EXHIBIT 7.1
STOCKHOLDERS AGREEMENT
This Stockholders Agreement (this "AGREEMENT") dated as of April 2,
2004 is made by and among Energy Spectrum Partners, LP ("ENERGY SPECTRUM"), the
Investors Group (as defined in Section 1.1 below), the Directors Group (as
defined in Section 1.1 below), and Xxxxx-Xxxxxxxx Corporation, a Delaware
corporation (the "COMPANY"). Energy Spectrum, the Investors Group, and the
Directors Group shall, as long as each such Person or group of Persons owns
Stock, be collectively referred to herein as the "STOCKHOLDERS".
RECITALS
WHEREAS, the Company is currently required, pursuant to the terms of
the Certificate of Designation, Preferences and Rights, as amended (the
"CERTIFICATE OF DESIGNATION"), of the Series A 10% Cumulative Convertible
Preferred Stock ($0.01 par value) of the Company (the "PREFERRED STOCK, SERIES
A"), to redeem all except one share of the shares of Preferred Stock, Series A
held by Energy Spectrum;
WHEREAS, the Company and its directors recognize and acknowledge that
it is in the best interest of the Company for Energy Spectrum to waive its right
to mandatory redemption, and to instead convert its shares of Preferred Stock,
Series A into shares of Common Stock pursuant to the conversion terms of the
Certificate of Designation;
WHEREAS, in light of the foregoing Recital, Energy Spectrum has agreed
to waive its right to mandatory redemption, and to convert all of its shares of
Preferred Stock, Series A into shares of Common Stock (as defined in Section 1.1
below), on the conversion terms set forth in the Certificate of Designation and
in the Preferred Stock Conversion Agreement (the "Conversion Agreement"), by and
between Energy Spectrum and the Company, dated the date hereof;
WHEREAS, Energy Spectrum is willing to enter into the Conversion
Agreement in reliance upon the Company, the Directors Group and the Investors
Group fulfilling their respective obligations under this Agreement;
WHEREAS, it is a condition of the consummation of the transactions
contemplated hereby that A-C will, prior to or concurrently with the execution
of this Agreement: (1) obtain a one year extension on the maturity date of
certain loan obligations, and (2) enter into a Stock and Warrant Purchase
Agreement (the "SWP Agreement") pursuant to which it will issue and sell to the
Investor Group 3,100,000 shares of its Common Stock and warrants (the
"Warrants") to purchase as additional 4,000,000 shares of Common Stock;
WHEREAS, the Company and its directors recognize and acknowledge that,
in waiving its right to mandatory redemption, Energy Spectrum is waiving a
valuable right, both in economic terms and in non-economic terms, and that
Energy Spectrum would not agree to waive its mandatory redemption right without
assurances that the Company would honor its obligations under this Agreement;
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WHEREAS, the Company and its directors recognize and acknowledge that
the directors of the Company have certain fiduciary duties to the common
stockholders of the Company; including the duties of loyalty, care and good
faith;
WHEREAS, the Company and its directors recognize and acknowledge that
under certain circumstances, the fiduciary duties of the directors of the
Company to its stockholders may require the directors to sell or consider the
sale of the Company;
WHEREAS, the parties to this Agreement recognize that Energy Spectrum
would not agree to convert its shares of Preferred Stock, Series A pursuant to
Article 3 of this Agreement without assurances that, if no Qualified Public
Offering occurs on or before September 30, 2005, Energy Spectrum will have the
rights, and the Company will perform its obligations under, Article 4 of this
Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth herein and other valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound, agree as follows:
1. DEFINITIONS; USAGE
1.1. DEFINITIONS. For the purposes of this Agreement, unless the
context otherwise requires, capitalized terms used and not otherwise defined in
this Agreement shall have the following meanings:
"AFFILIATE"--as defined in the rules promulgated under the Securities
Act.
"AGREEMENT"--as defined in the first paragraph of this Agreement.
"ALTERNATIVE INVESTMENT BANK NOTICE"--as defined in Section 4.3(a).
"AS CONVERTED BASIS" -means after giving effect to the exercise and or
conversion of all securities exercisable for or convertible into Common Stock.
"BOARD"--the board of directors of the Company.
"CERTIFICATE OF DESIGNATION"--as defined in the Recitals above.
"COMMON STOCK"--the common stock of the Company, par value $0.15 per
share, any stock into which such stock shall have been converted or changed, or
any stock resulting from any reclassification of such stock and all other stock
of any class or classes (however designated) of the Company, the holders of
which have the right, without limitation as to amount, either to all or to a
share of the balance of current dividends and liquidating dividends after the
payment of dividends and distributions on any shares entitled to preference.
"COMPANY"--as defined in the first paragraph of this Agreement.
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"COMPANY RESPONSE"--as defined in Section 4.2(a).
"CONSENT"--any approval, consent ratification, waiver, or other
authorization.
"CORPORATE TRANSACTION"--either of the following transactions to which
the Company is a party:
(a) a merger, reorganization, consolidation or share exchange
in which securities possessing more than 50% of the total combined
voting power of the Company's securities outstanding immediately prior
thereto are transferred to, or in the event of a share exchange more
than 50% of the total combined voting power of the Company's
outstanding securities immediately thereafter come to be held by, a
Person or Persons different from the Person or Persons holding such
voting power immediately prior to such transaction; or
(b) the sale, transfer or other disposition of all or
substantially all of the Company's assets.
"DIRECTORS GROUP"--each of Xxxxxxx X. Xxxxxxxxxxxx, Xxxx Xxxxxxxxx and
Xxxxx Xxxxxx.
"DIRECTORS GROUP DESIGNEE"--the director the Directors Group has the
right to designate for election to the Board pursuant to Section 2.2(c).
"ENERGY SPECTRUM"--as defined in the first paragraph of this Agreement.
"ENERGY SPECTRUM DESIGNEES"--the directors Energy Spectrum has the
right to designate for election to the Board pursuant to Section 2.2(a).
"ENERGY SPECTRUM RESPONSE"--as defined in Section 4.2(b).
"INVESTMENT BANK"--the investment banking firm retained pursuant to
Section 3 hereof.
"INVESTMENT BANK NOTICE"--as defined in Section 4.1.
"INVESTORS GROUP"--each of the persons so designated on Exhibit "A."
"INVESTORS GROUP DESIGNEES"--the directors the Investors Group has the
right to designate for election to the Board pursuant to Section 2.2(b).
"PERSON"--any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"PREFERRED STOCK, SERIES A"--as defined in the Recitals above.
"QUALIFIED PUBLIC OFFERING"--the closing of an underwritten public
offering of Common Stock by means of a registration statement filed by the
Company under the Securities Act, which offering: (i) does not exclusively
relate to securities under an employee stock option, bonus or other compensation
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plan; (ii) is at a price of not less than $0.50 per share of Common Stock (such
amount to be ratably adjusted to reflect any stock splits, subdivisions,
combinations or any other action that would cause an adjustment pursuant to any
antidilution provisions); and (iii) yields net proceeds to the Company of not
less than $10,000,000 (net of underwriting discounts and other expenses and
including proceeds received by the Company upon exercise of any over-allotment
option by underwriters).
"SECURITIES ACT"--the Securities Act of 1933, as amended.
"STOCK"--means all capital stock of the Company held by a Stockholder.
"STOCKHOLDER"--Energy Specturm, each Person in the Investors Group,
each Person in the Directors Group, and each additional stockholder of the
Company who becomes a party to this Agreement by executing a counterpart to this
Agreement and delivering it to the Company.
1.2. USAGE. In this Agreement, unless a clear contrary intention
appears:
(a) the singular number includes the plural number and vice
versa;
(b) reference to any Person includes such Person's successors
and assigns but, if applicable, only if such successors and assigns are
not prohibited by this Agreement, and reference to a Person in a
particular capacity excludes such Person in any other capacity or
individually;
(c) reference to any gender includes each other gender or, in
the case of an entity, the neuter;
(d) reference to any agreement, document or instrument means
such agreement, document or instrument as amended or modified and in
effect from time to time in accordance with the terms thereof;
(e) reference to any law means such law as amended, modified,
codified, replaced or reenacted, in whole or in part, and in effect
from time to time, including rules and regulations promulgated
thereunder and reference to any section or other provision of any law
means that provision of such law from time to time in effect and
constituting the substantive amendment, modification, codification,
replacement or reenactment of such section or other provision;
(f) "hereunder", "hereof", "hereto" and words of similar
import shall be deemed references to this Agreement as a whole and not
to any particular Article, Section or other provision thereof;
(g) "including" (and with correlative meaning "include") means
including without limiting the generality of any description preceding
such term;
(h) "or" is used in the inclusive sense of "and/or";
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(i) with respect to the determination of any period of time,
"from" means "from and including" and "to" means "to but excluding";
and
(j) references to documents, instruments or agreements shall
be deemed to refer as well to all addenda, exhibits, schedules or
amendments thereto.
2. BOARD OF DIRECTORS; VOTING
2.1. BOARD SIZE. At all meetings (and written consents in lieu of
meetings) of stockholders of the Company, each Stockholder shall vote all of
such Stockholder's Stock and other securities entitled to vote in respect of the
election of the directors of the Company and take all other actions as may be
necessary to cause the number of directors on the Board to be not less than nine
(9) directors.
2.2. ELECTION OF DIRECTORS. At all meetings (and written actions in
lieu of meetings) of stockholders of the Company at which directors are to be
elected, each Stockholder shall vote all of such Stockholder's Stock and other
securities entitled to vote in respect of the election of the directors of the
Company to elect as directors of the Company the Energy Spectrum Designees,
Investors Group Designees and Directors Group Designees:
(a) ENERGY SPECTRUM DESIGNEES. At each of the Company's annual
or special meetings of stockholders at which directors are to be
elected, Energy Spectrum shall have the right to designate in writing:
(i) three (3) nominees for election to the Board, so
long as Energy Spectrum and/or its Affiliates collectively
hold a number of shares of Stock (on an As Converted Basis)
greater than 66% of the number of shares of Stock held by them
(on an As Converted Basis) at the date hereof, after making
ratable adjustments in the event of any stock splits, stock
dividends or stock combinations;
(ii) two (2) nominees for election to the Board, so
long as Energy Spectrum and/or its Affiliates collectively
hold a number of shares of Stock (on an As Converted Basis)
greater than 33%, but less than or equal to 66%, of the number
of shares of Stock held by them (on an As Converted Basis) at
the date hereof, after making ratable adjustments in the event
of any stock splits, stock dividends or stock combinations;
and
(iii) one (1) nominee for election to the Board, so
long as Energy Spectrum and/or its Affiliates collectively
hold a number of shares of Stock (on an As Converted Basis)
greater than five percent (5%) of the outstanding Common Stock
on an As Converted Basis, but less than or equal to 33%, of
the number of shares of Stock held by them (on an As Converted
Basis) at the date hereof, after making ratable adjustments in
the event of any stock splits, stock dividends or stock
combinations.
This Agreement does not grant Energy Spectrum the right to
have more than: three (3) directors on the Board at any time if
designating directors pursuant to Section 2.2(a)(i), two (2) directors
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on the Board at any time if designating directors pursuant to Section
2.2(a)(ii), or one (1) director on the Board at any time if
designating directors pursuant to Section 2.2(a)(iii).
(b) INVESTORS GROUP DESIGNEES. At each of the Company's annual
or special meetings of stockholders at which directors are to be
elected, the Investors Group shall have the right to designate in
writing the following:
(i) two (2) nominees for election to the Board, so
long as the Investors Group and/or Affiliates of any member of
the Investors Group collectively hold a number of shares of
Stock (on an As Converted Basis) greater than 50%, of the
number of shares of Stock held by them (on an As Converted
Basis) at the date hereof, after making ratable adjustments in
the event of any stock splits, stock dividends or stock
combinations; and
(ii) one (1) nominee for election to the Board, so
long as the Investors Group and/or Affiliates of any member of
the Investors Group collectively hold a number of shares of
Stock (on an As Converted Basis) greater than five percent
(5%) of the outstanding Common Stock on an As Converted Basis,
but less than or equal to 50%, of the number of shares of
Stock held by them (on an As Converted Basis) at the date
hereof, after making ratable adjustments in the event of any
stock splits, stock dividends or stock combinations.
This Agreement does not grant the Investors Group the right
to have more than: two (2) directors on the Board at any time if
designating directors pursuant to Section 2.2(b)(i) or one (1)
director on the Board at any time if designating directors pursuant to
Section 2.2(b)(ii).
(c) DIRECTORS GROUP DESIGNEE. At each of the Company's annual
or special meetings of stockholders at which directors are to be
elected, the Directors Group shall have the right to designate in
writing one (1) nominee for election to the Board, so long as the
Directors Group and/or Affiliates of any member of the Directors Group
collectively hold a number of shares of Stock (on an As Converted
Basis) greater than five percent (5%) of the outstanding Common Stock
on an As Converted Basis.
2.3. REMOVAL. Each Stockholder agrees to vote such Stockholder's Stock
(calculated on an As Converted Basis), at all meetings (and written actions in
lieu of meetings) of stockholders of the company, for removal of a certain
director as directed by the Person or Persons having the right to designate such
director pursuant to Section 2.2(a), (b) or (c) above.
2.4. VACANCIES. Each Stockholder agrees to vote such Stockholder's
Stock (calculated on an As Converted Basis), at all meetings (and written
actions in lieu of meetings) of stockholders of the Company, to fill any vacancy
on the Board caused by the resignation, death or removal of any director
designated under 2.2(a), (b) or (c) with a nominee selected as provided therein.
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3. CORPORATE TRANSACTION
3.1. NO QUALIFIED PUBLIC OFFERING. If a Qualified Public Offering does
not occur on or before September 30, 2005, then at any time on or after October
1, 2005, Energy Spectrum may send notice to the Company that the Energy Spectrum
recommends that the Company retain an Investment Bank (the "INVESTMENT BANK
NOTICE") to seek and report on candidates interested in entering into a
Corporate Transaction, with a view toward maximizing stockholder value.
3.2. INVESTMENT BANK PROCESS.
Within 45 days of receipt of the Investment Bank Notice, the
Board of Directors shall appoint an investment banking firm to seek and report
on candidates interested in entering into a Corporate Transaction, with a view
toward maximizing stockholder value. If the Company does not give Energy
Spectrum the Company's response of its selection (the "Company Response") within
the 45-day period described in this Section 3.2, Energy Spectrum may elect, in
its sole discretion, to give the Company the Alternative Investment Bank Notice
as set forth in Section 3.3(a). If Energy Spectrum elects to give the Company
the Alternative Investment Bank Notice, the Company shall relinquish its rights
under this Section 3.2, and the parties' rights under this Article 3 shall be
governed by Section 3.3.
3.3. ALTERNATIVE PROCESS.
(a) If the Company does not give Energy Spectrum the Company
Response within the 45-day period set forth in Section 3.2 above,
Energy Spectrum may elect, in its sole discretion and at any time after
the expiration of such 45-day period, to give a list of three (3)
investment banking firms to the Company (the "ALTERNATIVE INVESTMENT
BANK NOTICE"), each of which investment banking firms shall, by virtue
of being recommended by Energy Spectrum, be considered an Investment
Bank for purposes of this Agreement if eventually retained by the
Company pursuant to and for the purposes set forth in this Article 3.
(b) Within thirty 30 days of its receipt of the Alternative
Investment Bank Notice, the Company shall retain one (1) Investment
Bank listed in the Alternative Investment Bank Notice.
3.4 RETENTION. The Investment Bank selected pursuant to this Section 3
shall be engaged to seek and report on candidates interested in entering into a
Corporate Transaction, with a view toward maximizing stockholder value.
4. GENERAL PROVISIONS
4.1. NOTICES. All notices, Consents, waivers, and other communications
required or permitted by this Agreement must be in writing and will be deemed to
have been given to a party when:
(a) Delivered to the appropriate address by hand or by
nationally recognized overnight courier service, costs prepaid (with
written confirmation of receipt);
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(b) Sent by facsimile or email with confirmation of
transmission by the transmitting equipment; or
(c) Received or rejected by the addressee, if sent by
certified mail, return receipt requested, in each case to the following
addresses, facsimile numbers or email addresses and marked to the
attention of the designated Person (by name or title), or to such other
address, facsimile number, email address or Person as a party may
designate by notice to the other parties:
The Company: Allis Chalmers Corporation
0000 Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
with a copy to: Xxxxxx X. Xxxxxxxx
Xxxxxx Xxxxxxxxx Xxxxx & Xxxxxxxx LLP
0000 00xx Xxxxxx, Xxxxx 0000 Xxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Stockholders: The contact information of
each Stockholder is provided
on Exhibit A hereto, which
shall be updated by the
Company whenever a transferee
delivers a counterpart to this
Agreement to the Company.
4.2. RESTRICTIVE LEGEND ON STOCK CERTIFICATES. The Company and each
Stockholder agree that all certificates representing all shares of Common Stock
of the Company which at any time are subject to the provisions of this Agreement
shall have endorsed upon them in boldface type the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ON TRANSFER AND OTHER OBLIGATIONS CONTAINED IN A
STOCKHOLDERS AGREEMENT BETWEEN THE CORPORATION AND CERTAIN OF ITS
STOCKHOLDERS, A COPY OF WHICH IS ON FILE WITH THE CORPORATION AND WILL
BE FURNISHED WITHOUT COST TO THE HOLDER HEREOF UPON WRITTEN REQUEST TO
THE SECRETARY OF THE CORPORATION.
4.3. TRANSFEREES. Under no circumstances shall any sale or other
transfer of any Stock subject hereto be valid until the proposed transferee
thereof shall have executed a counterpart and become a party to this Agreement,
and thereby shall have become subject to all of the provisions hereof, unless
the requirement is waived by written consent of the parties hereto; provided
that this Agreement shall terminate with respect to any shares sold in an
offering registered under the Securities Act or in a broker's transaction
pursuant to Rule 144 under the Securities Act.
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4.4. FURTHER ASSURANCES. Each party hereto agrees to perform any
further acts and to execute and deliver any further documents which may be
reasonably necessary to carry out the provisions of this Agreement.
4.5. REMEDIES. If a breach of any party to this Agreement occurs, any
party may pursue any available remedy by proceeding at law or in equity to
enforce the performance of any provision of this Agreement. Except as otherwise
provided by law or as otherwise provided in this agreement, a delay or omission
by any such party in exercising any right or remedy accruing upon any such
breach shall not impair the right or remedy or constitute a waiver of or
acquiescence in any such breach. No remedy is exclusive of any other remedy. All
available remedies are cumulative.
4.6. SEVERABILITY. In the event that any of the provisions, or portions
thereof, of this Agreement are held to be unenforceable or invalid by any court
of competent jurisdiction, the validity and enforceability of the remaining
provisions, or portions thereof, shall not be affected thereby.
4.7. GOVERNING LAW. This Agreement has been executed in and shall be
governed by the laws of the State of Delaware.
4.8. INUREMENT; ASSIGNMENTS. Subject to the restrictions against
transfer or assignment as herein contained, the provisions of this Agreement
shall inure to the benefit of and shall be binding on the heirs, assigns,
successors in interest, personal representatives, estates, heirs, and legatees
of each of the parties hereto.
4.9. AMENDMENT. This Agreement may only be amended by the written
consent of all then current parties to this Agreement.
4.10. ENTIRE AGREEMENT. This Agreement contains the entire
understanding between the parties hereto concerning the subject matter contained
herein.
4.11. COUNTERPARTS. This Agreement may be executed simultaneously in
multiple counterparts, each of which when so executed shall be deemed to be an
original and such counterparts shall together constitute one and the same
instrument.
4.12. REPRESENTATION BY COUNSEL. All of the Stockholders represent that
they have consulted, or have had an opportunity to consult, separate counsel in
negotiating and executing this Agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective on and after April 2, 2004.
THE COMPANY:
------------
/S/ XXXXXXX XXXXXXXXXXXX
-----------------------------------------------
MUNAWAR HIDYATALLAH, CHIEF EXECUTIVE OFFICER
DIRECTORS GROUP:
----------------
/S/ XXXXXXX XXXXXXXXXXXX
-----------------------------------------------
Xxxxxxx X. Xxxxxxxxxxxx
/S/ XXXX X. XXXXXXXXX
-----------------------------------------------
Xxxx X. Xxxxxxxxx
/S/ XXXXX X. XXXXXX
-----------------------------------
XXXXX X. XXXXXX
INVESTORS GROUP:
----------------
/S/ XXXXXXX XXXXXXXX
-----------------------------------------------
Xxxxxxx Xxxxxxxx
Xxxxx Investors Defined Benefit Plan
/S/ XXXXXX XXXXX
-----------------------------------------------
By:
Title:
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RER Corp.
/S/ XXXXXX XXXXXXXXXXX
-----------------------------------------------
By:
Title:
/S/ XXXXXX XXXXX
-----------------------------------------------
Xxxxxx Xxxxx
/S/ XXXXXXXXXXX XXXXX
-----------------------------------------------
Xxxxxxxxxxx Xxxxx
ENERGY SPECTRUM PARTNERS LP
---------------------------
By: Energy Spectrum Capital LP, General Partner
By: Energy Spectrum LLC, General Partner
By: /S/ Xxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxx
-----------------------------------------
Title: Chief Investment Officer
-----------------------------------------
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EXHIBIT A
LIST OF STOCKHOLDERS AND ADDRESS FOR NOTICE
------------------------------------------ -------------------------------------
STOCKHOLDER ADDRESS FOR NOTICE
------------------------------------------ -------------------------------------
Energy Spectrum 0000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx
------------------------------------------ -------------------------------------
Directors Group
Xxxxxxx X. Xxxxxxxxxxxx 0000 Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Xxxx X. Xxxxxxxxx 0000 Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Xxxxx X. Xxxxxx 0000 00xx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx XX 00000
------------------------------------------ -------------------------------------
Investors Group
RER Corp 0000 Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Xxxxx Investors Defined Benefit Plan 000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxx Xxxxx 000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxxxxxxx Xxxxx 0000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxxx Xxxxxxxx 00 X. Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
-------------------- ----------------------------------------------------------
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