VOTING AGREEMENT dated as of May 7, 2002 (this
"Agreement"), among XXXX CORPORATION, a Virginia corporation
("Parent"), and the parties listed on Schedule A attached
hereto (each, a "Stockholder" and, collectively, the
"Stockholders").
WHEREAS Parent, Plumber Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of Parent ("Sub"), and Chase Industries Inc., a Delaware
corporation (the "Company"), propose to enter into an Agreement and Plan of
Merger dated as of the date hereof (as the same may be amended or supplemented,
the "Merger Agreement"; terms used but not defined herein shall have the
meanings set forth in the Merger Agreement) providing for, among other things,
the merger of Sub with and into the Company upon the terms and subject to the
conditions set forth in the Merger Agreement;
WHEREAS each Stockholder owns (of record and beneficially) the number of
shares of Company Common Stock set forth opposite such Stockholder's name on
Schedule A hereto (such shares, together with any other shares of capital stock
of the Company or other voting securities or interests of the Company acquired
(of record and beneficially) by the Stockholders after the date hereof and
during the term of this Agreement (including through the exercise of any Company
Stock Options or any warrants, stock options or similar instruments), being
collectively referred to herein as the "Subject Shares"); and
WHEREAS as a condition to its willingness to enter into the Merger
Agreement, Parent has required that each Stockholder enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements set forth herein, the parties hereto agree
as follows:
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SECTION 1. Representations and Warranties of Each Stockholder. Each
Stockholder hereby represents and warrants to Parent as follows:
(a) Organization; Authority; Execution and Delivery; Enforceability. If
such Stockholder is a corporation, limited liability company, partnership or
other legal entity that is not an individual (a "Legal Entity"), such
Stockholder (i) is duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization and (ii) has the requisite
corporate, company, partnership or other power and authority to execute and
deliver this Agreement, to consummate the transactions contemplated hereby and
to comply with the terms hereof. If such Stockholder is a Legal Entity, the
execution and delivery of this Agreement by such Stockholder, the consummation
by such Stockholder of the transactions contemplated hereby and compliance by
such Stockholder with the terms hereof have been duly authorized by all
necessary corporate, company, partnership or other action on the part of such
Stockholder and no other corporate, company, partnership or other proceedings on
the part of such Stockholder are necessary to authorize this Agreement, to
consummate the transactions contemplated hereby or to comply with the provisions
hereof. This Agreement has been duly executed and delivered by such Stockholder
and, assuming due execution by Parent, constitutes a valid and binding
obligation of such Stockholder enforceable against such Stockholder in
accordance with its terms. The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and compliance with the
provisions hereof do not and will not conflict with, or result in any violation
or breach of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of, or result in, termination, cancelation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any Lien in or upon any of the properties or assets of such
Stockholder under, or give rise to any increased, additional, accelerated or
guaranteed rights or entitlements under, any provision of (i) if such
Stockholder is a Legal Entity, its certificate of incorporation or by-laws,
partnership agreement or limited liability company agreement (or similar
organizational documents), (ii) any Contract to which such Stockholder is a
party or any of the properties or assets of such Stockholder is subject or (iii)
subject to the governmental filings and other matters referred to in the
following sentence, any (A) statute, law, ordinance, rule or regulation or (B)
judgment, order, writ,
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injunction, stipulation or decree, in each case, applicable to such Stockholder
or its properties or assets, other than, in the case of clauses (ii) and (iii),
any such conflicts, violations, breaches, defaults, rights, losses, Liens or
entitlements that individually or in the aggregate could not reasonably be
expected to impair in any material respect the ability of such Stockholder to
perform its obligations under this Agreement or prevent or materially impede or
delay the consummation of any of the transactions contemplated by this
Agreement. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to such Stockholder in connection with the execution and delivery of
this Agreement by such Stockholder, the consummation by such Stockholder of the
transactions contemplated hereby or the compliance by such Stockholder with the
provisions hereof, except for (1) filings under the HSR Act and any other
applicable competition, merger control, antitrust or similar law or regulation,
(2) filings with the SEC of such reports under the Exchange Act as may be
required in connection with this Agreement and the transactions contemplated
hereby and (3) such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to be obtained or
made individually or in the aggregate could not reasonably be expected to impair
in any material respect the ability of such Stockholder to perform its
obligations under this Agreement or prevent or materially impede or delay the
consummation of any of the transactions contemplated hereby.
(b) The Subject Shares. Such Stockholder is the record and beneficial owner
of, and has good and marketable title to, the shares of Company Common Stock set
forth opposite its name on Schedule A hereto, free and clear of any Liens. As of
the date hereof, other than as set forth opposite its name on Schedule A hereto,
such Stockholder does not own (of record or beneficially) any shares of capital
stock of, or any other voting securities or interests of, the Company. Such
Stockholder is the record and beneficial owner of the options, warrants, rights
or other similar instruments to acquire any capital stock of the Company or
other voting interests or securities of the Company set forth opposite its name
on Schedule A (the "Company Stock Options"). Except as set forth on Schedule A,
such Stockholder has the sole right to Transfer (as defined in Section 3(c)) and
vote the Subject Shares of such Stockholder, and none of the Subject Shares are
subject to any voting trust or other agreement, arrangement or restriction with
respect to the
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Transfer or the voting of such Subject Shares, except as set forth in Section 3
of this Agreement.
SECTION 2. Representations and Warranties of Parent. Parent hereby
represents and warrants to each Stockholder as follows: Parent (i) is duly
incorporated, validly existing and in good standing under the laws of Virginia
and (ii) has all requisite corporate power and authority to execute and deliver
this Agreement, to consummate the transactions contemplated hereby and to comply
with the terms hereof. The execution and delivery of this Agreement by Parent,
the consummation by Parent of the transactions contemplated hereby and
compliance by Parent with the terms hereof have been duly authorized by all
necessary corporate action on the part of Parent and no other corporate
proceedings on the part of Parent are necessary to authorize this Agreement, to
consummate the transactions contemplated hereby or to comply with the provisions
hereof. This Agreement has been duly executed and delivered by Parent and,
assuming due execution by each Stockholder, constitutes a valid and binding
obligation of Parent enforceable against Parent in accordance with its terms.
The execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby and compliance with the provisions hereof do
not and will not conflict with, or result in any violation or breach of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of, or result in, termination, cancelation or acceleration of any
obligation or to loss of a material benefit under, or result in the creation of
any Lien in or upon any of the properties or assets of Parent under, or give
rise to any increased, additional, accelerated or guaranteed rights or
entitlements under, any provision of (i) the Restated Articles of Incorporation
or the by-laws of Parent, (ii) any Contract to which Parent is a party or any of
its properties or assets is subject or (iii) subject to the governmental filings
and other matters referred to in the following sentence, any (A) statute, law,
ordinance, rule or regulation or (B) judgment, order or decree, in each case,
applicable to Parent or its properties or assets, other than, in the case of
clauses (ii) and (iii), any such conflicts, violations, breaches, defaults,
rights, losses, Liens or entitlements that individually or in the aggregate
could not reasonably be expected to impair in any material respect the ability
of Parent to perform its obligations under this Agreement or prevent or
materially delay the consummation of any of the transactions contemplated by
this Agreement. No consent, approval, order or authorization of, or
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registration, declaration or filing with, any Governmental Entity is required by
or with respect to Parent in connection with the execution and delivery of this
Agreement by Parent, the consummation by Parent of the transactions contemplated
hereby or compliance by Parent with the provisions hereof, except for (1)
filings under the HSR Act and any other applicable competition, merger control,
antitrust or similar law or regulation, (2) filings with the SEC of such reports
under the Exchange Act as may be required in connection with this Agreement and
the transactions contemplated hereby and (3) such other consents, approvals,
orders, authorizations, registrations, declarations and filings the failure of
which to be obtained or made individually or in the aggregate could not
reasonably be expected to impair in any material respect the ability of Parent
to perform its obligations under this Agreement or prevent or materially delay
the consummation of any of the transactions contemplated hereby.
SECTION 3. Covenants of Each Stockholder. Each Stockholder covenants and
agrees as follows:
(a) At any meeting of the stockholders of the Company called to vote upon
the Merger Agreement, or at any adjournment or postponement thereof, or in any
other circumstances upon which a vote, consent, adoption or other approval
(including by written consent solicitation) with respect to the Merger Agreement
is sought, such Stockholder shall vote (or cause to be voted) all the Subject
Shares of such Stockholder (owned of record or beneficially) in favor of, and
shall consent to (or cause to be consented to), the adoption of the Merger
Agreement and the approval of the Merger.
(b) At any meeting of the stockholders of the Company, or at any
adjournment or postponement thereof, or in any other circumstances upon which a
vote, consent, adoption or other approval (including by written consent
solicitation) is sought, such Stockholder shall vote (or cause to be voted) all
the Subject Shares of such Stockholder (owned of record or beneficially)
against, and shall not consent to (and shall cause not to be consented to), any
of the following (or any agreement to enter into, effect, facilitate or support
any of the following): (i) any Company Takeover Proposal or any transaction or
occurrence that if proposed and offered to the Company or its stockholders (or
any of them) would constitute a Company Takeover Proposal (collectively,
"Alternative Transactions") or (ii) any
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amendment of the Company Certificate or the by-laws of the Company or any other
proposal, action or transaction involving the Company or any of its Subsidiaries
or any of its stockholders, which amendment or other proposal, action or
transaction could reasonably be expected to prevent or materially impede or
delay the consummation of the Merger or the other transactions contemplated by
the Merger Agreement or this Agreement or to deprive Parent of any material
portion of the benefits to be received from the consummation of the Merger or
the other transactions contemplated by the Merger Agreement or this Agreement,
or change in any manner the voting rights of the Company Common Stock or any
other capital stock or voting interests or securities of the Company
(collectively, "Frustrating Transactions").
(c) Other than pursuant to the Merger Agreement or this Agreement, such
Stockholder shall not (i) sell, transfer, pledge, assign, tender or otherwise
dispose of (including by gift) (collectively, "Transfer"), or consent to or
permit any Transfer of, any Subject Shares of such Stockholder or any interest
therein, or enter into any Contract, option or other arrangement (including any
profit sharing arrangement) with respect to the Transfer of, or the creation or
offer of any derivative security in respect of, any Subject Shares of such
Stockholder (or any interest therein), to or with any person other than, in the
case of the Primary Stockholder to Citigroup Inc. or any of its direct or
indirect subsidiaries which shall have agreed to be bound by this Agreement as a
Stockholder by a written agreement reasonably satisfactory to Parent that has
been delivered to Parent, or (ii) enter into any voting arrangement, whether by
proxy, voting agreement or otherwise, with respect to any Subject Shares of such
Stockholder, and shall not commit or agree to take any of the foregoing actions.
Such Stockholder shall not, nor shall such Stockholder permit any entity under
such Stockholder's control to, deposit any Subject Shares of such Stockholder in
a voting trust.
(d) Such Stockholder shall not, nor shall such Stockholder permit any of
its Subsidiaries to, nor shall it authorize or permit any director, officer or
employee of such Stockholder or any of its Subsidiaries or any Representative of
such Stockholder or any of its Subsidiaries to, directly or indirectly, (i)
solicit, initiate or encourage, or take any other action knowingly to
facilitate, any Alternative Transaction or Frustrating Transaction, (ii) enter
into any agreement with
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respect to any Alternative Transaction or Frustrating Transaction or (iii) enter
into, continue or otherwise participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or
otherwise cooperate in any way with, or assist or participate in any effort or
attempt by any person with respect to, any Alternative Transaction or
Frustrating Transaction.
(e) Such Stockholder shall use its best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, and to assist and cooperate
with the other parties in doing all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
transactions contemplated by this Agreement. Such Stockholder shall not commit
or agree to take any action inconsistent with the transactions contemplated by
this Agreement.
(f) Such Stockholder shall not, nor shall such Stockholder permit any of
its Subsidiaries to, nor shall it authorize or permit any director, officer or
employee of such Stockholder or any of its Subsidiaries or any Representative of
such Stockholder or any of its Subsidiaries to, directly or indirectly, issue
any press release or make any other public statement or announcement with
respect to the Merger Agreement, this Agreement, the Merger or any of the other
transactions contemplated by the Merger Agreement or this Agreement, without the
prior written consent of Parent, except as may be required by applicable law.
(g) Notwithstanding anything to the contrary contained herein, nothing in
this Section 3 shall prohibit any Stockholder from, in his capacity as an
officer and/or director of the Company, taking any actions, on behalf of the
Company, that the Board of Directors of the Company is permitted to take under
Section 4.02 of the Merger Agreement.
SECTION 4. Further Assurances. Each Stockholder shall from time to time
execute and deliver, or cause to be executed and delivered, such additional or
further consents, documents and other instruments as Parent may request for the
purpose of effectuating the matters covered by this Agreement.
SECTION 5. Certain Events. (a) Each Stockholder agrees that this Agreement
and the obligations hereunder shall attach to such Stockholder's Subject Shares
and shall be binding
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upon any person or entity to which legal or beneficial ownership of such Subject
Shares shall pass, whether by operation of law or otherwise, including such
Stockholder's heirs, guardians, administrators or successors, and such
Stockholder further agrees to take all actions necessary to effectuate the
foregoing. In the event of any stock split, stock dividend, reclassification,
merger, reorganization, recapitalization or other change in the capital
structure of the Company affecting the capital stock of the Company, the number
of shares of Company Common Stock listed on Schedule A hereto opposite the name
of each Stockholder shall be adjusted appropriately. In addition, in the event
that any Stockholder acquires any additional shares of capital stock of the
Company or other voting interests or securities of the Company (including
through the exercise of any Company Stock Options or any other warrants, stock
options or similar instruments), the number of shares of Company Common Stock
listed on Schedule A hereto opposite the name of such Stockholder shall be
adjusted appropriately. This Agreement and the representations, warranties,
covenants, agreements and obligations hereunder shall attach to any additional
shares of capital stock of the Company or other voting interests or securities
of the Company issued to or acquired by any Stockholder directly or indirectly
(including through the exercise of any Company Stock Options or any similar
rights or instruments).
(b) Each Stockholder shall cause a counterpart of this Agreement to be
deposited with the Company at its principal place of business or registered
office where it shall be subject to the same right of examination by a
Stockholder of the Company, in person or by agent or attorney, as are the books
and records of the Company.
SECTION 6. Registration of Parent Common Stock.
(a) Registration. Parent shall prepare and file with the Securities and
Exchange Commission (the "Commission") not later than 45 days following the
Closing Date a registration statement (the "Registration Statement") with
respect to the Registrable Securities (as defined below) and thereafter use its
reasonable best efforts to cause such registration statement to be declared
effective under the Securities Act not later than 120 days following the Closing
Date. For purposes of this Agreement, "Registrable Securities" shall mean the
shares of Parent Common Stock issued to the primary stockholder noted as such on
Schedule
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A (the "Primary Stockholder") pursuant to the Merger Agreement and any shares of
Parent Common Stock or other securities issued in respect of such shares upon
any stock split, stock dividend, merger, consolidation, recapitalization or
similar event. Such securities shall cease to be Registrable Securities when (A)
a registration statement registering such securities shall have become effective
under the Securities Act and such securities have been sold pursuant thereto,
(B) such securities shall have been sold under Rule 144 (or successor provision)
under the Securities Act, (C) such securities shall have been otherwise
transferred to a party that is not an affiliate of the Primary Stockholder and
new certificates for them not bearing a legend restricting further transfer
shall have been delivered by Parent or (D) such securities shall have ceased to
be outstanding.
(b) Certain Delay Rights. (i) If at any time Parent provides written notice
to the Primary Stockholder that the Board of Directors of Parent or any duly
authorized committee of that board (the "Board") has determined, in its good
faith reasonable business judgment, that it would be materially disadvantageous
to Parent (because Parent is in possession of material non-public information
the disclosure of which would adversely affect Parent or such registration or
sale of Registrable Securities would materially interfere with or otherwise
adversely affect in any material respect any merger, acquisition, disposition or
other similar transaction that is material to Parent (a "Disadvantageous
Condition")) for the Registration Statement to be maintained effective, or to be
filed or to become effective, and setting forth in general terms the reasons for
such determination, Parent shall be entitled to cause the Registration Statement
to be withdrawn or the effectiveness of the Registration Statement to be
terminated, or, in the event the Registration Statement has not yet been filed,
Parent shall be entitled to not file the Registration Statement, until such
Disadvantageous Condition no longer exists (notice of which Parent shall
promptly deliver to the Primary Stockholder) but in no event shall such delay be
for a period of longer than 45 days from the date of the original notice from
Parent of the Disadvantages Condition.
(ii) Upon receipt by the Primary Stockholder of any notice from Parent of a
Disadvantageous Condition, the Primary Stockholder shall forthwith discontinue
use of the prospectus and any prospectus supplement under the Registration
Statement and shall suspend sales of Registrable Securities during such delay
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period. In the event that Parent elects to exercise its delay rights under this
Section 6(b), the Primary Stockholder agrees to keep confidential the fact of
such election and any information provided by Parent in connection therewith.
Notwithstanding anything else contained in this Agreement, neither the filing
nor the effectiveness of the Registration Statement may be delayed for more than
a total of 45 days in any 90 day period or for more than a total of 120 days in
any 365 day period pursuant to this Section 6(b).
(c) Expenses. Except as otherwise provided in this Agreement, Parent shall
pay all out-of-pocket fees and expenses incurred by Parent in compliance with
its obligations under this Section 6, including all registration filing fees,
printing expenses, fees and disbursements of counsel for Parent, and the fees
and expenses of Parent's accountants and its expenses incurred in connection
with any "road show" presentations in which it may participate at the request of
the joint lead managing underwriters (collectively, "Registration Expenses").
The Primary Stockholder shall pay (i) any transfer taxes relating to the sale or
disposition of the Registrable Securities and (ii) any underwriting discounts or
selling commissions applicable to the sale of Registrable Securities.
(d) Registration Procedures. In connection with the filing of the
Registration Statement Parent will, subject to Section 6(b):
(i) furnish the Primary Stockholder, as updated from time to time,
prior to the filing thereof with the Commission, a copy of the Registration
Statement (including any preliminary prospectus contained therein), and
each amendment thereto and each amendment or supplement, if any, to the
prospectus included therein and shall reflect in each such document, when
so filed with the Commission, such comments pertaining to the Primary
Stockholder as the Primary Stockholder may propose in writing;
(ii) prepare and file with the Commission such amendments and
supplements (including post-effective amendments and supplements) to the
Registration Statement and the prospectus used in connection therewith as
may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of Registrable Securities covered by the
Registration Statement;
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(iii) furnish such number of copies of the prospectus and other
documents incident thereto, including any amendment of or supplement
thereto (in each case including all exhibits), as the Primary Stockholder
from time to time may reasonably request in writing;
(iv) cause all Registrable Securities covered thereby to be listed on
each, if any, securities exchange on which similar securities issued by
Parent are then listed and use its reasonable best efforts to register or
qualify such Registrable Securities under such applicable state securities
or blue sky laws as the Primary Stockholder may reasonably request in
writing; provided, however, that Parent shall not be required for any such
purpose to (A) qualify generally to do business as a foreign company,
entity or a broker-dealer in any jurisdiction wherein it would not
otherwise be required to qualify but for the requirements of this
Agreement, (B) subject itself to taxation in any such jurisdiction or (C)
consent to general service of process in any such jurisdiction;
(v) provide a transfer agent and registrar for all such Registrable
Securities and a CUSIP number for all such Registrable Securities, in each
case not later than the effective date of such registration;
(vi) upon appropriate prior written notice by the Primary Stockholder,
make available for inspection by the Primary Stockholder, any underwriter
participating in any underwritten offering pursuant to Section 6(e), and
any attorney or accountant retained by the Primary Stockholder or any such
underwriter, on reasonable prior notice and during normal business hours,
reasonable financial and other records, pertinent corporate documents and
properties of Parent, and use its reasonable efforts to cause Parent's
officers and directors to supply all information reasonably requested in
writing by the Primary Stockholder or any such underwriter, attorney or
accountant in connection with the Registration Statement; provided,
however, that the Primary Stockholder and any such underwriter, attorney or
accountant shall have agreed to keep confidential all information so
provided, except as required by law or administrative process and except
for information that is available to the
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public other than as a result of a breach of such confidentiality
obligation;
(vii) furnish to the Primary Stockholder a copy of all material
documents filed with and all material correspondence from or to the
Commission relating to the Registration Statement;
(viii) immediately notify the Primary Stockholder, at any time when a
prospectus relating to the Registration Statement is required to be
delivered under the Securities Act, of Parent becoming aware that the
prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits 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 then
existing, and within ten days prepare and furnish to the Primary
Stockholder a reasonable number of copies of an amended or supplemental
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of Registrable 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 then existing;
(ix) otherwise comply with all applicable rules and regulations of the
Commission; and
(x) in connection with any underwritten offering pursuant to Section
6(e), to the extent applicable, furnish to the Primary Stockholder, a
signed counterpart, addressed to the Primary Stockholder, of an opinion of
counsel for Parent, dated the effective date of the Registration Statement,
and "comfort" letters signed by Parent's independent public accountants who
have examined and reported on Parent's financial statements included in the
Registration Statement, to the extent permitted by the standards of the
AICPA or other relevant authorities, covering substantially the same
matters with respect to the Registration Statement (and the prospectus
included therein) and, in the case of the accountants' "comfort" letters,
with respect to events subsequent to the date of such financial statements,
as are customarily covered in opinions of issuer's counsel and in
accountants' "comfort"
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letters delivered to the underwriters in underwritten public offerings of
securities.
(e) Underwriting. (i) In the event that the Primary Stockholder desires to
sell Registrable Securities pursuant to the Registration Statement in an
underwritten offering, there shall be two joint lead managing underwriters and
book runners and each of Parent and the Primary Stockholder shall, in its sole
discretion, select and obtain one investment banking firm of national reputation
to be such two joint lead managing underwriters and book runners. If requested
by such underwriters for any underwritten offering of Registrable Securities,
Parent shall enter into an underwriting agreement with such underwriters for
such offering, which agreement will contain such representations and warranties
by Parent and such other terms and provisions as are customarily contained in
underwriting agreements with respect to secondary distributions, including
indemnification and contribution provisions substantially to the effect and to
the extent provided in Section 6(f). Such underwriting agreement shall also
contain such representations and warranties by the Primary Stockholder and such
other terms and provisions as are customarily contained in underwriting
agreements with respect to secondary distributions, including indemnification
and contribution provisions substantially to the effect and to the extent
provided in Section 6(f). If requested by such underwriters, Parent shall make
available, upon advance notice, such employees as such underwriters may
reasonably request to prepare for and participate in any "road show"
presentations, provided that such preparation or participation does not
materially interfere with the performance of such employees' duties.
(ii) If, in the written opinion of each of the joint lead managing
underwriters, the total amount of securities to be registered in such
registration, including Registrable Securities, will exceed the maximum amount
of Parent's securities that can be marketed either (A) at a price reasonably
related to the then current market value of such securities, or (B) without
otherwise materially and adversely affecting the entire offering, then Parent
shall include in such registration only such maximum number of securities which,
in the reasonable opinion of such underwriters, can be sold in the following
order of priority: (1) first, all the Registrable Securities requested to be
included in such registration by the Primary Stockholder, (2) second, all the
Registrable Securities requested to be
14
included in such registration by any other Stockholder and (3) third, all other
shares of Parent Common Stock to be included by Parent or any third party
exercising rights similar to those granted under this Agreement. To the extent
that shares of Parent Common Stock to be included in the Registration Statement
must be allocated among the holders of Parent Common Stock pursuant to clauses
(1), (2) or (3) above, such shares shall be allocated among the applicable
holder(s) of Parent Common Stock based on the number of shares of Parent Common
Stock that such holder(s) shall have requested to be included therein.
(f) Indemnification and Contribution. (i) Parent agrees to indemnify and
hold harmless, to the fullest extent permitted by law, the Primary Stockholder,
its officers, directors, agents, trustees, stockholders and each person, if any,
who controls the Primary Stockholder (within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act) from and against any and
all losses, claims, damages, liabilities and expenses (including reasonable
costs of investigation and reasonable attorneys' fees, disbursements and
expenses) arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
amendment thereof, any preliminary prospectus or prospectus (as amended or
supplemented if Parent shall have furnished any amendment or supplements
thereto) relating to the Registrable Securities or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except insofar as such untrue statement or
omission or alleged untrue statement or omission was made (x) in reliance upon
and in conformity with any information furnished to Parent in writing by the
Primary Stockholder expressly for use therein, (y) in any prospectus used after
such time as Parent advised the Primary Stockholder in writing that the filing
of a post-effective amendment or supplement thereto was required, other than
such prospectus as so amended or supplemented or (z) in any prospectus used
after such time as the obligation of Parent to keep such prospectus effective
and current shall have expired.
(ii) In connection with the Registration Statement, the Primary Stockholder
shall furnish to Parent in writing such information with respect to the Primary
Stockholder as Parent may reasonably request for use in connection with the
Registration Statement or related prospectus and agrees to indemnify and hold
15
harmless Parent, its officers, directors, agents, trustees and stockholders and
each person, if any, that controls Parent (within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act) from and against any
and all losses, claims, damages, liabilities and expenses (including reasonable
costs of investigation and reasonable attorneys' fees, disbursements and
expenses) arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
amendment thereof, any preliminary prospectus or prospectus (as amended or
supplemented if Parent shall have furnished any amendment or supplement thereto)
relating to the Registrable Securities or any omission or alleged omission to
state therein a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, but only
insofar as such losses, claims, damages, liabilities and expenses are caused by
information furnished in writing to Parent by the Primary Stockholder expressly
for use therein; provided, however, that in no event shall the liability of the
Primary Stockholder under this Section 6(f)(ii) exceed the proceeds obtained by
the sale of the Primary Stockholder's Registrable Securities in any such
registration.
(iii) Each party indemnified under subparagraph (i) or (ii) above shall,
promptly after receipt of notice of a claim or action against such indemnified
party in respect of which indemnity may be sought hereunder, notify the
indemnifying party in writing of the claim or action; provided that the failure
to notify the indemnifying party shall not relieve it from any liability that it
may have to an indemnified party on account of the indemnity agreement contained
in subparagraph (i) or (ii) above except to the extent that the indemnifying
party was actually prejudiced by such failure, and in no event shall such
failure relieve the indemnifying party from any other liability that it may have
to such indemnified party. If any such claim or action shall be brought against
an indemnified party, and it shall have notified the indemnifying party thereof,
unless based on the advice of counsel to such indemnified party that a conflict
of interest under the applicable rules of professional conduct between such
indemnified party and indemnifying parties may exist in respect of such claim or
that there may be additional defenses available to the indemnified party, the
indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other similarly notified indemnifying party, to
assume the defense thereof.
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After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action and the prompt
undertaking of such defense with counsel reasonably acceptable to the
indemnified party, the indemnifying party shall not be liable to the indemnified
party under this Section 6(f) for any legal or other expenses subsequently
incurred by the indemnified party in connection with the defense thereof. Any
indemnifying party against whom indemnity may be sought under this Section 6(f)
shall not be liable to indemnify an indemnified party if such indemnified party
settles such claim or action without the consent of the indemnifying party (such
consent not to be unreasonably withheld). The indemnifying party may not agree
to any settlement of any such claim or action, other than solely for monetary
damages for which the indemnifying party shall be responsible hereunder, the
result of which any remedy or relief shall be applied to or against the
indemnified party, without the prior written consent of the indemnified party,
which consent shall not be unreasonably withheld. In any action hereunder as to
which the indemnifying party has assumed the defense thereof, the indemnified
party shall continue to be entitled to participate in the defense thereof, with
counsel of its own choice, but the indemnifying party shall not be obligated
hereunder to reimburse the indemnified party for the costs thereof unless (A)
the indemnifying party agrees to pay such costs or (B) the indemnifying party
fails to promptly assume and continue the defense of such claim or action with
counsel reasonably satisfactory to the indemnified party.
(iv) If the indemnification provided for in this Section 6(f) from an
indemnifying party shall for any reason be unavailable to an indemnified party
(other than in accordance with the terms of this Agreement) in respect of any
loss, claim, damage, liability or expense referred to herein, then such
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage, liability or expense in such proportion as is
appropriate to reflect the relative fault of such indemnifying party on the one
hand and of such indemnified party on the other hand in connection with the
statements or omissions (or actions) that resulted in such losses, claims,
damages, liabilities or expenses as well as any other relevant equitable
considerations; provided, however, that in no event shall the liability of the
Primary Stockholder under this Section 6(f)(iv) exceed the proceeds obtained by
the sale of the Primary Stockholder's Registrable
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Securities in any such registration. The relative fault of the indemnifying
party on the one hand and the indemnified party on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by such indemnifying party or
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by an indemnified party as a result of the loss,
claim, damage, liability or expense in respect thereof referred to above in this
subparagraph (iv), shall be deemed to include, for purposes of this subparagraph
(iv), any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
(v) Parent and the Primary Stockholder agree that it would not be just and
equitable if contribution pursuant to Section 6(f)(iv) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in subparagraph (iv) above.
Notwithstanding any other provision of this Section 6(f), the Primary
Stockholder shall not be required to contribute any amount in excess of the
amount by which the proceeds of the offering received by the Primary Stockholder
exceeds the amount of any damages which the Primary Stockholder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(vi) The obligations of Parent and the Primary Stockholder under this
Section 6(f) shall be in addition to any liability that any party may otherwise
have to any other party.
(g) Stockholder Agreements. The Primary Stockholder hereby covenants and
agrees that:
(i) it will not sell any Registrable Securities under the Registration
Statement until it has received notice from Parent that the Registration
Statement and any post-effective amendments thereto have become effective;
provided that Parent shall notify the Primary Stockholder promptly when the
Registration Statement and any post-effective amendments thereto have
become effective;
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(ii) it will comply with the prospectus delivery requirements of the
Securities Act as applicable to it in connection with the sales of
Registrable Securities pursuant to the Registration Statement;
(iii) it shall promptly furnish to Parent such information regarding
the Primary Stockholder, the Registrable Securities held by it and the
distribution proposed by the Primary Stockholder as Parent may reasonably
request and shall otherwise cooperate with Parent to the extent such
information or cooperation is required in connection with any registration,
qualification or compliance referred to in this Agreement; and
(iv) it shall notify Parent as promptly as practicable of any
inaccuracy or change in information previously furnished to Parent or of
the happening of any event, in either case as a result of which any
prospectus relating to such registration contains an untrue statement of a
material fact regarding the Primary Stockholder or the distribution of the
Registrable Securities or omits to state any material fact regarding the
Primary Stockholder or the distribution of the Registrable Securities
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, and to furnish to Parent promptly any additional information
required to correct and update any previously furnished information or
required such that such prospectus shall not contain, with respect to the
Primary Stockholder or the distribution of the Registrable Securities, 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,
in the light of the circumstances under which they were made, not
misleading.
(h) Shelf Registration. Notwithstanding anything to the contrary contained
herein, in the event that all of the Registrable Securities of the Primary
Stockholder have not been sold upon the consummation of the offering
contemplated by the Registration Statement, Parent shall prepare and file or
cause to be prepared and filed with the Commission as soon as reasonably
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practicable after the consummation of such offering a registration statement to
be made on a delayed or continuous basis pursuant to Rule 415 of the Securities
Act registering the resale from time to time by the Primary Stockholder of all
of the Registrable Securities owned by the Primary Stockholder (the "Shelf
Registration Statement"). The Shelf Registration Statement shall be on Form S-3
or another appropriate form permitting registration of such Registrable
Securities for resale by the Primary Stockholder in accordance with the methods
of distribution set forth in the Shelf Registration Statement (such methods of
distribution to include underwritten offerings). Parent shall not permit any
securities other than Registrable Securities owned by the Primary Stockholder to
be included in the Shelf Registration Statement. Parent shall use its reasonable
best efforts to cause the Shelf Registration Statement to be declared effective
under the Securities Act as soon as reasonably practicable after such Shelf
Registration Statement is initially filed with the Commission, and Parent shall
use its reasonable best efforts to keep the Shelf Registration Statement
continuously effective under the Securities Act until the earlier of (i) the
sale of all of the Registrable Securities included in the Shelf Registration
Statement or (ii) the one-year anniversary of the date on which the Registration
Statement described in Section 6(a) becomes effective. Other than for purposes
of this Section 6(h) and Section 8(B), the Shelf Registration Statement shall be
considered to be a "Registration Statement" under the terms of this Agreement.
SECTION 7. Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise, by any of the parties hereto without the
prior written consent of the other parties hereto, except that each of Parent
and the Primary Stockholder may, in their sole discretion assign, in whole or in
one or more parts, any or all of their rights, interests and obligations under
this Agreement to its successors or affiliates and to any person who acquires a
substantial portion of the stock or substantially all of the assets of Parent or
the Primary Stockholder, as applicable; provided that no such assignment shall
relieve Parent or the Primary Stockholder of any of their obligations under this
Agreement. Any purported assignment in violation of this Section 7 shall be
void. Subject to the preceding sentences of this Section 7, this Agreement shall
be binding upon, inure to the benefit of and be enforceable
20
by, the parties hereto and their respective successors and assigns.
SECTION 8. Termination. Except for the provisions of Section 6, this
Agreement shall terminate upon the earlier of (a) the Effective Time, (b) the
termination of the Merger Agreement in accordance with its terms and (c) any
amendment of the Merger Agreement without the consent of the Primary Stockholder
that (i) decreases the Exchange Ratio, (ii) otherwise materially adversely
affects the economic benefits of the Merger to the Primary Stockholder or the
holders of Company Common Stock or treats any holder of Company Common Stock
differently from any other holder, (iii) extends the date referred to in Section
7.01(b)(i) of the Merger Agreement or (iv) creates any additional conditions to
the Merger; provided, however, that for purposes of this sentence, the term
"Merger Agreement" shall mean the Agreement and Plan of Merger by and among
Parent, Sub and the Company of even date herewith, as in effect on the date
hereof, and capitalized terms used in this sentence shall have the meaning given
such terms therein. The provisions of Section 6 shall terminate upon the earlier
of (A) the date on which there ceases to be any Registrable Securities and (B)
the one-year anniversary of the date on which the Registration Statement becomes
effective. In the event of the termination of this Agreement pursuant to this
Section 8, except as set forth herein, this Agreement shall forthwith become
null and void, there shall be no liability on the part of any of the parties,
and except as set forth in this Section 8 all rights and obligations of each
party hereto shall cease; provided that no such termination of this Agreement
shall relieve any party hereto from any liability for any willful and material
breach of any provision of this Agreement prior to termination.
SECTION 9. General Provisions. (a) Amendments. This Agreement may not be
amended except by an instrument in writing signed by all of the parties hereto.
(b) Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, telecopied (with confirmation) or sent by
overnight or same-day courier (providing proof of delivery) to Parent in
accordance with Section 8.02 of the Merger Agreement and to the Stockholders
(including the Representative, at their respective addresses set
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forth on Schedule A hereto (or at such other address for a party as shall be
specified by like notice).
(c) Interpretation. When a reference is made in this Agreement to a Section
or a Schedule, such reference shall be to a Section of, or a Schedule to, this
Agreement unless otherwise indicated. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. The
term "or" is not exclusive. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms. Any
agreement or instrument defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement or instrument as from
time to time amended, modified or supplemented. References to a person are also
to its permitted successors and assigns. For purposes of this Agreement,
beneficial ownership shall be deemed not to include beneficial ownership
attributable to a Stockholder solely by reason of a Stockholder being owned or
controlled directly or indirectly by Citigroup Inc.
(d) Counterparts; Effectiveness. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties hereto and delivered to the other party. The effectiveness
of this Agreement shall be conditioned upon the execution and delivery of the
Merger Agreement by each of the parties thereto.
(e) Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) (i) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties hereto with respect to the subject matter of
this Agreement and (ii) is not intended to confer upon any person other than the
parties hereto (and the persons specified as indemnitees in Section 6(f)) any
rights or remedies.
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(f) Governing Law. This agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to any
principles of conflicts of laws of such state.
(g) Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner and to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
SECTION 10. Specific Enforcement; Jurisdiction. The parties agree that
irreparable damage would occur and that the parties will not have any adequate
remedy at law in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in any Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any court of the United States located in the State of
Delaware or of any Delaware state court in the event any dispute arises out of
this Agreement or the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request and (c) agrees that it will not bring any action relating to
this Agreement or the transactions contemplated by this Agreement in any court
other than a court of the United States located in the State of Delaware or a
Delaware state court.
SECTION 11. Agent for Service of Process. Each Stockholder hereby appoints
the Company, with offices on the date hereof as provided for in Section 8.02 of
the Merger Agreement, as its authorized agent (the "Authorized Agent"), upon
whom process may be served in any suit, action or proceeding arising
23
out of or relating to this Agreement or any transaction contemplated by this
Agreement that may be instituted in any court described in Section 10. Each
Stockholder agrees to take any and all action, including the filing of any and
all documents, that may be necessary to establish and continue such appointment
in full force and effect as aforesaid. Each Stockholder agrees that service of
process upon the Authorized Agent shall be, in every respect, effective service
of process upon such Stockholder.
SECTION 12. Stockholder Capacity. No person executing this Agreement who is
or becomes during the term hereof a director or officer of the Company makes any
agreement or understanding herein in his or her capacity as such director or
officer. Each Stockholder signs solely in his or her capacity as the record
holder and beneficial owner of, or the trustee of a trust whose beneficiaries
are the beneficial owners of, such Stockholder's Subject Shares and nothing
herein shall limit or affect any actions taken by a Stockholder in its capacity
as an officer or director of the Company to the extent specifically permitted by
the Merger Agreement.
SECTION 13. Waiver of Jury Trial. Each party hereto hereby waives, to the
fullest extent permitted by applicable law, any right it may have to a trial by
jury in respect of any suit, action or other proceeding directly or indirectly
arising out of, under or in connection with this Agreement. Each party hereto
(a) certifies that no representative, agent or attorney of any other party has
represented, expressly or otherwise, that such party would not, in the event of
any action, suit or proceeding, seek to enforce the foregoing waiver and (b)
acknowledges that it and the other parties hereto have been induced to enter
into this Agreement, by, among other things, the mutual waiver and
certifications in this Section 13.
SECTION 14. Indemnification. (a) General. Parent agrees that if the Primary
Stockholder is made a party or threatened to be made a party to any action, suit
or proceeding, whether civil, criminal, administrative or investigative, to the
extent arising out of or pertaining to the Primary Stockholder in its capacity
as a stockholder of the Company (in accordance with Section 12) and arising out
of or related to this Agreement or the transactions contemplated hereby (a
"Proceeding"), the Primary Stockholder shall be indemnified and held harmless by
Parent to the fullest extent authorized by applicable law, as the
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same exists or may hereafter be amended, against all Expenses (as hereinafter
defined) incurred or suffered by the Primary Stockholder that are directly
related to such Proceeding. The foregoing indemnity shall not apply to the
extent that the claims in any Proceeding are judicially determined to arise out
of a breach of the Primary Stockholder's representations, warranties or
covenants contained in this Agreement.
(b) Expenses. As used in this Agreement, the term "Expenses" shall include
damages, losses, judgments, liabilities, fines, penalties, settlements, costs,
reasonable attorneys' fees and any other expenses reasonably incurred in
connection with a Proceeding.
(c) Notice of Claim. The Primary Stockholder shall promptly deliver to
Parent notice of any claim made against it for which indemnification will or
could be sought under this Agreement, but the failure of the Primary Stockholder
to deliver such notice shall not relieve Parent of any liability Parent may have
to the Primary Stockholder except to the extent that Parent is actually
prejudiced thereby. In addition, each of the Primary Stockholder and Parent
shall deliver to the other party such information and cooperate with the other
party as such other party may reasonably require.
(d) Defense of Claim. With respect to any Proceeding as to which the
Primary Stockholder notifies Parent of the commencement thereof:
(i) Parent will be entitled to participate therein at its own expense.
(ii) To the extent that it may wish, Parent will be entitled to assume
the defense thereof, unless based on the advice of counsel to the Primary
Stockholder, a conflict of interest under the applicable rules of
professional conduct between the Primary Stockholder and Parent may exist
in respect of such claim or there may be additional defenses available to
the Primary Stockholder. In the event that Parent does not assume the
defense thereof, the reasonable fees and expenses of counsel to the Primary
Stockholder shall be at the expense of Parent. In any Proceeding as to
which Parent has assumed the defense thereof, the Primary Stockholder shall
continue to be entitled to participate in the defense thereof, with counsel
of its own choice, but
25
Parent shall not be obligated hereunder to reimburse the Primary
Stockholder for the costs thereof unless (A) Parent agrees to pay such
costs or (B) Parent fails to promptly assume and continue the defense of
such Proceeding with counsel reasonably satisfactory to the Primary
Stockholder.
(iii) Parent shall not be liable to indemnify the Primary Stockholder
under this Agreement for any amounts paid in settlement of any action or
claim effected without its written consent, such consent not be
unreasonably withheld. Parent may not agree to any settlement of any such
claim or action, other than solely for monetary damages for which Parent
shall be responsible hereunder, the result of which any remedy or relief
shall be applied to or against the Primary Stockholder or which requires
any admission of liability of the Primary Stockholder, without the prior
written consent of the Primary Stockholder, which consent shall not be
unreasonably withheld.
(e) Non-exclusivity. The right to indemnification and the payment of
Expenses incurred in defending a Proceeding conferred in this Section 14 shall
not be exclusive of any other right which the Primary Stockholder may otherwise
have.
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IN WITNESS WHEREOF, Parent and Stockholders have caused this Agreement to
be signed by their respective officers thereunto duly authorized, all as of the
date first written above.
XXXX CORPORATION,
by
--------------------------------------
Name:
Title:
COURT SQUARE CAPITAL LIMITED,
by
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Name:
Title:
