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Exhibit 10.31
EXECUTION COPY
MANAGEMENT STOCKHOLDERS AGREEMENT
OF
MARQUEE HOLDINGS INC.
This Management Stockholders
Agreement ("AGREEMENT") is entered into as of
December 23, 2004, and
effective as of the Effective Time, by and among Marquee
Holdings Inc., a Delaware
corporation (the "COMPANY"), J.P. Morgan Partners
(BHCA), L.P., a Delaware
limited partnership ("JPMP BHCA"), J.P. Morgan Partners
Global Investors, L.P., a
Delaware limited partnership ("JPMP GLOBAL"), J.P.
Morgan Partners Global
Investors (Cayman), L.P., a Cayman limited partnership
("JPMP CAYMAN"), J.P. Morgan
Partners Global Investors (Cayman) II, L.P., a
Cayman limited partnership
("JPMP CAYMAN II" and together with JPMP BHCA, JPMP
Global, JPMP Cayman, and any
other affiliated entities designated by JPMP BHCA
to the Company in writing
prior to the Effective Time, the "JPMP INVESTORS"),
Apollo Investment Fund V,
L.P., a Delaware limited partnership, ("APOLLO FUND
V"), Apollo Overseas Partners
V, L.P., a Cayman Island exempted limited
partnership, ("APOLLO
OVERSEAS"), Apollo Netherlands Partners V(A), L.P., a
Cayman Island exempted
limited partnership, ("APOLLO NETHERLANDS V(A)"), Apollo
Netherlands Partners V(B),
L.P., a Cayman Island exempted limited partnership,
("APOLLO NETHERLANDS V(B)"),
Apollo German Partners V GmbH & Co KG, a German
limited partnership ("APOLLO
GERMAN PARTNERS" and, together with Apollo Fund V,
Apollo Overseas, Apollo
Netherlands V(A) and Apollo Netherlands V(B), the
"APOLLO INVESTORS") and each
of the individual purchasers who becomes a party
hereto from time to time in
accordance with the terms hereof (each individually,
a "MANAGEMENT STOCKHOLDER,"
and collectively, the "MANAGEMENT STOCKHOLDERS").
These parties are sometimes
referred to herein individually by name or as a
"PARTY" and collectively as
the "PARTIES." The definitions of certain
capitalized terms used herein
are set forth in Section 8.
RECITALS:
WHEREAS, each of the
Management Stockholders is an employee, executive
officer,
or director of the Company or
one or more subsidiaries of the Company;
WHEREAS, pursuant to those
certain Contribution and Subscription Agreements,
dated as of December 21, 2004
(the "SUBSCRIPTION AGREEMENTS"), between the
Company and certain of the
Management Stockholders, the Company has issued to
such Management Stockholders
the number of shares of the Company's common stock,
par value $0.01 per share
("COMMON STOCK"), designated therein, on the terms and
conditions set forth in the
Subscription Agreements;
WHEREAS, as a condition to
and as an inducement to the Company's, the JPMP
Investors' and the Apollo
Investors' willingness to enter into the Subscription
Agreement, the Management
Stockholders are entering into this Agreement;
WHEREAS, the Company may
hereafter issue to each Management Stockholder Common
Stock, as a result of the
exercise by such Management Stockholder of vested
options to purchase Common
Stock ("VESTED OPTIONS"), which options were issued
(or may hereafter be issued)
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such Management Stockholder
pursuant to the 2004 Stock Option Plan of Marquee
Holdings Inc. (the "OPTION
PLAN") or any other employee benefit plan hereafter
adopted by the board of
directors of the Company (collectively, "EMPLOYEE
OPTIONS"); and
WHEREAS, the Parties hereto
now desire to enter into this Agreement to provide
for certain matters with
respect to the ownership and transfer by the Management
Stockholders of all shares of
Common Stock now or hereafter issued to or
acquired by the Management
Stockholders as a result of the exercise of Vested
Options, the acquisition of
Common Stock pursuant to the Subscription Agreement
or otherwise (collectively,
the "RESTRICTED SHARES").
AGREEMENT:
NOW, THEREFORE, in
consideration of the foregoing and the mutual agreements
set
forth herein, and other good
and valuable consideration, the receipt and
adequacy of which is hereby
acknowledged, the Parties hereto, intending to be
legally bound, hereby agree
as follows:
SECTION 1. RESTRICTIONS ON
TRANSFER.
(a) Each Management
Stockholder hereby agrees and acknowledges
that prior to the IPO Date he
or she shall not, directly or indirectly, sell,
assign, transfer, convey,
pledge or otherwise dispose of (each, a "TRANSFER")
any Restricted Shares without
the prior written consent of the Company, which
consent shall have been
authorized by a majority of the members of the board of
Directors of the Company (the
"BOARD") and which consent may be (i) withheld in
the sole discretion of the
Board, or (ii) given subject to reasonable terms and
conditions determined by the
Board in its sole discretion. Each Management
Stockholder further agrees
that in connection with any Transfer of Restricted
Shares consented to by the
Company, the Management Stockholder shall, if
requested by the Company,
deliver to the Company an opinion of counsel in form
and substance reasonably
satisfactory to the Company and counsel for the
Company, to the effect that
the Transfer is not in violation of this Agreement,
the Securities Act, or the
securities laws of any state. Any purported Transfer
in violation of the
provisions of this Section 1 shall be null and void and
shall have no force or
effect.
(b) Notwithstanding
the foregoing, nothing in this Section 1 shall
prevent the Transfer of any
Restricted Shares by any Management Stockholder (i)
to the Company; (ii) pursuant
to Sections 3 or 4 of the Agreement; (iii) to any
trusts, corporations or
partnerships established for estate planning purposes
and for the benefit of any
member of a Management Stockholder's immediate
family, provided the
Management Stockholder retains the sole and exclusive
right
to vote or dispose of any
Restricted Shares transferred to the trust,
corporation or partnership;
and (iv) upon a Management Stockholder's death, to
the Management Stockholder's
executors, administrators, testamentary trustees,
legatees and
beneficiaries.
(c) Each Management
Stockholder agrees that, as a condition
precedent to any Transfer
described in this Section 1, each transferee described
in this Section 1 (other than
the Company) shall deliver to the Company a copy
of this Agreement signed by
such transferee.
(d) Prior to any
proposed Transfer of any Restricted Shares (other
than pursuant to Section
1(b)(iv)), the Management Stockholder (or his or her
transferee) holding such
Restricted Shares to be Transferred shall give written
notice to the Company of his
or her
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intention to effect such
Transfer, which shall set forth in reasonable detail
the terms and conditions of
such proposed Transfer, including the proposed
amount and form of
consideration, terms and conditions of payment and a
summary
of any other material terms
pertaining to the Transfer.
SECTION 2. COMPANY CALL RIGHT AND
INVOLUNTARY TRANSFERS.
(a) Prior to the IPO
Date the Company shall have the right but not
the obligation to repurchase
Restricted Shares and/or cancel outstanding
Employee Options held by the
Management Stockholder or his or her successor in
interest thereunder (the
"CALL RIGHT") as set forth in this Section 2. The Call
Right shall be exercised by
written notice (the "CALL NOTICE") to the Management
Stockholder given in
accordance with Section 9(h) of this Agreement on or
prior
to the last date on which the
Call Right may be exercised by the Company.
(b) Upon the
Management Stockholder's Termination of Service for
any reason, and for a period
of six months thereafter, the Company shall have a
Call Right to repurchase
Restricted Shares in exchange for the Repurchase Price
and to cancel Vested Options
in exchange for the Cancellation Payment. The Call
Right pursuant to this
Section 2(b) may be exercised only once but may be
exercised with respect to all
or less than all of the Restricted Shares or
Vested Options outstanding on
the date of the Call Notice.
(c) In addition, the
Company shall have a Call Right effective
immediately prior to a Change
of Control occurring after January 31, 2005 to
repurchase Restricted Shares
in exchange for the Repurchase Price and to cancel
Employee Options in exchange
for the Cancellation Payment. The Call Right
pursuant to this Section 2(c)
may be exercised only once but may be exercised
with respect to all or less
than all of the Restricted Shares or Vested Options
outstanding on the date of
the Call Notice.
(d) The Repurchase
Price under Section 2(b) shall be determined as
follows: (i) in the event the
Management Stockholder's Termination of Service is
by reason of his or her
death, disability, Good Reason or involuntary
termination by the Company
without Cause, the Repurchase Price shall be the Fair
Market Value of the
Restricted Shares on the date of the Call Notice; and
(ii)
in the event the Management
Stockholders' Termination of Service is for any
other reason, the Repurchase
Price shall be the lesser of (A) the Fair Market
Value of the Restricted
Shares on the date of the Call Notice and (B) the
purchase price paid for the
Restricted Shares (and if shares of AMC were
contributed under the
Subscription Agreement, for purposes of determining the
purchase price paid for
Restricted Shares, the value of each contributed AMC
share shall equal $19.50).
The Repurchase Price under Section 2(c) shall be the
Fair Market Value of the
Restricted Shares on the date of the Call Notice. The
Cancellation Payment for
Vested Options upon exercise of the Call Right shall be
equal to the excess of the
applicable Repurchase Price over the exercise price
of such Vested Options; and
the Cancellation Payment for all other Employee
Options upon exercise of the
Call Right shall be zero and such Employee Options
will be canceled without
payment therefor.
(e) Subject to Section
2(g) below, the repurchase of Restricted
Shares and cancellation of
Vested Options pursuant to the exercise of a Call
Right shall take place on a
date specified by the Company, but in no event
following the later of the
60th day following the date
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of the Call Notice or the
10th day following the receipt by the Company of all
necessary Governmental
Approvals. On such date, the Management Stockholder
shall
transfer the Restricted
Shares subject to the Call Notice to the Company, free
and clear of all liens and
encumbrances, by delivering to the Company the
certificates representing the
Restricted Shares to be purchased, duly endorsed
for transfer to the Company
or accompanied by a stock power duly executed in
blank, with such other
documents and information as the Company may reasonably
request, the Company shall
pay to the Management Stockholder the Repurchase
Price; and the Employee
Options subject to the Call Notice shall be cancelled
and the Company shall pay the
Management Stockholder the Cancellation Price
therefor. The Company and the
Management Stockholder each shall use his, her or
its reasonable efforts to
expedite all proceedings contemplated hereunder at the
earliest practicable
date.
(f) (i) In the case of
any transfer of title or beneficial
ownership of Restricted
Shares upon default, foreclosure, forfeit, divorce,
court order or otherwise,
other than by a voluntary decision on the part of a
Management Stockholder (each,
an "INVOLUNTARY TRANSFER"), the Management
Stockholder shall promptly
(but in no event later than two days after the
Involuntary Transfer) furnish
written notice (the "INVOLUNTARY TRANSFER NOTICE")
to the Company indicating
that the Involuntary Transfer has occurred, specifying
the name of the person to
whom the shares were transferred (the "INVOLUNTARY
TRANSFEREE"), giving a
detailed description of the circumstances giving rise
to,
and stating the legal basis
for, the Involuntary Transfer.
(ii)
Upon the receipt of
the Involuntary Transfer Notice,
and for a period of six
months thereafter, the Company shall have the right to
repurchase, and the
Involuntary Transferee shall have the obligation to
sell,
all (but not less than all)
of the Restricted Shares acquired by the Involuntary
Transferee for a repurchase
price equal to the Fair Market Value of such
Restricted Shares as of the
date of the Involuntary Transfer (the "INVOLUNTARY
TRANSFER REPURCHASE PRICE"
and such right, the "INVOLUNTARY TRANSFER REPURCHASE
RIGHT"). The Involuntary
Transfer Repurchase Right shall be exercised by written
notice (the "INVOLUNTARY
TRANSFER REPURCHASE NOTICE") to the Involuntary
Transferee given in
accordance with Section 9(h) of this Agreement on or
prior
to the last date on which the
Involuntary Transfer Repurchase Right may be
exercised by the
Company.
(iii) Subject to
Section 2(g) below, the repurchase of
Restricted Shares pursuant to
the exercise of the Involuntary Transfer
Repurchase Right shall take
place on a date specified by the Company, but in no
event following the later of
the 60th day following the date of the date of the
Involuntary Transfer
Repurchase Notice or the 10th day following the receipt
by
the Company of all necessary
Governmental Approvals. On such date, the
Involuntary Transferee shall
transfer the Restricted Shares subject to the
Involuntary Transfer
Repurchase Notice to the Company, free and clear of all
liens and encumbrances, by
delivering to the Company the certificates
representing the Restricted
Shares to be purchased, duly endorsed for transfer
to the Company or accompanied
by a stock power duly executed in blank, with such
other documents and
information as the Company may reasonably request, and
the
Company shall pay to the
Involuntary Transferee the Involuntary Transfer
Repurchase Price. The Company
and the Involuntary Transferee each shall use his,
her or its reasonable efforts
to expedite all proceedings contemplated hereunder
at the earliest practicable
date. If the Involuntary Transferee does not
transfer the Restricted
Shares to the Company as required, such
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Restricted Shares shall be
deemed to be cancelled and the Company shall make
payment in respect of such
Restricted Shares, without any interest accrued
thereon, upon delivery
thereof.
(g) Notwithstanding
anything to the contrary herein,
(i)
The Company shall not be permitted to purchase any
Restricted Shares held by any
Management Stockholder or Involuntary Transferee
upon exercise of the Call
Right or the Involuntary Transfer Repurchase Right if
the Board determines
that:
(A) The purchase of
Restricted Shares would render
the Company or its
subsidiaries unable to meet their obligations in the
ordinary
course of business taking
into account any pending or proposed transactions,
capital expenditures or other
budgeted cash outlays by the Company, including,
without limitation, any
proposed acquisition of any other entity by the Company
or any of its
subsidiaries;
(B) The Company is
prohibited from purchasing the
Restricted Shares by
applicable law restricting the purchase by a corporation
of
its own shares; or
(C) The purchase of
Restricted Shares would
constitute a breach of,
default, or event of default under, or is otherwise
prohibited or limited by, the
terms of any loan agreement, indenture, or other
agreement or instrument to
which the Company or any of its subsidiaries is a
party (the "FINANCING
DOCUMENTS") or the Company is not able to obtain the
requisite consent of any of
its senior lenders to the purchase of the Restricted
Shares.
The events described in (A)
through (C) above each constitute a "REPURCHASE
DISABILITY."
(ii) In
the event of a Repurchase Disability, the Company
shall notify in writing the
Management Stockholder or Involuntary Transferee
with respect to whom the Call
Right or the Involuntary Transfer Repurchase Right
has been exercised (a
"DISABILITY NOTICE"). The Disability Notice shall
specify
the nature of the Repurchase
Disability. The Company shall thereafter repurchase
the Restricted Shares (and/or
cancel Employee Options) described in the Call
Notice or Involuntary
Transfer Repurchase Notice as soon as reasonably
practicable after all
Repurchase Disabilities cease to exist (or the Company
may
elect, but shall have no
obligation, to cause its nominee to repurchase the
Restricted Shares (and/or
cancel Employee Options) while any Repurchase
Disabilities continue to
exist). In the event the Company suspends its
obligations to repurchase the
Restricted Shares (and/or cancel Employee Options)
pursuant to a Repurchase
Disability, (A) the Company shall provide written
notice to each applicable
Management Stockholder or Involuntary Transferee as
soon as practicable after all
Repurchase Disabilities cease to exist (the
"REINSTATEMENT NOTICE"); (B)
the Fair Market Value of the Restricted Shares
subject to the Call Notice or
Involuntary Transfer Repurchase Notice shall be
determined as of the date the
Reinstatement Notice is delivered to the
Management Stockholder or
Involuntary Transferee, which Fair Market Value shall
be used to determine the
Repurchase Price or Involuntary Transfer Repurchase
Price in the manner described
above; and (C) the repurchase shall occur on a
date specified by the Company
within 10 days following the determination of the
Fair Market Value of the
Shares.
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SECTION 3. EXIT SALE.
(a) If at any time (i)
from the date hereof until the earlier to
occur of (A) five years from
the Effective Time and (B) the IPO Date (such
period, the "BLOCKOUT
PERIOD"), the Principal Investors acting together or a
Principal Investor if at such
time there exists only one Principal Investor, or
(ii) following the Blockout
Period, any Investors owning, in the aggregate, at
least 50% of the then
outstanding Common Stock (in the case of either (i) or
(ii), collectively, the "EXIT
SELLERS") propose a sale to any Independent Third
Party (an "EXIT SALE
TRANSFEREE") in a bona fide arm's length transaction or
series of transactions
(including pursuant to a purchase agreement, tender
offer, merger or other
business combination transaction or otherwise) of all of
the Common Stock such Exit
Sellers own (an "EXIT SALE"), then the Company upon
direction of the Exit Sellers
may elect to require each Management Stockholder
to sell all, but not less
than all, of such Management Stockholder's Restricted
Shares (including Restricted
Shares issuable upon exercise of Vested Options
held by the Management
Stockholder and including Restricted Shares issuable
upon
exercise of Employee Options
that vest as a result of the consummation of the
Exit Sale), as a part of the
Exit Sale to such Exit Sale Transferee, at the
purchase price and upon the
terms and subject to the conditions of the Exit Sale
(all of which shall be set
forth in the Drag-Along Notice) and may also require
each Management Stockholder
to vote in favor of such Exit Sale or act by written
consent approving the same
with respect to all Restricted Shares owned by such
Management Stockholder, as
necessary or desirable to authorize, approve and
adopt the Exit Sale. In the
event that any Management Stockholder shall fail to
vote the Shares held by him
or her in favor of the Exit Sale, such Management
Stockholder shall, upon such
failure to so vote, be deemed immediately to have
granted the Exit Sellers a
proxy to vote such Management Stockholder's Shares in
favor of the Exit Sale. Each
Management Stockholder acknowledges that each such
proxy granted hereby,
including any successive proxy, if necessary, is being
given to secure the
performance of an obligation hereunder, is coupled with
an
interest, and shall be
irrevocable until such obligation is performed. Without
limiting the foregoing, if an
Exit Sale or an AMC Sale involving a sale of the
entire Company or all or
substantially all of its assets to an Independent Third
Party requires the approval
of the Company's stockholders, each Management
Stockholder shall waive any
dissenters' rights, appraisal rights or similar
rights in connection with
such merger or consolidation. In the event that a sale
is proposed pursuant to this
Section 3(a), all outstanding proposals to Transfer
Restricted Shares shall
immediately be withdrawn and no Transfer of Restricted
Shares shall be consummated
until the expiration of the time period provided for
in Section 3(e).
(b) The rights set
forth in Section 3(a) shall be exercised by the
Exit Sellers giving written
notice (the "DRAG-ALONG NOTICE") to the Company, at
least ten (10) Business Days
prior to the date on which the Exit Sellers expect
to consummate the Exit Sale.
In the event that the terms and/or conditions set
forth in the Drag-Along
Notice are thereafter amended in any material respect,
the Exit Sellers shall give
written notice (an "AMENDED DRAG-ALONG NOTICE") of
the amended terms and
conditions of the proposed Transfer to the Company. Each
Drag-Along Notice and Amended
Drag-Along Notice shall set forth: (i) the name of
the Exit Sale Transferee and
the number of shares of Common Stock proposed to be
purchased by such Exit Sale
Transferee, (ii) the proposed amount of
consideration and material
terms and conditions of payment offered by the Exit
Sale Transferee and (iii) a
summary of any other material terms pertaining to
the Transfer (the "THIRD
PARTY TERMS"). Upon receipt of any Drag-Along Notice or
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Amended Drag-Along Notice,
the Company shall deliver a copy of same to each
Management Stockholder at
least five (5) Business Days prior to the proposed
date of such
Transfer.
(c) All Transfers of
Shares to the Exit Sale Transferee pursuant
to this Section 3 shall be
consummated simultaneously at the offices of the
Company, unless the Exit
Sellers, elect otherwise, on the later of (i) a
Business Day not less than
ten (10) or more than sixty (60) days after the
Drag-Along Notice is received
by the Company or (ii) the third Business Day
following receipt of all
material Governmental Approvals, or at such other time
and/or place as each of the
parties to such Transfers may agree. The delivery of
stock certificates shall be
made on such date, against payment of the purchase
price for such Shares MINUS
the aggregate exercise price of any Vested Options
being Transferred by the
Management Stockholder, duly endorsed for Transfer or
with duly executed stock
powers or similar instruments, or such other instrument
of Transfer of such Shares as
may be reasonably requested by the Exit Sellers
and acceptable to the
Company, with all stock transfer taxes paid and stamps
affixed, and in the case of
Vested Options subject to a Drag-Along Notice, an
instrument acceptable to the
Company evidencing the cancellation of Vested
Options. Each Management
Stockholder shall receive the same amount of
consideration received by the
Exit Sellers per Share (minus the exercise price
of Vested Options subject to
the Drag-Along Notice). To the extent that the
parties (or any successors
thereto) to a sale pursuant to this Section 3 are to
provide any indemnification
or otherwise assume any other post-closing
liabilities, Exit Sellers and
all Management Stockholders and other Investors
selling Shares in a
transaction under this Section 3 shall do so severally
and
not jointly (and on a pro
rata basis in accordance with the Shares (including
Shares subject to Employee
Options) being sold by each) and their respective
potential liability
thereunder shall not exceed the proceeds received.
Furthermore, each Management
Stockholder shall only be required to give
customary representations and
warranties, including, but not limited to, title
to Shares (including Shares
subject to Employee Options) conveyed, legal
authority and capacity, and
non-contravention of other agreements to which he or
she is a party; PROVIDED,
that in connection with such transaction no Management
Stockholder shall be required
to enter into any non-competition agreement. Each
Management Stockholder shall
be required to enter into any instrument,
undertaking or obligation
necessary or reasonably requested and deliver all
documents necessary or
reasonably requested in connection with such sale (as
specified in the Drag-Along
Notice) in connection with this Section 3.
(d) Notwithstanding
the foregoing, no Drag-Along Rights under this
Section 3 shall apply with
respect to any Permitted Transfer within the meaning
of clause (ii), (iii) or (v)
of the definition of "Permitted Transfer" herein.
(e) If at the end of
the 90th day after the Company's receipt of
the Drag-Along Notice, the
Exit Sellers have not completed the proposed
Transfer, the Drag-Along
Notice shall be null and void, and it shall be
necessary for a separate
Drag-Along Notice to be delivered, and the terms and
provisions of this Section 3
separately complied with, in order to consummate
such Transfer pursuant to
this Section 3; PROVIDED, that such 90 day time period
may be extended at the option
of the Exit Sellers for a reasonable period of
time not to exceed an
additional 90 days to the extent that the failure to
complete the proposed
Transfer is cause by the failure to obtain the necessary
Governmental
Approvals.
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SECTION 4. TAG-ALONG RIGHTS.
(a) Subject to the
prior exercise of the Company's Call Right
pursuant to Section 2 and
subject to Section 4(c), if at any time an Investor
(referred to in this Section
4 as the "TAG-ALONG SELLER") proposes to transfer
shares of Common Stock held
by such Tag-Along Seller to any Person other than
the Company or another
Investor, whether in one transaction or in a series of
related transactions, then
the Company shall give the Management Stockholders
notice (the "TAG-ALONG
NOTICE") of their opportunity to participate in a
tag-along sale pursuant to
this Section 4 (a "TAG-ALONG SALE"). Notwithstanding
the foregoing, the provisions
of this Section 4 shall also apply where the
Tag-Along Seller is a
Principal Investor and the transferee is the Company.
The
Tag-Along Notice shall be
delivered within two (2) Business Days of the
expiration of the Investor
Election Period or the Second Investor Election
Period, as the case may be,
each as defined in the Investor Stockholders
Agreement. Each Management
Stockholder shall have the right, exercisable upon
written notice to the
Tag-Along Seller within seven (7) Business Days after
the
expiration of the Investor
Election Period or the Second Investor Election
Period, as the case may be
(the "TAG-ALONG ELECTION PERIOD"), to participate in
the Tag-Along Sale to any
Person (the "TAG-ALONG TRANSFEREE") on the terms and
conditions applicable to such
Transfer and as set forth in the Tag-Along Notice
(such participation rights
being hereinafter referred to as "TAG-ALONG RIGHTS").
Any Management Stockholder
that has not notified the Tag-Along Seller of his,
her or its intent to exercise
Tag-Along Rights within the Tag-Along Election
Period shall be deemed to
have elected not to exercise such Tag-Along Rights
with respect to such
Tag-Along Sale. Each Management Stockholder may sell in
the
Tag-Along Sale up to the
number of whole Restricted Shares, including any (A)
Restricted Shares issuable
upon exercise of Vested Options or (B) any Restricted
Shares that will be issuable
pursuant to Employee Options that vest as a result
of the consummation of the
Transfer to the Tag-Along Transferee (collectively,
the "Management Shares") in
an amount equal to the product of (i) the aggregate
number of Management Shares
owned by the Management Stockholder on the date of
the Tag-Along Sale and (ii) a
fraction, the numerator of which is equal to the
number of shares of Common
Stock proposed to be sold by the Tag-Along Seller and
the denominator of which is
the aggregate number of shares of Common Stock owned
by the Tag-Along Seller (the
"ELIGIBLE SHARES"). If one or more other Investors
and Management Stockholders
elects not to include the maximum number of his, her
or its eligible Shares in a
proposed sale, the Tag-Along Seller shall (as
required by the Investor
Stockholders Agreement) give prompt notice to each
other participating
Management Stockholder and each participating Management
Stockholder may sell in the
proposed sale a number of additional Management
Shares equal to his, her or
its pro rata portion (based upon the aggregate
number of Management Shares
owned by such Management Stockholder relative to the
aggregate number of shares of
Common Stock and Management Shares owned by all
Management Stockholders and
Investors) of the number of Shares and Management
Shares held by Management
Stockholders and other Investors eligible to be
included in the proposed
sale. Such additional Management Shares which any such
Management Stockholder(s)
proposes to sell shall not be included in the
calculation of Eligible
Shares. To the extent that the total number of Shares
proposed to be sold by the
Tag-Along Seller and the number of Shares and
Management Shares proposed to
be sold by all of the other Investors and
Management Stockholders
collectively exceeds the number of Shares and Management
Shares that the Tag-Along
Transferee is willing to purchase, the number of
Shares and Management Shares
that the Tag-Along Seller and each other Investor
and Management Stockholder
propose to sell will be reduced pro rata based upon
the relative
number
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of Shares and Management
Shares that the Tag-Along Seller and each other
Investor and Management
Stockholder had proposed to sell.
(b) At the closing of
the Tag-Along Sale, the delivery of stock
certificates shall be made on
such date by each Management Stockholder
exercising Tag-Along Rights,
against payment of the purchase price for such
Shares MINUS the aggregate
exercise price of any Vested Options being
Transferred by the Management
Stockholder, duly endorsed for transfer or with
duly executed stock powers or
similar instruments, or such other instrument of
transfer of such Shares
(including Shares issuable upon exercise of Employee
Options) as may be reasonably
requested by the Tag-Along Transferee and the
Company, with all stock
transfer taxes paid and stamps affixed and/or against
delivery of an instrument
evidencing the cancellation of the Vested Options
subject to the Tag-Along
Right reasonably acceptable to the Company. The
consummation of such proposed
Tag-Along Sale shall be subject to the sole
discretion of the Tag-Along
Seller, who shall have no liability or obligation
whatsoever to any Management
Stockholder participating therein in connection
with such Management
Stockholder's transfer of Restricted Shares or Vested
Options. Each Management
Stockholder shall receive the same amount and form of
consideration received by the
Tag-Along Seller per each share of Common Stock on
the same terms and conditions
as the Tag-Along Seller (minus the aggregate
exercise price of any Vested
Options subject to such Tag-Along Sale). To the
extent that the parties (or
any successors thereto) to the Tag-Along Sale are to
provide any indemnification
or otherwise assume any other post-closing
liabilities, the Tag-Along
Seller and all other Investors and Management
Stockholders participating in
a transaction under this Section 4 shall do so
severally and not jointly
(and on a pro rata basis in accordance with the Shares
(including Shares issuable
upon exercise of Vested Options) being sold by each),
and their respective
potential liability thereunder shall not exceed the
proceeds received; PROVIDED,
that in connection with such transaction no
Management Stockholder shall
be required to enter into any non-competition
agreement. If any
Governmental Approval is required in connection with any
such
Tag-Along Sale and such
Governmental Approval has not been completed or obtained
on or prior to the date
scheduled for closing, the closing of the Tag-Along Sale
shall take place on the third
Business Day after such Governmental Approval has
been completed or obtained.
Each participating Management Stockholder shall be
required to enter into any
instrument, undertaking, obligation or make any
filing necessary or
reasonably requested and deliver all documents necessary
or
reasonably requested in
connection with such sale (as specified in the Tag-Along
Notice) as a condition to the
exercise of such holder's rights to Transfer
Restricted Shares (including
Shares subject to Employee Options) under this
Section 4.
(c) Notwithstanding
the foregoing, no Tag-Along Rights of any
Management Stockholder shall
apply hereunder with respect to any sales pursuant
to (i) any Permitted Transfer
within the meaning of clause (ii), (iii), (iv) or
(v) of the definition of
"Permitted Transfer" herein, (ii) any sale pursuant to
Section 3 of this Agreement
or Section 4 of the Investor Stockholders Agreement.
(d) If at the end of
the 90th day after the end of the Investor
Election Period or the Second
Investor Election Period, as the case may be, the
Tag-Along Seller has not
completed the proposed Tag-Along Sale, the Tag-Along
Notice shall be null and
void, and it shall be necessary for a separate
Tag-Along Notice to be
delivered, and the terms and provisions of this Section
4
separately complied with, in
order to consummate a Transfer pursuant to this
Section 4.
9
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SECTION 5. COOPERATION.
(a) If the Company or
the holders of the Company's securities
enter into any transaction
for which Rule 506 (or any similar rule then in
effect) promulgated under the
Securities Act, may be available with respect to
the transaction (including a
merger, consolidation, or other reorganization),
each Management Stockholder
shall, if requested by the Company, appoint a
purchaser representative (as
defined in Rule 501 of the Securities Act)
reasonably acceptable to the
Company. If the purchaser
