Securities or (y) such
Securities shall be transferable under paragraph (k) of Rule 144, the holder
thereof shall be entitled to receive from the Company, without expense, new
certificates not bearing the legend set forth in this Section 12.1.
12.2. Stockholders Agreement Legend. Each certificate representing
Securities shall have the following legend endorsed conspicuously thereupon:
"The securities represented by this certificate are subject to
restrictions on voting and transfer and requirements of sale and
the provisions as set forth in the Stockholders Agreement dated as
of September 27, 1999, as amended and in effect from time to time,
and constitute ______________ Securities as defined in such
Stockholders Agreement. The Company will furnish a copy of such
agreement to the holder of this certificate without charge upon
written request."
Any person who acquires Securities which are not subject to all or part of
the terms of this Agreement shall have the right to have such legend (or the
applicable portion thereof) removed from certificates representing such
Securities.
12.2. Option-Eligible Shares Legend. Each certificate representing
Option-Eligible Shares shall have the following legend endorsed conspicuously
thereupon:
"The securities represented by this certificate are
Option-Eligible Shares (as defined in the Stockholders Agreement)
and are subject to purchase by the holders of the Junior
Management Options and the CSFB Option (as defined in the
Stockholders Agreement) under the terms and conditions described
in Section 5 of the Stockholders Agreement, and any transfer of
these Option-Eligible Shares is subject to certain conditions
specified in and must be in compliance with the terms of such
Section 5 of the Stockholders Agreement."
The legend required by this Section 12.3 shall cease to be required (a) as
to any particular Option-Eligible Shares, upon the exercise of a Junior
Management Option or the CSFB Option with respect to such shares or (ii) with
respect to all Option-Eligible Shares, after all Junior Management Options and
the CSFB Option have terminated pursuant to the terms of Section 5, and in any
such event the holder thereof shall be entitled to receive from the Company,
without expense, replacement certificates not bearing the legend set forth in
this Section 12.3.
12.3. Stop Transfer Instruction. The Company will instruct any transfer
agent not to register the Transfer of any Securities until the conditions
specified in the foregoing legends are satisfied.
13. AMENDMENT, TERMINATION, ETC.
13.1. No Oral Modifications. This Agreement may not be orally amended,
modified, extended or terminated, nor shall any oral waiver of any of its terms
be effective.
13.2. Written Modifications. This Agreement may be amended, modified,
extended or terminated, and the provisions hereof may be waived, by an agreement
in writing signed by the Bain Majority Holders and the holders of a majority of
all Securities then outstanding and each such amendment, modification,
extension, termination and waiver shall be binding upon each party hereto and
each holder of Securities and Non-CSFB Warrant Securities subject hereto;
provided, however, (a) the consent of the CSFB Majority Holders shall be
required for any amendment, modification, extension, termination or waiver which
has a material adverse effect on the rights of the holders of CSFB Securities as
such under this Agreement, (b) the consent of the Management Majority Holders
shall be required for any amendment, modification, extension, termination or
waiver which has a material adverse effect on the rights of the holders of
Management Securities as such under this Agreement, (c) the consent of the
Non-CSFB Majority Warrantholders shall be required for any amendment,
modification, extension, termination or waiver which has a material adverse
effect on the rights of the holders of Non-CSFB Warrant Securities as such under
this Agreement. In addition, each party hereto and each holder of Securities or
Non-CSFB Warrant Securities subject hereto may waive any of its rights hereunder
by an instrument in writing signed by such party or holder.
14. MISCELLANEOUS.
14.1. Authority; Effect. Each party hereto represents and warrants to
and agrees with each other party that the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized on behalf of such party and do not violate any agreement or
other instrument applicable to such party or by which its assets are bound. This
Agreement does not, and shall not be construed to, give rise to the creation of
a partnership among any of the parties hereto, or to constitute any of such
parties members of a joint venture or other association.
14.2. Notices. Notices and other communications provided for in this
Agreement shall be in writing and shall be effective (i) when one day shall have
elapsed (exclusive of Saturdays, Sundays and banking holidays in the City of
Boston) from their deposit for overnight delivery with Federal Express or other
bonded courier (charges prepaid), addressed to the party or parties sought to be
charged with notice of the same at the respective addresses set forth or
referred to below, subject to written notice of change of address given by any
party to each other party, (ii) when three (3) days shall have elapsed
(exclusive of Saturdays, Sundays and banking holidays in the City of Boston)
from their deposit in the U.S. mail, postage prepaid and registered or
certified, addressed to the party or parties sought to be charged with notice of
the same at the respective addresses set forth or referred to below, subject to
written notice of change of address given by any party to each other party, or
(iii) if earlier, upon receipt.
If to the Company, to it at:
c/o ICON Health & Fitness, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: President
with a copy to:
▇▇▇▇ Capital, Inc.
Two ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇ ▇▇▇▇
If to the Bain Investors, to them at:
c/o Bain Capital, Inc.
Two ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇ ▇▇▇▇
with a copy to:
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
If to CSFB, to it at:
Credit Suisse First Boston Corp.
Eleven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
If to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, to him at:
c/o ICON Health & Fitness, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, a Professional Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to the Non-CSFB Warrantholders, to them at:
c/o IBJ Whitehall Bank & Trust Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
If to any other Investor, to such Investor at the address set
forth in the stock record book of the Company.
Notice to the holder of record of any shares of capital stock
shall be deemed to be notice to the holder of such shares for all
purposes hereof.
14.3. Binding Effect, etc. This Agreement constitutes the entire
agreement of the parties with respect to its subject matter, supersedes all
prior or contemporaneous oral or written agreements or discussions with respect
to such subject matter, and shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, representatives, successors and
assigns. No provision of this Agreement providing for the expiration of any
provision by lapse of time or upon the occurrence of specified events or
otherwise shall relieve any Person of liability for breach or violation prior to
such expiration.
14.4. Descriptive Headings. The descriptive headings of this Agreement
are for convenience of reference only, are not to be considered a part hereof
and shall not be construed to define or limit any of the terms or provisions
hereof.
14.5. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one instrument.
14.6. Severability. If in any judicial or arbitral proceedings a court or
arbitrator shall refuse to enforce any provision of this Agreement, then such
unenforceable provision shall be deemed eliminated from this Agreement for the
purpose of such proceedings to the extent necessary to permit the remaining
provisions to be enforced. To the full extent, however, that the provisions of
any applicable law may be waived, they are hereby waived to the end that this
Agreement be deemed to be valid and binding agreement enforceable in accordance
with its terms, and in the event that any provision hereof shall be found to be
invalid or unenforceable, such provision shall be construed by limiting it so as
to be valid and enforceable to the maximum extent consistent with and possible
under applicable law.
14.7. Joint and Several Liability of the Company and ICON. ICON shall be
jointly and severally liable in respect of all payment obligations of the
Company under this Agreement.
14.8. Third Party Beneficiaries. Solely for purposes of Sections 8 (other
than Section 8.5), 11.1, 12.1, 13, 14 and 15 hereof, the Non-CSFB Warrantholders
shall be deemed to be intended third-party beneficiaries of this Agreement and
shall be bound hereby.
14.9. Termination of Equity Commitment Letter. ICON, the Bain Initial
Investors, CSFB and the Senior Management Initial Investors hereby agree on
behalf of themselves and their affiliates that the letter agreement dated July
8, 1999 between ICON, ▇▇▇▇ Capital, Inc., Credit Suisse First Boston Corp. and
the Senior Management Initial Investors, as amended (the "Equity Commitment
Letter"), is hereby terminated without further liability to any party thereunder
and shall be of no further force and effect.
14.10. Limitation on CSFB Acquisitions. CSFB agrees that neither it nor
any of its Affiliates shall acquire any shares of Common Stock or Options from
any third party if, after giving effect to such acquisition, CSFB and its
Affiliates would own (or be deemed to own) in the aggregate Equivalent Shares
representing more than 49.5% of the outstanding shares of Common Stock of the
Company on a fully diluted basis. Solely for purposes of this Section 14.10, in
calculating the number of Equivalent Shares owned by CSFB and its Affiliates,
CSFB shall be deemed to have exercised the CSFB Option in full.
15. GOVERNING LAW.
15.1. Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic substantive laws of the State of Delaware without
giving effect to any choice or conflict of laws provision or rule that would
cause the application of the domestic substantive laws of any other
jurisdiction.
15.2. Consent to Jurisdiction. Each party to this Agreement, by its
execution hereof, (a) hereby irrevocably submits to the exclusive jurisdiction
of the state courts of the State of New York sitting in the County of New York
or the United States District Court for the Southern District of New York for
the purpose of any action, claim, cause of action or suit (in contract, tort or
otherwise), inquiry, proceeding or investigation arising out of or based upon
this Agreement or relating to the subject matter hereof, (b) hereby waives to
the extent not prohibited by applicable law, and agrees not to assert, and
agrees not to allow any of its subsidiaries to assert, by way of motion, as a
defense or otherwise, in any such action, any claim that it is not subject
personally to the jurisdiction of the above-named courts, that its property is
exempt or immune from attachment or execution, that any such proceeding brought
in one of the above-named courts is improper, or that this Agreement or the
subject matter hereof or thereof may not be enforced in or by such court and (c)
hereby agrees not to commence or maintain any action, claim, cause of action or
suit (in contract, tort or otherwise), inquiry, proceeding or investigation
arising out of or based upon this Agreement or relating to the subject matter
hereof or thereof other than before one of the above-named courts nor to make
any motion or take any other action seeking or intending to cause the transfer
or removal of any such action, claim, cause of action or suit (in contract, tort
or otherwise), inquiry, proceeding or investigation to any court other than one
of the above-named courts whether on the grounds of inconvenient forum or
otherwise. Notwithstanding the foregoing, to the extent that any party hereto is
or becomes a party in any litigation in connection with which it may assert
indemnification rights set forth in this agreement, the court in which such
litigation is being heard shall be deemed to be included in clause (a) above.
Each party hereto hereby consents to service of process in any such proceeding
in any manner permitted by New York law, and agrees that service of process by
registered or certified mail, return receipt requested, at its address specified
pursuant to Section 14.2 hereof is reasonably calculated to give actual notice.
The provisions of this Section 15.2 shall not restrict the ability of any party
to enforce in any court any judgment obtained in the federal or state courts of
the State of New York.
15.3. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE
LAW WHICH CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES AND COVENANTS THAT
IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO
TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE OR ACTION, CLAIM, CAUSE OF
ACTION OR SUIT (IN CONTRACT, TORT OR OTHERWISE), INQUIRY, PROCEEDING OR
INVESTIGATION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER
HEREOF OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE TRANSACTIONS
CONTEMPLATED HEREBY, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING.
EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE OTHER PARTIES
HERETO THAT THIS SECTION 15.3 CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH THEY
ARE RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT. ANY PARTY HERETO MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 15.3 WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO
TRIAL BY JURY.
15.4. Reliance. Each of the parties hereto acknowledges that he or it has
been informed by each other party that the provisions of Section 15 constitute a
material inducement upon which such party is relying and will rely in entering
into this Agreement and the transactions contemplated hereby.
[THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
[Stockholders Agreement]
IN WITNESS WHEREOF, each of the undersigned has duly executed this
Agreement (or caused this Agreement to be executed on its behalf by its officer
or representative thereunto duly authorized) under seal as of the date first
above written.
THE COMPANY: HF HOLDINGS, INC.
By /s/ S. ▇▇▇▇ ▇▇▇▇
----------------
Title: CFO, Vice President &
Treasurer
ICON: ICON HEALTH & FITNESS, INC.
By /s/ S. ▇▇▇▇ ▇▇▇▇
----------------
Title: CFO, Vice President &
Treasurer
THE BAIN INITIAL INVESTORS: ▇▇▇▇ CAPITAL FUND IV, L.P.
By ▇▇▇▇ Capital Partners IV, L.P., a
Delaware Limited Partnership,
its general partner
By ▇▇▇▇ Capital Investors, Inc.,
its general partner
By /s/ ▇▇▇▇▇▇ ▇▇▇
--------------
Title: Managing Director
[Stockholders Agreement]
▇▇▇▇ CAPITAL FUND IV-B, L.P.
By ▇▇▇▇ Capital Partners IV, L.P., a
Delaware Limited Partnership,
its general partner
By ▇▇▇▇ Capital Investors, Inc.,
its general partner
By /s/ ▇▇▇▇▇▇ ▇▇▇
--------------
Title: Managing Director
BCIP ASSOCIATES
By /s/ ▇▇▇▇▇▇ ▇▇▇
--------------
Title: a general partner
BCIP TRUST ASSOCIATES, L.P.
By /s/ ▇▇▇▇▇▇ ▇▇▇
--------------
Title: a general partner
[Stockholders Agreement]
THE LLC: HF INVESTMENT HOLDINGS, LLC
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------
Title: Administrative Member
[Stockholders Agreement]
THE SENIOR MANAGEMENT
INITIAL INVESTORS: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, individually
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, individually
[Stockholders Agreement]
CSFB: CREDIT SUISSE FIRST BOSTON
CORPORATION
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------
Title: Managing Director
[Stockholders Agreement]
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
[Stockholders Agreement]
INVERNESS/PHOENIX CAPITAL LLC
By ▇. ▇▇▇▇▇▇ Dunwoody
-------------------
Title: Managing Director
[Stockholders Agreement]
By /s/ ▇▇▇ ▇▇▇▇ Tsung
------------------
▇▇▇ ▇▇▇▇ Tsung
[Stockholders Agreement]
By /s/ ▇▇▇-▇▇▇▇▇ Ko
----------------
▇▇▇-▇▇▇▇▇ Ko