EXHIBIT 10.26
U.S. CAN CORPORATION
STOCKHOLDERS AGREEMENT
Dated as of October 4, 2000
U.S. CAN CORPORATION
STOCKHOLDERS AGREEMENT
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.............................................................................................1
1.1. CERTAIN MATTERS OF CONSTRUCTION.................................................................1
1.2. DEFINITIONS.....................................................................................2
ARTICLE II COVENANTS AND CONDITIONS..............................................................................13
2.1. RESTRICTIONS ON TRANSFERS; RIGHTS OF FIRST REFUSAL.............................................13
2.2. CALL BY THE COMPANY............................................................................17
2.3. MANAGEMENT STOCKHOLDER PUT.....................................................................21
2.4. TAKE ALONG.....................................................................................24
2.5. COME ALONG.....................................................................................26
2.6. CORPORATE GOVERNANCE...........................................................................29
2.7. RIGHTS OF PARTICIPATION........................................................................32
2.8. FINANCIAL INFORMATION..........................................................................34
2.9. CONFIDENTIALITY................................................................................34
ARTICLE III REGISTRATION RIGHTS..................................................................................34
3.1. GENERAL........................................................................................34
3.2. DEMAND REGISTRATION INITIATED BY THE BERKSHIRE STOCKHOLDERS....................................34
3.3. DEMAND REGISTRATION INITIATED BY THE SALOMON SMITH BARNEY GROUP................................35
3.4. DEMAND REGISTRATION INITIATED BY THE SCARSDALE GROUP...........................................36
3.5. DEMAND REGISTRATION INITIATED BY THE MANAGEMENT STOCKHOLDERS...................................37
3.6. REDUCTION IN REGISTRATION; PIGGYBACK REGISTRATION..............................................38
3.7. OBLIGATIONS OF THE COMPANY.....................................................................39
3.8. FURNISH INFORMATION............................................................................41
3.9. EXPENSES OF REGISTRATION.......................................................................41
3.10. UNDERWRITING REQUIREMENTS......................................................................41
3.11. INDEMNIFICATION................................................................................42
3.12. REGISTRATION ON FORM S-3.......................................................................44
3.13. REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934..................................................45
3.14. NO INCONSISTENT AGREEMENTS.....................................................................45
3.15. STOCK SPLIT....................................................................................45
3.16. TIMING AND OTHER LIMITATIONS...................................................................46
3.17. LOCK-UP........................................................................................46
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ARTICLE IV MISCELLANEOUS.........................................................................................47
4.1. REMEDIES.......................................................................................47
4.2. ENTIRE AGREEMENT; AMENDMENT; WAIVER............................................................47
4.3. SEVERABILITY...................................................................................48
4.4. NOTICES........................................................................................48
4.5. BINDING EFFECT; ASSIGNMENT.....................................................................49
4.6. GOVERNING LAW..................................................................................49
4.7. TERMINATION....................................................................................50
4.8. RECAPITALIZATIONS, EXCHANGES, ETC..............................................................50
4.9. ACTION NECESSARY TO EFFECTUATE THE AGREEMENT...................................................50
4.10. PURCHASE FOR INVESTMENT; LEGEND ON CERTIFICATE.................................................50
4.11. EFFECTIVENESS OF TRANSFERS.....................................................................51
4.12. OTHER STOCKHOLDERS.............................................................................51
4.13. NO WAIVER......................................................................................52
4.14. COUNTERPART....................................................................................52
4.15. HEADINGS.......................................................................................52
4.16. THIRD PARTY BENEFICIARIES......................................................................52
4.17. CONSENT TO JURISDICTION........................................................................52
4.18. WAIVER OF JURY TRIAL...........................................................................52
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STOCKHOLDERS AGREEMENT
This Stockholders Agreement (this "Agreement") is entered into as of
the 4th day of October, 2000 by and among (i) U.S. Can Corporation, a Delaware
corporation (together with its successors and permitted assigns, the "Company")
and (ii) the Stockholders (as defined below) party hereto.
WHEREAS, upon consummation of the transactions contemplated by that
certain Agreement and Plan of Merger dated as of June 1, 2000, as heretofore
amended (the "Merger Agreement") by and between the Company and Pac Packaging
Acquisition Corp., the Berkshire Stockholders (as defined below), the Management
Stockholders (as defined below) and the Other Stockholders (as defined below) as
of the date of such consummation will own the number of shares of Preferred
Stock (as defined below), shares of Common Stock (as defined below) and options
to purchase shares of Common Stock, each as set forth in the books and records
of the Company;
WHEREAS, each of the parties to this Agreement desires that this
Agreement supersedes the existing Stockholders Agreement dated as of March 15,
1993 among the Company and Francisco A. Soler, Ricardo Poma, Salomon Brothers,
Inc. and other parties thereto, and by execution of this Agreement, such
Stockholders Agreement shall terminate effective as of the date of this
Agreement; and
WHEREAS, each of the Stockholders desires to enter into this Agreement
for the purpose of regulating certain relationships of the Stockholders with
regard to the Company and certain restrictions on the Common Stock and other
equity securities owned by the Stockholders.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
ARTICLE 1
DEFINITIONS
1.1. CERTAIN MATTERS OF CONSTRUCTION. In addition to the definitions
referred to or set forth below in this Section 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 Sections and Articles refer to Sections and
Articles of this Agreement;
(c) Definitions shall be equally applicable to both nouns and
verbs and the singular and plural forms of the terms defined; and
(d) The masculine, feminine and neuter genders shall each include
the other.
1.2. DEFINITIONS. For the purposes of this Agreement, the following
terms shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
"Adverse Claim" shall have the meaning set forth in Section 8.102 of
the applicable Uniform Commercial Code.
"Affiliate" shall mean, with respect to any specified Person, any other
Person which, directly or indirectly, through one or more intermediaries
controls, or is controlled by, or is under common control with, such specified
Person (for the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise.
"Agreement" shall have the meaning set forth in the first paragraph of
this Agreement.
"Associate" (i) when used to indicate a relationship with any Person
shall mean, (a) any corporation or organization of which such Person is an
officer or partner or is, directly or indirectly, the beneficial owner of ten
percent (10%) or more of any class of equity securities, (b) any trust or other
estate in which such Person has a substantial beneficial interest or as to which
such Person serves as a trustee or in a similar fiduciary capacity, and (c) any
relative of such Person who has the same home as such Person, is a parent,
sibling, spouse, in-law, child or grandchild of such Person, or the spouse of
any of them, or (ii) when used to indicate a relationship with the Company,
shall also mean a director or officer of the Company or any Subsidiary. Neither
the Company nor any of its Subsidiaries shall be deemed an Associate of any
Stockholder.
"Berkshire Representatives" shall have the meaning as set forth in
Section 2.6(a).
"Berkshire Stockholders" shall mean (i) those Persons listed as the
Berkshire Stockholders on the Schedule and (ii) their Permitted Transferees
(other than the Company).
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"Board" or "Board of Directors" shall mean the Board of Directors of
the Company as the same shall be constituted from time to time.
"Board Determination Procedures" shall mean the procedures by which the
Board calculates the Board Participation Determination. Such procedures shall
include, but not be limited to, a good faith estimate by the Board of any
acceleration of vesting of any Time Options, Time Vested Equity, Performance
Options and/or Performance Vested Equity upon consummation of the proposed
Transfer, the Applicable Percentage (as defined in the Performance Options and
the Subscription Agreement governing the Performance Vested Equity), the IRR (as
defined in the Performance Options and the Subscription Agreement governing the
Performance Vested Equity) and the number of Shares the prospective transferee
will ultimately purchase in the proposed Transfer.
"Board Participation Determination" shall mean for each Management
Stockholder a good faith estimate of the number of shares of Time Vested Equity
and Time Options which will vest upon the consummation of the proposed Transfer
and the number of shares of Performance Vested Equity and Performance Options
which will vest and be earned upon consummation of the proposed Transfer,
determined in accordance with the Board Determination Procedures.
"Call Event" shall have the meaning as set forth in Section 2.2(a).
"Call Group" shall have the meaning as set forth in Section 2.2(a).
"Call Notice" shall have the meaning as set forth in Section 2.2(a).
"Call Option" shall have the meaning as set forth in Section 2.2(a).
"Call Price" shall have the meaning as set forth in Section 2.2(b).
"Call Securities" shall mean all of (i) the Shares, (ii) vested Time
Options, (iii) vested and earned Performance Options and (iv) if the
Determination Date has not yet occurred, vested and unearned Performance
Options, in each case which are owned by the members of the Call Group on the
date of a Call Event.
"Cause" shall have the meaning as set forth below, except with respect
to any Management Stockholder who is employed by the Company or one of its
Subsidiaries pursuant to an effective written employment agreement, if any,
between the Company and/or one of its Subsidiaries and such Management
Stockholder in which there is a definition of "Cause," in which event the
definition of "Cause" as set forth in such employment agreement shall be deemed
to be the definition of "Cause" herein solely for such Management Stockholder
and only for so long as such employment agreement remains effective.
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In all other events, the term "Cause" shall mean that any one or more
of the following has occurred:
(i) the Management Stockholder shall have committed a felony;
(ii) the Management Stockholder shall have breached in any
material respect any non-competition provisions of any written
agreement between the Management Stockholder and the Company or any of
its Affiliates;
(iii) the Management Stockholder shall have openly disregarded his
responsibilities to the Company and/or its Affiliates and shall have
refused to devote substantial time and energy to the business and
affairs of the Company and/or its Affiliates (other than due to
Disability or temporary disability which, in the reasonable judgment of
the Board of Directors, causes the Management Stockholder to be
incapable of devoting such time and energy) and has failed to remedy
any such action within thirty (30) days of notice to such Management
Stockholder by the Board of Directors of such action.
"Change in Control" shall mean (i) any transaction or series of related
transactions in which any Person who is not an Affiliate of the Company, or any
two or more such Persons acting as a group, and all Affiliates of such Person or
Persons, who prior to such time owned no Shares or Shares representing less than
fifty percent (50%) of the voting power at elections for the Board, shall (A)
acquire, whether by purchase, exchange, tender offer, merger, consolidation,
recapitalization or otherwise, or (B) otherwise be the owner of (as a result of
a redemption of Shares or otherwise), Shares (or shares in a successor
corporation by merger, consolidation or otherwise) such that following such
transaction or transactions, such Person or group and their respective
Affiliates beneficially own fifty percent (50%) or more of the voting power at
elections for the board of directors of the Company or any successor
corporation, or (ii) the sale or transfer of all or substantially all of the
Company's or United States Can Company's assets and following such sale or
transfer, there is a liquidation of the Company. For purposes of this
definition, it is understood and agreed that as of the date hereof, the only
stockholders of the Company which constitute Affiliates of the Company are
Berkshire Fund V Investment Corp., Berkshire Fund V Coinvestment Corp. and
Berkshire Investors LLC.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Come Along Percentage" shall have the meaning set forth in Section
2.5(a).
"Common Stock" shall mean the Company's common stock, par value $.01
per share, that the Company may be authorized to issue from time to time, any
other securities of the Company into which such Common Stock may hereafter be
changed or for which such Common Stock may be exchanged after giving effect to
the terms of such change or exchange (by way of reorganization,
recapitalization, merger, consolidation or otherwise) and shall also include any
common stock of the Company hereafter authorized and any capital stock of the
Company of any
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other class hereafter authorized which is not preferred as to dividends or
distribution of assets in liquidation over any other class of capital stock of
the Company and which has ordinary voting power for the election of directors of
the Company. Unless otherwise stated herein, Common Stock shall include, without
limitation, all shares of the Management Stockholders' Time Vested Equity
(whether or not vested) and Performance Vested Equity (whether or not vested or
earned).
"Common Stock Equivalents" shall mean all shares of Common Stock (i)
owned by, or (ii) issuable upon exercise of Performance Options (solely to the
extent such Performance Options, on or prior to the time the determination of
Common Stock Equivalents is made, are both vested and earned) and Time Options
(solely to the extent such Time Options, on or prior to the time the
determination of Common Stock Equivalents is made, are vested) held by, each
Stockholder.
"Company" shall have the meaning set forth in the first paragraph of
this Agreement.
"Company Note" shall have the meaning as set forth in Section 2.2(c).
"Company Option Period" shall have the meaning as set forth in Section
2.1(a).
"Company Sale" shall mean any transaction or a series of related
transactions through which the holders of Common Stock Equivalents and their
Affiliates immediately prior to the transaction or series of related
transactions shall own less than fifty percent (50%) of all Common Stock
Equivalents (including without limitation, all shares issued in respect of any
such Common Stock Equivalents by way of stock dividend, stock split or
combination of shares) immediately following the transaction or series of
related transactions.
"Contingent Company Note" shall mean a Contingent Equity Company Note
and/or a Contingent Option Company Note.
"Contingent Equity Company Note" shall mean a note issued by the
Company with a face value amount equal to the excess, if any, of the Fair Market
Value (on the date of the Call Event or the Put Event, as the case may be) of
the vested and unearned Performance Vested Equity (or the portion thereof
contemplated by Section 2.2(b)(iv)(B)) over the Investment Price of such
Performance Vested Equity or such portion, such Contingent Equity Company Note
to be payable on the Determination Date if the vested Performance Vested Equity
is earned, at the lesser of (i) its face amount plus interest at a rate equal to
the Mid-term Applicable Federal Rate from the date of the Call Event or the Put
Event, as the case may be, to the Determination Date and (ii) the difference
between the Fair Market Value (on the Determination Date) and the Investment
Cost.
"Contingent Option Company Note" shall mean a note issued by the
Company with a face value amount equal to the excess, if any, of the Fair Market
Value (on the date of the Call Event or the Put Event, as the case may be) of
the Shares acquirable upon exercise of the vested and unearned Performance
Options (or the portion thereof contemplated by
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Section 2.2(b)(vii)(B)), over the aggregate exercise price of such vested and
unearned Performance Options or such portion, such Contingent Option Company
Note to be payable on the Determination Date if the vested Performance Options
are earned, at the lesser of (i) its face amount plus interest at a rate equal
to the Mid-term Applicable Federal Rate from the date of the Call Event or the
Put Event, as the case may be, to the Determination Date and (ii) the difference
between the Fair Market Value (on the Determination Date) and the aggregate
exercise price of such vested and unearned Performance Options.
"Credit Agreement" shall mean the Credit Agreement dated as of October
4, 2000 by and among the Company, United States Can Company, USC May
Verpackungen Holding, Inc., certain foreign subsidiaries of the Company, Bank of
America, N.A., as Administrative Agent, Citicorp North America, Inc., as
Syndication Agent, and Bank One, NA (Main Office Chicago), as Documentation
Agent, as such Credit Agreement may be amended, modified or supplemented from
time to time, including, without limitation, amendments, modifications,
supplements and restatements thereof giving effect to increases, renewals,
extensions, refundings, deferrals, restructurings, replacements or refinancings
of, or additions to, the arrangements provided in such Credit Agreement.
"Default" shall have the meaning as set forth in Section 2.2(c).
"Designated Employee" or "Designated Employees" shall have the meaning
as set forth in Section 2.2(d).
"Determination Date" shall have the meaning ascribed to it in the
relevant Performance Option certificate or Subscription Agreement, as the case
may be.
"Director's Cause" shall mean (i) the Director's repeated failure to
perform, or gross negligence in the performance of, his duties and
responsibilities, (ii) the Director's fraud, embezzlement or other material
dishonesty or (iii) the Director's conviction of, or plea of guilty or no
contest to, a felony or crime involving moral turpitude.
"Disability" shall mean permanent disability within the meaning of
Section 22(e)(3) of the Code, unless otherwise defined in a separate written
employment agreement between the Company and/or one of its Subsidiaries and the
person whose disability is in question in which event the definition of
"Disability" as set forth in such employment agreement shall be deemed to be the
definition of "Disability" herein solely for such person and only for so long as
such employment agreement remains effective.
"Earned" shall mean, when used in connection with Performance Vested
Equity or Performance Options, as the case may be, that such Performance Vested
Equity or Performance Options have been earned in accordance with the relevant
Subscription Agreement(s) or the Incentive Plan and the certificates issued
pursuant thereto, as the case may be.
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"Employment Ratio" shall mean a ratio equal to (i) the number of full
months since the date of this Agreement that the Management Stockholder has
remained employed by the Company, over (ii) 36 months.
"Employment Ratio Remainder" shall mean 1 minus the Employment Ratio.
"Fair Market Value" shall mean the fair value per share of the
applicable Shares as of the applicable date on the basis of a sale of such
Shares in an arms length private sale between a willing buyer and a willing
seller, neither acting under compulsion. In determining such Fair Market Value,
no discount shall be taken for constituting a minority interest or for the
illiquidity of such Shares and no upward adjustment or discount shall be taken
relating to the fact that the Shares in question are subject to the restrictions
and entitled to the rights provided hereunder. In determining the fair value per
share of the applicable Shares, all outstanding shares of the Company's
Preferred Stock shall conclusively be considered to have a Fair Market Value
equal to the principal amount thereof, plus any accrued but unpaid dividends.
Such Fair Market Value shall be determined in good faith by the Board of
Directors; PROVIDED, HOWEVER, that in each instance in which the Shares (or
Options) of a Management Stockholder are to be purchased at Fair Market Value of
such Shares (or at a price based on the Fair Market Value of the Shares
underlying the Options) pursuant to Section 2.1(d), 2.2 or 2.3, the Management
Stockholder may deliver to the Company a written objection to the initial Fair
Market Value of the Shares as determined by the Board. If the Board and the
Management Stockholder thereafter agree on a Fair Market Value of the Shares,
such Fair Market Value shall be used to determine the Call Price or the Put
Price, as the case may be. If the parties are unable to agree on the Fair Market
Value, the Board shall select an independent appraiser having substantial
knowledge and experience in valuing private companies and the financial markets,
subject to the consent of the Management Stockholder (which consent shall not be
unreasonably withheld), and such appraiser will determine the Fair Market Value
of the Shares. The determination of such appraiser shall be binding on the
Company and the Management Stockholder. In the event that the Fair Market Value
ultimately determined by the appraiser is higher than that initially determined
by the Board, the Company shall bear the costs of the appraisal. In the event
that the Fair Market Value ultimately determined by the appraiser is lower than
or equal to that initially determined by the Board, the Management Stockholder
shall bear the costs of the appraisal.
"Federal Bankruptcy Code" means Title 11 of the United States Code.
"Good Reason" shall mean a material adverse change in the nature or
scope of the employee's authorities, status, working conditions, duties or
responsibilities ,or a material reduction in salary, in benefits or in bonus
program inconsistent with reductions for similarly situated employees of the
Company or any Subsidiary of the Company or inconsistent with the Company's or
any such Subsidiary's past practices. A change in the employee's reporting
relationships shall not constitute "Good Reason."
"Holder" or "Holders" have the meaning as set forth in Section 3.1.
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"Incentive Plan" shall mean the U.S. Can Corporation 2000 Equity
Incentive Plan.
"Investment Price" shall mean an amount per Share equal to the price
per Share paid for such Share at the time of initial purchase thereof (subject
to appropriate adjustments for stock splits, recapitalizations and the like).
"Involuntary Transfer" shall have the meaning as set forth in Section
2.1(e).
"Major Default" shall mean the occurrence of any of the following
events: (a) the Company or any Subsidiary is, or has been, accruing any default
interest under the Credit Agreement or any other material loan or credit
agreement to which the Company or any Subsidiary is a party, or (b) the Company
or any Subsidiary shall (I) apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of itself
or of all or a substantial part of its property, (II) make a general assignment
for the benefit of its creditors, (III) commence a voluntary case under the
Federal Bankruptcy Code (as now or hereafter in effect), (IV) file a petition
seeking to take advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, liquidation or composition or readjustment of debts,
or (V) fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under the
Federal Bankruptcy Code.
"Management Representatives" shall have the meaning as set forth in
Section 2.6(a).
"Management Stockholders" shall mean (i) those Persons listed as the
Management Stockholders on the Schedule and (ii) their Permitted Transferees
(other than the Company).
"Merger Agreement" shall have the meaning as set forth in the recitals.
"Mid-term Applicable Federal Rate" shall mean the mid-term applicable
federal rate as defined in Section 1274 of the Code.
"New Securities" shall have the meaning as set forth in Section 2.7(b).
"Offer Price" shall have the meaning as set forth in Section 2.1(a).
"Offered Shares" shall have the meaning as set forth in Section 2.1(a).
"Options" shall mean Performance Options and Time Options.
"Other Stockholders" shall mean (i) those Persons listed as the Other
Stockholders on the Schedule, (ii) their Permitted Transferees (other than the
Company) and (iii) those Persons described in Section 4.12(iii).
"Participating Offeree" shall have the meaning as set forth in Section
2.5(a).
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"Participation Notice" shall have the meaning as set forth in Section
2.5(a).
"Participation Securities" shall have the meaning as set forth in
Section 2.5(a).
"Performance Options" shall mean, collectively, the options granted to
certain Management Stockholders under the Incentive Plan to purchase shares of
Common Stock, the number of earned and vested options of which is subject to the
attainment of certain targets set forth in the Incentive Plan and the option
certificates issued pursuant thereto.
"Performance Vested Equity" shall mean the Common Stock purchased by
Management Stockholders the value of which, for certain purposes of this
Agreement, is subject to the attainment of certain targets set forth in the
Subscription Agreement(s) pursuant to which it is issued.
"Permitted Transfer" shall mean:
(i) a Transfer of Shares by any Stockholder who is a natural
person to (a) such Stockholder's spouse, children (including legally
adopted children and stepchildren), spouses of children, grandchildren,
spouses of grandchildren, parents or siblings; (b) a trust for the
benefit of the Stockholder and/or any of the Persons described in
clause (a); or (c) a limited partnership or limited liability company
whose sole partners or members, as the case may be, are the Stockholder
and/or any of the Persons described in clause (a) or clause (b);
PROVIDED, that in any of clauses (a), (b) or (c), the Stockholder
transferring such Shares retains exclusive power to exercise all rights
under this Agreement.
(ii) a Transfer of Shares by any Stockholder to the Company;
(iii) a Transfer of Shares by a Stockholder upon death or
incapacity to such Stockholder's estate, executors, administrators and
personal representatives, and then to such Stockholder's legal
representatives, heirs or legatees (whether or not such recipients are
a spouse, children, spouses of children, grandchildren, spouses of
grandchildren, parents or siblings of such Stockholder); PROVIDED that,
in the case of a Management Stockholder whose Shares were subject to
the provisions of Section 2.2 immediately prior to such Management
Stockholder's death, the Company has not exercised its Call Option with
respect to such Shares under Section 2.2;
(iv) a Transfer of Shares (a) by the initial Berkshire
Stockholders to any Affiliate of Berkshire Partners LLC or any of the
employees, partners, members or Affiliates of such Berkshire
Stockholder or any such Affiliate, or (b) between any Berkshire
Stockholders;
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(v) a Transfer of Shares (a) by a member of the Scarsdale Group
to any other member of the Scarsdale Group, or (b) from any Stockholder
which is not a natural person to any Affiliate of such Stockholder; and
(vi) A Transfer of Shares by the Squam Stockholder to any of its
Affiliates or any of the employees, partners or members of the Squam
Stockholder or any such Affiliate.
PROVIDED, HOWEVER, that Performance Options and Time Options may only be
transferred in accordance with the terms of the Incentive Plan; and PROVIDED,
FURTHER, that no Permitted Transfer shall be effective unless and until the
transferee of the Shares, Performance Options or Time Options so transferred
complies with Section 4.12 including without limitation, executing and
delivering to the Company a counterpart of this Agreement and agreeing to be
bound hereunder in the same manner and to the same extent as the Stockholder
from whom the Shares, Performance Options or Time Options were transferred.
Except in the case of a Permitted Transfer pursuant to clause (ii) above, from
and after the date on which a Permitted Transfer becomes effective, the
Permitted Transferee of the Shares, Performance Options or Time Options so
transferred shall have the same rights, and shall be bound by the same
obligations, under this Agreement as the transferor of such Shares, Performance
Options or Time Options and shall be deemed for all purposes hereunder (i) a
"Berkshire Stockholder" in the case of a Permitted Transfer from a Berkshire
Stockholder, (ii) a "Management Stockholder" in the case of a Permitted Transfer
from a Management Stockholder or (iii) an "Other Stockholder" in the case of a
Permitted Transfer from an Other Stockholder. No Permitted Transfer shall
conflict with or result in any violation of a judgment, order, decree, statute,
law, ordinance, rule or regulation.
"Permitted Transferee" shall mean any Person who shall have acquired
and who shall hold Shares, Performance Options or Time Options pursuant to a
Permitted Transfer.
"Person" shall mean any individual, partnership, corporation,
association, limited liability company, trust, joint venture, unincorporated
organization or entity, or any government, governmental department or agency or
political subdivision thereof.
"Preferred Stock" shall mean the Company's preferred stock, par value
$.01 per share, that the Company may be authorized to issue from time to time,
any other securities of the Company into which such Preferred Stock may
hereafter be changed or for which such Preferred Stock may be exchanged after
giving effect to the terms of such change or exchange (by way of reorganization,
recapitalization, merger, consolidation or otherwise) and shall also include any
preferred stock of the Company hereafter authorized.
"Proportionate Share" shall have the meaning as set forth in Section
2.1(a)
"Proprietary Information" shall have the meaning as set forth in
Section 2.8.
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"Public Offering" shall mean the completion of a sale of Common Stock
pursuant to a registration statement which has become effective under the 1933
Act (excluding registration statements on Form S-4, S-8 or similar limited
purpose forms), in which the Common Stock shall be listed and traded on a
national exchange or on the NASDAQ National Market System.
"Put Event" shall have the meaning as set forth in Section 2.3(a).
"Put Notice" shall have the meaning as set forth in Section 2.3(a).
"Put Option" shall have the meaning as set forth in Section 2.3(a).
"Put Price" shall have the meaning as set forth in Section 2.3(b).
"Put Securities" shall mean all of (i) the Shares, (ii) vested Time
Options, (iii) vested and earned Performance Options and (iv) if the
Determination Date has not yet occurred, vested and unearned Performance
Options, in each case which are owned by the Management Stockholder exercising
the Put Option or a Permitted Transferee of the Management Stockholder
exercising the Put Option on the date of a Put Event.
"Register," "registered" and "registration" shall have the meaning as
set forth in Section 3.1.
"Registrable Securities" shall mean (i) all shares of Common Stock held
by any Stockholder, provided that in the case of Time Vested Equity, such shares
of Common Stock shall be Registrable Securities solely to the extent vested and
in the case of Performance Vested Equity, such shares of Common Stock shall be
Registrable Securities solely to the extent vested and earned, (ii) all shares
of Common Stock issuable upon the exercise of Performance Options and Time
Options in each case, to the extent exercisable, held by any Stockholder, and
(iii) any other common equity securities of the Company issued in exchange for,
upon a reclassification of, or in a distribution with respect to, such Common
Stock. As to any particular Registrable Securities, such securities shall cease
to be Registrable Securities when (a) a registration statement (other than a
registration statement on Form S-8) with respect to the sale of such securities
shall have become effective under the 1933 Act and such securities shall have
been disposed of in accordance with such registration statement, (b) a
registration statement on Form S-8 with respect to such securities shall have
become effective under the 1933 Act, or (c) such securities shall have been sold
under Rule 144 (or any successor provision) under the 1933 Act and such
securities may be resold by the Holder thereof without registration under the
1933 Act.
"Sale Request" shall have the meaning as set forth in Section 2.4(a).
"Salomon Smith Barney Group" shall mean Salomon Smith Barney Inc. and
its Affiliates.
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"Scarsdale Group" shall mean (i) those Persons listed as the Scarsdale
Group on the Schedule and (ii) their Permitted Transferees (other than the
Company).
"Schedule" shall refer to the Schedule of Stockholders attached hereto
as Exhibit A, as amended from time to time.
"SEC" shall mean the United States Securities and Exchange Commission.
"Seller" shall have the meaning as set forth in Section 2.4(a).
"Shares" shall mean (i) shares of Common Stock held by Stockholders
from time to time, (ii) shares of Preferred Stock held by Stockholders from time
to time, or (iii) securities of the Company issued in exchange for, upon
reclassification of, or as a distribution in respect of, any of the foregoing.
"Squam Stockholder" shall mean Squam Lake Investors IV, L.P. and its
Permitted Transferees (other than the Company).
"Stockholder Offeree" shall have the meaning as set forth in Section
2.1(a).
"Stockholder Offeror" shall have the meaning as set forth in Section
2.1(a).
"Stockholders" shall mean, collectively, the Berkshire Stockholders,
the Management Stockholders and the Other Stockholders.
"Subscription Agreements" shall mean those subscription agreements
dated as of October 4, 2000 pursuant to which certain Management Stockholders
purchased Time Vested Equity and Performance Vested Equity.
"Subsidiary" with respect to any entity (the "parent") shall mean any
corporation, company, firm, association or trust of which such parent, at the
time in respect of which such term is used, (i) owns directly or indirectly more
than fifty percent (50%) of the equity or beneficial interest, on a consolidated
basis, or (ii) owns directly or controls with power to vote, directly or
indirectly through one or more Subsidiaries, shares of the equity or beneficial
interest having the power to elect more than fifty percent (50%) of the
directors, trustees, managers or other officials having powers analogous to that
of directors of a corporation. Unless otherwise specifically indicated, when
used herein the term Subsidiary shall refer to a direct or indirect Subsidiary
of the Company.
"Supermajority Vote" shall mean an affirmative vote of eighty percent
(80%) of the Common Stock.
"Take Along Group" shall have the meaning as set forth in Section
2.4(a).
"Third Party" shall mean any Person other than the Company.
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"Time Options" shall mean, collectively, the time vested options,
granted to certain Management Stockholders under the Incentive Plan, to purchase
shares of Common Stock on the terms set forth therein and in the certificates
issued pursuant thereto.
"Time Vested Equity" shall mean the Common Stock purchased by
Management Stockholders the value of which, for certain purposes of this
Agreement, is subject to the vesting restrictions set forth in the Subscription
Agreement(s) pursuant to which it is issued.
"Transfer" shall mean to transfer, sell, assign, pledge, hypothecate,
give, create a security interest in or lien on, place in trust (voting or
otherwise), assign or in any other way encumber or dispose of, directly or
indirectly and whether or not by operation of law or for value, any Shares,
Performance Options or Time Options.
"Transfer Notice" shall have the meaning as set forth in Section
2.1(a).
"Transferor" shall have the meaning as set forth in Section 2.5(a).
"Transferring Stockholder" shall have the meaning as set forth in
Section 2.1(c).
"vested" shall mean, when used in connection with Time Vested Equity,
Performance Vested Equity, Time Options or Performance Options, as the case may
be, that such Time Vested Equity, Performance Vested Equity, Time Options or
Performance Options have vested under the terms of the relevant Subscription
Agreement(s) or the Incentive Plan and the certificates issued pursuant thereto,
as the case may be.
"Voluntary Termination" shall mean any voluntary termination of
employment with the Company or a Subsidiary of the Company by a Management
Stockholder, except as otherwise specified in an effective written agreement, if
any, between the Company and/or one of its Subsidiaries and such Management
Stockholder and except for Good Reason. The term Voluntary Termination shall not
include termination of employment due to death, Disability or retirement in
accordance with Company policy.
ARTICLE 2
COVENANTS AND CONDITIONS
Subject to the provisions of Section 4.7 hereof relating to the
termination of certain provisions of this Agreement, the following covenants and
conditions shall apply.
2.1. RESTRICTIONS ON TRANSFERS; RIGHTS OF FIRST REFUSAL. No Stockholder
may Transfer all or any of the Shares owned by such Stockholder to any Person
other than (i) a Permitted Transferee, (ii) pursuant to Section 2.2 or 2.3,
(iii) pursuant to Section 2.4 by any Take Along Group which has delivered a
Sales Request under Section 2.4 and by any other Stockholder in accordance with
such Sales Request, (iv) after the third anniversary of the date hereof, in
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accordance with the following provisions of this Article II, and (v) by the
Salomon Smith Barney Group prior to the third anniversary of the date hereof,
solely to the extent such Transfer is required of the Salomon Smith Barney Group
by any Third Party regulatory body and provided that such Transfer is made in
accordance with the following provisions of this Article II. Any attempted
Transfer of Shares not permitted by this Section 2.1 shall be null and void, and
the Company shall not in any way give effect to such nonpermissible Transfer.
Any attempted Transfer of Performance Options or Time Options not permitted by
the Incentive Plan shall be null and void, and the Company shall not in any way
give effect to such nonpermissible Transfer.
(a) Rights of First Refusal on Transfers of Shares.
(i) No Stockholder may Transfer its Shares to a Third Party
(other than those Transfers described in clause (vii) of this
Section 2.1(a)) other than in a transaction in which the only
consideration is cash. If at any time a Stockholder receives, or
otherwise negotiates with an unaffiliated Third Party, a written,
bona fide offer to purchase all or any of such Stockholder's
Shares for cash and such Stockholder (each, a "Stockholder
Offeror") desires to Transfer such Shares in accordance with such
offer, such Stockholder Offeror shall give notice of such offer
(the "Transfer Notice") to the Company and all other Stockholders
(such other Stockholders being hereafter referred to as the
"Stockholder Offerees"). The Transfer Notice shall state the
terms and conditions of such offer, including the name of the
prospective purchaser, the proposed purchase price per share of
such Shares (the "Offer Price"), payment terms, the type of
disposition and the number of such Shares to be transferred (the
"Offered Shares").
(ii) For a period of twenty (20) days after receipt of the
Transfer Notice (the "Company Option Period"), the Company may,
by notice in writing to the Stockholder Offeror delivering such
Transfer Notice, elect in writing to purchase any or all of the
Offered Shares at the Offer Price.
(iii) If the Company does not elect to purchase any of the
Offered Shares, or exercises such right only with respect to a
portion of such Offered Shares, then for a period of twenty (20)
days commencing on the earlier of (a) the date, if any, that the
Stockholder Offeror notifies the Stockholder Offerees in writing
that the Company has determined either not to exercise such right
of purchase or to exercise such right only with respect to a
portion of the Offered Shares, and (b) the expiration of the
Company Option Period, the Stockholder Offerees shall have the
right to purchase all or any portion of such Offered Shares not
so elected to be purchased by the Company, at the Offer Price.
The specific number of such Offered Shares remaining after the
Company has exercised its right pursuant to clause (ii) to which
each Stockholder Offeree shall be entitled to purchase shall be
determined on a PRO RATA basis in proportion to the respective
number of shares of Common Stock owned beneficially by each such
Stockholder Offeree as of the date of the Transfer Notice in
relation to the total number of
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shares of Common Stock owned beneficially by all Stockholder
Offerees (for each such Stockholder, its "Proportionate Share").
Each Stockholder Offeree shall also be entitled to indicate a
desire to purchase all or a portion of any Offered Shares
remaining after such PRO RATA allocation. Each Stockholder
Offeree shall be allocated the maximum amount of Offered Shares
set forth in such Stockholder Offeree's offer to purchase, unless
such allocation would result in the allocation of more securities
in the aggregate than are available for purchase by the
Stockholder Offerees, in which case such Offered Shares shall be
allocated among the Stockholder Offerees PRO RATA in accordance
with each such Stockholder Offeree's Proportionate Share;
PROVIDED, HOWEVER, that if the foregoing results in any
Stockholder Offeree being allocated more than the maximum amount
of Offered Shares specified in such Stockholder Offeree's offer
to purchase, such Stockholder Offeree will be allocated such
maximum amount and the excess will be allocated as provided in
this sentence (including this proviso).
(iv) If the Company and the Stockholder Offerees fail to
accept the offer as to all of the Offered Shares, the Stockholder
Offeror shall be permitted to sell, subject to Section 2.5, all
Offered Shares to the original transferee named in the Transfer
Notice upon the original terms set forth in the Transfer Notice,
within sixty (60) days (subject to any extension for any
regulatory approvals being diligently pursued) following
termination of the offer period granted to the Stockholder
Offerees. If such Transfer is not completed within such sixty
(60) day period, the Stockholder Offeror may not Transfer such
Offered Shares without again complying with this Section 2.1(a).
(v) The closing of the purchase and sale of any Offered
Shares to be acquired by the Company or the Stockholder Offerees
hereunder shall be held at the offices of the Company on such
dates and times as the parties may agree but in all events within
twenty (20) days following termination of the offer period
granted to the Stockholder Offerees. Five (5) days prior to the
closing of the purchase of any Offered Shares by the original
transferee named in the Transfer Notice, the Stockholder Offeror
shall notify the Company of the disposition of such Offered
Shares, including the name of each purchaser and the number of
Offered Shares to be bought by each such purchaser. The closing
of the purchase and sale of any Offered Shares to be acquired by
the original transferee named in the Transfer Notice shall be
held at the offices of the Company on such date and time as the
parties may agree but in all events within sixty (60) days
following termination of the offer period granted to the
Stockholder Offerees.
(vi) At any such closing, the Company, the Stockholder
Offerees or the original transferee named in the Transfer Notice,
as the case may be, shall deliver to the Stockholder Offeror
against delivery of certificates duly endorsed and stock powers
representing the Offered Shares being acquired by the Company,
the
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Stockholder Offerees or the original transferee named in the
Transfer Notice, as the case may be, the Offer Price per Share,
on the same terms as set forth in the Transfer Notice payable in
respect of the Offered Shares being purchased.
(vii) The provisions of this Section 2.1(a) shall not apply
to a Transfer of Shares which (A) is pursuant to Section 2.2,
(B) is pursuant to Section 2.3, (C) is pursuant to Section 2.4,
(D) is a Transfer by a Participating Offeree pursuant to
Section 2.5 or (E) is a Permitted Transfer.
(b) Any Shares Transferred pursuant to this Section 2.1 shall
remain subject to the Transfer restrictions of this Agreement and each
intended transferee pursuant to this Section shall execute and deliver
to the Company a counterpart of this Agreement, which shall evidence
such transferee's agreement that the Shares intended to be transferred
shall continue to be subject to this Agreement and that as to such
Shares the transferee shall be bound by the restrictions of this
Agreement as a Stockholder hereunder.
(c) Any Stockholder who is the subject of an Involuntary Transfer
(as defined below) (the "Transferring Stockholder"), shall notify the
Company and the other Stockholders in writing within ten (10) days of
such Involuntary Transfer (but the failure to give such notice shall
not affect the rights of the parties hereunder). Upon the receipt of
such notice by the Company and the other Stockholders, the Company and
the other Stockholders shall treat the Involuntary Transfer as an offer
under this Section 2.1. The Company and the other Stockholders shall
act upon the deemed offer under this Section within the time periods
and following the applicable procedures set forth in this Section 2.1,
with the date of the deemed offer being the later of the date of the
receipt by the Company and the other Stockholders of written notice
setting forth the existence of such an Involuntary Transfer and the
date of such Involuntary Transfer, such later date being the date of
notification for the purpose of this Section 2.1.
(d) The purchase price for the Shares being transferred as a
result of an Involuntary Transfer under Section 2.1(c) shall be the
Fair Market Value of such Shares.
(e) For purposes of this Agreement, the term "Involuntary
Transfer" shall mean any involuntary sale, transfer, encumbrance or
other disposition (other than as a result of the death of the
Stockholder) by or in which any Stockholder shall be deprived or
divested of any right, title or interest in or to any Shares, including
without limitation (I) any levy of execution, transfer in connection
with bankruptcy, reorganization, insolvency or similar proceedings,
(II) any transfer to a public officer or agency pursuant to any
abandoned property or escheat law, or (III) any transfer to the spouse
of an individual or change in the record holder made pursuant to
divorce proceedings. A Transfer pursuant to Section 2.2 shall not be
deemed to be an Involuntary Transfer.
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2.2. CALL BY THE COMPANY OF MANAGEMENT STOCKHOLDERS' EQUITY INTERESTS.
(a) Upon the termination of the employment of any Management
Stockholder by the Company or any of its Subsidiaries (a "Call Event")
for any reason, the Company or its designee shall have the right to
purchase (the "Call Option"), by delivery of a written notice (the
"Call Notice") to such terminated Management Stockholder no later than
sixty (60) days after the date of such Call Event, and such Management
Stockholder and such Management Stockholder's Permitted Transferees
(collectively, the "Call Group") shall be required to sell all (but not
less than all) of the Call Securities at a price per share (or per
option) equal to the Call Price (as defined below) of such Call
Securities as of the date the Call Notice is delivered.
(b) For purposes of this Section 2.2, the term "Call Price" shall
mean:
(i) with respect to vested Time Vested Equity, vested and
earned Performance Vested Equity and any Shares purchased upon
exercise of Time Options and Performance Options held by the Call
Group,
(A) in the event of a termination of a Management
Stockholder's employment (v) by the Management Stockholder
for Good Reason, (w) by the Company without Cause, (x) by
virtue of death or Disability, (y) upon retirement in
accordance with Company policy or (z) by Voluntary
Termination on or after the third anniversary of the date
hereof, the Fair Market Value of such Shares;
(B) in the event of a termination of a Management
Stockholder's employment by Voluntary Termination prior to
the third anniversary of the date hereof,
(x) for the Shares representing the product of the Employment
Ratio and the number of shares of vested Time Vested Equity,
vested and earned Performance Vested Equity and any Shares
purchased upon exercise of Time Options and Performance
Options held by the Call Group, the Fair Market Value of such
Shares,
and
(y) for the Shares representing the product of the Employment
Ratio Remainder and the number of shares of vested Time
Vested Equity, vested and earned Performance Vested Equity
and any Shares purchased upon exercise of Time Options and
Performance
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Options held by the Call Group, the lower of (I) the
Investment Price of such Shares, or (II) the Fair Market
Value of such Shares; and
(C) in the event of a termination of a Management
Stockholder's employment by the Company for Cause, the lower
of (x) the Investment Price of such Shares or (y) the Fair
Market Value of such Shares;
(ii) with respect to any Shares purchased by the Management
Stockholder which are not covered by clause (i) of this Section
2.2(b), the Fair Market Value of such Shares;
(iii) with respect to unvested Time Vested Equity, unvested
Performance Vested Equity, and vested but unearned Performance
Vested Equity (if the Determination Date has occurred), the lower
of (I) the Investment Price of such Shares, or (II) the Fair
Market Value of such Shares;
(iv) with respect to vested Performance Vested Equity which
has been called pursuant to this section prior to a Determination
Date (so it is not known how many, if any, of such shares of
vested Performance Vested Equity will be earned),
(A) in the event of a termination of a Management
Stockholder's employment (v) by the Management Stockholder
for Good Reason, (w) by the Company without Cause, (x) by
virtue of death or Disability, (y) upon retirement in
accordance with Company policy or (z) by Voluntary
Termination on or after the third anniversary of the date
hereof, (I) the lower of (i) the Investment Price of such
Shares, or (ii) the Fair Market Value of such Shares plus
(II) a Contingent Equity Company Note;
(B) in the event of a termination of a Management
Stockholder's employment by Voluntary Termination prior to
the third anniversary of the date hereof,
(x) for the Shares representing the product of the Employment
Ratio and the number of shares of vested Performance Vested
Equity which have not been earned prior to the Call Event,
(I) the lower of (i) the Investment Price of such Shares, or
(ii) the Fair Market Value of such Shares plus (II) a
Contingent Equity Company Note;
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and
(y) for the Shares representing the product of the Employment
Ratio Remainder and the number of shares of vested
Performance Vested Equity which have not been earned prior to
the Call Event, (I) the lower of (i) the Investment Price of
such Shares, or (ii) the Fair Market Value of such Shares;
and
(C) in the event of a termination of a Management
Stockholder's employment by the Company for Cause, the lower
of (x) the Investment Price of such Shares or (y) the Fair
Market Value of such Shares;
(v) with respect to any vested Time Options, the difference
between (x) the Call Price for the Shares underlying such Time
Options (calculated as if the Shares underlying such Time Options
were outstanding and had been called pursuant to this Section 2.2
and therefore calculated in accordance with the procedures set
forth in clause 2.2(b)(i) above) minus (y) the exercise price of
such vested Time Options; PROVIDED, that such difference shall
not be less than zero;
(vi) with respect to any vested and earned Performance
Options, the difference between (x) the Call Price for the Shares
underlying such Performance Options (calculated as if the Shares
underlying such Performance Options were outstanding and had been
called pursuant to this Section 2.2 and therefore calculated in
accordance with the procedures set forth in clause 2.2(b)(i)
above) minus (y) the exercise price of such vested and earned
Performance Options; PROVIDED, that such difference shall not be
less than zero; and
(vii) with respect to any vested Performance Options which
have been called pursuant to this section prior to a
Determination Date (so it is not known how many, if any, of such
Performance Options will be earned),
(A) in the event of a termination of a Management
Stockholder's employment (v) by the Management Stockholder
for Good Reason, (w) by the Company without Cause, (x) by
virtue of death or Disability, (y) upon retirement in
accordance with Company policy or (z) by Voluntary
Termination on or after the third anniversary of the date
hereof, a Contingent Option Company Note; and
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(B) in the event of a termination of a Management
Stockholder's employment by Voluntary Termination prior to
the third anniversary of the date hereof, (x) for the vested
Performance Options representing the product of the
Employment Ratio and the number of vested Performance Options
which have not been earned prior to the Call Event, a
Contingent Option Company Note (calculated separately for
each group of vested Performance Options with different grant
dates) and (y) the remainder of the vested Performance
Options shall automatically expire.
(c) The closing of any purchase of Call Securities by the Company
pursuant to Section 2.2(a) shall take place at the principal office of
the Company no later than the 150th day after the Call Event. At such
closing, the Company shall deliver to the Call Group consideration in
an amount equal to the aggregate Call Price payable in respect of such
Call Securities against delivery of (i) original stock certificates and
stock powers duly endorsed in favor of the Company representing the
Call Securities, and (ii) an executed agreement, in form reasonably
satisfactory to the Company, evidencing the cancellation of any vested
Time Options and vested Performance Options purchased at such closing.
The Company shall pay the Call Price by paying the Call Group in cash,
or, as applicable, a Contingent Company Note; PROVIDED, HOWEVER, that
in the event that any such cash payment would cause the Company or any
Subsidiary to be in violation of applicable law or in default under or
otherwise in violation of the terms of any material loan or credit
agreement to which the Company or any of its Subsidiaries is a party (a
"Default"), the Company shall pay such cash portion of the Call Price
by issuing a subordinated promissory note in a principal amount equal
to the cash portion of the purchase price (the "Company Note"). The
principal of such note will be due and payable in five equal annual
installments, the first such installment becoming due and payable on
the first anniversary of the issuance of such note, and interest will
accrue thereon at a rate equal to the Mid-term Applicable Federal Rate
plus three percent (3%) from the date of issuance of the Company Note
and will be payable quarterly in arrears. Such Company Note may be
prepaid by the Company in whole at any time or in part from time to
time without premium or penalty and shall otherwise be in the form of
Exhibit B hereto. Notwithstanding anything to the contrary in this
Agreement, the Company shall not be obligated to make any cash payment
pursuant to this Section 2.2(c) or any cash payment of principal or
interest due under a Company Note if such payment would cause a
Default. In the event the Company cannot make any cash payment under
this Section 2.2(c) or the cash payments of principal and interest due
under a Company Note because it is in Default or would be in Default by
virtue of such payments, the Company will undertake to make such
payments at such time as the Company is no longer in, or would no
longer be by virtue of such payments in, Default; PROVIDED, HOWEVER,
(i) if a Change in Control has occurred, or (ii) if the Company or any
Subsidiary shall (A) apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator
of itself or of all or a substantial
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part of its property, (B) make a general assignment for the benefit of
its creditors, (C) commence a voluntary case under the Federal
Bankruptcy Code (as now or hereafter in effect), (D) file a petition
seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding-up, liquidation or composition or
readjustment of debts, or (E) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Federal Bankruptcy Code,
any such Company Note shall be due and payable and the Company shall be
obligated to make all payments due under the Company Note.
(d) Notwithstanding anything set forth in this Section 2.2 to the
contrary, prior to the exercise by the Company of its Call Option to
purchase Call Securities pursuant to this Section 2.2, the Board of
Directors of the Company may designate one or more new or existing
employees of the Company or any Subsidiary (individually a "Designated
Employee" and collectively, the "Designated Employees") or another
Stockholder who shall have the right, but not the obligation, to
exercise the Call Option and to acquire, in lieu of the Company, some
or all (as determined by the Company) of the Call Securities that the
Company is entitled to purchase from the Call Group hereunder, on the
same terms and conditions as set forth in Section 2.2(c) which apply to
the purchase of Call Securities by the Company, except all payments
pursuant to this Section 2.2(d) shall be made in immediately available
funds or by certified or cashier's check, and shall not be payable in
the form of a note of any kind. In no event shall the Company designate
to any Person its call right with respect to any portion of the Call
Securities payable in the form of a Contingent Option Company Note or a
Contingent Equity Company Note. Concurrently with any such purchase of
Call Securities by any such Designated Employee, such Designated
Employee shall execute a counterpart of this Agreement, whereupon such
Designated Employee shall be deemed a "Management Stockholder" and
shall have the same rights and be bound by the same obligations as the
Management Stockholders hereunder.
2.3. MANAGEMENT STOCKHOLDER PUT.
(a) Upon the termination of the employment of any Management
Stockholder with the Company or any of its Subsidiaries (a "Put Event")
by virtue of death or Disability or by virtue of retirement in
accordance with Company policy, then such Management Stockholder (and
each Permitted Transferee of such Management Stockholder who has been
transferred Shares pursuant to this Agreement from such Management
Stockholder) shall have the right to sell (the "Put Option"), by
delivery of a written notice (the "Put Notice") to the Company no later
than sixty (60) days after the date of such Put Event, and the Company
shall be required to purchase all (but not less than all) of the Put
Securities at a price per share equal to the Put Price (as defined
below) of such Put Securities as of the date the Put Notice is
delivered.
(b) For purposes of this Section 2.3, the term "Put Price" shall
mean
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(i) with respect to vested Time Vested Equity, vested and
earned Performance Vested Equity and any other Shares held by a
Management Stockholder or his Permitted Transferees, the Fair
Market Value of such Shares;
(ii) with respect to unvested Time Vested Equity, unvested
Performance Vested Equity, and vested but unearned Performance
Vested Equity (if the Determination Date has occurred), the lower
of (I) the Investment Price of such Shares, or (II) the Fair
Market Value of such Shares;
(iii) with respect to vested Performance Vested Equity which
has been put pursuant to this section prior to a Determination
Date (so it is not known how many, if any, of such shares of
vested Performance Vested Equity will be earned), (x) the lower
of (I) the Investment Price of such Shares, or (II) the Fair
Market Value of such Shares plus (y) a Contingent Equity Company
Note;
(iv) with respect to any vested Time Options, the difference
between (x) the Put Price for the Shares underlying such Time
Options (calculated as if the Shares underlying such Time Options
were outstanding and had been put pursuant to this Section 2.3
and therefore calculated in accordance with the procedures set
forth in clause (i) above) minus (y) the exercise price of such
vested Time Options; PROVIDED, that such difference shall not be
less than zero;
(v) with respect to any vested and earned Performance
Options, the difference between (x) the Put Price for the Shares
underlying such Performance Options (calculated as if the Shares
underlying such Performance Options were outstanding and had been
put pursuant to this Section 2.3 and therefore calculated in
accordance with the procedures set forth in clause (i) above)
minus (y) the exercise price of such vested and earned
Performance Options; PROVIDED, that such difference shall not be
less than zero; and
(vi) with respect to any vested Performance Options which
have been put pursuant to this section prior to a Determination
Date (so it is not known how many, if any, of such Performance
Options will be earned), a Contingent Option Company Note.
(c) The closing of any purchase of Put Securities by the Company
pursuant to Section 2.3(a) shall take place at the principal office of
the Company no later than the 150th day after the Put Event. At such
closing, the Company shall deliver to the Management Stockholder (and
his or her Permitted Transferees, as the case may be)
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exercising the Put Option consideration in an amount equal to the
aggregate Put Price payable in respect of such Put Securities against
delivery of (i) original stock certificates and stock powers duly
endorsed in favor of the Company representing the Put Securities, and
(ii) an executed agreement, in form reasonably satisfactory to the
Company, evidencing the cancellation of any vested Time Options and
vested Performance Options purchased at such closing. The Company shall
pay the Put Price by paying the Management Stockholder (and his or her
Permitted Transferees, as the case may be) in cash, or, as applicable,
a Contingent Company Note; PROVIDED, HOWEVER, that in the event that
any such cash payment would cause the Company or any Subsidiary to be
in Default, the Company shall pay such cash portion of the Put Price by
issuing a Company Note. The principal of such Company Note will be due
and payable in five equal annual installments, the first such
installment becoming due and payable on the first anniversary of the
issuance of such note, and interest will accrue thereon at a rate equal
to the Mid-term Applicable Federal Rate plus three percent (3%) from
the date of issuance of the Company Note and will be payable quarterly
in arrears. Such Company Note may be prepaid by the Company in whole at
any time or in part from time to time without premium or penalty and
shall otherwise be in the form of Exhibit B hereto. Notwithstanding
anything to the contrary in this Agreement, the Company shall not be
obligated to make any cash payment pursuant to this Section 2.3(c) or
any cash payment of principal or interest due under a Company Note if
such cash payment would cause a Default. In the event the Company
cannot make any cash payment under this Section 2.3(c) or the cash
payments of principal and interest due under a Company Note because it
is in Default or would be in Default by virtue of such payments, the
Company will undertake to make such payments at such time as the
Company is no longer in, or would no longer be by virtue of such
payments in, Default; PROVIDED, HOWEVER, (i) if a Change in Control has
occurred, or (ii) if the Company or any Subsidiary shall (A) apply for
or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or of all or a
substantial part of its property, (B) make a general assignment for the
benefit of its creditors, (C) commence a voluntary case under the
Federal Bankruptcy Code (as now or hereafter in effect), (D) file a
petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up, liquidation or
composition or readjustment of debts, or (E) fail to controvert in a
timely and appropriate manner, or acquiesce in writing to, any petition
filed against it in an involuntary case under the Federal Bankruptcy
Code, any such Company Note shall be due and payable and the Company
shall be obligated to make all payments due under the Company Note. In
the event the Company intends to issue to the Management Stockholder
(and his or her Permitted Transferees, as the case may be) a Company
Note, it will so notify the Management Stockholder (and his or her
Permitted Transferees, as the case may be) at least 10 days before such
issuance and the Management Stockholder (and his or her Permitted
Transferees, as the case may be) may, upon notice that the Company
intends to issue such Company Note (but in no event after such Company
Note is issued), withdraw the exercise of his or her put.
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(d) Notwithstanding anything set forth in this Section 2.3 to the
contrary, following the exercise by the Management Stockholder (and his
or her Permitted Transferees, as the case may be) of his or her Put
Option to sell Put Securities pursuant to this Section 2.3, the Board
of Directors of the Company may designate one or more Designated
Employees or another Stockholder who shall have the right, but not the
obligation, to purchase, in lieu of the Company, some or all (as
determined by the Company) of the Put Securities that the Company is
required to purchase from the Management Stockholder hereunder, on the
same terms and conditions as set forth in Section 2.3(c) which apply to
the purchase of Put Securities by the Company, except all payments
pursuant to this Section 2.3(d) shall be made in immediately available
funds or by certified or cashier's check, and shall not be payable in
the form of a note of any kind. In no event shall the Company designate
to any Person its obligation with respect to any portion of the Put
Securities payable in the form of a Contingent Option Company Note or a
Contingent Equity Company Note. Concurrently with any such purchase of
Put Securities by any such Designated Employee, such Designated
Employee shall execute a counterpart of this Agreement, whereupon such
Designated Employee shall be deemed a "Management Stockholder" and
shall have the same rights and be bound by the same obligations as the
Management Stockholders hereunder.
2.4. TAKE ALONG.
(a) If at any time, any of the Stockholders constituting more
than a seventy five percent (75%) of the Common Stock Equivalents,
individually or acting as a group (such Stockholders, as applicable,
being referred to herein as the "Take Along Group") elect to
consummate, or cause the Company to consummate, a Company Sale to a
Third Party which is not an Affiliate of any Stockholder included in
the Take Along Group (in which Company Sale, outstanding shares of the
Company's Preferred Stock will not entitle the holders thereof to
receive any more than the liquidation preference as provided by the
terms thereof), then upon twenty (20) days' written notice by the Take
Along Group to each other Stockholder, which notice shall set forth the
terms and conditions of such proposed Company Sale, including the name
of the prospective transferee, the number of shares of Common Stock and
Common Stock Equivalents proposed to be sold by the Take Along Group in
the Company Sale, the consideration to be received by the Take Along
Group and the proposed time and place of closing (such notice being
referred to as the "Sale Request"), each other Stockholder (each, a
"Seller"), in the event the Company Sale is consummated, shall be
obligated to consummate, consent to and raise no objection to the
proposed Company Sale and take all other actions reasonably necessary
or desirable to consummate the proposed Company Sale on the terms
proposed by the Take Along Group as set forth in the Sale Request.
Without limiting the generality of the foregoing, (i) if the Company
Sale is structured as a merger or consolidation, each Seller will vote
or cause to be voted all Shares that he holds or with respect to which
he has the power to direct the voting and which he is entitled to vote
on such proposed Company Sale in favor of such proposed Company Sale
and will waive all appraisal and dissenters rights and hereby grants a
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proxy in favor of the Take Along Group to vote the Seller's Shares in
accordance with this Section 2.4(a) and (ii) if the Company Sale is
structured as a sale or redemption of Common Stock, each Seller will
agree to sell his PRO RATA portion of Common Stock Equivalents
(including his PRO RATA portion of Time Options and Performance Options
which would become Common Stock Equivalents by reason of the Company
Sale) being sold in the Company Sale on the same terms and conditions
(subject to the last sentence of this Section 2.4(a)) as the Take Along
Group. A Stockholder's PRO RATA portion, for purposes of this Section
2.4(a), is the product of (i) a fraction, the numerator of which is the
number of outstanding Common Stock Equivalents which such Stockholder
then owns and the denominator of which is the total number of such
Common Stock Equivalents then actually outstanding and (ii) the total
number of Common Stock Equivalents being sold in the Company Sale. Each
proxy granted above in this Section 2.4(a) is irrevocable, coupled with
an interest and shall survive until the expiration of the provisions of
this Section 2.4(a). If required, each Seller shall (i) deliver
certificates for all of its Shares being Transferred pursuant to this
Section 2.4(a) at the closing of the proposed Transfer, free and clear
of all claims, liens and encumbrances. The terms and conditions of any
sale pursuant to this Section 2.4(a) shall be the same as set forth in
the Sale Request; PROVIDED, HOWEVER, that in the case of Performance
Options and Time Options, the holders of such securities shall have the
opportunity to either (i) exercise such Performance Options and Time
Options (if such Performance Options or Time Options are exercisable or
would be exercisable upon consummation of the Company Sale) and
participate in such sale as holders of Common Stock issuable upon such
exercise, or (ii) upon the consummation of the sale, receive in
exchange for such Performance Options and Time Options the amount
determined by multiplying (1) the same amount of consideration per
share received by the Stockholders for which the Performance Option
or Time Option is exercisable less the exercise price or conversion
price per share of such Performance Option or Time Option by (2) the
number of shares of Common Stock represented by such Performance
Options and Time Options; and PROVIDED, FURTHER, that (i) if such
securities are, or upon consummation of the Company Sale would
be vested (in the case of Time Vested Equity) or vested and earned (in
the case of Performance Vested Equity), such vested Time Vested Equity
and vested and earned Performance Vested Equity shall participate in
such sale as all other shares of Common Stock, and (ii) if such
securities would not be vested (in the case of Time Vested Equity) or
vested and earned (in the case of Performance Vested Equity) upon
consummation of the Company Sale, holders of such unvested Time Vested
Equity and unvested or unearned Performance Vested Equity shall receive
in exchange for such Shares the lesser of (I) the Investment Price of
such Shares or (II) the price paid per share of Common Stock in the
Company Sale.
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(b) Each Stockholder, whether in his capacity as a Seller,
Stockholder, officer or director of the Company, or otherwise, shall
take or cause to be taken all commercially reasonable actions in order
expeditiously to consummate any Company Sale and any related
transactions, including, without limitation, executing, acknowledging
and delivering consents, assignments, waivers and other documents or
instruments as may be reasonably requested and otherwise cooperating
with the Take Along Group and any prospective buyer; PROVIDED, HOWEVER,
that Stockholders shall be obligated to become liable in respect of any
representations, warranties, covenants, indemnities or otherwise to the
Third Party solely to the extent provided in the immediately following
sentence. Without limiting the generality of the foregoing, each
Stockholder agrees to execute and deliver such agreements as may be
reasonably specified by the Take Along Group to which such Take Along
Group will also be party, including, without limitation, agreements to
(i) (1) make individual representations, warranties, covenants and
other agreements as to the unencumbered title to its Shares and the
power, authority and legal right to Transfer such Shares and the
absence of any Adverse Claim with respect to such Shares and (2) be
liable without limitation as to such representations, warranties,
covenants and other agreements and (ii) be liable (whether by purchase
price adjustment, indemnity payments or otherwise) in respect of
representations, warranties, covenants and agreements in respect of the
Company and its subsidiaries; PROVIDED, HOWEVER, that the aggregate
amount of liability described in this clause (ii) in connection with
any Company Sale shall not exceed the lesser of (I) such Stockholder's
PRO RATA portion of any such liability, to be determined in accordance
with such Stockholder's portion of the total value for his, her or its
Shares included in such Company Sale or (II) the proceeds to such
Stockholder in connection with such Company Sale.
2.5. COME ALONG. No Stockholder may Transfer Shares to a Third Party
who is not a Permitted Transferee without complying with the terms and
conditions set forth in this Section 2.5.
(a) On or after the third anniversary of the date hereof, any
Stockholder or group of Stockholders owning greater than four percent
(4%) of the outstanding shares of Common Stock, when desiring to
Transfer Shares (the "Transferor"), shall give not less than fifteen
(15) days prior written notice of such intended Transfer to each other
Stockholder and the Company. Such notice (which may be the same as the
Transfer Notice delivered pursuant to Section 2.1(a)) (the
"Participation Notice") shall set forth the terms and conditions of
such proposed Transfer, including the name of the prospective
transferee, the number of Shares proposed to be transferred (the
"Participation Securities") by the Transferor, the percentage of the
total number of shares of Common Stock and/or Preferred Stock, as the
case may be, held by the Transferor that the Participation Securities
constitutes of such class (the "Come Along Percentage"), the purchase
price per share of Common Stock and/or Preferred Stock proposed to be
paid therefor, the payment terms and type of transfer to be effectuated
and the proposed time and place of closing. Within fifteen (15) days
-26-
following the delivery of the Participation Notice by the Transferor to
each other Stockholder and to the Company, each other Stockholder
desiring to participate in such proposed Transfer (each, a
"Participating Offeree") shall, by notice in writing to the Transferor
and to the Company, have the opportunity and right to sell to the
purchasers in such proposed Transfer (upon the same terms and
conditions as the Transferor) up to that number of shares of Common
Stock and/or Preferred Stock, as the case may be, subject to the last
sentence of Section 2.5(c) below, as shall equal the product of (i) the
Come Along Percentage for the Common Stock and/or the Preferred Stock,
as the case may be, and (ii) the number of shares of Common Stock (in
the case of a Management Stockholder, vested Time Vested Equity and
vested and earned Performance Vested Equity and other Shares held by
such Management Stockholder) and/or Preferred Stock, as the case may
be, which will be owned by such Participating Offeree as of the
proposed date of closing set forth in the Participation Notice without
giving effect to the transfer contemplated hereby; PROVIDED, HOWEVER,
that for purposes of determining whether shares of Common Stock or
Options owned by a Management Stockholder will be vested and/or earned,
as the case may be, such determination will be made after giving effect
to the transfer contemplated hereby and the Board, in its reasonable
judgment, within five (5) business days after the Participation Notice
is delivered to the Company, will make a Board Participation
Determination for each Management Stockholder and notify such
Management Stockholder of such Board Participation Determination. No
Management Stockholder may participate in the proposed Transfer with
respect to any Shares or Options which may vest and/or be earned upon
consummation of the Transfer in excess of the Board Participation
Determination and notwithstanding the Board Participation
Determination, no Management Stockholder may sell or transfer in the
proposed Transfer any unvested Time Vested Equity or Time Options or
any unvested or unearned Performance Vested Equity or Performance
Options if such equity or options do not become vested and/or earned,
as the case may be, upon consummation of the proposed Transfer. The
Transferor shall attempt to obtain inclusion in the proposed Transfer
of the entire number of Shares which the Transferor and the
Participating Offerees desire to have included in the proposed
Transfer. In the event the Transferor shall be unable to obtain
the inclusion of such entire number of shares of Common Stock and/or
Preferred Stock, as the case may be, in the proposed Transfer, the
number of shares of Common Stock and/or Preferred Stock, as the case
may be, to be sold in the Proposed Transfer by each Participating
Offeree and the Transferor shall be determined in accordance with
Section 2.5(c) below. The terms and conditions of any sale pursuant
to this Section 2.5(a) shall be the same as set forth in the
Participation Notice, except as is provided in Section 2.5(c)
below and except that the actual date of the closing of any proposed
Transfer may change.
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(b) At the closing of any proposed Transfer in respect of which a
Participation Notice has been delivered, the Transferor, together with
all Participating Offerees, shall deliver to the proposed transferee
certificates evidencing the Shares to be sold thereto duly endorsed
with stock powers and shall receive in exchange therefor the
consideration to be paid or delivered by the proposed transferee in
respect of such Shares as described in the Participation Notice.
(c) The acceptance of each Participating Offeree shall be
irrevocable except as hereinafter provided, and each such Participating
Offeree shall be bound and obligated to sell, on the same terms and
conditions specified in the Participation Notice as the Transferor
(subject to all of the provisions of this Agreement), such number of
Shares as specified in such Participating Offeree's written commitment;
PROVIDED, HOWEVER, that in the case of Performance Options and Time
Options (for which the exercise price is less than the price per share
of Common Stock being paid in the Transfer), the holders of such
securities shall have the opportunity to either (i) exercise such
Performance Options and Time Options (if then exercisable) 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 the amount determined by
multiplying (1) the same amount of consideration per share of Common
Stock received by the other Stockholders less the exercise price per
share of such Performance Option and Time Option by (2) the number of
shares of Common Stock of such class represented by such Performance
Option or Time Option. In the event the Transferor shall be unable to
obtain the inclusion in the sale of all Shares which the Transferor and
each Participating Offeree desires to have included in the sale, the
number of Shares to be sold in the sale by the Transferor and each
Participating Offeree shall be reduced on a PRO RATA basis according to
the proportion which the number of Shares which each such party desires
to have included in the sale bears to the total number of Shares
desired by all such parties to have included in the sale; PROVIDED,
HOWEVER, in no event shall shares of Preferred Stock and Common Stock
be substituted for one another.
(d) The provisions of this Section 2.5 shall not in any way limit
or affect the restrictions placed on the Stockholders by Section 2.1
and shall not apply to (i) any Transfer to the Company or other
Stockholders pursuant to Section 2.1, (ii) any Transfer pursuant to
Section 2.2, (iii) any Transfer pursuant to Section 2.3, (iv) any
Transfer pursuant to Section 2.4, or (v) any Permitted Transfer.
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2.6. CORPORATE GOVERNANCE.
(a) Subject to Section 2.6(b), at each annual meeting of the
Stockholders and at each special meeting of the Stockholders called for
the purpose of electing directors of the Company, and at any time at
which Stockholders of the Company shall have the right to, or shall,
vote for directors of the Company, then, and in each event, the
Stockholders hereby agree to attend each meeting in person or by proxy
and hereby agree to vote Shares now owned or hereafter acquired by him,
her or it (whether at a meeting or by written consent in lieu thereof)
(i) to fix the number of members of the Board at up to nine (9), and
(ii) to elect and thereafter to continue in office as a director of the
Company the following: (a) so long as the Berkshire Stockholders hold
(I) at least five percent (5%) but less than twenty-five percent (25%)
of the Common Stock, one director or (II) at least twenty-five percent
(25%) of the Common Stock, two (2) directors, nominated by the
Berkshire Stockholders (who shall initially be Richard K. Lubin and
Carl Ferenbach) (collectively the "Berkshire Representatives"); (b) two
(2) directors nominated by the Management Stockholders (who shall
initially be Paul W. Jones and John L. Workman) (collectively, the
"Management Representatives"); (c) Louis Susman; (d) Ricardo Poma; (e)
Francisco Soler; and (f) up to two (2) directors who are not officers
or employees of the Company who shall be reasonably acceptable to the
other directors (such consent to appointment not to be unreasonably
withheld); PROVIDED, that in the event that both Ricardo Poma and
Francisco Soler cease to serve as members of the Board for any reason,
and so long as the Scarsdale Group shall hold at least five percent
(5%) of the Common Stock, the Scarsdale Group shall have the right to
nominate (by written designation signed by the holders of a majority of
shares of Common Stock owned by members of the Scarsdale Group) one (1)
director. As to the directors elected to the Board pursuant to this
Section 2.6(a) or Section 2.6(b), the following provisions shall apply:
(I) no Berkshire Representative may be removed without the consent of a
majority in interest of the Berkshire Stockholders, except in the event
of Director's Cause as determined in good faith by unanimous decision
of all directors other than the Berkshire Representatives, (II) no
Management Representative may be removed without the consent of a
majority in interest of the Management Stockholders, except in the
event of Director's Cause as determined in good faith by unanimous
decision of all directors other than the Management Representatives,
and (III) neither Ricardo Poma nor Francisco Soler may be removed
without the consent of a majority in interest of the Scarsdale Group,
except in the event of Director's Cause as determined in good faith by
unanimous decision of all directors other than Ricardo Poma and
Francisco Soler; PROVIDED, that in the event of a determination by the
Board pursuant to clause (I), (II) or (III) of this sentence to remove
a director, each Stockholder shall take all action as may be necessary
or appropriate, including without limitation, the voting of all Shares
owned by such Stockholder, to effect the removal of such director. Any
vacancy on the Board shall be filled by the designee of the
Stockholders who would be entitled to designate such director pursuant
to this Section 2.6(a) or Section 2.6(b), as the case may be, and if
there shall be no such designation right, such vacancy may be filled by
the remaining directors. Each Stockholder shall, upon receipt of notice
identifying such designee, take all action as may be necessary or
appropriate, including without limitation, the voting of all Shares
owned by such Stockholder, to elect the director so designated.
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(b) PROPORTIONAL REPRESENTATION. Upon a majority vote of the
holders of Common Stock, the composition of the directors constituting
the Board of Directors shall be changed so that after designating
directors in accordance with this Section 2.6(b), each of the Berkshire
Stockholders and the Management Stockholders shall have represented on
the Board that number of directors (rounded up to the nearest whole
number) represented by the percentage equal to (x) the number of shares
of Common Stock held by such stockholder group over (y) the total
number of shares of Common Stock held by all Stockholders (in the case
of Time Vested Equity and Performance Vested Equity, such percentage to
be calculated taking into account only vested Shares). Notwithstanding
the foregoing:
(i) If at or after the time of the election to change to
proportional representation pursuant to this Section 2.6(b) Louis
Susman would otherwise be entitled to serve on the Board of
Directors pursuant to Section 2.6(a), he shall remain as a
director pursuant to this Section 2.6(b).
(ii) If at or after the time of the election to change to
proportional representation pursuant to this Section 2.6(b), both
Ricardo Poma and Francisco Soler are serving on the Board of
Directors, at the option of the Scarsdale Group, either (A) the
Scarsdale Group shall have represented on the Board that number
of directors (rounded up to the nearest whole number) represented
by the percentage equal to (x) the number of shares of Common
Stock held by the Scarsdale Group over (y) the total number of
shares of Common Stock (in the case of Time Vested Equity and
Performance Vested Equity, taking into account only vested
Shares) held by all Stockholders; or (B) both Ricardo Poma and
Francisco Soler shall remain on the Board of Directors.
(iii) If at or after the time of the election to change to
proportional representation pursuant to this Section 2.6(b), only
one of (A) Ricardo Poma, (B) Francisco Soler or (C) the designee
of the Scarsdale Group pursuant to Section 2.6(a) if Ricardo Poma
and Francisco Soler both cease to serve on the Board of Directors
pursuant to Section 2.6(a), is serving on the Board of Directors,
at the option of the Scarsdale Group, either (A) the Scarsdale
Group shall have represented on the Board that number of
directors (rounded up to the nearest whole number) represented by
the percentage equal to (x) the number of shares of Common Stock
held by the Scarsdale Group over (y) the total number of shares
of Common Stock (in the case of Time Vested Equity and
Performance Vested Equity, taking into account only vested
Shares) held by all Stockholders; or (B) such person then serving
on the Board of Directors shall remain on the Board of Directors.
In the event that the size of the Board of Directors needs to be
increased in order to establish the foregoing representation, each
Stockholder shall take all action as may be
-30-
necessary or appropriate, including without limitation, the voting of
all Shares owned by such Stockholder, to effect the increase in the
size of the Board. Each Stockholder agrees that such Stockholder and
its Permitted Transferees shall take all action as may be necessary or
appropriate, including without limitation, the voting of all Shares
owned by them, to elect the directors so designated by the Stockholders
as set forth in this Section 2.6(b).
(c) SUBSIDIARIES; COMMITTEES. Unless the Board unanimously
determines otherwise, the board of directors of each Subsidiary of the
Company and the audit committee, the compensation committee and all
other authorized committees of the Board and of each Subsidiary's board
of directors shall be composed so that the representation thereon shall
be in the same proportion, as nearly as may be possible (subject to any
foreign law requirements, where applicable), as the representation of
such directors on the Board; PROVIDED, HOWEVER, that no Management
Representative shall sit on the audit committee or the compensation
committee.
(d) SUPERMAJORITY PROVISIONS. Without a prior Supermajority Vote
of the Stockholders, the Company shall not, and shall not permit any
Subsidiary to, effect any:
(i) merger or consolidation of the Company or any of its
Subsidiaries (except in the case of such transaction among the
Company and its Subsidiaries or among such Subsidiaries and
except where the holders of the capital stock of the surviving or
the resulting corporation immediately following such transaction
are the same as those of the Company immediately prior to the
transaction) or acquisition of all or substantially all of the
business of another entity;
(ii) amendment or repeal of its Certificate of Incorporation
or By-laws as now in effect;
(iii) sale, lease, transfer or other disposition of all or
any substantial portion of the properties or assets of the
Company or any of its Subsidiaries;
(iv) declaration or payment of any dividends or other
distributions to the Stockholders, including, but not limited to,
any dividend or other distribution by means of a redemption or
purchase of Common Stock or other securities held by the
Stockholder other than pursuant to Section 2.2, Section 2.3 or
any mandatory redemption provisions of the Preferred Stock;
(v) issuance or sale of any equity securities of the Company,
including, but not limited to, any public offering of securities
of the Company; PROVIDED, HOWEVER, that this restriction shall
not apply to the issuance of shares of Common Stock upon the
exercise of options or other securities issued pursuant to the
Incentive Plan;
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(vi) incurrence of any indebtedness in excess of indebtedness
permitted under the terms and conditions of the Credit Agreement
(or any credit agreement or loan documentation put in place as a
replacement or substitute for the Credit Agreement);
(vii) any refinancing of any indebtedness under the Credit
Agreement (or any credit agreement or loan documentation put in
place as a replacement or substitute for the Credit Agreement);
or
(viii) any financial restructuring in which Management
Stockholders are treated differently and adversely from other
holders of Common Stock.
PROVIDED, HOWEVER, that upon the occurrence of a Major Default, all actions
which previously required a Supermajority Vote pursuant to this Section 2.6
(other than pursuant to clause (viii)) shall be decided by a simple majority
vote of the Board as in effect at such time, or if required by law or otherwise,
by a simple majority vote of the Stockholders.
2.7. RIGHTS OF PARTICIPATION.
(a) RIGHTS OF PARTICIPATION. The Company hereby grants to each
Stockholder so long as it shall own any Shares, the right to purchase
up to a PRO RATA portion of New Securities (as defined in paragraph (b)
below) which the Company, from time to time, proposes to sell or issue
following the date hereof. A Stockholder's PRO RATA portion, for
purposes of this Section 2.7, is the product of (i) a fraction, the
numerator of which is the number of outstanding Common Stock
Equivalents which such Stockholder then owns and the denominator of
which is the total number of such Common Stock Equivalents then
actually outstanding, multiplied by (ii) the number of New Securities
the Company proposes to sell or issue.
(b) DEFINITION OF NEW SECURITIES. "New Securities" shall mean any
Common Stock or other equity securities of the Company whether now
authorized or not, any rights, options or warrants to purchase Common
Stock or other equity securities and any indebtedness or preferred
stock of the Company which is convertible into Common Stock or other
equity securities (or which is convertible into a security which is, in
turn, convertible into Common Stock or other equity securities);
PROVIDED, that the term "New Securities" does not include (i)
indebtedness of the Company which is not by its terms convertible into
Common Stock; (ii) Common Stock issued as a stock dividend to all
holders of Common Stock PRO RATA or upon any subdivision or combination
of shares of Common Stock; (iii) any employee or director stock options
approved by the Board of Directors; (iv) Common Stock issued in
exchange for the cancellation or retirement of
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any debt securities of the Company or in connection with any
restructuring or other financial workout of the Company; (v) Common
Stock or warrants to purchase Common Stock issued to non-Affiliates of
the Company as part of a bona fide debt offering of units comprised of
such Common Stock or warrants and a debt security of the Company; (vi)
Common Stock issued in connection with the acquisition of another
corporation or other entity by the Company by merger, purchase of
substantially all assets or other reorganization, PROVIDED, that upon
any such issuance, the Board shall consider equitable equity incentives
for the Management Stockholders in connection with such acquisition
taking into account the arrangements that would likely have been
effected if such acquisition had been part of the transactions
contemplated by the Merger Agreement, the time passed since the
consummation of the transactions contemplated by the Merger Agreement
and the changes in the Fair Market Value of the Common Stock since the
date of this Agreement; (vii) the issuance of Common Stock upon the
exercise or conversion of any rights, options or warrants to purchase
Common Stock; or (viii) Common Stock issuable in a Public Offering; and
PROVIDED, FURTHER, that if any "New Securities" include Common Stock
and other equity securities coupled as a package, "New Securities"
shall mean the package of securities and not each class of securities
individually.
(c) NOTICE FROM THE COMPANY. In the event the Company proposes to
issue New Securities, the Company shall give each Stockholder who has a
right of participation under this Section 2.7 written notice of such
proposal, describing the type of New Securities and the price and the
terms upon which the Company proposes to issue the same. For a period
of ten (10) business days following the delivery of such notice by the
Company, the Company shall be deemed to have irrevocably offered to
sell to each Stockholder its PRO RATA share of such New Securities for
the price and upon the terms specified in the notice. Each Stockholder
may exercise its rights of participation hereunder by giving written
notice to the Company and stating therein the quantity of New
Securities to be purchased. Each Stockholder shall also be entitled to
indicate a desire to purchase all or a portion of any New Securities
remaining after such PRO RATA allocation. If, as a result of such
oversubscription right, such oversubscriptions exceed the total number
of New Securities available in respect of such oversubscription right,
the oversubscribing Stockholders shall be cut back with respect to
their oversubscriptions on a PRO RATA basis or as they may otherwise
agree among themselves.
(d) SALE BY THE COMPANY. In the event that the Stockholders who
have a right of participation under this Section 2.7 fail to commit to
purchase all of such New Securities within said ten (10) business day
period, the Company shall have ninety (90) days thereafter to sell the
New Securities with respect to which the right of participation was not
exercised, at a price and upon terms no more favorable to the
purchasers thereof than specified in the Company's notice given
pursuant to Section 2.7(c).
(e) CLOSING. The closing for any such issuance shall take place
as proposed by the Company with respect to the New Securities to be
issued, at which closing the
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Company shall deliver certificates for the New Securities in the
respective names of the purchasing Stockholders against receipt of
payment therefor.
2.8. FINANCIAL INFORMATION. From and after the date hereof, each holder
of Common Stock and/or Preferred Stock shall be entitled to receive from the
Company, upon written request and if not otherwise publicly available, the
following information, if such information has been prepared by the Company for
any other purpose: (i) as soon as practicable following the end of each fiscal
quarter of the Company, unaudited quarterly financial reports and (ii) as soon
as practicable following the end of each fiscal year of the Company, audited
annual financial reports; PROVIDED, HOWEVER, that the terms of this Section 2.8
shall not apply to any holder of Common Stock or Preferred Stock when such
Person ceases to own any Common Stock or Preferred Stock.
2.9. CONFIDENTIALITY. Each Stockholder shall maintain the
confidentiality of any confidential and proprietary information of the Company
("Proprietary Information") using the same standard of care, but in no event
less than reasonable care, as it applies to its own confidential information,
except for any Proprietary Information which is publicly available or a matter
of public knowledge generally. Nothing herein shall prevent any Stockholder from
using Proprietary Information to enforce its rights under this Agreement or from
disclosing a summary of Proprietary Information to the partners of such
Stockholder as to the performance of the Company.
ARTICLE 3
REGISTRATION RIGHTS
3.1. GENERAL. For purposes of Article III: (a) the terms "register,"
"registered" and "registration" refer to a registration effected by preparing
and filing a registration statement in compliance with the 1933 Act and the
declaration or ordering of effectiveness of such registration statement; (b) the
term "Holder" means any Stockholder holding Registrable Securities; and (c) the
shares of Common Stock issuable upon the exercise of vested Time Options and
vested and earned Performance Options shall be deemed to be outstanding and held
by the holders of such vested Time Options and vested and earned Performance
Options.
3.2. DEMAND REGISTRATION INITIATED BY THE BERKSHIRE STOCKHOLDERS.
(a) Subject to paragraph (b) hereof, on or after the date on
which the Company has effected a Public Offering, if the Company shall
receive a written request (specifying that it is being made pursuant to
this Section 3.2) by or on behalf of Berkshire Stockholders holding an
aggregate of fifty percent (50%) or more of the Registrable Securities
held by the Berkshire Stockholders that the Company file a registration
statement under the 1933 Act, or a similar document pursuant to any
other statute then in effect corresponding to the 1933 Act, covering
the registration of at least the lesser of (i) $20 million of
Registrable Securities (determined based upon the Fair Market Value of
such Registrable Securities on the date of request), or (ii) one
hundred percent (100%)
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of the Registrable Securities then held by the Berkshire Stockholders,
then the Company shall promptly notify all other Holders of such
request pursuant to Section 3.6(b) and shall use its best efforts to
cause all Registrable Securities that the Holders have requested
(within thirty (30) days after such Company notice) be registered, to
be registered under the 1933 Act.
(b) If the total amount of Registrable Securities that the
Holders request to be included in such offering exceeds the amount of
securities that the underwriters reasonably believe compatible with the
success of the offering, then the Company will include in such
registration only the number of securities which, in the opinion of
such underwriters, can be sold in accordance with the procedures set
forth in Section 3.6(b);
(c) The Company shall be obligated to effect for the Berkshire
Stockholders two (2) registrations of Registrable Securities pursuant
to this Section 3.2; PROVIDED, that in the event that, at the request
of the underwriters, the amount of Registrable Securities that the
Berkshire Stockholders requested to be included in any offering is
reduced by more than thirty percent (30%), such offering shall be
deemed not to be a registration demanded by the Berkshire Stockholders
for purposes of this Section 3.2(c).
3.3. DEMAND REGISTRATION INITIATED BY THE SALOMON SMITH BARNEY GROUP.
(a) Subject to paragraph (b) hereof, on or after the date on
which the Company has effected a Public Offering, if the Company shall
receive a written request (specifying that it is being made pursuant to
this Section 3.3) by or on behalf of the Salomon Smith Barney Group, so
long as such request represents an aggregate of fifty percent (50%) or
more of the Registrable Securities held by the Salomon Smith Barney
Group, that the Company file a registration statement under the 1933
Act, or a similar document pursuant to any other statute then in effect
corresponding to the 1933 Act, covering the registration of at least
the lesser of (i) $20 million of Registrable Securities (determined
based upon the Fair Market Value of such Registrable Securities on the
date of request), or (ii) one hundred percent (100%) of the Registrable
Securities then held by the Salomon Smith Barney Group, then the
Company shall promptly notify all other Holders of such request
pursuant to Section 3.6(b) and shall use its best efforts to cause all
Registrable Securities that the Holders have requested (within thirty
(30) days after such Company notice) be registered, to be registered
under the 1933 Act.
(b) If the total amount of Registrable Securities that all
Holders request to be included in such offering exceeds the amount of
securities that the underwriters reasonably believe compatible with the
success of the offering, then the Company will include in such
registration only the number of securities which, in the opinion of
such underwriters, can be sold in accordance with the procedures set
forth in Section 3.6(b);
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(c) The Company shall be obligated to effect for the Salomon
Smith Barney Group one (1) registration of Registrable Securities
pursuant to this Section 3.3; PROVIDED, that in the event that, at the
request of the underwriters, the amount of Registrable Securities that
the Salomon Smith Barney Group requested to be included in any offering
is reduced by more than thirty percent (30%), such offering shall be
deemed not to be a registration demanded by the Salomon Smith Barney
Group for purposes of Section 3.3(c).
3.4. DEMAND REGISTRATION INITIATED BY THE SCARSDALE GROUP.
(a) Subject to paragraph (b) hereof, on or after the date on
which the Company has effected a Public Offering, if the Company shall
receive a written request (specifying that it is being made pursuant to
this Section 3.4) by or on behalf of the Scarsdale Group, so long as
such request represents an aggregate of fifty percent (50%) or more of
the Registrable Securities held by the Scarsdale Group, that the
Company file a registration statement under the 1933 Act, or a similar
document pursuant to any other statute then in effect corresponding to
the 1933 Act, covering the registration of at least the lesser of (i)
$20 million of Registrable Securities (determined based upon the Fair
Market Value of such Registrable Securities on the date of request), or
(ii) one hundred percent (100%) of the Registrable Securities then held
by the Scarsdale Group, then the Company shall promptly notify all
other Holders of such request pursuant to Section 3.6(b) and shall use
its best efforts to cause all Registrable Securities that the Holders
have requested (within thirty (30) days after such Company notice) be
registered, to be registered under the 1933 Act.
(b) If the total amount of Registrable Securities that all
Holders request to be included in such offering exceeds the amount of
securities that the underwriters reasonably believe compatible with the
success of the offering, then the Company will include in such
registration only the number of securities which, in the opinion of
such underwriters, can be sold in accordance with the procedures set
forth in Section 3.6(b);
(c) The Company shall be obligated to effect for the Scarsdale
Group one (1) registration of Registrable Securities pursuant to this
Section 3.4; PROVIDED, that in the event that, at the request of the
underwriters, the amount of Registrable Securities that the Scarsdale
Group requested to be included in any offering is reduced by more than
thirty percent (30%), such offering shall be deemed not to be a
registration demanded by the Scarsdale Group for purposes of Section
3.4(c).
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3.5. DEMAND REGISTRATION INITIATED BY THE MANAGEMENT STOCKHOLDERS.
(a) Subject to paragraph (b) hereof, on or after the date on
which the Company has effected a Public Offering, if the Company shall
receive a written request (specifying that it is being made pursuant to
this Section 3.5) by or on behalf of the Management Stockholders, so
long as such request represents an aggregate of fifty percent (50%) or
more of the Registrable Securities held by the Management Stockholders,
that the Company file a registration statement under the 1933 Act, or a
similar document pursuant to any other statute then in effect
corresponding to the 1933 Act, covering the registration of at least
the lesser of (i) $20 million of Registrable Securities (determined
based upon the Fair Market Value of such Registrable Securities on the
date of request), or (ii) one hundred percent (100%) of the Registrable
Securities then held by the Management Stockholders, then the Company
shall promptly notify all other Holders of such request pursuant to
Section 3.6(b) and shall use its best efforts to cause all Registrable
Securities that the Holders have requested (within thirty (30) days
after such Company notice) be registered, to be registered under the
1933 Act.
(b) If the total amount of Registrable Securities that all
Holders request to be included in such offering exceeds the amount of
securities that the underwriters reasonably believe compatible with the
success of the offering, then the Company will include in such
registration only the number of securities which, in the opinion of
such underwriters, can be sold in accordance with the procedures set
forth in Section 3.6(b);
(c) The Company shall be obligated to effect for the Management
Stockholders one (1) registration of Registrable Securities pursuant to
this Section 3.5; PROVIDED, that in the event that, at the request of
the underwriters, the amount of Registrable Securities that the
Management Stockholders requested to be included in any offering is
reduced by more than thirty percent (30%), such offering shall be
deemed not to be a registration demanded by the Management Stockholders
for purposes of Section 3.5(c).
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3.6. REDUCTION IN REGISTRATION; PIGGYBACK REGISTRATION.
(a) If, at any time, the Company determines to register any of
its equity securities for its own account under the 1933 Act in
connection with the public offering of such securities solely for cash
on a form that would also permit the registration of any of the
Registrable Securities, the Company shall, at each such time, promptly
give each Holder written notice of such determination. Upon the written
request of any Holder received by the Company within thirty (30) days
after the giving of any such notice by the Company, the Company shall
use its best efforts to cause to be registered under the 1933 Act all
of the Registrable Securities of such Holder that each Holder has
requested be registered. If the total amount of Registrable Securities
that are to be included by the Company for its own account and at the
request of Holders exceeds the amount of securities that the
underwriters reasonably believe compatible with the success of the
offering, then the Company will include in such registration only the
number of securities which in the opinion of such underwriters can be
sold, in the following order:
(i) first, the equity securities to be registered on behalf
of the Company; and
(ii) then the Registrable Securities requested to be included
by the Holders, PRO RATA, based on the number of Registrable
Securities owned by each of them which each of them request be
included in such registration; PROVIDED, HOWEVER, that if an
underwriter who is not an Affiliate or Associate of any Holder,
requires, in connection with such underwritten offering, that the
number of Registrable Securities to be sold by any Holder be
apportioned or excluded, such number of Registrable Securities of
such Holder shall be reduced or not included to the extent so
requested by said underwriter.
(b) If the Company at any time proposes to register any of its
equity securities for the account of any Holder pursuant to Section
3.2, Section 3.3, Section 3.4, Section 3.5 or Section 3.12 of this
Agreement, under the 1933 Act in connection with the public offering of
such securities solely for cash on a form that would also permit the
registration of any of the Registrable Securities, the Company shall,
at each such time, promptly give each Holder written notice of such
determination. Upon the written request of any Holder received by the
Company within thirty (30) days after the giving of any such notice by
the Company, the Company shall use its best efforts to cause to be
registered under the 1933 Act all of the Registrable Securities of such
Holder that such Holder has requested be registered. If the total
amount of Registrable Securities that the requesting Holders and the
Company propose to register under Section 3.2, Section 3.3, Section
3.4, Section 3.5 or Section 3.12, exceeds the amount of securities that
the underwriters reasonably believe compatible with the success of the
offering, then the Company will include in such registration only the
number of securities which in the opinion of such underwriters can be
sold, in the following order:
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(i) first, the equity securities to be registered on behalf
of Stockholders initiating the demand, PRO RATA, based on the
number of Registrable Securities owned by each of them which each
of them request be included in such registration;
(ii) second, the Registrable Securities requested to be
included by the other Holders, PRO RATA, based on the number of
Registrable Securities owned by each of them which each of them
request be included in such registration; and
(iii) third, the equity securities to be registered on behalf
of the Company;
PROVIDED, HOWEVER, that if an underwriter who is not an Affiliate or
Associate of any Holder or the Company, in good faith, requires in
connection with such underwritten offering that the number of
Registrable Securities to be sold by any Holder or the Company be
apportioned or excluded, such number of Registrable Securities of such
Holder or the Company shall be reduced or not included to the extent so
requested by said underwriter.
3.7. OBLIGATIONS OF THE COMPANY. Whenever required under Sections 3.2,
3.3, 3.4, 3.5, 3.6 or 3.12 to use its best efforts to effect the registration of
any Registrable Securities, the Company shall:
(a) prepare and file with the SEC a registration statement with
respect to such Registrable Securities, and use its best efforts to
cause such registration statement to become and remain effective;
(b) as expeditiously as reasonably possible, prepare and file
with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection with such registration
statement as may be necessary to comply with the provisions of the 1933
Act with respect to the disposition of all securities covered by such
registration statement;
(c) as expeditiously as reasonably possible, furnish to the
Holders such numbers of copies of a prospectus, including a preliminary
prospectus, in conformity with requirements of the 1933 Act, and such
other documents they may reasonably request in order to facilitate the
disposition of Registrable Securities owned by them;
(d) as expeditiously as reasonably possible, use its best efforts
to register and qualify the securities covered by such registration
statement under the securities or Blue Sky laws of such jurisdictions
as shall be reasonably appropriate for the distribution of the
securities covered by the registration statement, provided that the
Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to
service of process in any such jurisdiction, and FURTHER
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PROVIDED that (anything in this Agreement to the contrary
notwithstanding with respect to the bearing of expenses) if any
jurisdiction in which the securities shall be qualified shall require
that expenses incurred in connection with the qualification of the
securities in that jurisdiction be borne by selling stockholders, then
such expenses shall be payable by selling stockholders PRO RATA, to the
extent required by such jurisdiction;
(e) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with, or
approved by, such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof to consummate the
disposition of such Registrable Securities;
(f) notify each seller of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto
is required to be delivered under the 1933 Act, upon discovery that, or
upon the happening of any event as a result of which, the prospectus
included in such registration statement, as then in effect, includes an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which
they were made, and at the request of any such seller or Holder,
promptly prepare and file with the SEC and furnish to such seller or
Holder a reasonable number of copies of a supplement to or an amendment
of such prospectus as may be necessary so that, as thereafter delivered
to the purchasers of such securities, such prospectus shall not include
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which
they were made; PROVIDED, that, each Holder agrees that it shall not
sell any Registrable Securities covered by such a registration
statement upon notice from the Company until receipt of notice that
such statement or omission has been corrected.
(g) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve (12) months, but not more than
eighteen (18) months, beginning with the first full calendar month
after the effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the 1933
Act, and will furnish to each seller at least two (2) business days
prior to the filing thereof a copy of any amendment or supplement to
such registration statement or prospectus and shall not file any
amendment or supplement thereof to which any such seller shall have
reasonably objected, except to the extent required by law, on the
grounds that such amendment or supplement does not comply in all
material respects with the requirements of the 1933 Act or of the rules
or regulations thereunder;
(h) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of
such registration statement; and
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(i) use its best efforts to list all Registrable Securities
covered by such registration statement on a securities exchange or
the NASDAQ National Market on which any class of Registrable
Securities is then listed.
3.8. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any act pursuant to this Article III that the
Holders selling Registrable Securities shall furnish to the Company such
information regarding them, the Registrable Securities held by them and the
intended method of disposition of such securities as the Company shall
reasonably request and as shall be required in connection with the action to be
taken by the Company.
3.9. EXPENSES OF REGISTRATION. All expenses incurred in connection with
a registration pursuant to Sections 3.2, 3.3, 3.4, 3.5, 3.6 or 3.12 (excluding
underwriters' discounts and commissions, which shall be borne by the sellers),
including without limitation all registration and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company (which
counsel shall be reasonably satisfactory to the holders of a majority of the
Registrable Securities then being registered), and the reasonable fees and
disbursements of one counsel for the selling Holders (which counsel shall be
selected by the Holders which own a majority of the Registrable Securities being
sold under the applicable registration) shall be borne by the Company; PROVIDED,
HOWEVER, that all such expenses in connection with any amendment or supplement
to a registration statement or prospectus filed more than nine (9) months after
the effective date of such registration statement because any Holder of
Registrable Securities has not effected the disposition of the securities
requested to be registered shall be paid by such Holder; PROVIDED, FURTHER,
however, that Holders initiating a demand may withdraw any request made pursuant
to Section 3.2, Section 3.3, Section 3.4 or Section 3.5, in which event such
first withdrawn request shall be deemed for all purposes herein not to have been
made.
3.10. UNDERWRITING REQUIREMENTS. Each Holder selling Registrable
Securities in any registration pursuant to Sections 3.2, 3.3, 3.4, 3.5 or 3.6
shall, as a condition for inclusion of such Registrable Securities in such
underwritten registration, execute and deliver an underwriting agreement
acceptable to the Company, in the case of a registration pursuant to Section
3.6(a), or acceptable to Holders who own a majority of the Registrable
Securities to be included in such registration, in the case of a registration
pursuant to Section 3.2, Section 3.3, Section 3.4, Section 3.5 or Section
3.6(b), and the underwriters with respect to such registration. Such
underwriters shall be selected (i) by the Company, in the case of a registration
pursuant to Section 3.6(a), or (ii) by a majority in interest of the Registrable
Securities to be included in such registration in all other cases and shall be
reasonably acceptable to the Company, in the case of a registration pursuant to
Section 3.6(b).
Notwithstanding the foregoing, each Holder shall take all action
reasonably necessary with respect to executing such underwriting agreement,
including being liable in respect of (i) any representations and warranties
being made by each selling Holder, and (ii) any indemnification agreements and
"lock-up" agreements made by each selling Holder for the
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benefit of the underwriters in such underwriting agreement; PROVIDED, HOWEVER,
that 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 Holder 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 Holder and accuracy of information with respect to such Holder furnished
for inclusion in any disclosure document relating to each Public Offering, the
aggregate amount of the liabilities of such participating Holder 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.
3.11. INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Article III:
(a) To the fullest extent permitted by law, the Company will
indemnify and hold harmless each Holder (which term, for purposes of
this Section 3.11, shall include each Stockholder, including the
Berkshire Stockholders, the Management Stockholders and the Other
Stockholders holding Registrable Securities, and shall also include the
directors, officers and employees of the Stockholders and their
Affiliates) requesting or joining in a registration, any underwriter
(as defined in the 1933 Act) for a registration, and each Person, if
any, who controls such Holder or such underwriter within the meaning of
the 1933 Act, against any and all losses, claims, damages or
liabilities, joint or several, to which any such Holder, underwriter or
Person may become subject under the 1933 Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or
are based on any untrue or alleged untrue statement of any material
fact contained in a registration statement relating to a registration
pursuant to this Article III, including any preliminary prospectus or
final prospectus contained therein or any amendments or supplements
thereto, or arise out of or are based upon the 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
arise out of any violation by the Company of the 1933 Act or any rule
or regulation promulgated under the 1933 Act applicable to the Company
and relating to action or inaction required of the Company in
connection with any such registration, and will reimburse each such
Holder, underwriter or control Person for any and all legal or other
expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability, action or
proceeding; PROVIDED, HOWEVER, that the indemnity agreement contained
in this Section 3.11(a) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability, action or proceeding if
such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld), nor shall the Company be
liable to anyone for any such loss, claim, damage, liability, action or
proceeding to the extent that it arises out of or is based upon an
untrue statement or omission made in connection with such
-42-
registration statement, preliminary prospectus, final prospectus or
amendments or supplements thereto in reliance upon and in conformity
with written information furnished expressly for use in connection with
such registration by such Holder, underwriter or control Person. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Holder, underwriter or
control Person and shall survive the transfer of such securities by
such Holder. If Holder is entitled to indemnification under this
Section 3.11, such Holder shall be entitled to advancement from the
Company for reasonable attorneys' fees and expenses to be incurred by
such Holder within the scope of the Company's indemnification and
reimbursement obligations, upon receipt by the Company of a written
undertaking by such Holder to repay such advancement if it shall be
adjudicated finally that such Holder was not entitled to such payment.
(b) To the fullest extent permitted by law, each Holder
requesting or joining in a registration will indemnify and hold
harmless the Company, each of its directors, each of its officers who
has signed the registration statement, each Person, if any, who
controls the Company within the meaning of the 1933 Act, and each agent
and any underwriter for the Company and any Person who controls any
such agent or underwriter and each other Holder and any Person who
controls such Holder (within the meaning of the 1933 Act) against any
and all losses, claims, damages or liabilities, joint or several, to
which the Company or any such director, officer, control Person, agent,
underwriter or other Holder may become subject, under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened in respect
thereto) arise out of or are based upon an untrue statement of any
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, or arise out of or are based upon
the omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue
statement or omission was made in such registration statement,
preliminary or final prospectus, or amendments or supplements thereto,
in reliance upon and in conformity with written information furnished
by such Holder (other than information furnished by such Holder on
behalf of the Company in his or her capacity as an officer or director
of the Company) expressly for use in connection with such registration;
and such Holder will reimburse the Company and each such director,
officer, control Person, agent, underwriter or other Holder for any and
all legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage,
liability, action or proceeding; PROVIDED, HOWEVER, the indemnity
obligation of each such Holder hereunder shall be limited to and shall
not exceed the proceeds actually received by such Holder upon a sale of
Registrable Securities pursuant to a registration statement hereunder;
and PROVIDED, FURTHER that the indemnity agreement contained in this
Section 3.11(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability, action or proceeding if such
settlement is effected without the consent of such Holder (which
consent shall not be unreasonably withheld). Such indemnity shall
remain in full force and effect regardless
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of any investigation made by or on behalf of the Company or any such
director, officer, Holder, underwriter or control Person and shall
survive the transfer of such securities by such Holder.
(c) Any Person seeking indemnification under this Section 3.11
will (i) give prompt notice to the indemnifying party of any claim with
respect to which it seeks indemnification (but the failure to give such
notice will not affect the right to indemnification hereunder, unless
and to the extent the indemnifying party is materially prejudiced by
such failure) and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest may exist between such indemnified and
indemnifying parties with respect to such claim, permit such
indemnifying party, and other indemnifying parties similarly situated,
jointly to assume the defense of such claim with counsel reasonably
satisfactory to the parties. In the event that the indemnifying parties
cannot mutually agree as to the selection of counsel, each indemnifying
party may retain separate counsel to act on its behalf and at its
expense. The indemnified party shall in all events be entitled to
participate in such defense at its expense through its own counsel. If
such defense is not assumed by the indemnifying party, the indemnifying
party will not be subject to any liability for any settlement made
without its consent (but such consent will not be unreasonably
withheld). No indemnifying party will consent to entry of any judgment
or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such
claim or litigation. An indemnifying party who is not entitled to, or
elects not to, assume the defense of a claim will not be obligated to
pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party a conflict
of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the reasonable fees and
expenses of such additional counsel.
(d) If for any reason the foregoing indemnification is
unavailable to any party or insufficient to hold it harmless as and to
the extent contemplated by the preceding paragraphs of this Section
3.11, then each indemnifying party shall contribute to the amount paid
or payable by the indemnified party as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect the
relative benefits received by the applicable indemnifying party, on the
one hand, and the applicable indemnified party, as the case may be, on
the other hand, and also the relative fault of the applicable
indemnifying party and the applicable indemnified party, as the case
may be, as well as any other relevant equitable considerations.
3.12. REGISTRATION ON FORM S-3. After the date on which the Company has
effected a Public Offering, if (i) a Holder or Holders request in writing
(specifying that such request is being made pursuant to this Section 3.12) that
the Company file a registration statement on Form S-3 (or any successor form to
Form S-3 regardless of its designation) for a public offering of
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securities having an aggregate value of not less than $1,000,000 and (ii) the
Company is entitled to use such form to register such securities, then the
Company shall file a Form S-3 with respect to such securities within ninety (90)
days from the date of such request, and shall use its best efforts to cause such
registration statement to become effective; PROVIDED, that the Company shall not
be required to effect such registration more frequently than once every six (6)
months.
3.13. REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to
making available to the Holders and their Permitted Transferees the benefits of
Rule 144 promulgated under the 1933 Act and any other rule or regulation of the
SEC that may at any time permit a Holder to sell securities of the Company to
the public without registration, the Company agrees to use its best efforts to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144, at all times subsequent to
ninety (90) days after the effective date of the first registration
statement covering a Public Offering filed by the Company;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act;
and
(c) furnish to any Holder forthwith upon request a written
statement by the Company that it has complied with the reporting
requirements of Rule 144 (at any time after ninety (90) days after the
effective date of said first registration statement filed by the
Company), and of the 1933 Act and the 1934 Act (at any time after it
has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other
reports and documents so filed by the Company as may be reasonably
requested in availing any Holder of any rule or regulation of the SEC
permitting the selling of any such securities without registration.
3.14. NO INCONSISTENT AGREEMENTS. The Company represents and warrants
that it has not entered into, and covenants that it will not hereafter enter
into, any agreement with respect to the registration of its securities that is
inconsistent with the rights granted to the Holders of Registrable Securities in
this Agreement without the prior written consent of a majority in interest of
the Holders.
3.15. STOCK SPLIT. If, on or after the receipt by the Company of a
request for registration of a public offering pursuant to Section 3.2, Section
3.3, Section 3.4 or Section 3.5, the proposed managing underwriter or
underwriters of such offering reasonably believes that the number of shares to
be registered is less than the minimum number necessary for the success of such
offering, the Company will promptly prepare and submit to its Board of
Directors, use its best efforts to cause to be adopted by its Board of Directors
and stockholders, and, if so adopted, file and cause to become effective, an
amendment to its certificate of incorporation so as to cause each share of its
outstanding Common Stock to be converted into such number of shares of such
Common Stock so that the number of shares of Registrable Securities to be
registered is equal to the minimum number which such managing underwriter or
underwriters reasonably believes is
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necessary for the success of such offering. Each Stockholder, together with his
or its Permitted Transferees, hereby agrees to vote the shares of the Company's
Common Stock held by him or it in favor of adopting such amendment.
3.16. TIMING AND OTHER LIMITATIONS.
(a) No request shall be made with respect to any registration
pursuant to Section 3.2, Section 3.3, Section 3.4 or Section 3.5 within
one hundred twenty (120) days immediately following the effective date
of any registration statement filed pursuant to this Article III.
(b) If the Company shall furnish to the Holders of Registrable
Securities requesting a registration pursuant to Section 3.2, Section
3.3, Section 3.4 or Section 3.5 a certificate signed by a majority of
the Board of Directors of the Company stating that in the good faith
judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company or its stockholders for such
registration statement to be filed on or before the date filing would
be required and it is therefore advisable to defer the filing of such
registration statement, then the Company shall have the right to defer
the filing of the registration statement for a period of not more than
one hundred twenty (120) days and the request pursuant to Section 3.2,
Section 3.3, Section 3.4 or Section 3.5 then made shall not be counted
for purposes of determining the number of registrations pursuant to
Section 3.2, Section 3.3, Section 3.4 or Section 3.5; PROVIDED,
HOWEVER, that the Company may not utilize such right more than once in
any twelve-month period.
3.17. LOCK-UP. In connection with any Public Offering of Shares, no
holder of Shares shall Transfer any Shares for a period beginning seven (7) days
immediately preceding the date upon which the Company in good faith believes
that the relevant registration statement shall become effective, and ending on
the one hundred eightieth (180th) day (or, at the discretion of the underwriter,
such lesser period) following the effectiveness of such registration statement
with respect to such Public Offering without the prior written consent of the
underwriters managing the offering; PROVIDED, HOWEVER, that the provisions of
this Section 3.17 shall not prohibit any Permitted Transfers, provided that the
Permitted Transferee agrees to be bound by the terms of this Agreement,
including this Section 3.17.
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ARTICLE 4
MISCELLANEOUS
4.1. REMEDIES. The parties to this Agreement acknowledge and agree that
the covenants of the Company and the Stockholders set forth in this Agreement
may be enforced in equity by a decree requiring specific performance. In the
event of a breach of any material provision of this Agreement, the aggrieved
party will be entitled to institute and prosecute a proceeding to enforce
specific performance of such provision, as well as to obtain damages for breach
of this Agreement. Without limiting the foregoing, if any dispute arises
concerning the Transfer of any of the Shares subject to this Agreement or
concerning any other provisions hereof or the obligations of the parties
hereunder, the parties to this Agreement agree that a temporary injunction may
be issued in connection therewith (including, without limitation, restraining
the Transfer of such Shares or rescinding any such Transfer). Such remedies
shall be cumulative and non-exclusive and shall be in addition to any other
rights and remedies the parties may have under this Agreement or otherwise.
4.2. ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement, together with
the Schedule hereto, sets forth the entire understanding of the parties, and as
of the closing contemplated by the Merger Agreement supersedes all prior
agreements and all other arrangements and communications, whether oral or
written, with respect to the subject matter hereof, including, without
limitation, the Stockholders Agreement dated as of March 15, 1993 among the
Company and Francisco A. Soler, Ricardo Poma, Salomon Brothers, Inc. and other
parties thereto, and by execution hereof, such Stockholders Agreement shall
terminate and be of no further force and effect. The Schedule may be amended to
reflect changes in the composition of the Stockholders as a result of Permitted
Transfers or Transfers permitted under Article II. Amendments to the Schedule
reflecting Permitted Transfers or Transfers permitted under Article II shall
become effective when a copy of the Agreement as executed by any new transferee
is filed with the Company, except as otherwise provided in Section 4.12. Any
other amendments to, or the termination of, this Agreement shall require the
prior written consent of the Company and a Supermajority Vote of the
Stockholders; PROVIDED, that (a) any such amendment which would have an adverse
effect on the Management Stockholders, if such adverse effect would be borne
solely by the Management Stockholders or would be borne disproportionately by
the Management Stockholders relative to the Berkshire Stockholders, shall
require the written consent of Management Stockholders holding a majority of the
Shares held by the Management Stockholders and (b) any such amendment which
would have an adverse effect on the Other Stockholders, if such adverse effect
would be borne solely by the Other Stockholders or would be borne
disproportionately by the Other Stockholders relative to the Berkshire
Stockholders, shall require the written consent of Other Stockholders holding a
majority of the Shares held by the Other Stockholders. Without the consent of
the Management Stockholders holding a majority of the Shares held by the
Management Stockholders, no amendment may be made to Sections 2.2 and 2.3.
Notwithstanding any provisions to the contrary contained herein, any party may
waive any rights with respect to which such party is entitled to benefits under
this Agreement. No waiver of or consent to any departure from any provision of
this Agreement shall be effective unless signed in writing by the party entitled
to the benefit thereof.
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4.3. SEVERABILITY. It is the desire and intent of the parties that the
provisions of this Agreement be enforced to the fullest extent permissible under
the laws and public policies applied in each jurisdiction in which enforcement
is sought. Accordingly, the invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if the invalid or
unenforceable provision were omitted. Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid or unenforceable
in such jurisdiction, it shall, as to such jurisdiction, be so more narrowly
drawn, without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of such provision in any other
jurisdiction.
4.4. NOTICES. All notices or other communications required or permitted
to be given hereunder shall be in writing and shall be delivered in the manner
specified herein or, in the absence of such specification, shall be deemed to
have been duly given seven (7) days after mailing by certified mail, when
delivered by hand, upon confirmation of receipt by telecopy, or one (1) business
day after sending by overnight delivery service, to the respective addresses of
the parties set forth below:
(a) For notices and communications to the Company to:
U.S. Can Corporation
900 Commerce Drive, Suite 302
Oak Brook, IL 60523
Attention: Paul W. Jones
Facsimile: (630) 572-0825
with a copy to each of:
Mayer Brown & Platt
190 South LaSalle Street
Chicago, IL 60603
Attention: Frederick B. Thomas
James T. Lidbury
Facsimile: (312) 701-7711
Berkshire Partners LLC
One Boston Place
Boston, MA 02108
Attention: Richard K. Lubin
Facsimile: (617) 227-6105
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Ropes & Gray
One International Place
Boston, MA 02110
Attention: David C. Chapin
Facsimile: (617) 951-7050
(b) for notices and communications to the Berkshire Stockholders,
to their respective addresses set forth in the Schedule, with a copy
to:
Ropes & Gray
One International Place
Boston, Massachusetts 02110
Attention: David C. Chapin
Facsimile: (617) 951-7050
(c) for notices and communications to any Management
Stockholders, to their respective addresses set forth in the Schedule,
with a copy to:
Mayer Brown & Platt
190 South LaSalle Street
Chicago, IL 60603
Attention: Frederick B. Thomas
James T. Lidbury
Facsimile: (312) 701-7711
(d) for notices and communication to any Other Stockholders, to
their respective addresses set forth in the Schedule.
By notice complying with the foregoing provisions of this Section 4.4, each
party shall have the right to change the mailing address for future notices and
communications to such party.
4.5. BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and to their respective
transferees, successors and assigns; PROVIDED, HOWEVER, that no right or
obligation under this Agreement may be assigned except as expressly provided
herein, it being understood that the Company's rights hereunder may be assigned
by the Company to any corporation which is the surviving entity in a merger,
consolidation or like event involving the Company. No such assignment shall
relieve an assignor of its obligations hereunder.
4.6. GOVERNING LAW. This Agreement shall be governed by the law of the
State of Delaware (regardless of the laws that might otherwise govern under
applicable Delaware principles of conflicts of law) as to all matters, including
but not limited to matters of validity, construction, effect, performance and
remedies.
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4.7. TERMINATION. Without affecting any other provision of this
Agreement requiring termination of any rights in favor of any Stockholder or
any transferee of Shares, the provisions of Article II shall terminate as to
such Stockholder or transferee, when, pursuant to and in accordance with this
Agreement, such Stockholder or transferee, as the case may be, no longer owns
any Shares, Performance Options or Time Options; PROVIDED, that termination
pursuant to this Section 4.7. shall only occur in respect of a Stockholder
after all Permitted Transferees in respect thereof also no longer own any
Shares. Notwithstanding the foregoing, Article II shall terminate upon the
earlier of a Change in Control or the consummation of the first Public
Offering; PROVIDED, that the Company shall be obligated to consummate the
purchase of any vested Time Options, vested Time Vested Equity, vested and
earned Performance Options and vested and earned Performance Vested Equity
which have been called pursuant to Section 2.2 or put pursuant to Section 2.3
prior to such termination, but have not otherwise been paid for as of such
date ; and PROVIDED, FURTHER, that upon a Change in Control, prior to
termination of Article II, unless the rights under this proviso are otherwise
waived by any Stockholder with respect to his, her or its rights, (i) the
Company or its designee shall make a repurchase offer to each Management
Stockholder for all of his or her Common Stock Equivalents and any vested
Performance Options for which a Determination Date has not yet occurred, on
terms no less favorable than if such securities had been called pursuant to
Section 2.2 and the Management Stockholder terminated his or her employment
for Good Reason, (ii) the Company or its designee shall make a repurchase
offer to each other Stockholder for all of his, her or its Common Stock
Equivalents at a price per share no less than the Fair Market Value of such
Common Stock Equivalents, and (iii) the consummation of any acceptance of
such offer by any Stockholder under clause (i) or (ii) shall occur within a
reasonable period of time after acceptance of such offer, which acceptance
shall occur not more than ten (10) business days after notice to the
Stockholders of the repurchase offer.
4.8. RECAPITALIZATIONS, EXCHANGES, ETC. The provisions of this
Agreement shall apply, to the full extent set forth herein with respect to
Shares, to any and all shares of capital stock of the Company or any successor
or assign of the Company (whether by merger, consolidation, sale of assets or
otherwise) which may be issued in respect of, in exchange for, or in
substitution of the Shares, by reason of a stock dividend, stock split, stock
issuance, reverse stock split, combination, recapitalization, reclassification,
merger, consolidation or otherwise.
4.9. ACTION NECESSARY TO EFFECTUATE THE AGREEMENT. The parties hereto
agree to take or cause to be taken all such corporate and other action as may be
necessary to effect the intent and purposes of this Agreement.
4.10. PURCHASE FOR INVESTMENT; LEGEND ON CERTIFICATE. Each of the
parties acknowledges that all of the Shares held by such party are being (or
have been) acquired for investment and not with a view to the distribution
thereof and that no transfer, hypothecation or assignment of Shares may be made
except in compliance with applicable federal and state securities laws. All the
certificates of Shares which are now or hereafter owned by the Stockholders and
which are subject to the terms of this Agreement shall have endorsed in writing,
stamped or printed, thereon the following legend:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT
REQUIRED."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE TERMS AND CONDITIONS, INCLUDING CERTAIN RESTRICTIONS ON
TRANSFER, OF A STOCKHOLDERS AGREEMENT DATED AS OF OCTOBER 4,
2000, AS AMENDED FROM TIME TO TIME, AND NONE OF SUCH SECURITIES,
OR ANY INTEREST THEREIN, SHALL BE TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT AS PROVIDED IN THAT
AGREEMENT. A COPY OF THE STOCKHOLDERS AGREEMENT IS ON FILE WITH
THE SECRETARY OF THE COMPANY AND WILL BE MAILED TO ANY PROPERLY
INTERESTED PERSON WITHOUT CHARGE WITHIN FIVE (5) BUSINESS DAYS
AFTER RECEIPT OF A WRITTEN REQUEST."
All shares shall also bear all legends required by federal and state
securities laws.
4.11. EFFECTIVENESS OF TRANSFERS. All Shares transferred by a
Stockholder (other than pursuant to an effective registration statement under
the 1933 Act or pursuant to a Rule 144 transaction) shall, except as otherwise
expressly stated herein, be held by the transferee thereof subject to this
Agreement. Such transferee shall, except as otherwise expressly stated herein,
have all the rights and be subject to all of the obligations of a Stockholder
under this Agreement (as though such party had so agreed pursuant to Section
4.12) automatically and without requiring any further act by such transferee or
by any parties to this Agreement. Without affecting the preceding sentence, if
such transferee is not a Stockholder on the date of such transfer, then such
transferee, as a condition to such transfer, shall confirm such transferee's
obligations hereunder in accordance with Section 4.12. No Shares shall be
transferred on the Company's books and records, and no transfer of Shares shall
be otherwise effective, unless any such transfer is made in accordance with the
terms and conditions of this Agreement, and the Company is hereby authorized by
all of the Stockholders to enter appropriate stop transfer notations on its
transfer records to give effect to this Agreement.
4.12. OTHER STOCKHOLDERS. Subject to the restrictions on transfers of
Shares contained herein, any Person who is not already a Stockholder acquiring
Shares, shall, on or before the transfer or issuance to it of Shares, sign a
counterpart or joinder to this Agreement in form reasonably satisfactory to the
Company and shall thereby become a party to this Agreement to be bound hereunder
as (i) a Berkshire Stockholder if a transferee (other than the Company) of a
Berkshire Stockholder, (ii) a Management Stockholder if a transferee (other than
the Company) of a Management Stockholder or (iii) an Other Stockholder if such
transferee (other than the Company) does not fall within clause (i) or (ii)
above. Each such additional Stockholder shall be listed on the Schedule, as
amended from time to time.
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4.13. NO WAIVER. No course of dealing and no delay on the part of any
party hereto in exercising any right, power or remedy conferred by this
Agreement shall operate as waiver thereof or otherwise prejudice such party's
rights, powers and remedies. No single or partial exercise of any rights, powers
or remedies conferred by this Agreement shall preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
4.14. COUNTERPART. This Agreement may be executed in two or more
counterparts each of which shall be deemed an original but all of which together
shall constitute one and the same instrument, and all signatures need not appear
on any one counterpart.
4.15. HEADINGS. All headings and captions in this Agreement are for
purposes of reference only and shall not be construed to limit or affect the
substance of this Agreement.
4.16. THIRD PARTY BENEFICIARIES. Nothing in this Agreement is intended
or shall be construed to entitle any Person other than the Company and the
Stockholders to any claim, cause of action, right or remedy of any kind.
4.17. CONSENT TO JURISDICTION. The Company and each of the
Stockholders, by its, his or her execution hereof, (i) hereby irrevocably submit
to the exclusive jurisdiction of the state courts in the State of Delaware for
the purposes of any claim or action arising out of or based upon this Agreement
or relating to the subject matter hereof, (ii) hereby waive, to the extent not
prohibited by applicable law, and agree not to assert by way of motion, as a
defense or otherwise, in any such claim or action, any claim that it or he is
not subject personally to the jurisdiction of the above-named courts, that its,
his or her property is exempt or immune from attachment or execution, that any
such proceeding brought in the above-named court is improper or that this
Agreement or the subject matter hereof may not be enforced in or by such court
and (iii) hereby agree not to commence any claim or action arising out of or
based upon this Agreement or relating to the subject matter hereof other than
before 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 claim or
action to any court other than the above-named courts whether on the grounds of
inconvenient forum or otherwise. The Company and each of the Stockholders hereby
consent to service of process in any such proceeding, and agree that service of
process by registered or certified mail, return receipt requested, at its
address specified pursuant to Section 4.4 is reasonably calculated to give
actual notice.
4.18. 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
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EXISTING OR HEREAFTER ARISING. EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN
INFORMED BY THE OTHER PARTIES HERETO THAT THIS SECTION 4.18 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 4.18 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH
PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, each of the undersigned has duly executed this
Stockholders Agreement (or caused this Stockholders Agreement to be executed on
its behalf by its officer or representative thereunto duly authorized) as of the
date first above written.
COMPANY: U.S. CAN CORPORATION
By:______________________________
Name:
Title:
BERKSHIRE
STOCKHOLDERS: BERKSHIRE FUND V INVESTMENT CORP.
By:_____________________________
Name:
Title:
BERKSHIRE FUND V COINVESTMENT CORP.
By: _____________________________
Name:
Title:
BERKSHIRE INVESTORS LLC
By: ______________________________
Name:
Title:
MANAGEMENT
STOCKHOLDERS:
---------------------------------
Gillian V. N. Derbyshire
---------------------------------
Roger B. Farley
---------------------------------
David R. Ford
---------------------------------
Paul W. Jones
---------------------------------
J. Michael Kirk
----------------------------------
Thomas A. Scrimo
----------------------------------
John L. Workman
----------------------------------
Ian Anderson
----------------------------------
Francis T. Azzarello
----------------------------------
Robert L. Burkhardt
----------------------------------
Daniel P. DesRochers
----------------------------------
James J. Donnelly
----------------------------------
Bernard D. Grilli
----------------------------------
Neil Houghton
----------------------------------
Sarah T. Macdonald
----------------------------------
John R. McGowan
----------------------------------
Roger P. McSweeney
----------------------------------
Larry S. Morrison
----------------------------------
Thomas J. Nicoletto
----------------------------------
Emil P. Obradovich
----------------------------------
Thomas J. Olander
----------------------------------
Gregg S. Pearson
----------------------------------
Friedhelm Pilarski
----------------------------------
Steven K. Sims
----------------------------------
James K. Strasser
----------------------------------
Tim M. Tremper
-----------------------------------
Nicola Valentini
----------------------------------
Sandra K. Vollman
OTHER STOCKHOLDERS SALOMON SMITH BARNEY GROUP
SALOMON SMITH BARNEY INC.
By: ________________________________
Name:
Title:
SQUAM STOCKHOLDER
SQUAM LAKE INVESTORS IV, L.P.
By: GPI, Inc., its general partner
By: ________________________________
Name: Alan K. Harris
Title: Vice President
SCARSDALE GROUP
SALCORP LTD.
By: ________________________________
Name:
Title:
BARCEL CORPORATION
By: ________________________________
Name:
Title:
SCARSDALE COMPANY N.V., INC.
By: ________________________________
Name:
Title:
WINDSOR INTERNATIONAL CORPORATION
By: ________________________________
Name:
Title:
ATLAS WORLD CARRIERS S.A.
By: ________________________________
Name:
Title:
THE WORLD FINANCIAL CORPORATION S.A.
By: ________________________________
Name:
Title:
LENNOXVILLE INVESTMENTS, INC.
By: ________________________________
Name:
Title:
EMPIRE INVESTMENTS S.A.
By: ________________________________
Name:
Title: