EXHIBIT 4.13
GENERAL MANUFACTURED HOUSING, INC.
AND
GMH HOLDINGS, INC.
SECURITIES PURCHASE AGREEMENT
December 21, 1995
TABLE OF CONTENTS
SECTION 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
AUTHORIZATION AND SALE OF THE SECURITIES . . . . . . . . . . . . . . . . . . 1
1.1 Authorization . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Sale of the Securities. . . . . . . . . . . . . . . . . . . . 2
SECTION 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
CLOSING DATE; DELIVERY . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Delivery. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
REPRESENTATIONS AND WARRANTIES OF THE GMH COMPANIES. . . . . . . . . . . . . 3
3.1 Organization and Qualification. . . . . . . . . . . . . . . . 3
3.2 Certificate of Incorporation and Bylaws . . . . . . . . . . . 3
3.3 Corporate Power . . . . . . . . . . . . . . . . . . . . . . . 3
3.4 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . 4
3.5 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . 4
3.6 Authorization . . . . . . . . . . . . . . . . . . . . . . . . 5
3.7 Financial Statements. . . . . . . . . . . . . . . . . . . . . 6
3.8 Title to Properties and Assets. . . . . . . . . . . . . . . . 7
3.9 Related-Party Transactions. . . . . . . . . . . . . . . . . . 8
3.10 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.11 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.12 Intellectual Property . . . . . . . . . . . . . . . . . . . . 8
3.13 Material Contracts. . . . . . . . . . . . . . . . . . . . . . 9
3.14 Compliance with Other Instruments . . . . . . . . . . . . . . 10
3.15 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.16 Registration Rights . . . . . . . . . . . . . . . . . . . . . 11
3.17 Governmental Consent. . . . . . . . . . . . . . . . . . . . . 11
3.18 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.19 Tax Returns, Payments, and Elections. . . . . . . . . . . . . 12
3.20 Environmental and Safety Laws . . . . . . . . . . . . . . . . 13
3.21 Brokers or Finders. . . . . . . . . . . . . . . . . . . . . . 14
3.22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.23 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.24 Federal Reserve Regulations . . . . . . . . . . . . . . . . . 15
3.25 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.26 Securities Act. . . . . . . . . . . . . . . . . . . . . . . . 16
3.27 Insurance.. . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.28 Issuance Taxes. . . . . . . . . . . . . . . . . . . . . . . . 16
3.29 Other Representations . . . . . . . . . . . . . . . . . . . . 16
3.30 Small Business Concern. . . . . . . . . . . . . . . . . . . . 16
3.31 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . 16
3.32 Acquisition and Financing . . . . . . . . . . . . . . . . . . 17
SECTION 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS . . . . . . . . . . . . . . 17
4.1 Experience. . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.2 Investment. . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.3 Rule 144. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.4 No Public Market. . . . . . . . . . . . . . . . . . . . . . . 18
4.5 Access to Data. . . . . . . . . . . . . . . . . . . . . . . . 18
4.6 Authorization . . . . . . . . . . . . . . . . . . . . . . . . 18
4.7 Brokers or Finders. . . . . . . . . . . . . . . . . . . . . . 18
4.8 Accredited Investor . . . . . . . . . . . . . . . . . . . . . 18
SECTION 5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
CONDITIONS TO CLOSING OF THE PURCHASERS. . . . . . . . . . . . . . . . . . . 19
5.1 Representations and Warranties. . . . . . . . . . . . . . . . 19
5.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.3 Compliance Certificate. . . . . . . . . . . . . . . . . . . . 19
5.4 Blue Sky Law. . . . . . . . . . . . . . . . . . . . . . . . . 19
5.5 Restated Certificates . . . . . . . . . . . . . . . . . . . . 19
5.6 Small Business Concern Documents. . . . . . . . . . . . . . . 19
5.7 Proceedings and Documents . . . . . . . . . . . . . . . . . . 19
5.8 Board of Directors. . . . . . . . . . . . . . . . . . . . . . 20
5.9 Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . . 20
5.10 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . 20
5.11 Stockholders Agreement. . . . . . . . . . . . . . . . . . . . 20
5.12 Investors' Rights Agreement.. . . . . . . . . . . . . . . . . 20
5.13 SIHI Fee Agreement. . . . . . . . . . . . . . . . . . . . . 20
5.14 Minimum Investment. . . . . . . . . . . . . . . . . . . . . . 20
5.15 Reliance Certificates . . . . . . . . . . . . . . . . . . . . 21
5.16 Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.17 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.18 Legal and Investigative Fees . . . . . . . . . . . . . . 21
5.19 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . 21
5.20 No Adverse Change . . . . . . . . . . . . . . . . . . . . . . 22
5.21 Related Party Transactions. . . . . . . . . . . . . . . . . . 22
5.22 Amendment to Purchase Agreement . . . . . . . . . . . . . . . 22
5.23 Subordination Agreement . . . . . . . . . . . . . . . . . . . 22
5.24 Satisfaction of Obligation. . . . . . . . . . . . . . . . . . 22
SECTION 6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
CONDITIONS TO CLOSING OF THE COMPANY . . . . . . . . . . . . . . . . . . . . 22
6.1 Representations and Warranties. . . . . . . . . . . . . . . . 22
6.2 Blue Sky Law. . . . . . . . . . . . . . . . . . . . . . . . . 23
6.3 Minimum Investment. . . . . . . . . . . . . . . . . . . . . . 23
SECTION 7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
COVENANTS OF THE GMH COMPANIES . . . . . . . . . . . . . . . . . . . . . . . 23
7.1 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . 23
7.2 Payment of Principal and Interest . . . . . . . . . . . . . . 23
7.3 Prompt Payment of Taxes . . . . . . . . . . . . . . . . . . . 23
7.4 Maintenance of Properties and Leases. . . . . . . . . . . . . 24
7.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.6 Accounts and Records. . . . . . . . . . . . . . . . . . . . . 24
7.7 Compliance with Requirements of Governmental Authorities. . . 24
7.8 Maintenance of Corporate Existence, etc . . . . . . . . . . . 24
7.9 Full Time Employment. . . . . . . . . . . . . . . . . . . . . 25
7.10 Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.11 Restrictions on Dividends and Distributions . . . . . . . . . 25
7.12 Certain Restrictions. . . . . . . . . . . . . . . . . . . . . 25
7.13 Transactions with Affiliates. . . . . . . . . . . . . . . . . 26
7.14 Limitation on Indebtedness. . . . . . . . . . . . . . . . . . 26
SECTION 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION. . . . . . . . . 30
8.1 Survival of Representations and Warranties. . . . . . . . . . 30
8.2 Indemnification by the Company. . . . . . . . . . . . . . . . 30
8.3 Indemnification by the Purchasers . . . . . . . . . . . . . . 30
SECTION 9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.1 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 31
9.2 Successors and Assigns; Third Party Beneficiaries . . . . . . 31
9.3 Entire Agreement; Amendment and Waiver. . . . . . . . . . . . 31
9.4 Notices, etc. . . . . . . . . . . . . . . . . . . . . . . . . 31
9.5 Delays or Omissions . . . . . . . . . . . . . . . . . . . . . 32
9.6 References. . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.7 Severability. . . . . . . . . . . . . . . . . . . . . . . . . 32
9.8 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . 32
9.9 Pronouns. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.10 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 32
9.11 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.12 Certain Definitions . . . . . . . . . . . . . . . . . . . . . 33
SCHEDULE A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
EXHIBIT A - Form of Restated Certificate
EXHIBIT B - Form of Junior Note
EXHIBIT C - Disclosure Schedule
EXHIBIT D - Form of Investors' Rights Agreement
EXHIBIT E - Form of Stockholders Agreement
EXHIBIT F - Form of Officer's Certificate
EXHIBIT G - Form of Opinion of Company's Counsel
EXHIBIT H - Xxx Xxxxx Reliance Certificate
EXHIBIT I - Xxxx Xxxxx Reliance Certificate
GENERAL MANUFACTURED HOUSING, INC.
AND
GMH HOLDINGS, INC.
SECURITIES PURCHASE AGREEMENT
This agreement (this "Agreement") is made effective as of December 21,
1995, among GMH HOLDINGS, INC., a Delaware corporation (the "Company"), GENERAL
MANUFACTURED HOUSING, INC., a Georgia corporation and a successor by merger to
GMH Acquisition Corp., a Delaware corporation ("GMH"), and each of the entities
set forth on the "Schedule of Purchasers" attached hereto as Schedule A (the
"Purchasers").
GMH Acquisition Corp., a Delaware corporation ("Acquisition Co."), has
entered into a Stock Purchase Agreement, dated as of October 10, 1995, as
amended (the "Stock Purchase Agreement"), with the Sellers (as defined therein),
providing for the purchase of all of the issued and outstanding capital stock of
General Manufactured Housing, Inc., a Georgia corporation ("Pre-Merger GMH").
Immediately prior to such purchase, Xxxxx Housing LLC, a Georgia limited
liability company ("Xxxxx" and, together with Pre-Merger GMH, the "Acquired
Entities") will be merged with and into Pre-Merger GMH. Concurrently with the
consummation of the transactions contemplated by this Agreement, (i) Acquisition
Co. will acquire such stock of Pre-Merger GMH and (ii) Acquisition Co. will be
merged (the "Merger") into Pre-Merger GMH with the effect that GMH shall become
a wholly-owned subsidiary of the Company as the surviving entity. The Company
together with GMH are sometimes collectively referred to as the "GMH Companies".
The transactions described above, together with the related
transactions to be consummated on the Closing Date, are collectively sometimes
referred to herein as the "Acquisition".
SECTION 1
AUTHORIZATION AND SALE OF THE SECURITIES
1.1 Authorization. The Company will have authorized before the
Closing (as defined below) the sale and issuance to the Purchasers of (a)
8,000,000 shares of Series A Redeemable Preferred Stock, par value $0.001 per
share (the "Series A Shares"), (b) 750,000 shares of Series B Convertible
Preferred Stock, par value $0.001 per share (the "Series B Shares")
(representing the right to convert into shares of Class C Common Stock
representing approximately 17% of the Common Stock of the Company on a fully
diluted basis), and (c) 1,218,750 shares (the "Class A Common Shares") of the
Company's Class A Common Stock, par value $0.001 per share ("Class A Common
Stock") (representing approximately 28% of the Common Stock of the Company on a
fully-diluted basis). GMH will have authorized before the Closing the sale and
issuance of GMH's Junior Subordinated Notes due June 30, 2003 in the total
aggregate principal amount of $5,000,000.00 (the "Junior Notes"). The Junior
Notes shall be dated the Closing Date (as defined below) and shall be in the
form attached as Exhibit B to this Agreement. The term Securities means
collectively the Series A Shares, the Series B Shares and the Class A Common
Shares. The Securities have the rights, preferences, privileges, and
restrictions as set forth in the Company's Restated Certificate of Incorporation
(the "Restated Certificate") attached hereto as Exhibit A.
1.2 Sale of the Securities and Junior Notes. Subject to the terms
and conditions hereof, (a) the Company shall sell and issue to each Purchaser,
and each Purchaser shall purchase from the Company, severally
but not jointly, the Securities specified opposite such Purchaser's name on the
Schedule of Purchasers, at the purchase price set forth on such schedule and (b)
GMH shall sell and issue to each Purchaser, and each Purchaser shall purchase
from GMH, severally but not jointly, the Junior Notes in such amounts specified
opposite such Purchaser's name on the Schedule of Purchasers, at the purchase
price set forth on such schedule. The Company's and GMH's agreement with each of
the Purchasers is a separate agreement, and the sale of Securities and the
Junior Notes to each of the Purchasers is a separate sale.
SECTION 2
CLOSING DATE; DELIVERY
2.1 Closing. The closing of the purchase and sale of the Securities
and the Junior Notes hereunder (the "Closing") shall take place at the offices
of Nixon, Hargrave, Devans & Xxxxx LLP at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
on December 20, 1995, or at such other place and time upon which the Company and
the Purchasers shall agree, as evidenced by the completion of the transactions
contemplated hereby. The date of Closing is referred to as the "Closing Date".
2.2 Delivery. At the Closing, (a) the Company shall deliver to each
Purchaser the appropriate certificate(s) representing the Securities purchased
by such Purchaser at the Closing and (b) GMH shall deliver to each Purchaser a
Junior Note representing the Junior Notes purchased by such Purchaser at the
Closing, which shall be delivered against payment of the purchase price therefor
in the amount specified in the Schedule of Purchasers, by wire transfer.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE GMH COMPANIES
The Company and GMH hereby jointly and severally represent and warrant
(which representations and warranties are deemed made immediately following the
consummation of the Acquisition and the Merger) to each Purchaser that, except
as set forth on the Disclosure Schedule attached hereto as Exhibit C,
specifically identifying the relevant subparagraph(s) hereof, which Disclosure
Schedule shall be deemed to be part of the representations and warranties as if
made hereunder:
3.1 Organization and Qualification. (a) The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has the requisite corporate power and authority to own,
lease and operate its assets, properties and business and to carry on its
business as it is now being conducted or contemplated to be conducted, including
such business as the Company will undertake as a result of the Acquisition.
(b) GMH is a corporation duly organized, validly existing and in
good standing under the laws of the State of Georgia, and has the requisite
corporate power and authority to own, lease and operate its assets, properties
and business and to carry on its business as it is now being conducted or
contemplated to be conducted, including such business as GMH will undertake as a
result of the Acquisition.
(c) The Company, GMH and each of their respective Subsidiaries
are duly qualified as a foreign corporation to transact business, and is in good
standing, in each jurisdiction where the character of its properties, owned or
leased, or the nature of its activities makes such qualification necessary,
except where the failure to be so qualified, individually or in the aggregate,
would not have a material adverse effect on the business, assets, properties,
operations, results of operations, condition (financial or otherwise) or
prospects of the Company, GMH and their Subsidiaries taken as a whole (a
"Material Adverse Effect").
3.2 Certificate of Incorporation and Bylaws. The Company has
delivered to the Purchasers true, correct, and complete copies of the Company's
certificate of incorporation, as amended through the date hereof, and the
Company's bylaws, as amended through the date hereof. GMH has delivered to the
Purchasers true, correct, and complete copies of GMH's certificate of
incorporation, as amended through the date hereof, and GMH's bylaws, as amended
through the date hereof.
3.3 Corporate Power. Each of the Company and GMH has all
requisite corporate power and authority to execute and deliver this Agreement
and the Ancillary Agreements (as defined in Section 3.6 below) to which it is a
party, to sell and issue the Securities hereunder, in the case of the Company,
and to sell and issue the Junior Notes, in the case of GMH, to consummate the
transactions contemplated by the Stock Purchase Agreement (including the
financings and refinancings contemplated thereby), to consummate the Merger as
contemplated by the Merger Instruments, to make the borrowing evidenced by the
Junior Notes, and to carry out and perform its respective obligations under the
terms of this Agreement, the Stock Purchase Agreement, the Restated Certificate
and each of the Ancillary Agreements to which it is a party.
3.4 Subsidiaries. None of the GMH Companies has any direct or
indirect Subsidiaries other than, in the case of the Company, GMH. Neither of
the GMH Companies, directly or indirectly, owns or controls or has any capital
or other equity interest or participation (or any interest convertible into or
exchangeable or exercisable for, any capital or other equity interest or
participation), nor is either of the GMH Companies, directly or indirectly,
subject to any obligation or requirement to provide funds to or invest in, any
person, except as provided in Section 3.4 of the Disclosure Schedule.
3.5 Capitalization. (a) The authorized capital stock of the Company
will, upon the filing of the Restated Certificate, consist of 17,462,500 shares,
(i) 4,375,000 of which are designated Class A Common Stock, par value $0.001 per
share (the "Class A Common Stock"), (ii) 787,500 of which are designated Class B
Common Stock, par value $0.001 per share (the "Class B Common Stock"), (iii)
2,150,000 shares of which are designated Class C Common Stock, par value $0.001
per share (the "Class C Common Stock; and collectively with the Class A Common
Stock and the Class B Common Stock, the "Common Stock"), and (iv) 10,150,000 of
which are designated Preferred Stock, par value $0.001 per share (the "Preferred
Stock"), 8,000,000 shares of which are designated "Series A Redeemable Preferred
Stock" (the "Series A Shares"), and 2,150,000 shares of which are designated
"Series B Convertible Preferred Stock." All issued and outstanding shares of the
Company's capital stock (including those issued in connection with the
Acquisition) have been duly authorized and validly issued, are fully paid and
nonassessable, and were issued in compliance with all applicable federal and
state securities laws and are owned of record, and to the Company's knowledge
beneficially, by the shareholders in the amounts set forth in Section 3.5 of the
Disclosure Schedule. Section 3.5 of the Disclosure Schedule lists all of the
issued and outstanding capital stock of the Company after giving effect to the
transactions contemplated hereby, including the owners of record of all equity
securities of the Company and the number of shares of each class of stock owned
thereby. The relative rights, privileges, and preferences of the Series A
Shares, Series B Shares and Common Stock will be as stated in the Restated
Certificate. Except as set forth in Section 3.5 of the Disclosure Schedule or in
the Restated Certificate, there are no options, warrants, conversion privileges,
or preemptive or other rights or agreements presently outstanding to purchase or
otherwise acquire any authorized but unissued shares of the capital stock or
other securities of the Company. Except as set forth in Section 3.5 of the
Disclosure Schedule, the Company is not a party or subject to any agreement or
understanding, and, to the Company's knowledge, except as contemplated hereby
and by the Ancillary Agreements, there is no agreement or understanding that
affects or relates to the voting or giving of written consents with respect to
any security, or the voting by a director, of the Company. All outstanding
securities have been sold for cash, other than the warrants issued to the
principals of Larkspur Capital Corporation as described in Section 3.5 of the
Disclosure Schedule. To the Company's knowledge, except as set forth in the
Stockholders Agreement and the Investors' Rights Agreement, no shareholder has
granted options or other rights to purchase any shares of Common Stock or other
equity security of the Company from such shareholder. The Company holds no
shares of its capital stock in its treasury.
(b) As of the Closing Date, the authorized capital stock of GMH
will consist of 100,000 shares of common stock, par value $100.00 per share. On
the Closing Date after giving effect to the Acquisition and the transactions
contemplated by this Agreement, 5,250 shares of such common stock will be issued
and outstanding. As of the Closing Date, GMH will not have outstanding
securities convertible into or exchangeable for any shares of its capital stock,
nor will it have outstanding any rights to subscribe for or to purchase, or any
options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, any shares of its capital stock or any securities
convertible into or exchangeable for any shares of its capital stock.
(c) As of the Closing Date and after giving effect to the
Acquisition and the other transactions contemplated hereby, except as set forth
in Section 3.5(c) of the Disclosure Schedule, none of the GMH Companies will be
subject to any obligation (contingent or otherwise) to repurchase or otherwise
to acquire or retire any shares of its capital stock. None of the GMH Companies
is required to file, nor has it filed, pursuant to Section 12 or Section 15(d)
of the Exchange Act, a registration statement relating to any class of its
debtor equity securities.
3.6 Authorization. (a) All corporate action on the part of the
Company, its officers, directors, and its stockholders necessary for the
authorization, execution, delivery, and performance of this Agreement, the
Restated Certificate, the Investors' Rights Agreement, to be dated as of the
Closing Date, by and among the Company, the Senior Subordinated Lender, the
Purchasers, and Bulldog Holdings LLC ("Bulldog") and substantially in the form
of Exhibit D hereto (the "Investors' Rights Agreement), the Stockholders
Agreement, to be dated as of the Closing Date, among the Company, the Senior
Subordinated Lender, certain members of management of the Company who are
parties thereto, Bulldog, the Purchasers and certain other parties thereto,
substantially in the form of Exhibit E hereto (the "Stockholders Agreement") and
all other agreements executed by the GMH Companies in connection with the
transactions contemplated hereby (the Investors' Rights Agreement, the Restated
Certificate, the Stockholders Agreement and such other agreements contemplated
hereby to which either of the GMH Companies is a party being sometimes
hereinafter referred to individually as an "Ancillary Agreement" and
collectively as the "Ancillary Agreements") by the Company, the authorization,
sale, issuance and delivery of the Securities at the Closing, the authorization
of the transactions contemplated by the Merger, the authorization of the
financings contemplated by the Senior Loan Agreement and the Senior Subordinated
Loan Instruments, and the performance of all of the Company's obligations
hereunder and thereunder have been taken or will be taken prior to the Closing.
This Agreement and each of the Ancillary Agreements, when executed and delivered
by the Company, will constitute a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to (i)
laws of general application relating to bankruptcy, insolvency, and the relief
of debtors, and (ii) rules of law governing specific performance, injunctive
relief, or other equitable remedies.
(b) All corporate action on the part of GMH, its officers,
directors, and its stockholders necessary for the authorization, execution,
delivery, and performance of this Agreement, the Junior Notes, the Stock
Purchase Agreement, the Merger Instruments, the Senior Loan Agreement, the
Senior Subordinated Loan Instruments, and the Ancillary Agreements to which GMH
is a party, by GMH, the authorization, sale, issuance and delivery of the Junior
Notes at the Closing, the authorization of the borrowing evidenced by the Junior
Notes, the authorization of the transactions contemplated by the Stock Purchase
Agreement, the authorization of the transactions contemplated by the Merger, the
authorization of the financings contemplated by the Senior Loan Agreement and
the Senior Subordinated Loan Instruments, and the performance of all of GMH's
obligations hereunder and thereunder have been taken or will be taken prior to
the Closing. This Agreement and each of the Ancillary Agreements to which GMH is
a party, when executed and delivered by GMH, will constitute a valid and legally
binding obligation of GMH, enforceable against GMH in accordance with its terms,
subject to (i) laws of general application relating to bankruptcy, insolvency,
and the relief of debtors, and (ii) rules of law governing specific performance,
injunctive relief, or other equitable remedies.
(c) The Series A Shares, Series B Shares, and the Class A Common
Shares, when issued in accordance with this Agreement, will be duly authorized,
validly issued, fully paid, and nonassessable, and will have the rights,
preferences, privileges, and restrictions as set forth in the Restated
Certificate. The Series A Shares, the Series B Shares and the Class A Common
Shares, when issued, will be free of any liens, claims, encumbrances or
restrictions on transfer, except as set forth in the Stockholders Agreement, the
Investors' Rights Agreement and the Restated Certificate.
3.7 Financial Statements. (a) The audited balance sheets of Pre-
Merger GMH as at December 31, 1994, and December 31, 1993, and the related
statements of income and retained earnings, and statements of cash flows for the
two years ended December 31, 1994, including the notes thereto, reported on by
Xxxxxx Xxxxxxxx LLP, independent certified public accountants ("Xxxxxx
Xxxxxxxx"), which have been delivered to the
Purchaser, fairly present the financial position of Pre-Merger GMH as at such
dates and the results of operations and retained earnings and the changes in
cash flows of Pre-Merger GMH for the years then ended in accordance with
generally accepted accounting principles applied on a consistent basis and show
all material liabilities, absolute or contingent, of Pre-Merger GMH as at such
date. The foregoing financial statements as at December 31, 1994, and for the
twelve-month period then ended are hereinafter referred to collectively, as the
"Financials"; the balance sheet included in the Financials is hereinafter
referred to as the "Balance Sheet"; and December 31, 1994 is hereinafter
referred to as the "Balance Sheet Date".
(b) The audited balance sheet of Pre-Merger GMH as at October
31, 1995 and the related unaudited statement of income and retained earnings,
and unaudited statements of cash flow for the ten-month period then ended, in
each case, including the notes thereto, reported on by Xxxxxx Xxxxxxxx, which
have been delivered to the Purchasers, fairly present the financial position of
Pre-Merger GMH as at such dates and the results of operations and retained
earnings and changes in cash flows of Pre-Merger GMH as of such dates and for
the periods then ended in accordance with generally accepted accounting
principles applied on a consistent basis and show all material liabilities,
absolute or contingent, of Pre-Merger GMH as at such date. Since the Balance
Sheet Date, Pre-Merger GMH has conducted its business in the ordinary course
consistent with past practice and except as set forth in Section 3.7(b) to the
Disclosure Schedule, there has been no change, event, occurrence or development
of a state of circumstances or facts, which, individually or in the aggregate,
has had, or would reasonably be expected to have, a Material Adverse Effect and
neither of the GMH Companies has knowledge of any such change, event, occurrence
or development or a state of circumstances or facts which is threatened, nor has
there been any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the GMH Companies
which, individually or in the aggregate, has had or would reasonably be expected
to have a Material Adverse Effect.
(c) The GMH Companies have delivered to the Purchasers complete
and correct copies of the pro forma consolidated balance sheet of the GMH
Companies as of the Closing Date (the "Pro Forma Balance Sheet"), giving pro
forma effect to the Acquisition, the Merger, the issuance of the Securities and
the Junior Notes hereunder, the borrowing under the Senior Loan Agreement and
the issuance of the Senior Subordinated Notes and Warrants as contemplated by
the Senior Subordinated Loan Instruments, as if such transactions were
consummated on the date of the Pro Forma Balance Sheet. The Pro Forma Balance
Sheet has been prepared in good faith on the basis stated therein (including
that the assumptions when made and as of the date hereof are reasonable
assumptions).
3.8 Title to Properties and Assets. Each of the GMH Companies has
good and marketable title to all of its owned real property (including
fixtures), good, valid and legal title to all its personal properties and
assets, and has good title to all its leasehold interests, in each case subject
to no mortgage, pledge, lien, lease, conditional sale agreement, security
interest, encumbrance, or charge, other than Permitted Liens as defined in the
Senior Loan Agreement.
3.9 Related-Party Transactions. Except as set forth in Section 3.9
to the Disclosure Schedule, no employee, officer or director of the GMH
Companies or member of his or her immediate family is indebted to either of the
GMH Companies, and, neither of the GMH Companies is indebted (or committed to
make loans or extend or guarantee credit) to any of them. Except as set forth in
Section 3.9 to the Disclosure Schedule, no employee, officer or director of
either of the GMH Companies or member of his or her immediate family has any
direct or indirect ownership interest in any firm or corporation with which
either of the GMH Companies is affiliated or with which either of the GMH
Companies has a business relationship, or any firm or corporation that competes
with either of GMH Companies, except stock ownership by employees, officers, or
directors of GMH Companies and members of their immediate families in publicly
traded companies that may compete with the GMH Companies. Except as set forth in
Section 3.9 to the Disclosure Schedule, no officer or director or any member of
their immediate families is, directly or indirectly, interested in any material
contract with either of the GMH Companies.
3.10 Permits. The GMH Companies have all franchises, permits
(including Environmental Permits), licenses, authorizations, approvals, and any
similar authority ("Permits") necessary for the conduct of their business as now
being conducted by them, the lack of which would,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect and reasonably believes they can obtain, without undue burden or
expense, any similar authority for the conduct of their business as planned by
the GMH Companies to be conducted. Without limiting the foregoing, the GMH
Companies have all Permits referred to in Schedule 7(d) of the Stock Purchase
Agreement all of which are in full force and effect. The GMH Companies are not
in violation in any material respect of, or default in any material respect
under, any of such Permits.
3.11 Liabilities. Except as set forth in Section 3.11 of the
Disclosure Schedule, the GMH Companies have no indebtedness for borrowed money
that either of the GMH Companies has directly or indirectly created, incurred,
assumed, or guaranteed, or with respect to which either of the GMH Companies has
otherwise become directly or indirectly liable. On the Closing Date, after
giving effect to the repayment of the obligations shown on Section 3.11 of the
Disclosure Schedule, as obligations that are intended to be satisfied on or
prior to the Closing Date, the GMH Companies will not be in default with respect
to any indebtedness for borrowed money or any instrument or agreement relating
thereto. Except as set forth in the immediately preceding sentence, neither of
the GMH Companies has any liabilities or obligations, absolute or contingent,
which are, individually or in the aggregate, material to the business of the
Company and GMH, except obligations under contracts made in the ordinary course
of business that would not be required to be reflected in financial statements
prepared in accordance with generally accepted accounting principles.
3.12 Intellectual Property. The GMH Companies do not own or possess,
and are not licensed with respect to, any "Intellectual Property" (as defined
below) other than as set forth in Section 3.12 of the Disclosure Schedule. To
the knowledge of the GMH Companies, the GMH Companies own or possess sufficient
legal rights to all Intellectual Property necessary for their business as
presently conducted and as proposed to be conducted without any conflict with,
or infringement of, the rights of others. Section 3.12 of the Disclosure
Schedule contains a complete list of all of the material Intellectual Property
rights of the GMH Companies or used in the business of GMH Companies, and except
as set forth therein, there are no outstanding options, licenses, or agreements
of any kind relating to the foregoing Intellectual Property, nor is either of
the GMH Companies bound by or a party to any options, licenses, or agreements of
any kind with respect to the Intellectual Property of any other person or
entity. To the knowledge of the GMH Companies, no shareholder, director, officer
or employee of either of the GMH Companies or any other person or entity other
than the GMH Companies has any interest in any of the Intellectual Property of
the GMH Companies which has not been waived, or in any inventions, profits,
royalties or other property arising therefrom. Neither of the GMH Companies has
received any communications alleging that the Company or GMH has violated or, by
conducting its business as proposed, would violate any Intellectual Property
rights of any other person or entity. To the knowledge of the GMH Companies,
none of the Company's or GMH's officers is obligated under any contract
(including licenses, covenants, or commitments of any nature) or other
agreement, or subject to any judgment, decree, or order of any court or
administrative agency, that would interfere with the use of such officers' best
efforts to promote the interests of the or that would conflict with the business
of the GMH Companies as proposed to be conducted. Except as set forth on
Schedule 3.12 of the Disclosure Schedule, all of the Intellectual Property of
the GMH Companies is owned by GMH Companies, free and clear of all liens and
encumbrances. Any and all patents, patent applications, copyrights, copyright
applications, trademarks and trademark applications relating to the Intellectual
Property of the GMH Companies is owned by the Company or GMH and held in the
Company's or GMH's name. As used in this Agreement the term "Intellectual
Property" means all intellectual property rights and other intangible property
rights including, without limitation, patents, patent applications, patent
rights, trademarks, trademark applications, trade names, fictitious or assumed
names, service marks, service xxxx applications, copyrights, copyright
applications, software, know-how, certificates of public convenience and
necessity, franchises, licenses, inventions, trade secrets, proprietary
processes, formulae and computer programs, software and displays.
3.13 Material Contracts. All Contracts (a) involving amounts of
$250,000 or more during a fiscal year in any one case, or (b) which,
individually or in the aggregate, would reasonably be expected to have a
material effect on the GMH Companies (or their business, assets,
properties, financial condition, operations or operating results), are to
the knowledge of the GMH Companies, legal, valid, binding, and in full
force and effect, and, are enforceable by the applicable GMH Company in
accordance with their respective terms, subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors, and
(ii) rules of law governing specific performance, injunctive relief or other
equitable remedies. True and complete copies of such Contracts have been made
available to the Purchasers. Section 3.13 of the Disclosure Schedule lists all
such contracts, agreements and instruments. Neither of the GMH Companies has
received notice that the Company or GMH has, breached any of the material terms
or provisions of such Contracts, and each of the Company and GMH has paid in
full or accrued all amounts due thereunder. Except as specifically set forth in
Section 3.13 of the Disclosure Schedule, none of the Contracts listed in Section
3.13 of the Disclosure Schedule provides for additional or accelerated payments
or other consideration to be made on account of the transactions contemplated
hereby or by the Stock Purchase Agreement and no notice to, filing or
registration with, or permit, license, variance, waiver, exemption, franchise,
order, consent, authorization or approval of, any person is required in order
that the Contracts set forth in Section 3.13 of the Disclosure Schedule continue
in full force and effect (without breach in any material respect by the GMH
Companies thereof, or giving any contractual party a right to terminate or
modify, such Contract) following the consummation of the transactions
contemplated hereby or by the Stock Purchase Agreement. All filings,
registrations, permits, licenses, variances, waivers, exemptions, franchises,
orders, authorizations and approvals required in order that the Contracts set
forth in Section 3.13 of the Disclosure Schedule continue in full force and
effect (without breach in any material respect by the Company thereof or payment
of additional or accelerated consideration thereunder) following the
consummation of the transactions contemplated hereby have been made, effected or
obtained and are in full force and effect.
3.14 Compliance with Other Instruments. None of the GMH Companies is,
and after giving effect to the Acquisition and the financing thereof none of
them will be, in violation or breach of any term of its certificate of
incorporation or bylaws (each as amended through the date hereof), or in any
material respect of any term or provision of any mortgage, indebtedness,
indenture, contract, agreement, instrument, judgement, or decree, and is not in
violation of any order, statute, rule, or regulation (collectively, "Laws")
applicable to the GMH Companies, except violations which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
The execution, delivery, and performance of, and compliance with the Stock
Purchase Agreement, the Merger Instruments, this Agreement and the Ancillary
Agreements, the issuance of the Securities and the Junior Notes, the
consummation of the transaction contemplated by the Senior Loan Agreement and
the Senior Subordinated Loan Instruments, the borrowing of the monies
represented by the Junior Notes, the consummation of the transactions
contemplated by the Stock Purchase Agreement and the Merger, and the
consummation of the transactions contemplated hereby and thereby, do not and
will not (i) violate, or result in a breach of any provision of or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a creation of any Lien upon any of the
assets, properties or business of either of the GMH Companies under, any of the
terms, conditions or provisions of (x) the certificate of incorporation or the
by-laws of either of the GMH Companies or (y) any Contract to which either of
the GMH Companies or any of their assets, properties or business are subject; or
(ii) violate any judgment, ruling, order, writ, injunction, award, decree, or
law of any court or foreign, federal, state, county or local government or any
other governmental, regulatory or administrative agency or authority which is
applicable to either of the GMH Companies or any of their assets, properties or
businesses, except, with respect to clauses (y) and (ii) above, violations
which, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect; or (iii) result in the suspension, revocation,
impairment, forfeiture, or non-renewal of any franchise, permit, license,
authorization, or approval material to either of the GMH Companies. To the
knowledge of the GMH Companies, there is no such term or provision or Law, the
effects of compliance with which are not reflected in the Financial Statements,
which materially and adversely affects the business of either of the GMH
Companies or any of their properties or assets.
3.15 Litigation. Except as set forth in Section 3.15 of the
Disclosure Schedule, there are no actions, suits, proceedings, or governmental
investigations pending or, to the knowledge of the GMH Companies, threatened
against either of the GMH Companies, or any of their respective properties
before any court or governmental agency (nor, to the knowledge of the GMH
Companies, is there any reasonable basis therefor). Neither of the GMH Companies
is a party to, or to the knowledge of the GMH
Companies, named in any order, writ, injunction, judgment, or decree of any
court, government agency, or instrumentality. Except as set forth in Section
3.15 of the Disclosure Schedule, there is no action, suit or proceeding by
either of the GMH Companies currently pending, nor is there any material action,
suit or proceeding that either of the GMH Companies currently intends to
initiate.
3.16 Registration Rights. Except as set forth in the Stockholders'
Agreement, the Company is not under any obligation to register (as defined in
the Stockholders' Agreement) any of its presently outstanding securities or any
of its securities which may hereafter be issued.
3.17 Governmental Consent. No consent, approval, or authorization of,
or designation, declaration, notification, or filing with any governmental
authority on the part of either of the GMH Companies is required in connection
with the valid execution, delivery and performance of this Agreement, the Stock
Purchase Agreement, the Merger Instruments, the Senior Loan Agreement, the
Senior Subordinated Loan Instruments, or any of the Ancillary Agreements, the
offer, sale, or issuance of the Securities and the Junior Notes, the borrowing
evidenced by the Junior Notes, or the consummation of any other transaction
contemplated hereby or thereby (other than those which have been obtained and
remain in full force and effect or those the failure of which to obtain would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect) , except the (i) filing of the Restated Certificate with the
Delaware Secretary of the State, and (ii) qualification (or the taking of such
action as may be necessary to secure an exemption from qualification, if
available) of the offer and sale of the Securities under applicable blue sky
laws, which filings and qualifications, if required, will be accomplished in a
timely manner; provided, however, that solely with respect to federal and state
"blue sky" securities laws, the representations and warranties provided in this
Section 3.17 with respect to the issuance and sale of the Securities shall be
subject to the accuracy of the representations of the Purchasers set forth in
Section 4 hereof.
3.18 Employees. To the knowledge of the GMH Companies, no officer of
either of the GMH Companies is or will be in violation of any judgment, decree,
or order, or any term of any employment contract, patent disclosure agreement,
or other contract or agreement relating to the relationship of any such officer
with the GMH Companies or any other party because of the nature of the business
conducted or to be conducted by the GMH Companies or the performance by the
officer of his responsibilities to the GMH Companies. Except as set forth in
Section 3.18 of the Disclosure Schedule, neither of the GMH Companies is a party
to or bound by any currently effective employment contract, deferred
compensation agreement, bonus plan, incentive plan, profit sharing plan,
retirement agreement, or other employee compensation agreement. To the knowledge
of the GMH Companies, no officer or key employee, or any group of key employees,
intends to terminate his or their employment with the GMH Companies, nor does
either of the GMH Companies have a present intention to terminate the employment
of any of the foregoing. Subject to the terms of the employment agreements with
each of Xxx Xxxxx, Xxxx Xxxxx and Xxxx Xxxxx and to general principles related
to wrongful termination of employees, the employment of each officer and
employee of the GMH Companies is terminable at the will of the GMH Companies. No
Contract exists between the employees of the GMH Companies (or a union
representing any of such employees) and the GMH Companies and, to the knowledge
of the GMH Companies, no union has attempted to organize or represent the labor
force of the GMH Companies in the 24 months immediately prior to the date
hereof. During such 24-month period there have been no lockouts, strikes,
slowdowns, work stoppages or threats thereof by or with respect to the labor
force of either of the GMH Companies. Except as set forth in Section 3.18 of the
Disclosure Schedule, no person (including, but not limited to, any foreign,
federal, state, county or local government or other governmental, regulatory or
administrative agency or authority) has any pending claim, suit, action,
proceeding or investigation against either of the GMH Companies arising out of
any statute, law, ordinance, code, rule or regulation relating to discrimination
in employment or employment practices or occupational safety and health
standards (including, without limitation, The Fair Labor Standards Act, as
amended, Title VII of the Civil Rights Act of 1964, as amended, the
Rehabilitation Act of 1973, as amended, the Age Discrimination in Employment Act
of 1967, as amended, or the Americans with Disabilities Act of 1990) which, in
each case, if upheld, would have a Material Adverse Effect.
3.19 Tax Returns, Payments, and Elections. Each of the GMH Companies
and the Acquired Entities has filed all tax returns and reports
as required by law. These returns and reports are true and correct in all
material respects. Except as set forth in Section 3.19 of the Disclosure
Schedule, each of the GMH Companies and the Acquired Entities has paid all taxes
and other assessments due, except those contested by it in good faith. Neither
of the GMH Companies has elected pursuant to the Internal Revenue Code of 1986,
as amended ("Code"), to be treated as a collapsible corporation pursuant to
Section 341(f) of the Code, nor has either of them made any other elections
pursuant to the Code (other than elections that relate solely to methods of
accounting, depreciation, or amortization) that would have a material effect on
the business, properties, prospects, or financial condition of each of the GMH
Companies taken as a whole, other than the S election previously made by GMH
which will terminate upon consummation of the Acquisition. Each of the GMH
Companies and the Acquired Entities has withheld or collected from each payment
made to each of its employees, the amount of all taxes, Federal Insurance
Unemployment Tax Act taxes required to be withheld or collected therefrom, and
has paid the same to the proper tax receiving officers or authorized
depositories.
3.20 Environmental and Safety Laws. Each of the GMH Companies has
obtained or is diligently pursuing obtaining all applicable environmental
permits ("Environmental Permits") relating to pollution or protection of the
environment, including laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or hazardous or toxic materials
or wastes into the ambient air, surface water, ground water, or land, or
otherwise relating to the manufacturing, processing, distribution, use,
treatment, storage, generation, disposal, transport or handling of pollutants,
contaminants or hazardous or toxic materials or wastes, all of which are set
forth in Section 3.20 to the Disclosure Schedule, and, except as specifically
indicated on such Schedule, the transactions contemplated hereby will not alter
or impair in any material respect any such Environmental Permits. Except as set
forth in Section 3.20 to the Disclosure Schedule, each of the GMH Companies is
in material compliance with all terms and conditions of such Environmental
Permits and has complied in all material respects and is in compliance in all
material respects with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligation, schedules and timetables
contained in such laws or contained in any regulation, code, plan, order,
decree, judgment, notice or demand letter issued, entered promulgated or
approved thereunder to the extent applicable. Except as disclosed in Section
3.20 to the Disclosure Schedule, there is no action, suit or proceeding at law
or in equity by any Person or any arbitration or any administrative or other
proceeding by or before (or, to the knowledge of the GMH Companies, any
investigation by) any governmental or other instrumentality or agency, pending,
or to knowledge of either of the GMH Companies, threatened against the GMH
Companies or the Acquired Entities relating to environmental compliance or
attempting to establish environmental liability. The GMH Companies have
previously delivered to the Purchasers true and correct copies of all of the
information set forth in Section 3.20 to the Disclosure Schedule.
Except as set forth in Section 3.20 of the Disclosure Schedule,
to the knowledge of the GMH Companies, there are no conditions, circumstances,
activities, practices, incidents, actions or plans relating to any real property
leased or owned by either of the GMH Companies, or the business of the GMH
Companies or the Acquired Entities or sites used by the GMH Companies or the
Acquired Entities for waste disposal or recycling which would be reasonably
likely to interfere with or prevent compliance or continued compliance with or
which are in non-compliance with any environmental laws or with any regulation,
code, order, decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder, or which would reasonably be
expected to give rise to any common law or other legal liability, including,
without limitation, liability under the Comprehensive Environmental Response,
Compensation and Liability Act, as amended ("CERCLA"), Resource Conservation and
Recovery Act, as amended ("RCRA"), or similar state, foreign or local laws, or
otherwise form the basis of any claim, action, demand, suit, proceeding,
hearing, notice of violation, study or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
generation, transport or handling, or emission, discharge, release or threatened
release into the environment, of any pollutant, contaminant, chemical, or
industrial, toxic or hazardous material, substance or waste. Without in any way
limiting the foregoing, and except as set forth in Section 3.20 of the
Disclosure Schedule, no release, emission or discharge into the environment of
any hazardous substance (as that term is defined under CERCLA or any applicable
state law) has occurred or is currently occurring in connection with the conduct
of the business of the GMH Companies.
3.21 Brokers or Finders. Except as set forth in Section 3.21 of the
Disclosure Schedule, neither of the GMH Companies has incurred, or will incur,
directly or indirectly, as a result of any action taken by either of the GMH
Companies, any liability for brokerage or finders' fees or agents' commissions
or any similar charges in connection with this Agreement or any transaction
contemplated hereby.
3.22 [Intentionally left blank]
3.23 ERISA. Except as listed in Section 3.23 of the Disclosure
Schedule, neither the GMH Companies nor any entity required to be aggregated
with the GMH Companies under Sections 414(b), (c), (m), (n) or (o) of the Code
sponsors, maintains, has any obligation to contribute to, has any liability
under, or is otherwise a party to, any Benefit Plan. For purposes of this
Agreement, "Benefit Plan" shall mean any plan, fund, program, policy,
arrangement or contract, whether formal or informal, which is in the nature of
(i) an employee pension benefit plan (as defined in Section 3(2) of ERISA) or
(ii) an employee welfare benefit plan (as defined in Section 3(1) of ERISA).
With respect to each Benefit Plan listed in Section 3.23 of the Disclosure
Schedule, to the extent applicable:
(a) Each such Benefit Plan has been maintained and operated in
all material respects in compliance with its terms and with all applicable
provisions of ERISA, the Code and all regulations, rulings and other authority
issued thereunder;
(b) All contributions required by law to have been made under
each such Benefit Plan (without regard to any waivers granted under Section 412
of the Code) to any fund or trust established thereunder or in connection
therewith have been made by the due date thereof;
(c) Each such Benefit Plan intended to qualify under Section
401(a) of the Code is the subject of a favorable unrevoked determination letter
issued by the Internal Revenue Service as to its qualified status under the
Code, which determination letter may still be relied upon as to such tax
qualified status, and no circumstances have occurred that would adversely affect
the tax qualified status of any such Benefit Plan;
(d) The actuarial present value of all accrued benefits under
each such Benefit Plan subject to Title IV of ERISA did not, as of the latest
valuation date of such Benefit Plan, exceed the then current value of the assets
of such Benefit Plan allocable to such accrued benefits, all as based upon the
actuarial assumptions and methods currently used for such Benefit Plan;
(e) None of such Benefit Plans that are "employee welfare
benefit plans" as defined in Section 3(1) of ERISA provides for continuing
benefits or coverage for any participant or beneficiary of a participant after
such participant's termination of employment, except as required by Sections 601
through 608 of ERISA;
(f) Neither of the GMH Companies nor any trade or business
(whether or not incorporated) under common control with the GMH Companies within
the meaning of Section 4001 of ERISA has, or at any time has had, any obligation
to contribute to any "multiemployer plan" as defined in Section 3(37) of ERISA;
and
(g) If any such Benefit Plan is not subject to ERISA and covers
any non-United States employee or former employee of the GMH Companies, then
according to the actuarial assumptions and valuations most recently used for the
purpose of funding each such plan (or, if the same has no such assumptions and
valuations or is unfunded, then according to the actuarial assumptions and
valuations in use by the Pension Benefit Guaranty Corporation), the total amount
or value of the funds available under each such plan to pay benefits accrued
thereunder or segregated in respect of such accrued benefits, together with any
reserve or accrual with respect thereto, exceeds the present value of all
benefits (actual or contingent) accrued as of such date of all participants and
past participants therein who are employees or former employees of the GMH
Companies.
3.24 Federal Reserve Regulations. Neither of the GMH Companies is
engaged in the business of extending credit for the purpose of purchasing or
carrying margin securities (within the meaning of Regulation G of the Board of
Governors of the Federal Reserve System), and no part of the proceeds of the
Securities or the Junior Notes will be used to purchase or carry any margin
security or to extend credit to others for the purpose
of purchasing or carrying any margin security or in any other manner which would
involve a violation of any of the regulations of the Board of Governors of the
Federal Reserve Syste m.
3.25 Disclosure. No representation or warranty of the GMH Companies
contained in this Agreement, the Ancillary Agreements, in the Disclosure
Schedule, in the exhibits attached hereto or in any written statement or
certificate furnished to the Purchasers pursuant hereto or in connection with
the transactions contemplated hereby, when read together, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading in light
of the circumstances under which they were made.
3.26 Securities Act. Subject to the accuracy of the Purchasers'
representations in Section 4 the offer, sale, and issuance of the Securities and
the Junior Notes in conformity with the terms of this Agreement constitute
transactions exempt from the registration requirements of Section 5 of the
Securities Act.
3.27 Insurance. The GMH Companies have in full force and effect fire
and casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its properties
that might be damaged or destroyed, and such other policies of insurance, and in
such amounts as in the best judgment of the GMH Companies is acceptable for the
nature and extent of the business of the GMH Companies as currently being
conducted, and as currently proposed to be conducted.
3.28 Issuance Taxes. All taxes, if any, imposed by law in connection
with the issuance, sale and delivery of the Securities and the Junior Notes
shall have been fully paid by the GMH Companies, and all laws imposing such
taxes shall have been fully complied with, prior to the Closing Date.
3.29 Other Representations. Neither of the GMH Companies has any
knowledge that, the representations and warranties of the Sellers and GMH
contained in Section 7 of the Stock Purchase Agreement are not true and correct
in all material respects. The representations and warranties of the Company and
GMH made in the Senior Loan Agreement and the Senior Subordinated Loan
Instruments are true and correct.
3.30 Small Business Concern. The Company, together with its
"affiliates" (as that term is defined in Section 121.401 of Title 13 of the Code
of Federal Regulations), is a "small business concern" within the meaning of the
Small Business Investment Act of 1958 and the regulations thereunder, including
Section 121.802(a) of Title 13 of the Code of Federal Regulations. The
information set forth in the documents provided to the Purchaser pursuant to
Section 5.6 below is accurate and complete. Neither the Company nor any
Subsidiary thereof engages in, and it shall not hereafter engage in, any
activities, nor shall the Company or any such Subsidiary use directly or
indirectly the proceeds of the sale of the Securities or the Junior Notes, for
any purpose, for which a Small Business Investment Company is prohibited from
providing funds by the Small Business Investment Act of 1958 and the regulations
thereunder, including Title 13, Code of Federal Regulations, 107.901.
3.31 Use of Proceeds. The proceeds received by the Company and GMH
from the sale of the Securities and the Junior Notes shall be used by the
Company and GMH to consummate the transactions contemplated by the Stock
Purchase Agreement and to pay related expenses. At least fifty-one percent (51%)
of the assets and activities of the GMH Companies on a consolidated basis (after
giving effect to the consummation of the transactions contemplated by the Stock
Purchase Agreements) will be within the United States of America.
3.32 Acquisition and Financing. Simultaneously with the consummation
of the transactions contemplated by this Agreement, GMH is consummating (i) the
Acquisition pursuant to the terms and provisions of the Stock Purchase
Agreement, (ii) the Merger pursuant to Merger Instruments and (iii) the
financings contemplated Senior Loan Agreement and the Senior Subordinated Loan
Instruments. True and complete copies of the Stock Purchase Agreement, the
Merger Instruments, the Senior Loan Agreement, the Senior Subordinated Loan
Instruments, and the Bulldog Documents have been delivered to the Purchasers. In
connection therewith, the GMH Companies hereby represent and warrant to the
Purchasers that to the knowledge of the GMH Companies after due inquiry, there
is no fact which materially adversely affects the financial condition or results
of
operations of the GMH Companies or the Acquired Entities which has not been set
forth in the Stock Purchase Agreement, this Agreement or any other documents,
certificates or statements delivered in connection therewith or herewith and
furnished to the Purchaser by or on behalf of the GMH Companies.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby severally (and not jointly) represents and
warrants to the GMH Companies with respect to the purchase of the
Securities and the Junior Notes as follows:
4.1 Experience. Such Purchaser has substantial experience in
evaluating and investing in private placement transactions of securities in
companies similar to the Company so that such Purchaser is capable of evaluating
the merits and risks of such Purchaser's investment in the Company and has the
capacity to protect such Purchaser's own interests.
4.2 Investment. Such Purchaser is acquiring the Securities for
investment for such Purchaser's own account, not as a nominee or agent, and not
with the view to, or for resale in connection with, any distribution thereof.
Such Purchaser understands that the Securities have not been, and will not be,
registered under the Securities Act or the securities laws of any state by
reason of exemptions from the registration provisions of the Securities Act and
such laws which depend upon, among other things, the bona fide nature of the
investment intent and the accuracy of such Purchaser's representations as
expressed herein.
4.3 Rule 144. Such Purchaser acknowledges that the Securities must
be held indefinitely unless subsequently registered under the Securities Act or
an exemption from such registration is available. Such Purchaser is aware of the
provisions of Rule 144 promulgated under the Securities Act which permit the
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things, (i) the
existence of a public market for the shares, (ii) the availability of certain
current public information about the Company, (iii) the resale occurring not
less than two years after a party (who is not an "affiliate") has purchased and
fully paid for the shares to be sold, (iv) the sale being effected through a
"broker's transaction" or in transactions directly with a "market maker" (as
provided by Rule 144(f)) and (v) the number of shares being sold during any
three-month period not exceeding specified limitations.
4.4 No Public Market. Such Purchaser understands that no public
market now exists for any of the securities issued by the Company and that there
is no assurance that a public market will ever exist for the Securities.
4.5 Access to Data. Such Purchaser has had an opportunity to discuss
the Company's business, management, and financial affairs with the Company's
management and the opportunity to review the Company's facilities and business
plan. Such Purchaser has also had an opportunity to ask questions of officers of
the Company, which questions were answered to its satisfaction. The Purchasers
acknowledge that they have had an opportunity to conduct their own independent
due diligence investigation of the Company.
4.6 Authorization. This Agreement and the Ancillary Agreements, when
executed and delivered by such Purchaser, will constitute valid and legally
binding obligations of the Purchaser, enforceable in accordance with their
respective terms, subject to (i) laws of general application relating to
bankruptcy, insolvency, and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief, or other equitable remedies.
Such Purchaser, if not a natural person, has full corporate or partnership, as
the case may be, power and authority to enter into and to perform its
obligations under this Agreement and the Ancillary Agreements in accordance with
their respective terms. Such Purchaser represents that it has not been
organized, reorganized or recapitalized specifically for the purpose of
investing in the Company.
4.7 Brokers or Finders. Except as set forth in Section 4.7 of the
Disclosure Schedule, neither the Purchaser nor the Company has incurred, or will
incur, directly or indirectly, as a result of any action taken by such
Purchaser, any liability for brokerage or finders' fees or agents' commissions
or any similar charges in connection with this
Agreement or any transaction contemplated hereby.
4.8 Accredited Investor. Such Purchaser is an "Accredited Investor"
as that term is defined in Rule 501(a) of Regulation D promulgated under the
Securities Act. Each Purchaser has its principal office in the state set forth
in Schedule A hereto.
SECTION 5
CONDITIONS TO CLOSING OF THE PURCHASERS
The obligations of each Purchaser to purchase the Securities and
the Junior Notes at the Closing is, at the option of Purchasers purchasing
at least 66-2/3% of the Securities, subject to the fulfillment on or prior
to the Closing Date of the following conditions:
5.1 Representations and Warranties. The representations and
warranties made by the GMH Companies in Section 3 of this Agreement shall have
been true and correct when made, and shall be true and correct as of the Closing
Date in all material respects.
5.2 Covenants. All covenants, agreements, and conditions contained in
this Agreement to be performed by the GMH Companies on or prior to the Closing
shall have been performed or complied with in all material respects.
5.3 Compliance Certificate. Each of the GMH Companies shall have
delivered to the Purchasers a Compliance Certificate in substantially the form
attached hereto as Exhibit F, executed by an executive officer of the applicable
GMH Company, dated the Closing Date, and certifying to the fulfillment of the
conditions specified thereon.
5.4 Blue Sky Law. The GMH Companies shall have obtained, or shall
obtain within the time periods required by applicable law, all necessary blue
sky law permits and qualifications, or secured exemptions therefrom, required by
any state for the offer and sale of the Securities and the Junior Notes at the
Closing.
5.5 Restated Certificates. The Restated Certificate shall have been
filed with the Secretary of State of the State of Delaware. A Restated
Certificate of Incorporation of GMH, amending GMH's certificate of incorporation
to require the approval of the holders of the Series A Shares with respect to
those matters referred to in the "Protective Provisions" of the Restated
Certificate as they apply to GMH, shall have been filed with the Secretary of
State of the State of Georgia.
5.6 Small Business Concern Documents. The Company shall have executed
and delivered to the Purchasers, a Size Status Declaration on SBA Form 480 and
an Assurance of Compliance on SBA Form 652D, and shall have provided to the
Purchasers information necessary for the preparation of a Portfolio Financing
Report on SBA Form 1031.
5.7 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be reasonably satisfactory in
substance and form to counsel for the Purchasers, and they shall have received
all such counterpart originals or certified or other copies of such documents as
they may reasonably request.
5.8 Board of Directors. Section 4(d) of Article FOURTH of the
Restated Certificate shall provide that the authorized number of directors of
the Company shall initially be seven (7), two (2) of whom shall be elected by
the Purchasers. The Company's board of directors shall, upon the Closing,
consist of Xxxxxx X. Xxxxx, E. Xxxx Xxxxxx, Xxxx X. Xxxxx, Xxxxxx X. Xxxxxx,
Xxxxx X. Del Xxxxx, and Xxxxx X. Xxxxxxx. The Board shall have established an
Audit and a Compensation Committee, with at least one of the directors elected
by the Purchasers serving on each such Committee. Similar provisions shall be
adopted with respect to GMH.
5.9 Opinion of Counsel. Each Purchaser shall have received from
Nixon, Hargrave, Devans & Xxxxx LLP, counsel for the Company, an opinion, dated
the Closing Date, satisfactory in form and substance to the Purchasers and their
special counsel, and which shall be substantially in the form of Exhibit G,
attached hereto.
5.10 No Litigation. No action, suit or other proceeding shall be
pending or threatened before any court, tribunal, or governmental authority
seeking or threatening to restrain or prohibit the consummation of the
transactions contemplated hereby, or seeking to obtain substantial damages in
respect thereof or which would otherwise materially and adversely affect the
Company, its business, assets, prospects or financial condition.
5.11 Stockholders Agreement. The Company, each Purchaser, Bulldog,
the Senior Subordinated Lender, the members of management of GMH who are parties
thereto and certain other parties thereto shall have entered into the
Stockholders Agreement, which shall be in form and substance satisfactory to the
Purchasers and their special counsel.
5.12 Investors' Rights Agreement. The Company, Bulldog, the Senior
Subordinated Lender, and each Purchaser shall have entered into the Investors'
Rights Agreement which shall be satisfactory in form and substance to the
Purchasers and their special counsel.
5.13 SIHI Fee Agreement. SIHI shall have entered into a Management
Agreement with the Company in form and substance satisfactory to the Purchasers
providing for deferral of the management fee under certain conditions as
specified therein.
5.14 Minimum Investment. The Purchasers shall purchase not less than
8,000,000 Series A Shares, 750,000 Series B Shares, 1,218,750 Class A Common
Shares and $5,000,000 principal amount of Junior Notes at the Closing, for an
aggregate purchase price equal to not less than $13,750,000.
5.15 Reliance Certificates. Xxx Xxxxx shall have executed and
delivered to the Purchasers a certificate in the form attached as Exhibit H
hereto, certifying that he has reviewed the representations and warranties
contained in Section 7 of the Purchase Agreement and that, to the best of his
knowledge, such representations and warranties are true, correct and complete.
Xxxx Xxxxx shall have executed and delivered to the Purchasers a certificate in
the form of Exhibit I, certifying that he has reviewed the representations and
warranties contained in Section 3 of this Agreement and that, to the best of his
knowledge, such representations and warranties are true, correct and complete.
5.16 Acquisition. The Company shall have consummated the Acquisition
as contemplated by the Purchase Agreement and the merger of Acquisition Co. with
and into GMH shall have occurred.
5.17 Financing. The terms and conditions for the financing of the
Company, including the credit facilities being provided by First Source
Financial LLP ("First Source") pursuant to the Senior Loan Agreement, and
related documents, and the Senior Subordinated Notes being purchased by the
Senior Subordinated Lender pursuant to the Senior Subordinated Loan Instruments
shall be acceptable to Purchasers. Concurrently with the Closing, the Company
shall have borrowed or have available for borrowing (a) from First Source, as a
term loan, the principal amount of $20,000,000 pursuant to the Senior Loan
Agreement; and an additional $6,000,000 principal amount as a revolving credit
facility and (b) from the Senior Subordinated Lender, $15,000,000 pursuant to
the Senior Subordinated Loan Instruments (collectively, the "Senior Debt"). A
complete and correct copy of each of the Senior Loan Agreement, such security
agreements and the Senior Subordinated Loan Instruments shall have been
delivered to Purchasers, together with evidence satisfactory to Purchasers of
such borrowings under the Senior Loan Agreement and the Senior Subordinated Loan
Instruments, and no other agreements or instruments shall exist relating to the
terms of such borrowings.
5.18 Legal and Investigative Fees. At the Closing, the Company will
pay (a) the legal fees and out-of-pocket expenses of Xxxx Xxxxx & Xxxxxxx,
special counsel to Purchasers, with respect to this Agreement and the
transactions contemplated hereby, and (b) Purchaser's reasonable out-of-pocket
expenses for due diligence with respect to this Agreement and the transactions
contemplated hereby.
5.19 Capitalization. The capitalization of the Company shall be
acceptable to Purchasers, including the Company providing the Purchasers with
evidence satisfactory to the Purchasers that (i) Bulldog and other investors
have invested at least $1,400,000 in cash equity in the Company and (ii) at
least $650,000 of such $1,400,000 has been invested directly by principals and
employees of Strategic Investments & Holdings, Inc. ("SIHI") and the children of
Xxxx Xxxxxx (but in no event shall more than $150,000 of such $650,000 be
invested by the children of Xxxx Xxxxxx). The capitalization of Bulldog
(including all documents relating thereto (the "Bulldog Documents"), true,
correct and complete copies of which shall have
been delivered to the Purchasers) shall be acceptable to the Purchasers.
5.20 No Adverse Change. No event or condition of any character shall
have occurred that has a reasonable possibility of having a Material Adverse
Effect.
5.21 Related Party Transactions. Arrangements satisfactory to the
Purchasers shall have been executed between (i) the Company and M/H Retail Inc.
and (ii) the Company and Hi-Tech Properties, Inc., and (iii) the Company and any
other Affiliate of the Company which provides services to the Company, whereby
any material profit derived from such relationships shall be derived by the
Company and the duration and scope of such arrangements are satisfactory to the
Purchasers.
5.22 Amendment to Purchase Agreement. An amendment in form and
substance satisfactory to the Purchasers shall have been executed by the parties
to the Purchase Agreement.
5.23 Subordination Agreement. The Subordination Agreement between
First Source, Equitable, the Company, GMH and SIHI (the "Subordination
Agreement") shall have been executed and delivered by the parties thereto, and
shall be in form and substance satisfactory to the Purchasers.
5.24 Satisfaction of Obligation. All of the obligations of the GMH
Companies or the Acquired Entities shown on Section 3.11 of the Disclosure
Schedule as obligations that are required or intended to be satisfied on or
prior to the Closing Date shall have been satisfied in full and all liens
securing any of such obligations shall have been released.
SECTION 6
CONDITIONS TO CLOSING OF THE COMPANY
The Company's obligation to sell and issue any Securities and GMH's
obligation to issue and sell any Junior Notes, at the Closing is, at the option
of the Company, subject to the fulfillment on or prior to the Closing Date of
the following conditions:
6.1 Representations and Warranties. The representations and
warranties made by each Purchaser in Section 4 of this Agreement shall have been
true and correct when made, and shall be true and correct as of the Closing
Date.
6.2 Blue Sky Law. The GMH Companies shall have obtained all necessary
blue sky law permits and qualifications, or secured exemptions therefrom,
required by any state for the offer and sale of the Securities at the Closing.
6.3 Minimum Investment. The Purchasers shall purchase not less than
8,000,000 Series A Shares, 750,000 Series B Shares, 1,218,750 Class A Common
Shares and $5,000,000 principal amount of Junior Notes at the Closing, for an
aggregate purchase price equal to not less than $13,750,000.
SECTION 7
COVENANTS OF THE GMH COMPANIES
7.1 Use of Proceeds. The proceeds of the issuance of the Securities
and the Junior Notes to the Purchasers shall be used solely for the purposes of
consummating the Acquisition contemplated by the Stock Purchase Agreement and
the payment of related fees and expenses. In the event that the Company or GMH
diverts any of such financing proceeds for any other use without the Purchasers'
prior written consent, the Purchasers shall have the right to rescind the
purchase contemplated hereby and receive immediate repayment of the amounts paid
hereunder in respect of the Securities and the Junior Notes, plus accrued and
unpaid dividends and interest, as the case may be. Within 90 days after the date
hereof, each of the Company and GMH will deliver a certificate signed by an
appropriate officer, to the Purchasers confirming that the proceeds of the sale
of the Securities and the Junior Notes hereunder have not been used in violation
of the Small Business Investment Act of 1958, as amended, or the regulations
promulgated thereunder. In addition, the Company and GMH shall provide the
Purchasers with all such information (including officer's certificates) which
the Purchasers may reasonably request in order for
Purchasers to conduct a post-closing review to assure that such proceeds were
used for the intended purpose as required by 107.305 of Title 13 of the Code of
Federal Regulations.
7.2 Payment of Principal and Interest. GMH shall duly and punctually
pay the principal and interest on the Junior Notes.
7.3 Prompt Payment of Taxes. (a) The GMH Companies shall pay when due
all FICA taxes and withheld federal, state and/or city income taxes for which
the GMH Companies are obligated, and notify the Purchasers promptly in the event
of its failure to make any such payments when due.
(b) The GMH Companies shall pay all other taxes, levies,
assessments, liens, claims of lien(s) which if unpaid would result in a lien,
and other governmental charges to which the GMH Companies or any of their
property is or shall be subject, before such charges become delinquent, except
that no such charge need be paid so long as its validity or amount is being
contested in good faith by appropriate proceedings and the GMH Companies shall
have established such reserve with respect thereto as shall be required by
generally accepted accounting principles, and the adequacy of such reserve shall
be supported by the opinion of an independent certified public accountants of
the GMH Companies. Notwithstanding the foregoing, any such tax, assessment,
charge or levy shall be paid forthwith (under protest) upon the commencement of
proceedings to foreclose any liens securing the same or upon institution of
distraint proceedings.
7.4 Maintenance of Properties and Leases. Each of GMH Companies will
keep, or cause to be kept, its properties and those of its Subsidiaries in good
repair, working order and condition, reasonable wear and tear excepted, and
shall from time to time make all needed repairs and replacements thereto; and
the GMH Companies will at all times comply with each provision of all leases to
which any of them is a party or under which any of them occupies property if the
breach of such provision would reasonably be expected to have a Material Adverse
Effect.
7.5 Insurance. The GMH Companies will (a) maintain such insurance as
may be required by law, or by the Senior Loan Agreement or otherwise reasonably
required by the Purchasers, all to such extent and against such hazards and
liabilities, as is customarily maintained by prudent companies similarly
situated, and (b) maintain a sufficient amount of insurance so that neither it
nor the Purchasers will be considered a co-insurer or co-insurers.
7.6 Accounts and Records. The GMH Companies will keep true records
and books of account in which full, true and correct entries will be made of all
dealing or transactions in relation to its business and affairs in accordance
with generally accepted accounting principles applied on a consistent basis. The
GMH Companies will employ certified public accountants selected by the Board of
Directors and have annual reviews made by such independent public accountants in
the course of which such accountants shall make such examinations, in accordance
with the standards established by the American Institute of Certified Public
Accountants.
7.7 Compliance with Requirements of Governmental Authorities. The GMH
Companies will not violate any law, ordinance or governmental rule or regulation
to which they are subject, nor fail to obtain any license, permit, franchise or
other governmental authorization necessary to the ownership of its properties or
to the conduct of its business, which violation or failure to obtain would
reasonably be expected to have a Material Adverse Effect.
7.8 Maintenance of Corporate Existence, etc. The GMH Companies shall
maintain in full force and effect their respective corporate existences, rights
and franchises and all licenses and other rights to use patents, processes,
licenses, trademarks, trade names or copyrights owned or possessed by them and
deemed by the GMH Companies to be necessary for the conduct of their business.
7.9 Full Time Employment. The GMH Companies shall enter into such
agreements as will require each of Xxx Xxxxx, Xxxx Xxxxx and Xxxx Xxxxx to
devote his entire working time to the business affairs of the GMH Companies for
a term of five years.
7.10 Senior Debt. The GMH Companies will not extend or permit the
extension of the time for payment in full of the Senior Debt or any replacement
thereof beyond December 1, 2003, unless the terms of such
extension or replacement (a) permit payment in full at its maturity, without
deferral, of the Junior Notes, and (b) permit, pursuant to the Investors' Rights
Agreement, repurchase of the Class A Common Shares, pursuant to the terms of
that agreement without restriction; provided there exists at the time of
redemption or payment no event of default under the Senior Loan Agreement or any
replacement thereof. The Company and GMH will not enter into any amendment or
modification of the Senior Loan Agreement or the Senior Subordinated Loan
Instruments except as permitted by the terms of the Subordination Agreement.
7.11 Restrictions on Dividends and Distributions. Until the entire
principal amount of the Junior Notes shall have been paid in full, without the
consent of the holders of sixty six and 2/3 percent (66-2/3%) of the aggregate
principal amount of the Junior Notes then outstanding, neither the Company nor
GMH will declare or pay any dividend on, or make any sinking fund payment,
redemption or repurchase with respect to, any shares of any class of its capital
stock, except (i) dividends in respect of the Series A Shares (but only if there
does not exist any accrued and unpaid interest (whether or not earned) on the
Junior Notes); (ii) the Company's purchase obligations with respect to the
Purchasers set forth in the Investor's Rights Agreement; (iii) dividends from
GMH to the Company from time to time for the payment of its portion of the
aggregate federal and state income tax liabilities (including estimated tax
liabilities) of the affiliated group filing consolidated returns of which the
Company is the common parent and GMH is a member for any taxable year, provided
that such payments shall not exceed with respect to any year the federal and
state income tax liabilities of GMH for such year determined as if GMH was not a
member of such affiliated group filing consolidated returns but rather as if GMH
filed its returns on a separate company basis for such year and all prior years;
and (iv) dividends by GMH to the Company to fund dividends and other
distributions permitted by clauses (i) through (iii).
7.12 Certain Restrictions. Without the prior written consent of the
holders of sixty-six and 2/3 percent (66-2/3%) of the aggregate principal amount
of the Junior Notes then outstanding, neither the Company nor GMH (a) will sell,
lease or otherwise dispose of or transfer a material portion of its or any
Subsidiary's assets (excluding sales of inventory in the ordinary course of
business); (b) will sell or otherwise dispose of any equity interest in any
Subsidiary; (c) will become a party to (or permit any Subsidiary to become a
party to) any merger, consolidation, reorganization, acquisition of another
company or commitment to take any such action, provided that a wholly-owned
Subsidiary of the Company may be merged with or into another subsidiary of the
Company or with or into the Company.
7.13 Transactions with Affiliates. Except for transactions entered
into in connection with the Acquisition which have been disclosed to the
Purchasers, without the prior written consent of the holders of sixty-six and
2/3 percent (66-2/3%) of the aggregate principal amount of the Junior Notes, the
Company and GMH shall not enter into any transaction or agreement, including but
not limited to, a loan, lease, royalty, purchase or sale agreement, directly or
indirectly with or which will benefit any officer, director, or holder of any
class of the Company's stock or any family member or relative of such officer,
director, or shareholder or any corporation or other entity or person which
directly or indirectly controls, is controlled by or is under common control
with such officer, director, or stockholder or family member or relative of such
officer, director, or stockholder unless such transaction is done on terms which
are arm's length to the GMH Companies or does not involve amounts in excess of
$25,000.
7.14 Limitation on Indebtedness. Without the prior written consent of
the holders of sixty-six and 2/3 percent (66-2/3%) of the aggregate principal
amount of the Junior Notes, the GMH Companies shall not incur any indebtedness
for borrowed money, other than the Senior Indebtedness (as defined in the
Subordination Agreement) which is not junior in terms of payment to the Junior
Notes.
7.15 Additional Covenants. The Company hereby covenants and agrees,
so long as any Purchaser owns any Securities or Junior Notes, as follows:
7.15.1 Financial Information. The Company shall furnish the
following reports to each Purchaser:
(i) as soon as practicable after the end of each fiscal
quarter (except the fourth quarter), and in any event within 45
days thereafter, an unaudited income statement and
statement of cash flows for such fiscal quarter and an unaudited
balance sheet as of the end of such fiscal quarter, in each case
prepared, to the extent consolidation is required under generally
accepted accounting principles applied on a consistent basis, on
a consolidated and a consolidating basis for the Company, GMH and
any subsidiaries hereafter existing; within 30 days after the end
of each month, an unaudited monthly income statement, statement
of cash flows and balance sheet, in each case prepared, to the
extent consolidation is required under generally accepted
accounting principles applied on a consistent basis, on a
consolidated and a consolidating basis for the Company, GMH and
any subsidiaries hereafter existing, subject to normal, non-
recurring year-end adjustments; and an annual budget (including
projected monthly consolidated and consolidating income
statements, balance sheets and statements of cash flow) at least
15 days prior to the beginning of each fiscal year. The monthly
financial statements shall include comparisons to the then
applicable annual budget and summaries of financial plans of the
Company, GMH and any Subsidiaries.
(ii) as soon as practicable after the end of each
fiscal year, and in any event within 90 days thereafter, an
income statement and statement of cash flows for such fiscal
year, a balance sheet of the Company, GMH and their
subsidiaries prepared on a consolidated basis as of the end
of such fiscal year, and a statement of changes in financial
condition for such fiscal year, all certified by independent
public accountants of recognized national standing selected
by the Company.
(iii) as soon as available, but in any event: (i) within 30
days after the beginning of each fiscal year of the GMH
Companies, a copy of the plan and forecast (including a projected
closing balance sheets, income statements and funds flow
statements) of the GMH Companies for such fiscal year; and (ii)
within 30 days after the end of the second fiscal quarter of the
GMH Companies in each fiscal year, an update of each plan and
forecast delivered with respect to the fiscal year in which such
fiscal quarter occurs, to the extent there are any material
changes in such plan resulting from actual and then anticipated
results and forecasts.
(iv) Promptly upon the filing or making thereof, copies of
each filing and report made by the GMH Companies with or to any
securities exchange or to the Securities and Exchange Commission
and of each written communication from the GMH Companies to its
shareholders generally.
(v) as and when provided to the Senior Subordinated
Lender, any reports furnished to the Senior Subordinated Lender.
All financial statements provided for above shall be
prepared in accordance with general accepted accounting
principles, applied on a consistent basis (except that such
unaudited financial statements may be prepared without footnotes
and will be subject to normal, non-recurring year-end audit
adjustments).
7.15.2 Additional Information and Rights.
(a) The GMH Companies will permit any Purchaser, so long
as such Purchaser owns at least 800,000 Series A Shares, or
75,000 Series B Shares, or 120,000 shares of Class C Common
Shares or any combination thereof, to visit and inspect any of
the properties of the GMH Companies, including its books of
account and other records (and make copies thereof and take
extracts therefrom), and to discuss its affairs, finances and
accounts with the officers and its independent public accountants
of GMH Companies, all at such reasonable times as such person may
reasonably request.
(b) Each Purchaser shall have the right to consult with
the officers of the GMH Companies as to the management of the GMH
Companies.
(c) The provisions of Section 7.15.1 hereof and this
Section 7.15.2 shall not be in limitation of any rights which any
Purchaser may have with respect to the books and records of the
GMH Companies and any Subsidiary, or to inspect their properties
or discuss their affairs, finances and accounts, under the laws
of the jurisdictions in which they are incorporated.
(d) The GMH Companies shall allow an agent or
representative of each Purchaser which does not have a
representative serving as a member of the Company's Board of
Directors or their respective designees to attend in a non-voting
capacity any and all meetings of the Board of Directors of the
GMH Companies and shall receive copies of any written consents
distributed in lieu of any meeting, and shall receive any and all
information provided to the members of the Board of Directors in
connection with any of the foregoing.
7.15.3 Termination of Financial Information Rights. The
obligation of the GMH Companies to deliver information under Section
7.15.1(i) and (ii) hereof and the rights of those Purchasers entitled
to the benefits of Section 7.15.2 hereof shall terminate and shall be
of no further force or effect upon the closing of the Company's
initial public offering of Common Stock. Thereafter, the Company shall
deliver to each Purchaser, and its assignees or transferees, such
financial information as the Company from time to time provides to
holders of its registered Common Stock as well as any information
provided for in Section 7.15.2, to the extent applicable.
7.15.4 Key Person Life Insurance. The GMH Companies shall,
within 90 days after the date hereof, use their respective best
efforts to obtain from financially sound and reputable insurers term
life insurance on the life of Xxx Xxxxx, and in such amounts, as the
Board of Directors shall determine. Any such term life insurance
policy (i) shall name the GMH Companies as loss payees, and (ii) shall
not be cancelable by the GMH Companies without prior written approval
of holders of not less than fifty one percent (51%) of the then
outstanding Series A Shares.
7.15.5 Employee and Other Stock Arrangements. Except with
respect to issuances set forth in Section 3.5 of the Disclosure
Schedule, the GMH Companies shall not, without the approval of the
Board of Directors and the holders of not less than sixty six and 2/3
percent (66-2/3%) of the then outstanding Series A Shares, issue any
of its capital stock, or grant an option or rights to subscribe for,
purchase or acquire any of its capital stock, to any employee,
consultant, officer or director of the GMH Companies or a Subsidiary.
7.15.6 Stock Fully Paid; Reservation of Shares. The Company
covenants and agrees that all Class C Common Stock that may be issued
upon the conversion of the Series B Shares will, upon issuance in
accordance with the terms of the Restated Certificate, be fully paid
and nonassessable, and that the issuance thereof shall not give rise
to any preemptive rights on the part of any person, other than the
rights created under the Stockholders Agreement. The Company further
covenants and agrees that the Company will at all times have
authorized and reserved a sufficient number of shares of its Class C
Common Stock for issuance upon conversion of the Series B Shares and
will increase the authorized number of shares of Class C Common Stock,
if at any time the number of shares of Class C Common Stock authorized
and unissued shall be insufficient to permit the conversion of Series
B Shares.
7.15.7 Replacement of Certificates Representing Preferred
Shares. Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of any
certificates representing Series A Shares, Series B Shares, Class A
Common Stock, or Class C Common Stock, as the case may be, and, in the
case of any such loss, theft or destruction, upon delivery of a bond
of indemnity satisfactory to the Company if required by the Board of
Directors, or, in the case of any such mutilation, upon surrender and
cancellation of the certificates representing
Series A Shares, Series B Shares, Class A Common Stock, or Class C
Common Stock, as the case may be, the Company will issue new
certificates representing Series A Shares, Series B Shares, Class A
Common Stock, or Class C Common Stock, as the case may be, in lieu of
such lost, stolen, destroyed or mutilated certificates representing
Series A Shares, Series B Shares, Class A Common Stock, as the case
may be.
SECTION 8
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
8.1 Survival of Representations and Warranties. The representations
and warranties of the GMH Companies shall survive the Closing for a period of
two years (provided that the representations and warranties of the GMH Companies
contained in Sections 3.2, 3.3, 3.5, 3.6 and 3.25 shall survive for the period
of the applicable statute of limitations) and the representations and warranties
of the Purchasers made herein shall survive the Closing for the period of the
applicable statute of limitations and shall in no way be affected by any
investigation of the subject matter thereof made by or on behalf of the
Purchasers and their respective representatives and agents. The covenants of the
parties herein shall survive the Closing. All statements contained herein or in
any certificate, schedule or other writing delivered in connection with the
transactions contemplated hereby shall be deemed representations and warranties
of the respective parties making them.
8.2 Indemnification by the Company. The GMH Companies hereby jointly
and severally agree to indemnify and hold each of the Purchasers harmless from
or against, for and in respect of any and all damages, losses, obligations,
liabilities, claims, actions or causes of action, encumbrances, costs, or
expenses suffered, sustained, incurred or required to be paid by any Purchaser
arising out of or in connection with or as a result of the breach by either GMH
Company of any representation, warranty, covenant or agreement made by it
contained in this Agreement, notice of which breach is given to the GMH
Companies prior to the expiration of the applicable survival period set forth in
Section 8.1 above. In addition, the GMH Companies hereby jointly and severally
agree to indemnify and hold each Purchaser harmless from or against, for and in
respect of all reasonable costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses, interest and penalties) incurred by any
Purchaser in connection with any action, suit, proceeding, demand, claim,
assessment or judgment incident to any of the matters indemnified against in
this Section 8.2.
8.3 Indemnification by the Purchasers. Each of the Purchasers (other
than the State of Michigan) hereby severally agrees to indemnify and hold the
GMH Companies harmless from or against, for and in respect of any and all
damages, losses, obligations, liabilities, claims, actions or causes of action,
encumbrances, costs, or expenses suffered, sustained, incurred or required to be
paid by the GMH Companies arising out of or in connection with or as a result of
the breach by such Purchaser of any representation, warranty, covenant or
agreement made by it contained in this Agreement. In addition, each of the
Purchasers (other than the State of Michigan) hereby severally agrees to
indemnify and hold the GMH Companies harmless from or against, for an in respect
of all reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses, interest and penalties) incurred by the GMH
Companies in connection with any action, suit, proceeding, demand, claim,
assessment or judgment incident to any of the matters indemnified against in
this Section 8.3.
SECTION 9
GENERAL PROVISIONS
9.1 Governing Law. This Agreement shall be governed by, and construed
according to the laws of the State of Delaware.
9.2 Successors and Assigns; Third Party Beneficiaries. Except as
otherwise expressly limited herein, the provisions hereof shall inure to the
benefit of, and be binding upon, the successors (including successor trustees,
in the case of a trustee), permitted assigns, heirs, executors, and
administrators of the parties hereto and the provisions of Section 8 shall inure
to the benefit of each party entitled to indemnification hereunder, including
each indemnified party.
9.3 Entire Agreement; Amendment and Waiver. This Agreement and the
Ancillary Agreements constitute the full and entire understanding and agreement
between the parties with regard to the subject matters hereof and thereof. Any
term of this Agreement may be amended, and the observance of any term hereof may
be waived (either generally or in a particular instance) only with the written
consent of Purchasers representing sixty six and 2/3 percent (66-2/3%) of the
Class A Common Shares held by the Purchasers at the time of the occurrence of
such waiver or amendment and the written consent of the Company. Any amendment
or waiver effected in accordance with this Section 10.3 shall be binding upon
each of the parties hereto.
9.4 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be (i) mailed by registered or
certified mail, postage prepaid, (ii) delivered by reliable overnight courier
service, or (iii) otherwise delivered by hand or by messenger, addressed (A) if
to a Purchaser, to such Purchaser's address set forth on the Schedule of
Purchasers, or at such other address as such Purchaser shall have furnished to
the Company in writing, with a copy to Xxxx Xxxxx & Xxxxxxx, Xxx Xxxxxxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxx, Esq.,
telecopier no. (000) 000-0000, or (B) if to a GMH Company to X.X. Xxx 0000, 0000
Xxxxxxxxxx Xxxx.,Xxxxxxxx, Xxxxxxx 00000-0000, telecopier no. (000)000-0000 or
at such other address as the Company shall have furnished to the Purchasers, and
to SIHI, Cyclorama Building, 000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxx Xxxx 00000,
Attention: Xxxx X. Xxxxx, with a copy to Nixon, Hargrave, Devans & Xxxxx LLP,
0000 Xxxx Xxxxx Xxxxx, Xxxxxxx, Xxx Xxxx, 00000-0000, Attention: Xxxxxxx X.
Xxxxxx, Esq., telecopier no. (000) 000-0000.
9.5 Delays or Omissions. No delay or omission to exercise any right,
power, or remedy accruing to any party upon any breach or default under this
Agreement, shall be deemed a waiver of any other breach or default theretofore
or thereafter occurring. Any waiver, permit, consent, or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must begin writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any of the parties, shall be
cumulative and not alternative.
9.6 References. Unless the context otherwise requires, any reference
to a "Section" refers to a section of this Agreement. Any reference to "this
Section" refers to the whole number section in which such reference is
contained.
9.7 Severability. If any provision of this Agreement is held to be
unenforceable under applicable law, then such provision shall be excluded from
this Agreement and the balance of this Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms. The court in its discretion may substitute for the excluded provision an
enforceable provision which in economic substance reasonably approximates the
excluded provision.
9.8 Fees and Expenses. The Company shall pay the reasonable fees and
disbursements of the law firm of Xxxx Xxxxx & Xxxxxxx, counsel for the
Purchasers incurred in connection with the negotiation, execution and delivery
of this Agreement and the Ancillary Agreements. In addition, the Company shall
pay all expenses incurred by it in connection with the negotiation, execution
and delivery of this Agreement and the Ancillary Agreements and the enforcement
by the Purchasers of any of their respective rights and benefits arising
hereunder or under any Ancillary Agreement against the Company, including,
without limitation, reasonable fees and disbursements of one counsel for the
Purchasers.
9.9 Pronouns. All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the identity of the person
or persons may require.
9.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and enforceable against
the parties actually executing such counterpart, and all of which, when taken
together, shall constitute one instrument.
9.11 Remedies. The parties to this Agreement acknowledge and agree
that a breach of any of the covenants of the Company or the Purchasers set forth
in this Agreement may not be compensable by payment of money damages and,
therefore, that the covenants of the foregoing parties
set forth in this Agreement may be enforced in equity by a decree requiring
specific performance.
9.12 Certain Definitions. As used in this Agreement, the following
terms shall have the following meanings unless the context otherwise required:
(i) "Affiliate" shall mean a person that, directly or
indirectly, controls or is controlled by, or is under common control with, any
Person.
(ii) "Contracts" means and includes all written contracts,
agreements, instruments, indentures, notes, bonds, leases, mortgages, deeds of
trust, franchises, licenses, permits, commitments or arrangements or
understandings.
(iii) "Control" (including, with correlative meaning, the
terms "controlled by" and "under common control with") as used with respect to
any person, means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such person, whether
through ownership of voting securities or by Contract or otherwise.
(iv) "Merger Agreement' shall mean the Merger Agreement
dated as of the Closing Date among Acquisition Co. and GMH.
(v) "Merger Certificate" means, collectively, the (a)
Certificate of Ownership and Merger with respect to the Merger, dated as of the
effective date of the Merger and duly filed with the Secretary of State of
Delaware on such date and (b) Articles of Merger with respect to the Merger,
dated as of the effective date of the Merger and duly filed with the Secretary
of State of Georgia on such date.
(vi) "Merger Instruments" means, collectively, the Merger
Agreement, the Merger Certificate and all other documents and instruments
executed in connection with the Merger.
(vii) "Person" means any individual, corporation, general or
limited partnership, limited liability company, firm, joint venture,
association, enterprise, joint stock company, trust, unincorporated organization
or other entity
(viii) "Senior Lenders" means First Source Financial LLP, as
Lender under the Senior Loan Agreement and any other "Lender" that may after the
Closing Date become an assignee of First Source Financial LLP under the Senior
Loan Agreement.
(ix) "Senior Loan Agreement" means the Secured Credit
Agreement, dated as of December 21, 1995, between GMH and First Source Financial
LLP, as amended from time to time.
(x) "Senior Subordinated Lender" means The Equitable Life
Assurance Society of the United States, a New York insurance company.
(xi) "Senior Subordinated Loan" means the loan in the
original principal amount of $15,000,000 made by Senior Subordinated Lender to
GMH pursuant to the Senior Subordinated Loan Instruments.
(xii) "Senior Subordinated Loan Instruments" means the
Senior Subordinated Note Agreement, Senior Subordinated Note and all other
documents and instrument executed in connection with the Senior
Subordinated Loan.
(xiii) "Senior Subordinated Note" means that certain Senior
Note Due December 21, 2002 in the aggregate principal amount of $17,243,295
issued by Acquisition Co. to Senior Subordinated Lender pursuant to the Senior
Subordinated Note Agreement.
(xiv) "Senior Subordinated Note Agreement" means that certain
Note and Warrant Purchase Agreement dated as of the Closing Date between GMH,
the Company and Senior Subordinated Lender.
(xv) "Subsidiary" shall mean any Person as to which the
Company, directly or indirectly, owns or has the power to vote, or to exercise a
controlling influence with respect to, fifty percent (50%) or more of the
securities of any class of such person, the holders of which class are entitled
to vote for the election of directors (or persons performing similar functions)
of such person.
Executed effective as of the date first set forth above.
THE GMH COMPANIES: GMH HOLDINGS, INC.
By: /s/ Xxxx X. Xxxxx
--------------------------------------
Name: Xxxx X. Xxxxx
Title: President
GENERAL MANUFACTURED HOUSING, INC.
By: /s/ Xxxx X. Xxxxx
--------------------------------------
Name: Xxxx X. Xxxxx
Title: President
THE PURCHASERS:
RFE INVESTMENT PARTNERS V, L.P.
By: RFE ASSOCIATES V, L.P.
Its General Partner
By: /s/ illegible
--------------------------------------
A General Partner
STERLING COMMERCIAL CAPITAL, INC.
By: /s/ Xxxxxx Xxxxxxxxxx
--------------------------------------
Xxxxxx Xxxxxxxxxx
Executive Vice President
State Treasurer of the State of Michigan,
Custodian of the Michigan Public School
Employees' Retirement System, State
Employees' Retirement System, Michigan State
Police Retirement System, and Michigan Judges
Retirement System
By: /s/ Xxxx X. Xxxx
--------------------------------------
Name: Xxxx X. Xxxx
Title: Administrator, Alternative Investments
Division
SCHEDULE A
SCHEDULE OF PURCHASERS
No. of No. of No. of
Series A Series B Class A Total Principal Total
Preferred Preferred Common Securities Amount of Junior Note
Shares Shares Shares Purchase Junior Notes Purchase
Purchaser's Name and Address Purchased Purchased Purchased Price Purchased Price
RFE Investment Partners V, L.P.
00 Xxxxx Xxxxxx
Xxx Xxxxxx, XX 00000 4,690,351 439,720 714,546 $5,130,071 $2,931,469.00 $2,931,469.00
State of Treasurer of the
State of Michigan, Custodian
000 Xxxx Xxxxxxx, 0xx Xxxxx
Xxxxxxx, XX 00000 3,076,922 288,462 468,750 $3,365,384 $1,923,076.50 $1,923,076.50
Sterling Commercial Capital, Inc.
000 Xxxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000 232,727 21,818 35,454 $ 254,545 $ 145,454.50 $ 145,454.50
--------- --------- --------- ---------- ------------- -------------
TOTAL 8,000,000 750,000 1,218,750 $8,750,000 $5,000,000.00 $5,000,000.00
RESTATED
CERTIFICATE OF INCORPORATION
OF
GMH HOLDINGS, INC.
Pursuant to the provisions of Sections 241 and 245 of the General
Corporation Law of the State of Delaware (the "G.C.L.") the undersigned, Xxxx X.
Xxxxx and Xxxxx X. XxxXxxxx, the President and Assistant Secretary,
respectively, of GMH HOLDINGS, INC., a corporation organized and existing in the
State of Delaware (the "Corporation"), do hereby certify as follows:
FIRST: The name of the Corporation is GMH HOLDINGS, INC.
SECOND: The Certificate of Incorporation of the Corporation was filed
with the Secretary of State on November 20, 1995.
THIRD: This Restated Certificate of Incorporation restates,
integrates and amends the Certificate of Incorporation of the Corporation. This
Restated Certificate of Incorporation amends the authorized capital stock of the
Corporation and the relative rights and preferences thereof. The Corporation has
not received any payment for any of its stock, and this Restated Certificate of
Incorporation has been duly adopted by the Directors of the Corporation in
accordance with the provisions of Sections 241 and 245 of the G.C.L.
FOURTH: The capital of the Corporation will not be reduced under
or by reason of the amendments to the Certificate of Incorporation effected
hereby.
FIFTH: The text of the Certificate of Incorporation is hereby
amended and restated to read as herein set forth in full:
FIRST: The corporate name of the corporation (hereinafter called
the "Corporation") is GMH HOLDINGS, INC.
SECOND: The address of the registered office of the Corporation in the
State of Delaware is located at 00 Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx xx Xxxx,
Xxxx of Dover, State of Delaware 19901, and the name of the registered agent of
this Corporation in the State of Delaware at such address is The Xxxxxxxx-Xxxx
Corporation/System, Inc.
THIRD: The purposes for which the Corporation is organized shall include
the transaction of any or all lawful business for which corporations may be
organized under the provisions of the General Corporation Law of the State of
Delaware.
FOURTH: A. The Corporation is authorized to issue four (4) classes of
capital stock, to be designated, respectively, Preferred Stock ("Preferred
Stock"), Class A Common Stock, Class B Common Stock and Class C Common Stock
(collectively, "Common Stock"). The total number of shares of capital stock
which the Corporation is authorized to issue is Seventeen Million, Four Hundred
Sixty-Two Thousand, Five Hundred (17,462,500). The total number of shares of
Preferred Stock which the Corporation shall have the authority to issue is Ten
Million, One Hundred Fifty Thousand (10,150,000). The total number of shares of
Class A Common Stock which the Corporation shall have the authority to issue is
Four Million, Three Hundred Seventy-five Thousand (4,375,000). The total number
of shares of Class B Common Stock which the Corporation shall have the authority
to issue is Seven Hundred Eighty-Seven Thousand, Five Hundred (787,500). The
total number of shares of Class C Common Stock which the Corporation shall have
authority to issue is Two Million, One Hundred Fifty Thousand (2,150,000). The
Preferred Stock shall have a par value of $.001 per share, the Class A Common
Stock shall have a par value of $.001 per share, the Class B Common Stock shall
have a par value of $.001 per share and the Class C Common Stock shall have a
par value of $.001 per share.
B. The Preferred Stock shall be divided into series. The first
series shall consist of 8,000,000 shares and is designated "Series A Redeemable
Preferred Stock" (the "Series A Preferred Stock"). The second series shall
consist of 2,150,000 shares and is designated "Series B Convertible Preferred
Stock" (the "Series B Preferred Stock"). The remaining shares of Preferred Stock
may be issued from time to time in one or more series. The Board of Directors of
the Corporation is authorized, subject to limitations prescribed by law and the
provisions of this Article FOURTH, to provide for the issuance of all or any of
the remaining shares of Preferred Stock in one or more series, and by filing a
certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers, preferences and rights of the shares
of each such series and the qualifications, limitations or restrictions thereof.
The Board of Directors is also expressly authorized to increase or decrease (but
not below the number of shares of such series then outstanding) the number of
shares of any series other than the Series A or Series B Preferred Stock
subsequent to the issue of shares of that series. In case the number of shares
of any such series shall be so decreased, the shares constituting such decrease
shall resume the status that they had prior to the adoption of the resolution
originally fixing the number of shares of such series.
The authority of the Board of Directors with respect to each series shall
include, but not be limited to, determination as to the following:
(a) The number of shares constituting that series and the
distinctive designation of that series;
(b) The dividend rate on the shares of that series, if any,
whether dividends shall be cumulative, and if so, from which date or
dates, and the relative rights of priority, if any, of payment of
dividends on shares of that series;
(c) Whether that series shall have voting rights, in addition to
the voting rights provided by law, and, if so, the terms of such
voting rights;
(d) Whether that series shall have conversion privileges, and,
if so, the terms and conditions of such conversion, including
provision for adjustment of the conversion rate in such events as the
Board of Directors shall determine;
(e) Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such redemption,
including the date or dates upon or after which they shall be
redeemable, and the amount per share payable in case of redemption,
which amount may vary under different conditions and at different
redemption dates;
(f) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms
and amount of such sinking fund;
(g) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of payment
of shares of that series; and
(h) Any other relative rights, preferences and limitations of
that series.
C. The following is a statement of the powers, designations,
preferences, privileges, rights, qualifications, limitations and restrictions in
respect to the Class A Common Stock, Class B Common Stock, Class C Common Stock,
the Series A Preferred Stock and the Series B Preferred Stock of the
Corporation:
1. Identical Rights of Class A, Class B and Class C Common Stock.
Except as otherwise provided in this Article FOURTH, all shares of Class A
Common Stock, Class B Common Stock and Class C Common Stock shall be identical
and shall entitle the holders thereof to the same rights and privileges.
2. Dividends; Other Distributions.
(a) The holders of shares of the Series A Preferred Stock shall
be entitled to receive dividends, out of any assets legally available
therefor, prior and in preference to any declaration or payment of any
dividend on the Series B Preferred Stock, Common Stock or other equity
securities of the Corporation, at the annual rate of twelve cents
($0.12) per share (as adjusted for any combinations, consolidations or
stock distributions or dividends with respect to such shares) payable,
only if and to the extent there exist cumulative earnings sufficient
to pay such dividend, quarterly in arrears on each March 31, June 30,
September 30 and December 31 of each year commencing March 31, 1996.
Such dividends shall accrue on each share from the date of filing this
Restated Certificate of Incorporation with the Secretary of State of
the State of Delaware (the "Original Issue Date") and shall accrue
from day to day, whether or not earned or declared. Such dividends
shall be cumulative so that if such dividends in respect of any
previous or current quarterly dividend period, at the annual rate
specified above, shall not have been paid or declared and a sum
sufficient for the payment thereof set apart, the deficiency shall
first be fully paid before any dividend or other distribution shall be
paid on or declared and set apart for the Series B Preferred Stock,
the Common Stock or any other equity securities of the Corporation.
(b) The holders of shares of Series B Preferred Stock shall not
be entitled to receive dividends on such shares.
(c) No dividends or distributions may be declared and paid upon
shares of Common Stock in any fiscal year of the Corporation so long
as any Series A Preferred Stock or Series B Preferred Stock remains
outstanding. When and as dividends are declared on the Common Stock,
whether payable in cash, in property or in securities of the
Corporation, the holders of the Common Stock shall be entitled to
share equally, share for share, in such dividends, except that if
dividends are declared which are payable in shares of Common Stock,
dividends shall be declared which are payable at the same rate on all
classes of stock, but such dividends shall be payable only in shares
of Class A Common Stock to holders of Class A Common Stock, shall be
payable only in shares of Class B Common Stock to holders of Class B
Common Stock and shall be payable only in shares of Class C Common
Stock to holders of Class C Common Stock.
(d) If the Corporation shall in any manner subdivide (by stock
split, stock dividend or otherwise) or combine (by reverse stock split
or otherwise) the outstanding shares of one class of Common Stock, the
outstanding shares of the other class of Common Stock shall be
proportionately subdivided or combined.
3. Liquidation Preference. In the event of any liquidation,
dissolution, or winding up of the Corporation, either voluntary or involuntary,
distributions to the shareholders of the Corporation shall be made in the
following manner:
(a) The holders of the Series A Preferred Stock shall be
entitled to receive, prior and in preference to any distribution of
any of the assets or surplus funds of the Corporation to the holders
of the Series B Preferred Stock or the Common Stock, by reason of
their ownership of such stock, (i) the amount of $1.00 per share (the
"Series A Original Cost") for each share of Series
A Preferred Stock then held by them, adjusted for any combinations,
consolidations, stock splits, or stock distributions or dividends with
respect to such shares, plus (ii) an amount equal to the accrued but
unpaid dividends whether or not earned or declared, on such share of
Series A Preferred Stock (such sum being referred to herein as the
"Series A Liquidation Value"). The assets and funds thus distributed
among the holders of the Series A Preferred Stock shall be distributed
among the holders of the Series A Preferred Stock in proportion to the
full Series A Liquidation Value each such holder is otherwise entitled
to receive in accordance with the preceding sentence.
(b) If, upon the completion of the distributions contemplated by
Section C.3(a) of this Article FOURTH, assets and funds remain
available for distribution by the Corporation, the holders of the
Series B Preferred Stock and Class C Common Stock shall be entitled to
receive, prior and in preference to any distribution of any of the
assets or surplus funds of the Corporation to the holders of the Class
A and Class B Common Stock, by reason of their ownership of such
stock, (i) the amount of $1.00 per share (the "Series B and Class C
Liquidation Value") for each share of Series B Preferred Stock and
Class C Common Stock then held by them, adjusted for any combinations,
consolidations, stock splits, or stock distributions or dividends with
respect to such shares. The assets and funds thus distributed among
the holders of the Series B Preferred Stock and Class C Common Stock
shall be distributed among the holders of the Series B Preferred Stock
and Class C Common Stock in proportion to the full Series B and Class
C Liquidation Value each such holder is otherwise entitled to receive
in accordance with the preceding sentence.
(c) If, upon the completion of the distributions contemplated by
Sections C.3(a) and (b) of this Article FOURTH, assets and funds
remain available for distribution by the Corporation, the entire
remaining assets and funds of the Corporation legally available for
distribution, if any, shall be distributed among the holders of the
Series B Preferred Stock and the Common Stock in proportion to the
number of shares of the Series B Preferred Stock and of the Common
Stock then held by them such that each share of Series B Preferred
Stock and each share of Common Stock shall be entitled to a ratable
distribution of such assets and funds.
(d) For purposes of this Section C.3, unless otherwise approved
by the holders of at least 66-2/3% of the then outstanding Series A
Preferred Stock voting as a class, (i) any acquisition of the
Corporation by means of merger of the Corporation with or into any
other corporation or other entity or person or other form of corporate
reorganization in which the Corporation shall not be the continuing or
surviving entity of such merger or reorganization (other than a mere
reincorporation transaction) or a transaction in which the Corporation
is the surviving entity but the shares of the Corporation's capital
stock outstanding immediately prior to the transaction are exchanged
or converted by virtue of the transaction into other property, whether
in the form of securities, cash or otherwise, or (ii) a sale of all or
substantially all of the assets of the Corporation shall be treated as
a liquidation, dissolution or winding up of the Corporation and shall
entitle the holders of Series A Preferred Stock, the Series B
Preferred Stock and the Class C Common Stock to receive at closing, in
cash, securities or other property (valued as provided in Section
C.3(e)) in amounts as specified in Sections C.3(a) and (b) of this
Article FOURTH.
(e) Whenever the distribution provided for in this Section C.3
shall be payable in securities or property other than cash, the "fair
value" of the assets or property to be distributed in such event shall
be determined in good faith by the Board of Directors of the
Corporation.
4. Voting Rights.
(a) General Voting Rights. Except as otherwise provided herein
and in Section C.7 of this Article FOURTH, and except as otherwise
required by law, (i) the holder of each share of Class A Common Stock
and Class C Common Stock issued and outstanding
shall have one vote per share, and (ii) the holder of each share of
Series B Preferred Stock shall be entitled to the number of votes as
is equal to the number of shares of Class C Common Stock into which
such holder's shares of Series B Preferred Stock could be converted at
the record date for determination of the shareholders entitled to vote
on such matters, or, if no such record date is established, at the
date such vote is taken or any written consent of stockholders is
solicited, and shall have voting rights and powers equal to the voting
rights and powers of the Class C Common Stock (except as otherwise
expressly required by law), such votes to be counted together with all
other shares of stock of the Corporation having general voting power
and not separately as a class. Except as expressly provided herein,
the Class B Common Stock and the Series A Preferred Stock shall be
non-voting. Holders of Common Stock, Series A Preferred Stock and
Series B Preferred Stock shall be entitled to notice of any
stockholders' meeting in accordance with the By-laws of the
Corporation. Fractional votes by the holders of Series B Preferred
Stock, as the case may be, shall not, however, be permitted, and any
fractional voting rights resulting from the above formula (after
aggregating all shares into which shares of Series B Preferred Stock
held by each holder could be converted) shall be rounded to the
nearest lower whole number.
(b) Special Voting Rights. No amendment to, or modification or
waiver of, any provision of this Certificate of Incorporation or the
By-Laws of the Corporation that (i) alters or changes the powers,
preferences or rights of the shares of Class B Common Stock or (ii)
modifies the provisions of Section C.5(b)(iii) of this Article FOURTH
as to shares of Class A Common Stock shall be effective without the
vote as a separate class of the holders of at least 66-2/3% of the
shares of the Class B Common Stock.
(c) Meeting Procedures. At every meeting of the holders of the
Class A and Class C Common Stock, such holders shall vote together as
a class. At every meeting of the holders of the Class A, Class B and
Class C Common Stock at which the holders of Class B Common Stock are
entitled to vote on any matter, such holders shall, except as
otherwise provided in subdivision (b), vote together as a single
class.
(d) Board Voting Matters. The Board of Directors shall consist
of seven (7) members. The holders of Series A Preferred Stock, as a
class, shall be entitled to elect two (2) members of the Board of
Directors. The holders of the Series B Preferred Stock and Class C
Common Stock, voting together as a class, shall be entitled to elect
four (4) members of the Board of Directors. The holders of the Class A
Common Stock as a class, shall be entitled to elect the remaining
member of the Board of Directors.
(e) Board Vacancy Procedures. In the case of any vacancy in the
office of a director occurring among the directors elected by the
holders of the Series A Preferred Stock, Series B Preferred Stock
and/or Class C Common Stock and Class A Common Stock, as the case may
be, pursuant to Section C.4(d) of this Article FOURTH, the Corporation
shall, promptly, but in any event within five (5) days after the
creation of such vacancy, call a special meeting of stockholders for
the purpose of filling any vacancy created in the Board, in accordance
with the By-Laws of the Corporation. The Corporation shall immediately
thereafter give the stockholders of the Corporation notice of such
special meeting. At such special meeting, the stockholders entitled to
elect the director(s) as to which the vacancy relates shall be
entitled to elect a director to fill each such vacancy for the
unexpired term of such Board seat, and such director or directors
shall serve until the next annual meeting of stockholders or until his
successor or successors shall have been duly elected and shall
qualify. Any director who shall have been elected by the holders of
the Series A Preferred Stock, Series B Preferred Stock and/or Class C
Common Stock or Class A Common Stock, as the case may be, or any
director so elected as provided in the preceding sentence hereof, may
be removed during the aforesaid term of office, whether with or
without cause, only by the affirmative vote of the holders of a
majority of the Series A Preferred Stock, Series B Preferred Stock
and/or Class C Common Stock or Class A Common Stock, as the case may
be, that elected such director.
(f) So long as any shares of the Series A Preferred Stock remain
outstanding, in the event of (i) a failure of the Corporation to
redeem shares of Series A Preferred Stock as required pursuant to
Section C.6 of this Article FOURTH; (ii) a failure of the Corporation
to pay dividends on the Series A Preferred Stock as provided in
Section C.2 of this Article FOURTH and such failure continues such
that the Corporation shall have accrued and unpaid dividends in
respect of the Series A Preferred Stock in excess of $2,500,000; or
(iii) the Corporation or any subsidiary of the Corporation shall
default in the payment of any of the Corporation's (or such
subsidiary's) indebtedness for borrowed money (including capitalized
leases) in an amount in excess of $10,000, and such default shall
continue unwaived or uncured for a period of 180 days or more (the
"Events of Default"), then the holders of the Series A Preferred
Stock, as a class, shall (immediately upon the giving of written
notice to the Corporation by the holders of a majority of the then
outstanding shares of Series A Preferred Stock) be entitled to elect
the smallest number of directors that shall constitute a majority of
the authorized number of directors of the Corporation, and the holders
of the Class A Common Stock, Class C Common Stock and Series B
Preferred Stock, as a class, voting together as a single class, shall
be entitled to elect the remaining members of the Board of Directors
in accordance with the procedures set forth in Section C.4(g). Upon
the election by the holders of the Series A Preferred Stock, as a
class, of the directors they are entitled to elect as provided in the
immediately preceding sentence, the terms of office of all persons who
were theretofore directors of the Corporation shall forthwith
terminate, whether or not the holders of the Class A Common Stock,
Class C Common Stock and Series B Preferred Stock, voting together as
a single class, shall then have elected the remaining directors of the
Corporation. If, after the election of a new Board of Directors
pursuant to this Section C.4(f), the Events of Default are cured
(which for purposes of clause (ii) of this subparagraph (f) shall mean
that accrued and unpaid dividends on the Series A Preferred Stock in
excess of $500,000 shall have been paid to the holders thereof and for
purposes of clause (iii) of this subparagraph (f) shall mean that no
default in the payment of any of the Corporation's (or such
subsidiary's) indebtedness for borrowed money shall exist), then the
holders of the Series A Preferred Stock shall be divested of the
special voting rights specified in this section, and the voting
procedures set forth in Section C.4(d) of this Article FOURTH shall
immediately, without any further action, apply. However, the special
voting rights of this section shall again accrue to the holders of the
shares of the Series A Preferred Stock, as a class, in case of any
later occurrence of an Event of Default. Upon the termination of any
such special voting rights as hereinabove provided, the Board of
Directors shall promptly call a special meeting of the stockholders at
which all directors will be elected in accordance with the provisions
of Section C.4(d) of this Article FOURTH, and the terms of office of
all persons who are then directors of the Corporation shall terminate
immediately upon the election of their successors.
(g) Whenever under the provisions of Section C.4(f) hereof, the
right shall have accrued to the holders of the Series A Preferred
Stock, as a class, to elect a majority of the Corporation's directors,
the Board of Directors shall, within ten (10) days after delivery to
the Corporation at its principal office of a request to such effect by
the holders of a majority of the then outstanding shares of the Series
A Preferred Stock, call a special meeting of the stockholders for the
election of directors, to be held upon not less than ten (10) nor more
than twenty (20) days' notice to such holders. If such notice of
meeting is not given within the ten (10) days required above, the
holders of Series A Preferred Stock requesting such meeting may also
call such meeting and for such purposes shall have access to the stock
books and records of the Corporation. At any meeting so called or at
any other meeting held for the election of directors while the holders
of shares of Series A Preferred Stock shall have the voting power
provided in Section C.4(f), the holders of a majority of the shares of
Series A Preferred Stock present in person or by proxy or voting by
written consent, shall be sufficient to constitute a quorum for the
election of directors as herein provided. In the case of any vacancy
in the
office of a director occurring among the directors elected by the
holders of Series A Preferred Stock pursuant to Section C.4(f), the
remaining directors so elected by that class may by affirmative vote
of a majority thereof (or the remaining director so elected if there
be but one) elect a successor or successors to hold office for the
unexpired term of the director or directors whose place or places
shall be vacant, provided that if there are no remaining directors so
elected by that class, the vacancies may be filled by the affirmative
vote of the holders of a majority of the shares of Series A Preferred
Stock given either at a special meeting of such stockholders duly
called for that purpose or pursuant to a written consent of
stockholders. Any directors who shall have been elected by the holders
of Series A Preferred Stock or by any directors so elected as provided
in the next preceding sentence hereof may be removed during the
aforesaid term of office, either with or without cause, by, and only
by, the affirmative vote of the holders of a majority of the shares of
the Series A Preferred Stock who elected such director or directors,
given either at a special meeting of such stockholders duly called for
that purpose or pursuant to a written consent of stockholders, and any
vacancy thereby created may be filled by the holders of Series A
Preferred Stock represented at such meeting or pursuant to such
written consent.
5. Conversion.
(a) The holders of the Series B Preferred Stock and Class C
Common Stock shall have conversion rights as follows:
(i) Right to Convert. (A) Each share of Series B Preferred Stock
shall be convertible, at the option of the holder thereof, at any time
after the date of issuance of such share at the office of the
Corporation or any transfer agent for the Series B Preferred Stock,
into such number of fully paid and nonassessable shares of Class C
Common Stock as is determined by dividing the initial Series B
Conversion Price by the Series B Conversion Price then in effect. The
"initial Series B Conversion Price" for the Series B Preferred Stock
shall be $1.00. The initial Series B Conversion Price shall be subject
to adjustment as hereinafter provided. No amount shall be payable by a
shareholder in respect of the conversion of any share of Series B
Preferred Stock.
(ii) Automatic Conversion.
(A) Each share of Series B Preferred Stock shall be
converted into one or more share(s) of Class A Common Stock at
the then-effective Series B Conversion Price for such share of
Series B Preferred Stock, at the option of the Corporation,
immediately upon the closing of a firm commitment underwritten
public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended (the "Securities
Act"), covering the offer and sale of shares of the Corporation's
Common Stock for the account of the Corporation and/or selling
stockholders to the public at a price per share of not less than
$5.00 per share (appropriately, adjusted for any
recapitalization, stock split, reverse stock split, stock
dividend or the like) and resulting in aggregate net proceeds to
the Corporation (after deducting underwriters' discounts and
expenses relating to the issuance, including fees of the
Corporation's counsel) of not less than $10,000,000 (a "Qualified
Offering") if and only if the holders of the Series B Preferred
Stock are first paid their liquidation preference provided for in
Section C.3(b) hereof.
(B) Each share of Class C Common Stock shall be converted
into one share of Class A Common Stock, at the option of the
Corporation, immediately upon the closing of a Qualified Offering
if and only if the holders of the Class C Common Stock are first
paid their liquidation preference provided for in Section C.3(b)
hereof.
(iii) Mechanics of Conversion. No fractional shares of Class
A Common Stock or Class C Common Stock shall be issued upon conversion
of Series B Preferred Stock. All shares of Class A Common Stock or
Class C Common Stock (including fractions thereof) issuable upon
conversion of more than one
share of Series B Preferred Stock by a holder thereof shall be
aggregated for purposes of determining whether the conversion would
result in the issuance of any fractional share. If, after the
aforementioned aggregation, the conversion would result in the
issuance of a fraction of a share of Class A Common Stock or Class C
Common Stock, the Corporation shall, in lieu of issuing any fractional
shares to which the holder would be otherwise entitled, pay cash equal
to the fair market value of such fractional share on the date of
conversion, which fair market value shall be determined in good faith
by the Board of Directors. Before any holder of Series B Preferred
Stock shall convert into full shares of Class A Common Stock or Class
C Common Stock and to receive certificates therefor, such holder shall
surrender the certificate or certificates therefor, duly endorsed, at
the office of the Corporation or of any transfer agent for the Series
B Preferred Stock, and shall give written notice to the Corporation at
such office that such holder elects to convert the same. The
Corporation shall, as soon as practicable thereafter, issue and
deliver at the office of the Corporation or at such transfer agent's
office to such holder of Series B Preferred Stock, (i) a certificate
or certificates for the number of shares of Class A Common Stock or
Class C Common Stock to which such holder shall be entitled as
aforesaid, and (ii) cash or a check payable to the holder of such
Series B Preferred Stock in the amount of any cash amounts payable as
the result of a conversion into fractional shares of Class A Common
Stock or Class C Common Stock. Such conversion shall be deemed to have
been made immediately prior to the close of business on the date of
such surrender of the Series B Preferred Stock to be converted, or, in
the case of a conversion at the option of the Corporation pursuant to
Section C.5(a)(ii), immediately prior to the closing of the Qualified
Offering, and the person or persons entitled to receive the Class A
Common Stock or Class C Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of
such Class A Common Stock or Class C Common Stock on the date of such
conversion. If the conversion is in connection with a Qualified
Offering the conversion shall be conditioned upon the closing with the
underwriter of the sale of securities pursuant to such offering, in
which event the person(s) entitled to receive the Class A Common Stock
issuable upon such conversion of the Series B Preferred Stock shall
not be deemed to have converted such Series B Preferred Stock, until
immediately upon the closing of such sale of securities.
(iv) Adjustments to Conversion Price for Certain Issues.
(A) Adjustments for Subdivisions, Combinations or
Consolidation of Class A or Class C Common Stock. In the event
the Corporation at any time or from time to time after the
Original Issue Date shall declare or pay, without consideration,
any dividend on the Class A Common Stock or Class C Common Stock
payable in Class A Common Stock or Class C Common Stock or in any
right to acquire Class A Common Stock or Class C Common Stock for
no consideration, or shall effect a subdivision of the
outstanding shares of Class A Common Stock or Class C Common
Stock into a greater number of shares of Class A Common Stock or
Class C Common Stock (by stock split, reclassification or
otherwise than by a payment of a dividend in Class A Common Stock
or Class C Common Stock or in any right to acquire Class A Common
Stock or Class C Common Stock), or in the event the outstanding
Class A Common Stock or Class C Common Stock shall be combined or
consolidated, by reclassification or otherwise, into a lesser
number of shares of Class A Common Stock or Class C Common Stock,
then the Series B Conversion Price in effect immediately prior to
such event shall, concurrently with the effectiveness of such
event, be proportionately decreased or increased as appropriate.
In the event that the Corporation shall declare or pay, without
consideration, any dividend on the Class A Common Stock or Class
C Common Stock payable in any right to acquire Class A Common
Stock or Class C Common Stock for no consideration, then the
Corporation shall be deemed to have made a dividend payable in
Class A Common Stock or Class C Common Stock in an amount of
shares equal to the maximum number of shares issuable upon
exercise of such rights to acquire Class A Common Stock or Class
C Common Stock.
(B) Adjustments for Reclassification, Exchange and
Substitution. If the Class A Common Stock or Class C Common Stock
issuable upon conversion of the Series B Preferred Stock shall be
changed into the same or a different number of shares of any
other class or classes of stock, whether by capital
reorganization, reclassification or otherwise (other than a
subdivision or combination of shares provided for above), the
Series B Conversion Price then in effect for each share of the
Series B Preferred Stock, shall, concurrently with the
effectiveness of such reorganization, reclassification or other
event, be proportionately adjusted such that the Series B
Preferred Stock shall be convertible into, in lieu of the number
of shares of Class A Common Stock or Class C Common Stock which
the holders would otherwise have been entitled to receive, that
number of shares of such other class or classes of stock or other
securities equivalent to the number of shares of Class A Common
Stock or Class C Common Stock that would have been subject to
receipt by the holders upon conversion of the Series B Preferred
Stock immediately before that change.
(v) No Impairment. The Corporation shall not, by amendment of
its Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale
of securities or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms to be observed or
performed hereunder by the Corporation but shall at all times in good
faith assist in the carrying out of all the provisions of this Section
C.5 of this Article FOURTH and in the taking of all such action as may
be necessary or appropriate in order to protect the conversion rights
of the holders of the Series B Preferred Stock against impairment.
(vi) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Series B Conversion Price pursuant
to this Section C.5 of this Article FOURTH, the Corporation at its
expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and furnish to each holder of shares
of Series B Preferred Stock, a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based. The Corporation shall, upon
the written request at any time of any holder of Series B Preferred
Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (x) such adjustments and readjustments, (y)
the Series B Conversion Price at the time in effect, and (z) the
number of shares of Class A Common Stock or Class C Common Stock and
the amount, if any, of other property which at the time would be
received upon the conversion of shares of Series B Preferred Stock.
(vii) Notices of Record Date. In the event that the Corporation
shall propose at any time:
(A) to declare any dividend or distribution upon its
Class A Common Stock or Class C Common Stock, whether or not a
regular cash dividend or a dividend payable in shares of Class A
Common Stock or Class C Common Stock, and whether or not out of
earnings or earned surplus;
(B) to offer for subscription pro rata to the holders of
any class or series of its stock any additional shares of stock
of any class or series or other rights;
(C) to effect any reclassification or recapitalization of
its Class A Common Stock or Class C Common Stock outstanding
involving a change in the Class A Common Stock or Class C Common
Stock; or
(D) to merge or consolidate with or into any other
corporation, or sell, lease or convey all or substantially all
its property or business, or to liquidate, dissolve or wind up or
to enter into any other transaction contemplated by Section C.3
(d) (i) or (ii) ;
then, in connection with each such event, the Corporation
shall send to the holders of the Series A Preferred Stock and
Series B Preferred Stock:
(1) at least 20 days' prior written notice of the
date on which a record shall be taken for such dividend,
distribution or subscription rights (and specifying the date
on which the holders of Class A Common Stock or Class C
Common Stock shall be entitled thereto) or for determining
rights to vote in respect of the matters referred to in (C)
and (D) above; and
(2) in the case of the matters referred to in (C) and
(D) above, in the event a record date is taken with respect
to any such matter, at least 20 days' prior written notice
of such record date or, if no such record date is taken, at
least 20 days' prior written notice of the date when such
matters shall take place (and specifying the date on which
the holders of Class A Common Stock or Class C Common Stock
shall be entitled to exchange their shares of Class A Common
Stock or Class C Common Stock for securities or other
property deliverable upon the occurrence of such event).
Each such written notice shall be delivered personally or sent by
first class mail, postage prepaid, addressed to the holders of
the Series A Preferred Stock and/or Series B Preferred Stock, as
the case may be, at the address for each such holder as shown on
the books of the Corporation.
(viii) Issue Taxes. The Corporation shall pay any and all
issue and other taxes that may be payable in respect of any issue or
delivery of shares of Class A Common Stock on conversion of Series B
Preferred Stock pursuant hereto; provided, however, that the
Corporation shall not be obligated to pay any transfer taxes resulting
from any transfer requested by any holder in connection with any such
conversion.
(ix) Reservation of Stock Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Class A Common Stock and Class C
Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series B Preferred Stock, such number of its shares
of Class A Common Stock and Class C Common Stock as shall from time to
time be sufficient to effect the conversion of all outstanding shares
of the Series B Preferred Stock; and if at any time the number of
authorized but unissued shares of Class A Common Stock or Class C
Common Stock shall not be sufficient to effect the conversion of all
of the then outstanding shares of the Series B Preferred Stock, the
Corporation shall take such corporate action as may, in the opinion of
its counsel, be necessary to increase its authorized but unissued
shares of Class A Common Stock or Class C Common Stock to such number
of shares as shall be sufficient for such purpose, including, without
limitation, utilizing its best efforts to obtain the requisite
stockholder approval of any necessary amendment to the Certificate of
Incorporation.
(b) The holders of Class A and Class B Common Stock shall have
conversion rights as follows:
(i) Mandatory Conversion of Class B Common Stock Upon Certain
Transfers. Immediately upon the transfer of any shares of Class B
Common Stock to any Person other than an Insurance Company Affiliate
of the holder of such shares, such shares shall, automatically and
without any action on the part of the holder thereof, be converted
into the same number of shares of Class A Common Stock as the number
of shares of Class B Common Stock so being transferred. Upon the
surrender for registration of transfer of any certificates which prior
to the transfer thereof represented shares of Class B Common Stock,
(A) the Corporation shall issue one or more new certificates, in such
denominations as may be requested, for the same aggregate number of
shares of Class A Common Stock represented by the certificates so
surrendered, and registered as the holder thereof may request, and (B)
the rights of the holder of such shares of Class B Common Stock shall
cease with respect to the number of shares so transferred and the
person or persons in whose name or names the
certificates for shares of Class A Common Stock are to be issued upon
such transfer shall be deemed to have become the holders of record of
the shares of Class A Common Stock represented thereby.
(ii) Mandatory Conversion of Class B Common Stock upon
Registration and Sale of Securities. Immediately upon the sale of
shares of Common Stock pursuant to an effective registration statement
filed under Section 5 of the Securities Act, each share of Class B
Common Stock sold pursuant to such registration statement shall,
automatically and without any action on the part of the holder
thereof, be converted into a share of Class A Common Stock. Upon the
surrender for registration of transfer of any certificate or
certificates which prior to the registered sale thereof represented
shares of Class B Common Stock, (A) the Corporation shall issue one or
more new certificates, in such denominations as may be requested, for
the same aggregate number of shares of Class A Common Stock
represented by the certificates so surrendered, and registered as the
purchaser of such shares of Class B Common Stock may request and (B)
the rights of the holder of such shares of Class B Common Stock shall
cease with respect to the number of shares so sold and the person or
persons in whose name or names the certificates for share of Class A
Common Stock are to be issued upon such sale shall be deemed to have
become the holder or holders of record of the shares of Class A Common
Stock represented thereby.
(iii) Mandatory Conversion of Class A Common Stock Upon
Certain Transfers. Immediately upon the transfer of any shares of
Class A Common Stock to any person who is a holder of Class B Common
Stock, such shares of Class A Common Stock shall, automatically and
without any action on the part of the holder thereof, be converted
into the same number of shares of Class B Common Stock as the number
of shares of Class A Common Stock so being transferred. Upon the
surrender for registration of transfer of any certificates which prior
to the transfer thereof represented shares of Class A Common Stock,
(A) the Corporation shall issue one or more new certificates, in such
denominations as may be requested, for the same aggregate number of
shares of Class A Common Stock represented by the certificates so
surrendered, and registered as the purchaser of such shares may
request and (B) the rights of the holder of such shares of Class A
Common Stock shall cease with respect to the number of shares so sold
and the person or persons in whose name or names the certificates for
shares of Class B Common Stock are to be issued upon such sale shall
be deemed to have become the holder or holders of record of the shares
of Class B Common Stock represented thereby.
(iv) Reservation of Shares, Validity, etc. The Corporation shall
at all times reserve and keep available out of its authorized but
unissued shares of Class A Common Stock, or its treasury shares,
solely for the purpose of issue upon the conversion of the Class B
Common Stock as provided in this Section C.5(b), such number of shares
of Class A Common Stock as are then issuable upon the conversion of
all outstanding shares of Class B Common Stock. The Corporation shall
at all times reserve and keep available out of its authorized but
unissued shares of Class B Common Stock, or its treasury shares,
solely for the purpose of issue upon the conversion of the Class A
Common Stock as provided in this Section C.5(b), such number of shares
Class B Common Stock as are then issuable upon the conversion of all
outstanding shares of Class A Common Stock. The Corporation covenants
that all shares of Class A Common Stock and Class B Common Stock which
are issuable upon conversion shall, when issued, be duly and validly
issued, fully paid and nonassessable and free of all liens and
charges. The Corporation shall take all such action as may be
necessary to assure that all such shares of Class A Common Stock or
Class B Common Stock may be so issued without violation of any law or
any regulation, rule or other requirement of any governmental
authority applicable to the Corporation or any requirement of any
securities exchange upon which shares of Class A Common Stock or Class
B Common Stock may be listed. The Corporation shall not take any
action which would affect the number of shares of Class A Common Stock
or Class B Common Stock outstanding or issuable for any purposes
unless immediately following such action the Corporation would have
authorized but unissued shares of Class A Common Stock and Class B
Common Stock, or treasury shares, not then reserved or
required to be reserved for any purpose other than the purpose of
issue upon conversion of Class B Common Stock or Class A Common Stock,
as the case may be, sufficient to meet the reservation requirements of
the first two sentences of this subdivision (v).
(v) Registration and Listing. If any shares of Class A Common
Stock or Class B Common Stock required to be reserved for purposes of
conversion hereunder require, before such shares may be issued upon
conversion, registration with or approval of any governmental
authority under any federal or state law (other than any registration
under the Securities Act or any state securities law required by
reason of any transfer involved in such conversion), or listing on any
domestic securities exchange, the Corporation shall, at its expense
and as promptly as possible, use its best efforts to cause such shares
to be duly registered or approved or listed, as the case may be.
(vi) Charges. The issue of certificates for shares of Class A
Common Stock upon conversion of shares of Class B Common Stock and
certificates for shares of Class B Common Stock upon conversion of
shares of Class A Common Stock shall be made without charge to the
holders of such shares for any issue tax in respect thereof or other
costs incurred by the Corporation in connection with such conversion
and the related issue of shares of Class A Common Stock and or Class B
Common Stock, as the case may be; provided that the Corporation shall
not be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of any certificate in a
name other than that of the holder of the Class B Common Stock
converted or the holder of the Class A Common Stock converted, as the
case may be.
(vii) Definitions. As used in this Section C.5(b), the
following terms shall have the following meanings:
Affiliate of a Person means another Person that directly,
or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with such Person and shall
include any portfolio or investment fund of which such Person is the
sole investment advisor. The term "control" means possession, directly
or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.
Insurance Company Affiliate of a Person means an Affiliate
of such Person that is an insurance company subject to regulation as
such under the insurance laws of the jurisdiction of its organization
or in which it conducts business.
Person means an individual, a partnership, an association,
a joint venture, a corporation, a business, a trust, an unincorporated
organization or a government or any department, agency or subdivision
thereof.
6. Redemption.
(a) The Corporation shall redeem, from any source of funds
legally available therefor, all of the outstanding Series A Preferred
Stock, on December 31, 2003 (the "Series A Redemption Date"). The
Corporation shall effect such redemption by paying in cash in exchange
for the shares of Series A Preferred Stock to be redeemed a sum equal
to the Series A Original Cost (as adjusted for any stock dividends,
combinations or splits with respect to such shares) plus all
accumulated but unpaid dividends on such shares (the "Series A
Redemption Price").
(b) At least 15 but no more than 30 days prior to the Series A
Redemption Date written notice shall be mailed, first class postage
prepaid, to each holder of record (at the close of business on the
business day next preceding the day on which notice is given) of the
Series A Preferred Stock to be redeemed, at the address last shown on
the records of the Corporation for such holder, notifying such holder
of the redemption to be effected, specifying the number of shares to
be redeemed from such holder, the Series A Redemption Date, the Series
A Redemption Price, the place at which payment may be obtained and
calling upon such holder to surrender to the Corporation, in the
manner and at the place designated his certificate or certificates
representing the shares to be redeemed (the "Redemption Notice").
Except as provided in Section C.6(c), on or after the Series A
Redemption Date, each holder of Series A Preferred Stock to be
redeemed shall surrender to this Corporation the certificate or
certificates representing such shares, in the manner and at the place
designated in the Redemption Notice, and thereupon the Series A
Redemption Price of such shares shall be payable to the order of the
person whose name appears on such certificate or certificates as the
owner thereof and each surrendered certificate shall be cancelled. In
the event less than all the shares represented by any such certificate
are redeemed, a new certificate shall be issued representing the
unredeemed shares.
(c) From and after the Series A Redemption Date, unless there
shall have been a default in payment of the Series A Redemption Price,
all rights of the holders of shares of Series A Preferred Stock
designated for redemption in the Redemption Notice as holders of
Series A Preferred Stock (except the right to receive the Series A
Redemption Price without interest upon surrender of their certificate
or certificates) shall cease with respect to such shares, and such
shares shall not thereafter be transferred on the books of the
Corporation or be deemed to be outstanding for any purpose whatsoever.
If the funds of the Corporation legally available for redemption of
shares of Series A Preferred Stock on the Series A Redemption Date are
insufficient to redeem the total number of shares of Series A
Preferred Stock to be redeemed on such date, those funds which are
legally available will be used to redeem the maximum possible number
of such shares ratably among the holders of such shares to be redeemed
based upon their holdings of Series A Preferred Stock. The shares of
Series A Preferred Stock not redeemed shall remain outstanding and
entitled to all the rights and preferences provided herein. At any
time thereafter when additional funds of the Corporation are legally
available for the redemption of shares of Series A Preferred Stock
such funds will immediately be used to redeem the balance of the
shares which the Corporation has become obliged to redeem on the
Series A Redemption Date, but which it has not redeemed.
(d) On or prior to the Series A Redemption Date, the Corporation
shall deposit the Series A Redemption Price of all shares of Series A
Preferred Stock designated for redemption in the Redemption Notice and
not yet redeemed with a bank or trust corporation having aggregate
capital and surplus in excess of $100,000,000 as a trust fund for the
benefit of the respective holders of the shares designated for
redemption and not yet redeemed, with irrevocable instructions and
authority to the bank or trust corporation to pay the Series A
Redemption Price for such shares to their respective holders on or
after the Series A Redemption Date upon receipt of notification from
the Corporation that such holder has surrendered his share certificate
to the Corporation pursuant to Section C.6(b) above. As of the Series
A Redemption Date, the deposit shall constitute full payment of the
shares to their holders, and from and after the Series A Redemption
Date the shares so called for redemption shall be redeemed and shall
be deemed to be no longer outstanding, and the holders thereof shall
cease to be stockholders with respect to such shares and shall have no
rights with respect thereto except the rights to receive from the bank
or trust corporation payment of the Series A Redemption Price of the
shares, without interest, upon surrender of their certificates
therefor.
7. Protective Provisions. In addition to any other rights provided
by law, so long as any shares of Series A Preferred Stock shall be outstanding,
the Corporation shall not, without first obtaining the affirmative vote or
written consent of the holders of not less than (a) 66.67% of such outstanding
shares of Series A Preferred Stock with respect to clauses (ii), (iv), (vi),
(vii), (viii) and (ix) below and (b) 50.1%. of such outstanding shares of Series
A Preferred Stock with respect to clauses (i), (iii), (v), (x), (xi) and (xii)
below:
(i) pay or declare any dividend on the Corporation's Common
Stock, Series B Preferred Stock or any other equity securities
(including options or warrants) of the Corporation (other than
the Series A Preferred Stock) or redeem, purchase or otherwise
acquire for value (or pay into
or set aside for a sinking fund for such purpose) any share or
shares of the Corporation's Common Stock, Series B Preferred
Stock or any other equity securities of the Corporation, or apply
any of the Corporation's assets to the redemption, retirement,
purchase or acquisition, directly or indirectly, through
subsidiaries or otherwise, of any of the Corporation's Common
Stock, Series B Preferred Stock, or other equity securities of
the Corporation, except for (x) redemptions of Series A Preferred
Stock as provided in Section C.6 hereof, and (y) repurchases of
Common Stock pursuant to that certain Investors' Rights Agreement
dated as of the Original Issue Date among the Corporation, and
the other parties thereto (the "Investors' Rights Agreement");
(ii) authorize, approve or consummate any transaction or
series of transactions contemplated by Section C.3(d) of this
Article FOURTH with respect to the Corporation or any subsidiary
of the Corporation;
(iii) make any loan, advance or capital contribution to, or
investment in, or permit or cause any subsidiary of the
Corporation to make any loan, advance or capital contribution to,
or investment in any of the officers, directors, employees,
providers, consultants, agents or other representatives of the
Corporation, other than (A) travel or salary advances in the
ordinary course of business in a manner consistent with past
practice, and (B) loans evidenced by promissory notes in
connection with the purchase of Common Stock under employment or
restrictive stock purchase agreements entered into by the
Corporation or the Investors' Rights Agreement;
(iv) incur or assume or permit to exist or permit or cause
any subsidiary of the Corporation to incur or assume or permit to
exist any indebtedness for borrowed money (including capitalized
leases) other than amounts owing under (A) that certain Secured
Credit Agreement dated as of December 21, 1995 by and between
General Manufactured Housing, Inc. ("Subsidiary") and First Source
Financial LLP, (B) that certain Note and Warrant Purchase
Agreement dated as of December 21, 1995 by and between the
Corporation, Subsidiary and The Equitable Life Assurance Society
of the United States and (C) that certain Securities Purchase
Agreement dated as of December 21, 1995 between and among the
Corporation, Subsidiary, RFE Investment Partners V L.P., Sterling
Commercial Capital, Inc. and the State Treasurer of the State of
Michigan, as Custodian in excess of $2,600,000 in the aggregate,
or issue any debt securities or assume, guarantee, endorse (other
than in the ordinary course of business consistent with past
practice) or otherwise as an accommodation become responsible for,
liabilities of any other person;
(v) purchase, hold or own, or permit or cause any
subsidiary of the Corporation to purchase, hold or own any capital
stock, evidence of indebtedness or other security of any
subsidiary of the Corporation or other corporation, partnership,
or other entity, unless such corporation, partnership or other
entity is a wholly-owned subsidiary of the Corporation.
(vi) permit or cause the Corporation or any subsidiary of
the Corporation to engage in any new line of business outside the
construction, manufacture, assembling, purchasing and selling all
types of manufactured buildings, structures and homes;
(vii) authorize or issue shares of any equity securities of
the Corporation, including any preferred stock, options or
warrants to purchase any such equity security;
(viii) amend or repeal any provision of, add any provision
to, or waive any provision (including any of these protective
provisions) of the Corporation's Certificate of Incorporation or
By-laws, or alter or change the rights, preferences, privileges or
powers of, or the restrictions provided for the benefit of, the
Series A
Preferred Stock or cause or permit any subsidiary of the
Corporation to do the same;
(ix) make any acquisition of, or loan, advance or capital
contribution to, or investment or permit any subsidiary of the
Corporation to make any acquisition of, or loan, advance or
capital contribution to, or investment in any business entity,
which, individually or together with any related series of such
transactions, exceeds $1,000,000;
(x) make or permit or cause any subsidiary of the
Corporation to make any capital expenditures in any one fiscal
year in excess of the sum of (A) $500,000 plus (B) the difference
between $500,000 and any unexpended amounts from prior years;
(xi) enter into any contract or transaction with an
affiliate of the Corporation (or cause or permit any subsidiary of
the Corporation to do the same) that does not deal at arm's length
with the Corporation or which exceeds $25,000 in amount; or
(xii) reclassify any shares of Common Stock or any other
shares of the Corporation into shares having any preference or
priority as to dividends or assets superior to or on a parity with
any such preference or priority of the Series A Preferred Stock.
In the event that the Corporation shall propose at any time to take any
action specified in this Section C.7, then the Corporation shall send to the
holders of the Series A preferred Stock at least 5 days prior written notice of
the date on which the vote of the holders of the Series A Preferred Stock shall
be taken with respect to such matter.
8. Increasing Common Stock. The number of authorized shares of
Common Stock may be increased or decreased (but not below the number of shares
of Common Stock then outstanding) by an affirmative vote of the holders of a
majority of the stock of the Corporation entitled to vote thereon.
9. No Reissuance of Series A Preferred Stock or Series B
Preferred Stock. No shares of Series A Preferred Stock or Series B Preferred
Stock acquired by the Corporation by reason of redemption, purchase, conversion
or otherwise shall be reissued, and any such shares shall be cancelled, retired,
and eliminated from the shares which the Corporation shall be authorized to
issue; provided, however, that any such redeemed or purchased shares of
Preferred Stock shall be eliminated from the shares which the Corporation shall
be authorized to issue only upon the filing with the Secretary of State of the
State of Delaware of a certificate of amendment of this Restated Certificate of
Incorporation in compliance with the General Corporation Law of the State of
Delaware.
FIFTH: No director of the Corporation shall be personally liable to the
Corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a director; provided, however, that the foregoing clause shall
not apply to any liability of a director (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of Title 8 of the G.C.L. or (iv) for
any transaction from which the director derived an improper personal benefit. If
the X.X.X.xx amended to authorize corporate action further eliminating or
limiting the personal liability of Directors, then the liability of a Director
of the Corporation shall be eliminated or limited to the fullest extent
permitted by the G.C.L. as so amended. The provisions of this Article FIFTH are
not intended to, and shall not, limit, supersede or modify any other defense
available to a Director under applicable law. Any repeal or modification of this
Article FIFTH by the stockholders of the Corporation shall not adversely affect
any right or protection of a director of the Corporation existing immediately
prior to the time of such repeal or modification.
SIXTH: In accordance with the provisions of Section 103(d) of the G.C.L.,
the Restated Certificate of Incorporation set forth above shall become effective
upon its filing date.
IN WITNESS WHEREOF, the President of the Corporation has executed, and
the Secretary of the Corporation has attested to, this Restated Certificate
of Incorporation this 20th day of December, 1995.
GMH HOLDINGS, INC.
By: /s/ Xxxx X. Xxxxx
----------------------------------
Name: Xxxx X. Xxxxx
Title: President
ATTEST:
By:/s/ Xxxxx X. XxxXxxxx
----------------------------
Name: Xxxxx X. XxxXxxxx
Title: Assistant Secretary
EXHIBIT A
EXHIBIT B
THIS JUNIOR SUBORDINATED NOTE IS SUBORDINATED PURSUANT TO THE
TERMS OF THAT CERTAIN SUBORDINATION AGREEMENT DATED THE DATE
HEREOF AMONG THE PAYEE, THE OTHER PURCHASERS WHO ARE PARTIES
TO THE AGREEMENT (AS DEFINED BELOW), THE MAKER, THE SENIOR
LENDER, THE SENIOR SUBORDINATED LENDER AND STRATEGIC
INVESTMENTS & HOLDINGS, INC.(ALL AS DEFINED BELOW).
GENERAL MANUFACTURED HOUSING, INC.
JUNIOR SUBORDINATED NOTE DUE JUNE 30, 2003
$[ ]
December __, 1995
FOR VALUE RECEIVED, GENERAL MANUFACTURED HOUSING, INC. a Georgia
corporation with its principal office at 0000 Xxxxxxxxxx Xxxxxxxxx, Xxxxxxxx,
Xxxxxxx 00000 (the "Maker"), hereby unconditionally promise(s) to pay to the
order of [ ] (the "Payee"), or registered assigns at the
office of the Payee located [ ] or at such other
office as the holder hereof may designate, in lawful money of the United
States, the principal sum of $[ ], together with interest thereon
as provided for below.
This Note is one of a duly authorized issue of Junior Subordinated Notes of
the Maker, limited in aggregate principal amount to Five Million Dollars
($5,000,000.00) (the "Notes"), copies of which are available for inspection at
the Maker's principal office. The Notes have been sold pursuant to a Securities
Purchase Agreement dated as of the date hereof, among the Maker and the Payees
of the Notes (the "Agreement"), a copy of which is available for inspection at
the Maker's principal office. This Note is subject and entitled to certain
terms, conditions, covenants and agreements contained in the Agreement.
Reference to the Agreement and the Subordination Agreement (as defined below)
shall in no way impair the negotiability hereof or the absolute and
unconditional obligation of the Maker to pay both principal of and interest on
this Note as provided herein.
1. EQUAL RANK. The Notes rank equally and ratably without priority over one
another. No payment, including any prepayment, shall be made hereunder unless
payment, including any prepayment, is made with respect to the other Notes in an
amount which bears the same ratio to the then unpaid balance on such other Notes
as the payment made hereon bears to the then unpaid balance under this Note.
2. INTEREST. Interest shall accrue on the outstanding principal balance
hereof at a rate per annum equal to thirteen percent (13%) per annum, payable
(in the event and only to the extent that Maker has accumulated earnings
sufficient to pay such accrued interest) quarterly, on the last day of
December, March, June and September in each year and on the Maturity Date (as
defined below), commencing on March 31, 1996. Interest for the period commencing
with the date of this Note through March 31, 1996 shall be payable on March 31,
1996.
If all or a portion of the principal amount of or interest on this Note
shall not be paid when due (whether or not such interest has been earned as
provided above and whether at stated maturity, by acceleration or otherwise)
such overdue amount shall bear interest at a rate per annum which is 2% above
the rate that would otherwise be applicable thereto.
Anything contained in this Note to the contrary notwithstanding, the
Payee does not intend to charge and the Maker shall not be required to pay
interest or other charges in excess of the maximum rate (if any) permitted by
applicable law (if any). Any payments in excess of such maximum shall be
refunded to the Maker or credited against principal.
3. PAYMENT OF PRINCIPAL AND INTEREST. The Maker shall pay the entire unpaid
principal hereof and any accrued and unpaid interest thereon in one lump payment
due on June 30, 2003. The term "Maturity Date" shall mean June 30, 2003.
4. SUBORDIANTION. Anything in this Note to the contrary notwithstanding,
the indebtedness evidenced by this Note shall be subordinated to the prior
payment and satisfaction of all indebtedness of the Maker to (i) First Source
Financial LLP (the "Senior Lender") arising out of the Secured Credit Agreement
dated December 21, 1995 (the "Loan Agreement") between the Senior Lender and the
Maker including any such additional indebtedness permitted by the Subordination
Agreement, and (ii) The Equitable Life Assurance Society of the United States
(the "Senior Subordinated Lender") arising out of that certain Note and Warrant
Purchase Agreement dated as of December 21, 1995 (the "Note Agreement"), between
the Maker and the Senior Subordinated Lender (such indebtedness of the Maker to
which this Note is subordinated being hereinafter referred to as "Senior
Indebtedness"), which subordination shall be subject to the terms and conditions
of that certain Subordination Agreement dated as of the date hereof between the
Maker, the Senior Lender, the Senior Subordinated Lender, Strategic Investments
& Holdings, Inc. and the Payees of the Notes. Senior Indebtedness shall include
any replacement or refinancing thereof. This Note and the other Notes shall be
senior in right of payment to all other borrowed money indebtedness of the
Maker, except the Senior Indebtedness.
5. LIQUIDATION RIGHTS. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Maker, this Note shall be entitled
to a claim in liquidation after the payment in full of all Senior Indebtedness
of the Maker, but before participation by the holders of any debt subordinate
hereto or of any capital stock of the Maker. The amount of the claim in
liquidation shall equal the amount to which the Payee of this Note would be
entitled in the case of payment, whether or not this Note is eligible for
payment at the time of liquidation. If upon such liquidation, dissolution, or
winding up, the assets available for distribution among the holders of the Notes
shall be insufficient to permit the payment of the full amounts of their claims
in liquidation, then the entire assets of the Maker to be distributed to the
holders of the Notes shall be distributed pro-rata among the holders of the
Notes based upon the amounts of their respective claims in liquidation.
6. PREPAYMENT. Optional prepayment. The Maker may prepay the principal
hereof and all interest thereon in whole or in part at any time without penalty
or premium after ten (10) days' prior written notice to the holders of the
Notes; provided that any partial prepayment is in multiples of $10,000. At the
time of prepayment, all interest owing on the amount prepaid to the date of
payment must simultaneously be paid.
7. EXPENSES. The Maker shall pay the Payee, on demand, for all reasonable
costs and expenses, including, but not limited to, reasonable attorneys' fees,
incurred in the collection or enforcement of this Note.
8. DISCLOSURE OF SENIOR INDEBTEDNESS. The Maker shall notify the Payee of
this Note of the existence of any Senior Indebtedness, incurred from time to
time, or any written modification, extension, renewal or rollover thereof or any
default therein within five (5) days of the date it is incurred or occurs. Such
notice shall provide the Payee of this Note access to all documents executed in
connection therewith and all information with respect thereto.
9. DEFAULT; ACCELERATION. The occurrence of any of the following shall
constitute an "Event of Default":
(a) The breach by the Maker of any of the terms or provisions contained
in this Note or any of the Notes, including without limitation the failure to
pay when due (whether at the date hereof or at a date fixed for prepayment
hereof or by acceleration hereof or otherwise) any principal, interest, charges
or other amounts hereunder or failure to perform hereunder or under any of the
Notes and such breach shall continue unremedied for five business days; or
(b) If the Maker
(i) shall commence any case or proceeding or other action relating
to it under any bankruptcy, insolvency or other similar law or seek
reorganization, arrangement, readjustment of its debts, dissolution,
liquidation, winding-up, composition or any other relief under any bankruptcy,
insolvency, reorganization, liquidation, dissolution, arrangement, composition,
readjustment of debt or any other similar act or law, of any jurisdiction,
domestic or foreign, now or hereafter existing; or
(ii) shall admit the material allegations of any petition or
pleading in connection with any such case or proceeding; or
(iii) makes an application for, or consents or acquiesces to, the
appointment of a receiver, conservator, trustee or similar officer for the Maker
or for all or a substantial part of the Maker's property; or
(iv) makes a general assignment for the benefit of creditors; or
(v) is unable or admits in writing its inability to pay its debts
as they mature; or
(c) Commencement of any case or proceeding or the taking of any other
action against the Maker in bankruptcy, insolvency, or similar law or seeking
reorganization, arrangement, readjustment of its debts, liquidation,
dissolution, winding-up, composition or for any other relief under any
bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement,
composition, readjustment of debt or any other similar act of law of any
jurisdiction, domestic or foreign, now or hereafter existing; or the appointment
of a receiver, conservator, trustee or similar officer for the Maker or for all
or a substantial part of the Maker's property; or the issuance of a warrant of
attachment, execution or similar process against any substantial part of the
property of the Maker; and the continuance of any of such events for sixty (60)
days undismissed, unbonded or undischarged; or
(d) An event of default shall occur under (i) the Senior Loan Agreement
(as defined in the Securities Purchase Agreement) or related documents, or (ii)
any of the Senior Subordinated Note Instruments (as defined in the Securities
Purchase Agreement) or related documents, or (iii) any other agreements relating
to Senior Indebtedness or (iv) any of the Notes; or
(e) The Maker shall fail to comply with any of its covenants contained
in the Agreement or the Investors Rights Agreement dated as of the date hereof
among the Maker, the Payees of the Notes and certain other parties, and such
failure continues unremedied for a period of thirty (30) days after the Maker
receives written notice from the Payee of such default; or
(f) Any representation or warranty of the Maker in the Agreement or in
any other document or instrument delivered pursuant to the Agreement shall prove
to have been false in any material respect upon the date when made; or
(g) Maker shall fail to pay at maturity, or within any applicable period
of grace, any obligation for borrowed money or credit received or in respect of
any indebtedness for borrowed money (other than the Senior Indebtedness) or fail
to observe or perform any material term, covenant or agreement contained in any
agreement by which it is bound, evidencing or securing borrowed money or credit
received or in respect of any indebtedness for borrowed money (other than the
Senior Indebtedness) for such period of time as would permit (assuming the
giving of appropriate notice if required) the holder or holders thereof or of
any obligations issued thereunder to accelerate the maturity thereof, or
(h) There shall remain in force, undischarged, unsatisfied and unstayed,
for more than thirty days, whether or not consecutive, any final judgment
against Maker that with other outstanding final judgments, undischarged, against
Maker exceeds in the aggregate $250,000; or
(i) The Maker shall be enjoined, restrained or in any way prevented by
the order of any court or any administrative or regulatory agency from
conducting any material part of its business; or
(j) The Agreement or the Investors' Rights Agreement shall cease, for
any reason, to be in full force and effect other than in accordance with the
terms thereof.
Upon the occurrence, and at any time during the continuance, of an Event
of Default, the Payee, at the Payee's option and without the need for
presentment, demand, protest, or other notice of any kind, may declare all
unpaid principal hereof and interest hereunder to be immediately due and payable
and same shall become immediately due and payable upon such declaration;
provided that in the event of any Event of Default specified in clauses (b) and
(c) above, all such amounts shall become immediately due and payable
automatically and without any requirement of notice from the Payee.
10. CERTAIN WAIVERS. The Maker and any endorser or guarantor hereof
(collectively, the "Obligors") and each of them (i) waive(s) presentment,
diligence, protest, demand, notice of demand, notice of acceptance or reliance,
notice of non-payment, notice of dishonor, notice of protest and all other
notices to parties in connection with the delivery, acceptance, performance,
default or enforcement of this Note, any endorsement or guaranty of this Note,
or any collateral or other security; (ii) consent(s) to any and all delays,
extensions, renewals or other modifications of this Note, any related document
or the debt(s) or collateral evidenced hereby or thereby or any waivers of any
term hereof or thereof, any release, surrender, taking of additional,
substitution, exchange, failure to perfect, record, preserve, realize upon, or
lawfully dispose of, or any other impairment of, any collateral or other
security, or any other failure to act by the Payee or any other forbearance or
indulgence shown by the Payee, from time to time and in one or more instances
(without notice to or assent from any of the Obligors) and agree(s) that none of
the foregoing shall release, discharge or otherwise impair any of their
liabilities; (iii) agree(s) that the full or partial release or discharge of any
Obligor(s) shall not release, discharge or otherwise impair the liabilities of
any other Obligor(s); and (iv) otherwise waive(s) any other defenses based on
suretyship or impairment of collateral.
11. REGISTRATION AND TRANSFER OF THIS NOTE. The Maker shall keep at its
principal executive office a register (herein sometimes referred to as the "Note
Register"), in which, but at its expense (other than transfer taxes, if any),
the Maker shall provide for the registration and transfer of the Notes. The
Payee of this Note, at such Payee's option, may in person or by duly authorized
attorney surrender this Note for exchange at the principal office of the Maker,
to receive in exchange therefor a new Note or Notes, as may be requested by such
Payee, of the same series and in the same aggregate unpaid principal amount as
the aggregate unpaid principal amount of the Note or Notes so surrendered;
provided, however, that any transfer tax relating to such transaction shall be
paid by the Payee requesting the exchange. Each such new Note shall be dated as
of the date to which interest has been paid on the unpaid principal amount of
the Note or Notes so surrendered and shall be in such principal amount and
registered in such name or names as such Payee may designate in writing.
12. LOST DOCUMENTS. Upon receipt by the Maker of evidence satisfactory to
it of the loss, theft, destruction or mutilation of this Note or any Notes
exchanged for it, and (in case of loss, theft or destruction ) of indemnity
satisfactory to it, and upon reimbursement to the Maker of all reasonable
expenses incidental thereto, and upon surrender and cancellation of such Note,
if mutilated, the Maker will make and deliver in lieu of such Note a new Note of
the same series and of like tenor and unpaid principal amount and dated as of
the date to which interest has been paid on the unpaid principal amount of the
Note in lieu of which such new Note is made and delivered.
13. COMMERCIAL TRANSACTION; JURY WAIVER. THE MAKER ACKNOWLEDGES THAT THE
TRANSACTION OF WHICH THIS NOTE IS A PART IS A COMMERCIAL TRANSACTION. THE MAKER
HEREBY KNOWINGLY AND VOLUNTARILY WAIVES TRIAL BY JURY AND THE RIGHT THERETO IN
ANY ACTION OR PROCEEDING OF ANY KIND, ARISING UNDER OR OUT OF, OR OTHERWISE
RELATED TO OR OTHERWISE CONNECTED WITH, THIS NOTE AND/OR ANY RELATED DOCUMENT.
THE MAKER FURTHER ACKNOWLEDGES THAT IT HAS HAD AN OPPORTUNITY TO REVIEW THIS
NOTE AND THE OTHER FINANCING DOCUMENTS WITH ITS COUNSEL AND THAT IT ON ITS OWN
HAS MADE THE DETERMINATION TO EXECUTE THIS NOTE AND ALL OTHER FINANCING
DOCUMENTS TO WHICH IT IS A PARTY AFTER CONSIDERATION OF ALL OF THE TERMS OF THIS
NOTE AND SUCH OTHER DOCUMENTS (INCLUDING THE INTEREST RATE) AND OF ALL OTHER
FACTORS WHICH IT CONSIDERS RELEVANT.
14. BINDING NATURE. This Note shall bind the Maker and the Maker's
successors and permitted assigns and shall inure to the benefit of the Payee and
the Payee's heirs, representatives, successors and permitted assigns.
This Note may only be transferred to a transferee of shares of capital stock of
GMH Holdings, Inc. which have been issued pursuant to the Agreement. The term
"Payee" as used herein shall include, in addition to the initial Payee, any
successors, endorsees, or other permitted assignees of such Payee and shall also
include any other holder of this Note.
15. GOVERNING LAW. This Note shall be governed by and construed and
interpreted in accordance with the laws the State of Delaware, without regard to
its rules pertaining to conflicts of laws thereunder.
16. MISCELLANEOUS. No delay or omission by the Payee in exercising any
right or remedy hereunder shall operate as a waiver of such right or remedy or
any other right or remedy; and a waiver on one occasion shall not be a bar to or
waiver of any right or remedy on any other occasion. All rights and remedies of
the Payee hereunder, any other applicable document and under applicable law
shall be cumulative and not in the alternative. No provision of this Note may be
waived or modified orally but only by a writing (a) signed by the party against
whom enforcement of such amendment, waiver or other modification is sought and
(b) consented to in writing by holders of Notes representing sixty six and 2/3
percent (66-2/3%) in principal amount of the Notes.
17. NOTICES. All notices, requests, consents and demands shall be made in
writing and shall be mailed first class postage prepaid, or delivered by hand or
by messenger to the Maker or to the Payee hereof at their respective addresses
set forth at the beginning of this Note or at such other respective addresses as
may be furnished in writing to each other.
IN WITNESS WHEREOF, the Maker has executed and delivered this Note as of
the day and year first written above.
Maker:
GENERAL MANUFACTURED HOUSING, INC.
By:_________________________________________
Name:
Title:
EXHIBIT C
DISCLOSURE SCHEDULE
TO SECURITIES PURCHASE AGREEMENT
Section 3.4 Subsidiaries
a) GMH may provide funds to M/H Retail, Inc. to assist in its
performance of service and warranty work.
b) GMH is obligated to provide funds to the Company to enable it to
pay its taxes and to pay dividends on the Series A Redeemable
Preferred Stock.
Section 3.5(a) Capitalization
ISSUED AND OUTSTANDING STOCK OF THE COMPANY
STOCKHOLDER NUMBER OF SHARES
SERIES A SERIES B CLASS A CLASS B CLASS C
PREFERRED PREFERRED COMMON COMMON COMMON WARRANTS
Bulldog Holdings LLC 1,400,000
RFE Investments
Partners V, L.P. 4,690,351 439,720 714,546
State Treasurer of
the State of
Michigan,
Custodian 3,076,922 288,462 468,750
Sterling Commercial
Capital, Inc. 232,727 21,818 35,454
The Equitable Life
Assurance Society of
the United States 350,000
Xxxxxx X. Xxxxxx 54,687
Xxxx X. Xxxxxxx 54,687
Xxxxxx X. Xxxxxxx 54,688
Xxxxxx X. Xxxxx 54,688
Xxxxxx X. Xxxxx and
Xxxxxx X. Xxxxx, as
joint tenants 92,749
Xxxxx Xxxxx Xxxxxx,
as Trustee 71,167
Xxxxxxx Xxxxx Xxxxx 71,167
Drew Xxxx Xxxxx 71,167
Xxxxxx Xxxxxx 28,000
Xxxxx Xxxxxxx 28,000
Xxxxxx X. Xxxxxx 21,000
Xxxxx Xxxxxxx 14,000
Xxxxxxx X'Xxxxxx 14,000
Xxxxx Xxxxx 13,125
Xxxxx X. XxXxxxxxx 13,125
--------- --------- --------- ------- -------- -------
TOTAL 8,000,000 2,150,000 1,656,250 0 0 568,750
Reference is hereby made to the following documents, each dated
the date hereof, with respect to options, warrants, etc.:
1) Warrants to purchase common stock of the Company in the names of:
a) The Equitable Life Assurance Society of the United States -
350,000 shares of Class A or Class B Common
b) Xxxxxx X. Xxxxxx - 54,687 shares of Class A Common
c) Xxxx X. Xxxxxxx - 54,687 shares of Class A Common
d) Xxxxxx X. Xxxxxxx - 54,688 shares of Class A Common
e) Xxxxxx X. Xxxxx - 54,688 shares of Class A Common
2) Stockholders' Agreement
3) Investors Rights Agreement
4) Note and Warrant Purchase Agreement
Section 3.5(c)
The Company is subject to "put" obligations set forth in the Investors
Rights Agreement.
Section 3.7(b)
GMH and Oakwood Mobile Homes, a manufacturer and retailer
headquartered in North Carolina, had an agreement pursuant to which
GMH was to supply 24 foot, double-wide homes to Oakwood's captive
retail network. GMH expected to use Plant No. 4 located in Waycross,
Georgia exclusively for the construction of these homes. Oakwood gave
notice to GMH, on or about August 25, 1995, that it would not be
ordering any further homes from GMH for the foreseeable future due to
over manufacturing by Oakwood of its own products, and the desire for
their retail network to sell Oakwood's products before those
manufactured by GMH. All homes that had been ordered to that time were
completed by GMH and
purchased by Oakwood. GMH has shifted double-wide production to Plant
No. 4 in order to reduce its considerable backlog of orders. In its
notification, Oakwood characterized this situation as temporary;
however, no assurances can be given that such suspension may not be
permanent. Sales to Oakwood accounted for approximately 10% of GMH's
total revenues during the first six months of 1995.
Section 3.9 Related - Party Transactions
Management Agreement dated the date hereof between GMH and Strategic
Investments & Holdings, Inc.
M/H Retail, Inc. is a corporation, all of the outstanding stock of
which is owned by the Xxxxx Xxxxx Xxxxxx Revocable Trust -1995 which
is a shareholder of the Company. M/H Retail and GMH are parties to an
existing service agreement which will be replaced at closing with a
Service Agreement dated the date hereof pursuant to which M/H retail
will provide certain warranty and repair work on manufactured homes
produced and sold by GMH.
Hi-Tech Properties, Inc. is a corporation wholly owned by Drew Xxxx
Xxxxx who is a shareholder of the Company. That corporation subleases
the Plant 4 property to GMH and separately subleases to GMH a vacant
lot adjacent to Plant 4.
Xxxxxx Xxxxx owns an approximate 20% equity interest in Sweetwater
Homes, Inc., a competitor of GMH. At closing, Xx. Xxxxx will execute a
letter setting forth his undertakings and commitments to the Company
with respect to his equity interest in Sweetwater Homes, Inc,
including, but not limited to, a) his resignation as a director of
Sweetwater, b) the termination of any existing relationship that would
be considered participation in the management or business affairs of
Sweetwater, and c) the limitation of equity ownership in Sweetwater to
no more than 20%.
On the closing date, Xxxxxx Xxxxx will enter into an employment
agreement which will provide that, if GMH elects not to exercise its
option to purchase the properties underlying its leases of Plants 4
and 5, GMH shall permit Xx. Xxxxx to exercise such options.
Section 3.11 Liabilities
Indebtedness to The Xxxxxxxxx Bank in the original principal amount of
$613,727.63.
Indebtedness to First Source Financial LLP under documents delivered
on the date hereof.
Indebtedness to The Equitable Life Assurance Society of the United
States under documents delivered on the date hereof.
Junior Subordinated Notes dated the date hereof to
1) RFE Investment Partners V, L.P.
2) The Treasurer of the State of Michigan as Custodian for the
Michigan Public School Employees Retirement System, the
Michigan State Employees' Retirement System, the Michigan
State Police Retirement System and the Michigan Judges
Retirement System
3) Sterling Commercial Capital, Inc.
Section 3.12 Intellectual Property
Service Xxxx and design No. S-13433 filed with and issued by State of
Georgia 3/11/94, expiring 3/11/04: "Jaguar Homes 1994...the Year of
the Cat!!!"
Prior to the formation of GMH, Xxxxxx Xxxxx acquired title to various
patents that relate to the business of mobile home manufacturing. Such
patents are not material to the business conducted by GMH and, if to
the extent that GMH now or in the future were deemed to infringe upon
the proprietary rights evidenced by such patents, Xx. Xxxxx agrees to
waive and release any such infringement.
Section 3.13 Material Contracts
The following vendors exceeded the $250,000 threshold in 1993 and/or
1995 (year-to-date) AND are parties to agreements, contracts, understandings, or
arrangements with GMH as described below (records for 1994 are not yet
available):
1) Edisto Housing offering a customer rebate program to purchases of
finished homes.
2) Fabwel, Inc. leases equipment to GMH at a nominal rent, pursuant
to an oral agreement, in consideration for the purpose of raw
materials from Fabwel.
3) M/H Retail, Inc. provides services to GMH pursuant to that certain
Agreement dated March 23, 1988, by and between M/H Retail, Inc.,
and GMH, as amended by that certain Amendment dated as of
_________, 1994.
4) AMS of Indiana, Inc. leases equipment to GMH at a nominal rent,
pursuant to an oral agreement, in consideration for the purchase
of raw materials from AMS of Georgia.
5) General Electric purchases are at agreed-upon prices pursuant to
the GE Appliances National Contract Sales Agreement.
Oakwood Mobile Homes, Inc. agreement and volume incentive program. See
Section 3.7(b) above.
Section 3.15 Litigation
"Outstanding State Cases" as of November 27, 1995, consisting of consumer
complaints made through state agencies, considered to be in the ordinary course
of business of the Borrower the outcomes of which, both individually and in the
aggregate should not have a material adverse effect:
STATE AGENCY SN CUSTOMER DEALER
AL 0000 Xxxxxx Xxxxxxx Xxxxxx
XX 2050 Xxxxx Xxxxx Xxxx
AL 0000 Xxxxxxxxxxxxx Xxxxxxxxx
XX 3969 Xxxxxx Godwins
FL 1526 Xxxxxxx Ed's Factory Showcase
FL 5027 Xxxxxx Quality-Plant City
FL 3687 Xxxxxxxxx K&E
FL 3703 Famous Xxxxx K&E
FL 4961 Xxxxxx Xxxxxxxxx
GA 6343 Xxxx Carefree
GA 5486 Xxxxxxxx Carefree
GA 1082 Xxxxxxxx Xxxxxxxx
GA 3763 Xxxxxxxx Atl. MH Brokers
GA 6211 Xxxxx Housing Brokers
GA 4163 Hood Great American
GA 1390 Xxxx Xxxxx & Veal
GA 7487 Hall Country Classic
GA 6452 Xxxxxxxx Bob's Family Housing
NC Dept of Insurance 1421 Sports
NC Dept of Insurance 4087 Davidson
NC 1421 Xxxxxx Sports Xxxxx Xxxx
NC 4087 Xxxxxxxx Xxxxx Homes
SC 0000 Xxxxxx Xxxxxxx-Xxxxxx
XX 3627 Xxxx/Xxxxxxxx Xxxxxx Homes
SC 3205 Xxxxxxx Edisto Housing
SC 3510 Xxxxx Southern Lifestyle
TN 6276 Xxxxx Capitol Homes
TN 5495 Xxxxx Oakwood
The following EEOC Notices of Discrimination have been issued by the Savannah
Local Office of the Equal Employment Opportunity Commission:
1) Xxxxx Xxxxxxxx: Sex discrimination charge filed 9/24/93.
2) Xxxxx Xxxxxxx: Sex discrimination, sexual harassment charges filed 6/10/94.
3) Xxxxxxx Xxxxxx: Sex, sexual harassment discrimination charges filed
9/16/94.
4) Xxxxx Xxxxx: Sex discrimination charge filed 6/20/95.
The foregoing cases are not expected to have a Material Adverse Effect.
Other pending and threatened causes of action:
1) Xxxxxxxx vs. Southern Lifestyle Homes, Inc. and General Manufactured
Housing, Inc.:
Claim for breach of contract and warranty, fraud, unfair trade practices,
and negligence filed June 1995 in South Carolina.
2) GMH, Inc. vs. Xxxxx Xxxxxxx: Relating to an alleged liability of
approximately 10,000 for towing services; Xxxxxxx has defaulted in this
matter.
3) GMH, Inc. vs. Cladwood Division of Smurfitt Newsprint Corporation
("Cladwood"): Product liability claim to recover amounts paid out by GMH,
Inc. to settle warranty claims by homeowners resulting from defective
composite siding manufactured by Cladwood.
4) Xxxxxx Xxxxx: Threatened South Carolina warranty/product liability action
by customer; settlement negotiations currently in progress.
5) Xxxxx Xxxxxx vs. GMH, Inc.: Employee of Xxxxxx Plumbing Co., Inc., a
Georgia corporation and subcontractor of Solar Shield, Inc., a South
Carolina corporation and contractor engaged by GMH, Inc., has filed a
complaint in connection with a personal injury resulting from a July 1994
accident which occurred at a GMH, Inc. plant.
6) Xxxx X. Xxxx vs. GMH, Inc. and others: Warranty claim suit filed in South
Carolina;
Complaint served on GMH, Inc. 10/9/95.
7) Xxxxxx Sports: Warranty Claim. This claim is being addressed. Last
inspection was 11/2/95. Awaiting letter from N. Carolina approving
inspection.
8) Xxxxx X. Xxxxxxxxx and Xxxxxxxx Xxxxxx Xxxxxxxxx vs. GMH, Inc., et al;
warranty claims in the amount of $50,000. Trial set for 4/16/96.
9) Xxxxx Xxxxxx and Xxxxxxx Xxxxxx vs. GMH, Inc., et al; warranty claim.
10) Xxxxx X. Xxxxxx: Threatened personal injury/ negligence claim.
11) Xxxxxx and Xxxx Xxxxxxxx: Threatened litigation regarding electrical
defects in mobile home.
12) Xxxx and Xxxxxxxx Edge: Complaint for damages based on warranty claims on
11/30/95;
13) Xxxxxxxxx Xxxxxxx: Warranty claims. Settlement has been negotiated but not
yet complete.
14) Actions which are considered to be in the ordinary course of business of the
Borrower for which Borrower has received no communication within the last
year:
a) Xxxxxx Xxxxx: Warranty claim.
b) Joycesteen Xxxx: Warranty claim.
c) Xxxxx and Jo Xxx Xxxxxxx: Warranty claim.
d) Xxxxxx and Xxxx Xxxxxxxx: Electrical fire, mobile home destroyed.
e) Xxxxxx and Xxxxxx Xxxxxxxx: Warranty claim.
The outcomes of the foregoing pending and threatened causes of action are not
expected to have a Material Adverse Effect.
Section 3.18 Employees
Employment Agreements dated as of the date hereof among GMH and each of
Xxxxxx X. Xxxxx, Xxxxxxx Xxxxx Xxxxx and Xxxx Xxxx Xxxxx
Executive Bonus Plan of GMH
Incentive Compensation Plan of GMH
Employee Benefit Plans:
A. Group Health
Health Care Master Contract between Blue Cross and Blue Shield of
Georgia and GMH, Number 23041-001,004, dated May 10, 1993,
continues until terminated.
B. Group Life
Group Term Life Insurance Master Policy
Transamerica Assurance Company
Master Policy #BTL1199
C. Group Travel
Group Travel Accident Program
Policy No. ETB-102015
4/27/95-4/27/96
D. Cafeteria Plan
General Manufactured Housing, Inc. Premium Only Cafeteria
Plan - Plan Amendment effective January 1, 1995.
The following EEOC Notices of Discrimination have been issued by the Savannah
Local Office of the Equal Opportunity Commission:
1) Xxxxx Xxxxxxxx: Sex discrimination charge filed 9/24/93.
2) Xxxxx Xxxxxxx: Sex discrimination, sexual harassment charges filed
6/10/94.
3) Xxxxxxx Xxxxxx: Sex, sexual harassment discrimination charges filed
9/16/94.
4) Xxxxx Xxxxx: Sex discrimination charge filed 6/20/95.
The foregoing cases are not expected to have a Material Adverse Effect.
Section 3.19 Tax Returns, Payments and Elections
GMH had an agreement to act as administrator for a Cafeteria Plan. No
final Form 5500 has been filed for such plan. AFLAC is in the process of
preparing such form but is having difficulty gathering certain information.
Pursuant to the Stock Purchase Agreement dated as October 10, 1995, as amended,
the Sellers (as defined in the Stock Purchase Agreement) have agreed to
indemnify GMH for any penalties incurred for such failure to file.
Section 3.20 Environmental and Safety Laws
The information set forth in the following documents is hereby incorporated in
its entirety herein:
1. Phase I Environmental Site Assessment Report for Plants 1, 2 and 3
dated August 25, 1995;
2. Asbestos Survey, Radon Gas Testing and Xxxxxxx Map Review for Plants
1, 2, 3 and 4 dated September 18, 1995;
3. Phase II Environmental Site Assessment Report for Plants 1, 2 and 3
dated September 21, 1995;
4. Proposal for Additional AST Investigation on Plant No. 1 and Plant No.
2, dated September 25, 1995;
5. Phase I Environmental Site Assessment Report for Plant 4 dated October
2, 1995;
6. Proposal for Phase II Environmental Site Assessment on Plant No. 4,
dated October 4, 1995;
7. Phase I Environmental Site Assessment Report for Plant 5, dated
October 11, 1995;
8. Report regarding Asbestos Abatement Cost Estimates dated October 12,
1995; and
9. Report regarding the Well Surveys for Plants No. 1 and 2 dated October
20, 1995.
Section 3.21 Brokers and Finders
The following fees are obligations of GMH:
R. Xxxxx Xxx -- $500,000
Larkspur Capital Corporation -- $1,565,000
Strategic Investments & Holdings, Inc. -- $500,000
Alliance Corporate Finance Group Incorporated -- $300,000
Section 3.23 ERISA
Executive Bonus Plan of GMH
Incentive Compensation Plan of GMH
Employee Benefit Plans:
A. Group Health
Health Care Master Contract between Blue Cross and Blue
Shield of Georgia and GMH, Number 23041-001,004, dated May
10, 1993, continues until terminated.
B. Group Life
Group Term Life Insurance Master Policy
Transamerica Assurance Company
Master Policy #BTL1199
C. Group Travel
Group Travel Accident Program
Policy No. ETB-102015
4/27/95-4/27/96
D. Cafeteria Plan
General Manufactured Housing, Inc. Premium Only Cafeteria
Plan - Plan Amendment effective January 1, 1995.
GMH had an agreement to act as administrator for a Cafeteria Plan. No final Form
5500 has been filed for such plan. AFLAC is in the process of preparing such
form but is having difficulty gathering certain information. Pursuant to the
Stock Purchase Agreement dated as October 10, 1995, as amended, the Sellers (as
defined in the Stock Purchase Agreement) have agreed to indemnify GMH for any
penalties incurred for such failure to file.
Section 4.7 Brokers or Finders.
See items listed under Section 3.21 above.
EXHIBIT D
==============================================
GMH HOLDINGS, INC.
INVESTORS' RIGHTS AGREEMENT
December 21, 1995
==============================================
TABLE OF CONTENTS
SECTION 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PUT/CALL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Put Rights. . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Repurchase Rights . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
BULLDOG OPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Option. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Successors and Assigns; Assignment of Rights. . . . . . . . . 5
3.3 Entire Agreement; Amendment; Waiver . . . . . . . . . . . . . 5
3.4 Notices, etc. . . . . . . . . . . . . . . . . . . . . . . . . 5
3.5 Delays or Omissions . . . . . . . . . . . . . . . . . . . . . 5
3.6 Rights; Separability. . . . . . . . . . . . . . . . . . . . . 6
3.7 Titles and Subtitles. . . . . . . . . . . . . . . . . . . . . 6
3.8 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 6
3.9 No Third Party Beneficiaries. . . . . . . . . . . . . . . . . 6
3.10 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.11 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 6
GMH HOLDINGS, INC.
INVESTORS' RIGHTS AGREEMENT
This Investors' Rights Agreement (this "Agreement") is made and entered
into as of the 21st day of December, 1995, by and among GMH HOLDINGS, INC., a
Delaware corporation (the "Company"), the persons identified on Exhibit A
attached hereto (the "Purchasers"), BULLDOG HOLDINGS LLC, a New York limited
liability company ("Bulldog") and THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE
UNITED STATES (the "Equitable").
WHEREAS, the Purchasers are parties to the Securities Purchase Agreement
dated as of the date hereof between the Company, General Manufactured Housing,
Inc. and the Purchasers (the "Series A Agreement"), certain of the Company's and
such Purchasers' obligations under which are conditioned upon the execution and
delivery by such Purchasers, Bulldog, Equitable and the Company of this
Agreement;
For purposes of Sections 1.1, 1.2(c) and 3 of this Agreement only,
Equitable shall be deemed to be a Purchaser.
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the parties hereto agree as follows:
SECTION 1
PUT/CALL
1.1 Put Rights. (a) At any time, and from time to time, commencing
December 30, 2003, a Purchaser may, by notice to the Company and to the other
Purchasers (a "Put Notice") elect to require the Company (subject to the
conditions set forth below), to purchase (a "Put") all of the Common Stock and
Series B Shares owned by such Purchaser at a price equal to the Fair Market
Value (as defined below) determined as of the date of the Put Notice, and the
Company, subject to the conditions set forth below, shall thereupon become
obligated to purchase all of such Common Stock and Series B Shares at the Fair
Market Value. In the event that the Fair Market Value is less than the price at
which such Purchaser is willing to Put such Common Stock and Series B Shares,
then, within 30 days after the date of the determination of Fair Market Value,
the Purchaser may withdraw such Put Notice and the obligations of the Purchaser
and the Company pursuant to this Section 1.1 with respect to such Put shall be
terminated. During the thirty (30) day period following the delivery of any Put
Notice, each Purchaser shall have the right to exercise a Put on equal priority
with the Purchaser who delivered the Put Notice initiating such process with
respect to all Common Stock and Series B Shares owned by such Purchaser.
(b) The Company's obligations with respect to a Put(s) shall be
limited to the extent of its funds legally available for the purchase of capital
stock of the Company. In the event that the Company is so limited in its ability
to fulfill any Put, the Company will use its reasonable efforts to arrange
financing on commercially reasonable terms and conditions in an amount
sufficient to enable it to fulfill its obligations in respect of all Common
Stock and Series B Shares Put by Purchasers during the 30 day period following
delivery of the initiating Put Notice. If, notwithstanding such efforts, after a
period of 90 days following the determination of Fair Market Value as of the
date of the initiating Put Notice, the Company is unable to acquire for cash all
of the Common Stock and Series B Shares which have been Put, then the Company
shall issue to each Purchaser who has Put Common Stock and Series B Shares a
Promissory Note of the Company in the original principal amount equal to the
Fair Market Value of the Common Stock and Series B Shares so Put which the
Company is unable to acquire for cash (prorating the cash to be paid and
principal amount of Promissory Notes to be delivered based upon the number of
shares (calculated on an as converted and/or as exercised basis) Put by each
Purchaser as compared to the total number of shares Put by all Purchasers). Any
such promissory note shall bear interest at the rate per annum equal to the then
prevailing rate for three year U.S. Treasury obligations plus 500 basis points
on the outstanding principal amount thereof, shall be mandatorily prepayable out
of excess cash flow of the Company and its subsidiaries on a consolidation
basis, and shall mature on the third anniversary of the Put Notice applicable
thereto. Such Promissory Note shall contain such subordination provisions as the
Company's senior lenders shall reasonably request. The Promissory Note shall be
secured by a pledge of the securities with respect to which the Put has been
exercised. The Promissory Note shall be substantially in the form of Exhibit I
attached to this Agreement. The securities pledged to secure the Promissory Note
shall be endorsed in blank, together with assignments separate from
certificates, which are undated and have been executed by the Company, and shall
be delivered to the Purchaser, together with a pledge agreement executed by the
Company in substantially the form of Exhibit II attached to this Agreement and
the Promissory Note, at the Closing of such Put.
(c) The closing of any Put transaction shall take place on a date
(such date to be as soon as practicable after the Valuation has been delivered)
and at the offices of the Company. The Company, will pay for the Common Stock
and Series B Shares to be purchased pursuant to a Put by wire transfer to the
Purchaser to the extent provided above, and, if required pursuant to
subparagraph (b) above by delivery of a Promissory Note duly executed by the
Company. The Company, will be entitled to receive customary representations and
warranties from the Purchaser regarding the sale of the Common Stock and Series
B Shares including a representation that the Purchaser has good and marketable
title to the Common Stock and Series B Shares to be transferred free and clear
of all liens, claims and other encumbrances.
(d) As used herein, the following terms shall have the following
respective meanings:
Entity Fair Market Value shall mean the fair market value of the
Company and its Subsidiaries considered as one entity (as established
pursuant to a Valuation), in the event of a sale of the Company and
its Subsidiaries pursuant to an active marketing process, less any
indebtedness of the Company and its Subsidiaries for borrowed money.
Fair Market Value of a share of Common Stock shall mean the
Entity Fair Market Value divided by the total number of issued and
outstanding shares of Common Stock of the Company on a fully diluted
basis (including the conversion of all securities convertible into
Common Stock and the exercise of all warrants which are exercisable
into Common Stock). Fair Market Value of a Series B Share shall mean
the Fair Market Value of a share of Common Stock multiplied by the
number of shares of Common Stock into which such Series B Share is
then convertible.
"Valuation" shall mean with respect to Entity Fair Market Value,
the agreement of the Company and the applicable Purchaser(s), or if
the Company and such Purchaser(s) are unable to agree within 30 days
after delivery of the Put Notice, the opinion of an investment banking
firm of national standing designated by mutual agreement of the
Company and the Purchaser. The costs of conducting the Valuation shall
be borne equally by the applicable Purchaser and the Company.
1.2 Repurchase Rights. (a) At any time commencing December 30, 2004, the
Company may, by notice to the Purchasers (a "Call Notice"), elect to purchase (a
"Call") all of the Purchasers' Common Stock and Series B Shares at a price equal
to the Fair Market Value thereof, determined as of the date of the Call Notice.
The Call Notice will set forth the time and place for the closing of the
transaction.
(b) At any time commencing December 30, 2004, the Company may, by a
Call Notice to Equitable, elect to Call all of Equitable's Common Stock at a
price equal to the Fair Market Value thereof, determined as of the date of the
Call Notice. The Call Notice will set forth the time and place for the closing
of the transaction.
(c) The closing of the transactions contemplated by this Section 1.2
shall take place on the date and at the place designated by the Company in the
Call Notice which date shall not be more than 90 days after the delivery of such
notice. The Company will pay for the Common Stock and Series B Shares to be
purchased pursuant to a Call in cash by wire transfer payable to the holder of
such Common Stock and Series B Shares. The Company will be entitled to receive
customary representations and warranties from each Purchaser regarding the sale
of the Common Stock and Series B Shares, including but not limited to the
representation that the Purchaser has good and marketable title to the Common
Stock and Series B Shares to be transferred free and clear of all liens, claims
and other encumbrances.
SECTION 2
BULLDOG OPTION
2.1 Option. On each dividend payment date with respect to the Series A
Shares (and whether or not any dividend in respect of the Series A Shares is
earned or declared), in the event that there is an aggregate amount of accrued
and unpaid dividends in respect of the Series A Shares in excess of $500,000,
then Bulldog shall grant to each Purchaser an option to purchase such
Purchaser's pro rata share (as defined below) of that number of Series B Shares
(adjusted for any combinations, consolidations, stock splits, or stock
distributions or dividends with respect to such shares) (the "Option Shares")
owned by Bulldog as equals .21875 times the difference between (a) the aggregate
amount of accrued and unpaid dividends in respect of all Series A Shares minus
(b) the greater of (x) $500,000 and (y) the lowest aggregate amount of accrued
and unpaid dividends outstanding in respect of all Series A Shares since the
immediately preceding dividend payment date (or, if Bulldog has converted some
or all of the Series B Shares such that it owns an insufficient number of Series
B Shares to satisfy such option, then such option shall be for such number of
shares of Common Stock as such number of Option Shares would then convert into
at the then applicable Series B Conversion Price); provided that the maximum
number of Option Shares as to which the Purchasers may be granted options
hereunder shall be that number of Option Shares as shall represent ten percent
(10%) of the Company's Common Stock on a fully-diluted basis. The option
exercise price per share with respect to any such option shall equal $2.2857 per
share (as adjusted for combinations, consolidations or stock distributions or
dividends with respect to such shares) and the term of each such option shall be
eight years from the date of grant of such option. Each option may be exercised
in whole or in part provided that options shall be exercised in amounts no less
than the lesser of (i) $10,000 in aggregate exercise price and (ii) the total
dollar amount in exercise price of all unexercised options held by such
optionee. If prior to exercise of any option granted pursuant to this Section,
the Company pays dividends in respect of the Series A Shares such that the
aggregate amount of accrued and unpaid dividends in respect of all Series A
Shares is less than $500,000, then one-half of the unexercised options which are
then held by such optionee (but excluding any options which have previously been
outstanding at any time when the aggregate amount of accrued and unpaid
dividends on all Series A Shares is less than $500,000) shall expire and be of
no further force or effect. A Purchaser's pro rata share shall be that
percentage which expresses the ratio between the number of shares of Common
Stock owned by such Purchaser and the aggregate number of shares of Common Stock
owned by all such Purchasers.
SECTION 3
MISCELLANEOUS
3.1 Governing Law. This Agreement shall be governed in all respects by
the laws of the State of Delaware, as applied to agreements among Delaware
residents entered into and to be performed entirely within Delaware.
3.2 Successors and Assigns; Assignment of Rights. The rights and
benefits of a Purchaser hereunder (including such Purchaser's rights and
benefits under Section 1.1 hereof) may be assigned to a transferee or assignee
in connection with transfer or assignment of any Series A Shares owned by such
Purchaser (A) to any person or entity which is a majority-owned subsidiary of a
Purchaser or controls, is controlled by or under common control with the
Purchaser, (B) to any other person or entity provided that (a) such transfer may
otherwise be effected in accordance with applicable securities laws, (b) such
transferee or assignee acquires at least 160,000 Series A Shares and (c) such
assignee or transferee executes a written instrument agreeing to be bound by the
terms and provisions of this Agreement, (C) to a constituent partner of a
Purchaser, a trust (including liquidating trusts for the benefit of such a
partner or partners) or the estate of such a constituent partner, and (D) to a
successor trustee of a Purchaser in its capacity as trustee. Any such transfer
or assignment permitted hereby shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
3.3 Entire Agreement; Amendment; Waiver. This Agreement, the Series A
Agreement and the other agreements contemplated thereby constitute the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof. Neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated, except by a written instrument signed
by the Company and the holders of at least sixty six and 2/3 percent (66-2/3%)
of the Series A Shares and any such amendment, waiver, discharge or termination
shall be binding upon all the parties hereto, but in no event shall the
obligation of any party hereto be materially increased, except upon the written
consent of such party.
3.4 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by United States
first-class mail, postage prepaid, sent by -facsimile or delivered personally by
hand or nationally recognized courier addressed (a) if to a Purchaser, as
indicated on the list of Purchasers attached hereto as Exhibit A, or at such
other address as such Purchaser or permitted assignee shall have furnished to
the Company in writing, (b) if to Bulldog to Strategic Investments & Holdings,
Inc., Cyclorama Building, 000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxx Xxxx 00000;
Attention: Xxxx X. Xxxxx or at such other address as shall have furnished to the
Company in writing, or (c) if to the Company, at such address or facsimile
number as the Company shall have furnished to each Purchaser in writing. All
such notices and other written communications shall be effective on the date of
mailing, facsimile transfer or delivery.
3.5 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any Purchaser (in any capacity hereunder), upon any
breach or default of the Company under this Agreement shall impair any such
right, power or remedy of such Purchaser nor shall it be construed to be a
waiver of any such breach or default, or an acquiescence therein, or of or in
any similar breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any Purchaser (in any capacity hereunder)
of any breach or default under this Agreement or any waiver on the part of any
Purchaser of any provisions or conditions of this Agreement must be made in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or otherwise
afforded to any Purchaser, shall be cumulative and not alternative.
3.6 Rights; Separability. Unless otherwise expressly provided herein, a
Purchaser's rights hereunder are several rights, not rights jointly held with
any of the other Purchaser. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected
or impaired thereby.
3.7 Titles and Subtitles. The titles of the paragraphs and subparagraphs
of this Agreement are for convenience of reference only and are not to be
considered in construing or interpreting this Agreement.
3.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
3.9 No Third Party Beneficiaries. The covenants and agreements set forth
herein are for the sole and exclusive benefit of the parties hereto and their
respective successors and assigns and such covenants and agreements shall not be
construed as conferring, and are not intended to confer, any rights or benefits
upon any other persons.
3.10 Remedies. The parties to this Agreement acknowledge and agree that a
breach of any of the covenants of the Company, the Purchasers or Bulldog set
forth in this Agreement may not be compensable by payment of money damages and,
therefore, that the covenants of the foregoing parties set forth in this
Agreement may be enforced in equity by a decree requiring specific performance.
Without limiting the foregoing, if any disputes arise concerning Section 1
hereof, the parties to this Agreement agree that an injunction may be issued
pending resolution of such controversy. Such remedies shall be cumulative and
non-exclusive and shall be in addition to any other rights and remedies the
parties may have under this Agreement. Any transfer or acquisition of Restricted
Securities in violation of this Agreement shall be null and void ab initio.
3.11 Definitions. As used in this Agreement, the following definitions
shall apply:
"Common Stock" shall mean, collectively, the Company's Class A Common
Stock, par value $0.001 per share, the Company's Class C Common Stock, par value
$0.001 per share, including shares of Class C Common Stock issued or issuable
upon conversion of Series B Shares, and the Company's Class B Common Stock, par
value $0.001 per share, including shares of Class A or Class B Common Stock
issued or issuable upon exercise of the warrants issued to Equitable on the date
hereof.
"Series A Shares" shall mean the Company's Series A Redeemable
Preferred Stock, par value $0.001 per share.
"Series B Shares" shall mean the Company's Series B Convertible
Preferred Stock, par value $0.001 per share.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have executed this Investors' Rights
Agreement effective as of the day and year first above written.
THE COMPANY: GMH HOLDINGS, INC.
By:____________________________________
Name:
Title:
BULLDOG: BULLDOG HOLDINGS LLC
By: SIHI-GMH LLC
Its Managing Member
By:____________________________________
THE PURCHASERS: RFE INVESTMENT PARTNERS V, L.P.
By: RFE ASSOCIATES V, L.P.,
Its General Partner
By:____________________________________
A General Partner
STERLING COMMERCIAL CAPITAL, INC.
By:____________________________________
Xxxxxx Xxxxxxxxxx,
Executive Vice President
State Treasurer of the State of Michigan,
Custodian of the Michigan Public School
Employees' Retirement System, State
Employees' Retirement System, Michigan
State Police Retirement System, and
Michigan Judges Retirement System
By:____________________________________
Name: Xxxx X. Xxxx
Title: Administrator, Alternative
Investments Division
EQUITABLE: THE EQUITABLE LIFE ASSURANCE SOCIETY OF
THE UNITED STATES
By:____________________________________
Investment Officer
Exhibit A
SCHEDULE OF PURCHASERS
Purchaser's Name and Address
RFE Investment Partners V, L.P.
00 Xxxxx Xxxxxx
Xxx Xxxxxx, XX 00000
State Treasurer of the
State of Michigan, Custodian
000 Xxxx Xxxxxxx, 0xx Xxxxx
Xxxxxxx, XX 00000
Sterling Commercial Capital, Inc.
000 Xxxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
INVESTORS' RIGHTS AGREEMENT
EXHIBIT I
PROMISSORY NOTE
FOR VALUE RECEIVED, GMH Holdings, Inc., a Delaware corporation
(hereinafter called the "Company"), with offices at ____________________________
hereby promises to pay to the order of ________________________________ [name of
person exercising Put], a ____________________________________________
("Payee"), at its office at _________________________________________ [address
of Payee], or at such other office as it designates in writing to the Company,
the principal sum of ______________________ Dollars ($___________), such payment
to be in such coin or currency of the United States of America as at the time of
payment is legal tender for the payment of public and private debts. The
principal amount of this Note shall be paid in three equal annual installments
(or in three installments as nearly equal as possible), one year, two years, and
three years from the initial issuance date of this Note. This Note shall bear
interest on the unpaid principal amount hereof from time to time outstanding,
payable every three months from the initial issuance date of this Note,
commencing on the third month from the initial issuance date of this Note in
like money on the principal sum unpaid hereof, from the date hereof, and upon
payment of principal in full, at a rate per annum equal to [Three year Treasury
rate plus 500 basis points] per annum. Payments of principal and/or interest
shall be made at the office of Payee. Notwithstanding the provisions of this
Note, if the rate of interest payable hereunder is limited by law, the rate
payable hereunder shall be the maximum rate permitted by law. If, however, the
Company pays any interest in excess of the maximum rate of interest permitted by
law, any interest so paid which exceeds such maximum rate shall automatically be
considered a payment of principal and shall automatically be applied in
reduction of principal due on this Note to the extent of such excess.
This Note may be prepaid in whole or in part by the Company. In
addition, in the event that at the end of any fiscal year ending after the date
hereof there shall exist "Excess Cash Flow" (as defined below), then within ten
(10) days after the date upon which the Company's audited consolidated financial
statements with respect to such fiscal year become available, the Company shall
be required to pay to Payee, an amount equal to all of such Excess Cash Flow.
Notwithstanding anything to the contrary contained in this Note, the Company
shall (a) with respect to any mandatory or permitted prepayment under this
paragraph, prepay this Note and other notes initially issued in the same year as
this Note by reason of the exercise of Put rights given to holders of certain
securities of the Company pursuant to repurchase rights granted in an Investors'
Rights Agreement dated as of December __, 1995 (the "Investors' Rights
Agreement") between the Company and the Purchasers named therein pro rata based
on the relative aggregate principal amounts thereof outstanding; and (b) prepay
in full Notes issued in early years by reason of the exercise of Put rights
given to holders of Company securities pursuant to the Investors' Rights
Agreement prior to prepayment of Notes issued in later years.
To secure payment of this Note and of any liability or liabilities of
the Company to the holder, due or to become due or that may hereafter be
contracted or existing, however acquired by the holder, the Company hereby
grants a security interest in and shall deliver to the holder appropriate
documentation, including a Pledge Agreement of even date herewith, representing
such security interest, securities of the Company which the Company has
delivered to the Payee pursuant to the exercise by the Payee of the Put option
contained in the Investors' Rights Agreement.
Reference to any other agreement referred to in this Note shall in no
way impair the negotiability of this Note or the absolute and unconditional
obligation of the Company to pay both principal and interest hereon as provided
herein.
In case of default in the payment of this Note or breach of the
obligations of the Company contained herein, the holder shall have all rights
given by the Uniform Commercial Code in the property, assets and securities in
which it has a security interest. In addition, in the case of default in the
payment of this Note or a breach of the obligations of the Company contained
herein, the unpaid balance of the principal and interest due hereunder shall be
immediately due and payable without notice. The waiver (which may only be by a
written instrument) or the remedying of any default in a reasonable manner shall
not operate as a waiver of the default remedied or any prior or subsequent
default. If any amount payable hereunder is not paid when due in accordance with
the terms hereof, the Company shall pay the holder hereof all its reasonable
costs and expenses of collection, including but not limited to, its reasonable
attorneys' fees actually incurred.
Presentment for payment, demand, notice of dishonor, protest and
notice of protest are hereby waived.
This Note shall be governed and construed in accordance with the laws
of the State of New York applicable to contracts made and to be performed wholly
within such state.
For purposes of this Note, the following definitions shall apply.
"Consolidated Net Income" for any period, shall mean the consolidated
net income (or deficit) of the Company and its subsidiaries for such period,
determined in accordance with GAAP, excluding, however, any gains or losses from
the sale or other disposition of assets (other than sales of inventory in the
ordinary course of business) and any other non-cash extraordinary or non-
recurring gains or losses.
"Excess Cash Flow" for any period, shall mean an amount equal to the
sum of (i) Consolidated Net Income for such period, plus (ii) an amount equal to
the amount of depreciation expense, depletion expense, non-cash amortization
expense (including the amortization of goodwill), accrued non-cash interest
expense and all other non-cash charges deducted in arriving at such net income
IN WITNESS WHEREOF, GMH Holdings, Inc. has caused this Note to be
duly executed and delivered in its corporate name by its officers duly
authorized on this ____ day of _______________, 199__.
GMH HOLDINGS, INC.
By:__________________________________
Its:
ATTEST
_____________________________
Secretary
INVESTORS' RIGHTS AGREEMENT
EXHIBIT II
PLEDGE AGREEMENT
THIS AGREEMENT is made as of ________________, 199__, by and between
____________________________, and _______________________ corporation
("Pledgor") and [ ] ("Pledgee").
The following is a recital of facts of facts underlying this
Agreement:
Pledgor has sold Common Stock, par value $.001 par share ("Common
Stock") to Pledgee pursuant to a Securities Purchase Agreement dated as of
December __, 1995, by and between Pledgor, General Manufactured Housing, Inc.
and the Purchasers named therein (the "Purchase Agreement"). Pursuant to an
Investors' Rights Agreement dated as of December __, 1995 between Pledgee,
Pledgor, and certain other Purchasers named therein, (the "Investors' Rights
Agreement"), Pledgor granted to Pledgee the right to put the Common Stock.
Pledgee has exercised its put rights pursuant to the Investors' Rights
Agreement. In connection with the put, the Pledgor is making payment by
delivering a promissory note in the principal amount of_________________________
Dollars ($ ) of even date herewith (the "Note"). In order to secure payment
of the Note and all other sums due to Pledgee pursuant to the terms of the
Investors' Rights Agreement, Pledgor desires to pledge to Pledgee its securities
of the class and in the number being repurchased as provided in Investors'
Rights Agreement (the "Stock").
NOW, THEREFORE, the parties agree as follows:
1. Pledge. Pledgor pledges and herewith delivers to Pledgee as
security for payment of the Note and all other sums due to Pledgee pursuant to
the Investors' Rights Agreement, in accordance with their respective terms, all
the Stock and given Pledgee a continuing lien upon the Stock as security
therefor. If Pledgor comes into default under the terms of the Note, and fails
to cure such default within any grace period specifically provided in the Note,
Pledgor authorizes Pledgee to sell all or any portion of the Stock at public or
private sale by completing the endorsements and/or assignments in blank and to
apply the proceeds, after deducting all expenses of collection and sale
(including reasonable attorney fees) in payment of any and all obligations of
Pledgor evidenced by the Note. Pledgee shall have all the rights and remedies
provided under the Uniform Commercial Code. Whenever any notice of sale is
required to be given to Pledgor, it shall be considered
reasonable if such notice is given at least (7) days prior to the date of such
sale. Simultaneously with the execution hereof, Pledgor has delivered the Stock
to Pledgee, endorsed in blank, together with assignments separate from
certificates, which are undated and have been executed by Pledgor.
2. Release of Collateral. When the Note and all sums due to Pledgee
pursuant to the Investors' Rights Agreement are paid in full, Pledgee shall
deliver the certificate(s) representing the Stock and endorsements and/or
assignments separate from certificates to Pledgor.
3. Pledgee's Rights. So long as Pledgor is not in default under the
Note or terms of this Agreement, Pledgee shall not have the right to receive any
dividends payable with respect to the Stock and Pledgee shall have no right to
vote the Stock except as provided in the Purchase Agreement. If, however, any
stock dividends or distributions of stock or other securities are made on
account of the Stock, then Pledgor shall promptly deliver such stock or
securities to Pledgee, endorsed in blank, together with assignments separate
from certificates, which are undated and have been executed by Pledgor,
whereupon such stock or securities shall be subject to the terms of this
Agreement and shall be considered to be Stock as that term is used herein. Upon
the occurrence of any default under the Note Pledge may exercise all voting
rights incident to the Stock (which term shall include any voting securities
issued as a dividend and distribution made thereon.)
4. Remedies Cumulative. Pledgee may pursue any and all remedies in
connection with the collateral pledged hereunder notwithstanding the
availability of other remedies, all such remedies shall be cumulative and may be
pursued simultaneously or independently.
5. Notices. Any notices required or desired to be given hereunder,
shall be in writing and shall be considered sufficiently given for all purposes
if delivered by hand or sent by registered or certified mail, to the parties
hereto at the address set forth below or such other address as they may direct
in writing by similar notice:
If to Pledgor:
[ ]
If to Pledgee:
[ ]
6. Miscellaneous. This Agreement is binding upon the parties hereto
and their successors and assigns. This Agreement may only be amended by a
writing signed by all of the parties hereto and may be waived only by a writing
signed by the party charged with such waiver. This Agreement may be signed in
more than one counterpart, each of which shall be considered to be an original,
but all of which shall constitute one and the same Agreement. This Agreement is
government by and shall be construed in accordance with the laws of the State of
Delaware.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first set forth above.
"PLEDGOR"
[ ]
By:___________________________________
"PLEDGEE"
[ ]
______________________________________
EXHIBIT E
____________________________________
GMH HOLDINGS, INC.
STOCKHOLDERS' AGREEMENT
_____________________________________
TABLE OF CONTENTS
Section Page
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. Representations of the Stockholders; Indemnity. . . . . . . . . . . . . 8
3. Restrictions on Transfers of Securities . . . . . . . . . . . . . . . . 9
(a) General Restrictions . . . . . . . . . . . . . . . . . . . . . . . 9
(b) Restrictions on Stockholder Groups . . . . . . . . . . . . . . . .11
4. Permitted Transfers of Shares . . . . . . . . . . . . . . . . . . . . .12
(a) A Stockholder Transfers. . . . . . . . . . . . . . . . . . . . . .12
(b) B Stockholder Transfers. . . . . . . . . . . . . . . . . . . . . .13
5. Transfers to the Corporation. . . . . . . . . . . . . . . . . . . . . .15
6. Offer of Securities . . . . . . . . . . . . . . . . . . . . . . . . . .15
7. Transfers with Respect to Employee Stockholders . . . . . . . . . . . .17
8. Closing of Transfers. . . . . . . . . . . . . . . . . . . . . . . . . .19
9. Come Along. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
(a) Come Along . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
(b) Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
10. Election of Directors and Other Voting Requirements . . . . . . . . . .22
(a) Voting for Directors . . . . . . . . . . . . . . . . . . . . . . .22
(b) Nominations. . . . . . . . . . . . . . . . . . . . . . . . . . . .22
(c) Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
(d) Removal of Directors . . . . . . . . . . . . . . . . . . . . . . .23
(e) Written Consent. . . . . . . . . . . . . . . . . . . . . . . . . .23
(f) Directors Expenses . . . . . . . . . . . . . . . . . . . . . . . .23
(g) Special Election Matters . . . . . . . . . . . . . . . . . . . . .23
(h) Committees of the Board. . . . . . . . . . . . . . . . . . . . . .24
(i) GMH Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
(j) Equitable's Rights . . . . . . . . . . . . . . . . . . . . . . . .24
11. Special Voting Requirements . . . . . . . . . . . . . . . . . . . . . .25
(a) Required Stockholder Approval While Series A Preferred Shares are
Outstanding. . . . . . . . . . . . . . . . . . . . . . . . . . . .25
(b) Required Stockholder Approval After Series A Preferred Shares
are Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . .27
12. Share and Warrant Certificates. . . . . . . . . . . . . . . . . . . . .29
(a) Restrictive Endorsement. . . . . . . . . . . . . . . . . . . . . .29
(b) Replacement Certificates . . . . . . . . . . . . . . . . . . . . .30
13. No Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
14. Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . . .30
15. Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . .32
16. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
(a) Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
(b) Termination; Amendment . . . . . . . . . . . . . . . . . . . . . .33
(c) Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
(d) Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . .34
(e) Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . .34
(f) Benefit and Binding Effect . . . . . . . . . . . . . . . . . . . .34
(g) Further Assurances . . . . . . . . . . . . . . . . . . . . . . . .35
(h) Specific Performance . . . . . . . . . . . . . . . . . . . . . . .35
(i) Voting Percentages . . . . . . . . . . . . . . . . . . . . . . . .35
Exhibit A Schedule of Stockholders
Exhibit B Registration Rights
STOCKHOLDERS' AGREEMENT
THIS STOCKHOLDERS' AGREEMENT dated as of December 21, 1995, by and among
GMH Holdings, Inc., a Delaware corporation (the "Company"), and each other party
executing this Agreement or a counterpart hereof (hereinafter referred to
collectively as "Stockholders" and individually as a "Stockholder").
W I T N E S S E T H:
WHEREAS, the Company is authorized to issue an aggregate of 4,375,000
shares of Class A Common Stock, par value $.001 per share (the "Class A Common
Shares"), of which 1,656,250 Class A Common Shares are currently issued and
outstanding, 787,500 shares of Class B Common Stock, par value $.001 per share
(the "Class B Common Shares"), none of which Class B Common Shares are currently
issued and outstanding, 2,150,000 shares of Class C Common Stock, par value
$.001 per share (the "Class C Common Shares" and together with the Class A
Common Shares and the Class B Common Shares, the "Common Shares"), none of which
Class C Common Shares are currently issued and outstanding, 8,000,000 shares of
Series A Redeemable Preferred Stock, par value $.001 per share (the "Series A
Preferred Shares"), all of which Series A Preferred Shares are currently issued
and outstanding, and 2,150,000 shares of Series B Convertible Preferred Stock,
par value, $.001 per share (the "Series B Preferred Shares"), all of which
Series B Preferred Shares are currently issued and outstanding (the Class A
Common Shares, Class B Common Shares, Class C Common Shares, Series A Preferred
Shares and Series B Preferred Shares are collectively referred to as the
"Shares"); and
WHEREAS, each Stockholder is the record and beneficial owner of the number
of Class A Common Shares, Class B Common Shares, Class C Common Shares, Series A
Preferred Shares and Series B Preferred Shares appearing opposite his or its
name on Exhibit A attached hereto, free and clear of all options, liens,
encumbrances or charges of any kind, except this Agreement; and
WHEREAS, the Company has issued to The Equitable Life Assurance Society of
the United States and to certain principals of Larkspur Capital Corporation
warrants dated the date hereof to purchase an aggregate of 568,750 Class A
Common Shares or Class B Common Shares at a price of $.01 per share (the
"Warrants"); and
WHEREAS, the parties deem it in the best interests of the Company to
provide for continuity in the control and operation of the Company and to
restrict the transfer of the Shares (including the Common Shares issuable upon
conversion of the Series B Preferred Shares or upon exercise of the Warrants),
as herein provided;
NOW, THEREFORE, in consideration of the agreements and mutual covenants
contained herein, the parties hereto agree as follows:
1. Definitions.
As used in this Agreement, terms defined in the preamble and recitals
hereto shall have the respective meanings specified therein, and the following
terms shall have the following meanings:
"A Stockholder" shall mean (i) any Stockholder that is designated one
of the Group A Stockholders in Exhibit A to this Agreement and (ii) any Person
who acquires Securities after the date hereof and is designated as an A
Stockholder in accordance with the provisions of this Agreement.
"Act" shall mean the Securities Act of 1933, as amended.
"Affiliate", as applied to any Person, means any other person,
directly or indirectly controlling, controlled by, or under common control with
that Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise, and in all events, GMH shall be deemed to be an
Affiliate of the Company.
"B Stockholder" shall mean (i) any Stockholder that is designated one
of the Group B Stockholders in Exhibit A to this Agreement and (ii) any Person
who acquires Securities after the date hereof and is designated as a B
Stockholder in accordance with the provisions of this Agreement.
"Bulldog" shall mean Bulldog Holdings LLC, a New York limited
liability company.
"Business Day" shall mean any day other than a Saturday or a Sunday or
a day on which commercial banking institutions in the City of New York are
authorized to close.
"Cause" shall mean, with respect to any Employee Stockholder, any of
the following: (a) any deliberate or intentional act or omission by the Employee
Stockholder with the intent of causing damage to the Company's or GMH's
relationships with its lenders, suppliers or customers; (b) any fraud,
misappropriation or embezzlement by the Employee Stockholder involving
properties, assets or funds of the Company or of GMH; (c) a conviction of the
Employee Stockholder, or plea of nolo contendere by the Employee Stockholder, to
any crime or offense involving monies or other property of the Company or GMH or
any other felony or criminal act involving moral turpitude; (d) any usurpation
by the Employee Stockholder of a corporate opportunity of the Company or GMH or
the Employee Stockholder's willful and continual neglect of or willful and
continual failure to perform any of his material duties, responsibilities or
obligations as an employee of the Company or GMH, but only after notice of such
usurpation, neglect or failure is delivered to the Employee Stockholder and the
Employee Stockholder fails or refuses to remedy such usurpation, neglect or
failure to the reasonable satisfaction of the Board of Directors of the Company
or GMH, as applicable, within thirty (30) days after the receipt of such notice;
provided, that any act or omission taken by the Employee Stockholder in good
faith and in the reasonable belief that such action or omission was in the best
interests of the Company or GMH shall not constitute "Cause"; or (e) the
violation by the Employee Stockholder of Section 7 of his Employment Agreement
or of any other non-competition agreement or covenant binding upon the Employee
Stockholder.
"Certificate of Incorporation" shall mean the Company's Certificate of
Incorporation, as amended or restated from time to time.
"Co-Sale Transfer" shall mean any sale by any Stockholder of such
number of the Voting Shares held by such Stockholder in a bona fide, arms-length
transaction to any Person who is not then either a party to this Agreement or a
Related Transferee of such Stockholder, as the case may be, which results in
such Person owning in excess of 10% of the then issued and outstanding Voting
Shares.
"Employee Stockholder" shall mean any of Xxxxxx X. Xxxxx, Xxxxx Xxxxx
Xxxxxx, as Trustee, Xxxx Xxxx Xxxxx, Xxxxxxx Xxxxx Xxxxx, Xxxxxx Xxxxxx, Xxxxx
Xxxxxxx, Xxxxxx X. Xxxxxx, Xxxxx Xxxxxxx, Xxxxxxx X'Xxxxxx, Xxxxx Xxxxx or Xxxxx
X. XxXxxxxxx.
"Equitable" shall mean The Equitable Life Assurance Society of the
United States, a New York insurance company.
"Fundamental Change" shall have the meaning set forth in Section 11(b)
hereof.
"GMH" shall mean, prior to the Merger, GMH Acquisition Corp., a
Delaware corporation, and after the Merger, General Manufactured Housing, Inc.,
a Georgia corporation.
"Group A Offerees" shall mean Bulldog, RFE, Michigan and Sterling.
"Investors Rights Agreement" shall mean that certain Investors Rights
Agreement dated as of the date hereof between and among the RFE Group, Bulldog,
Equitable and the Company.
"Merger" shall mean the merger of GMH Acquisition Corp. with and into
General Manufactured Housing, Inc., with General Manufactured Housing, Inc. as
the surviving corporation.
"Michigan" shall mean the State Treasurer of the State of Michigan,
Custodian of the Michigan Public School Employees' Retirement System, State
Employees Retirement System, Michigan State Police Retirement System and the
Michigan Judges' Retirement System.
"Non-Selling Stockholder Group" shall mean the following Employee
Stockholders: Xxxxxx Xxxxxx, Xxxxx Xxxxxxx, Xxxxx X. Xxxxxx, Xxxxx Xxxxxxx,
Xxxxxxx X'Xxxxxx, Xxxxx Xxxxx and Xxxxxx X. XxXxxxxxx.
"Person" shall mean a natural person, corporation, limited
partnership, general partnership, joint stock company, limited liability
company, limited liability partnership, joint venture, association, company,
trust, bank, trust company, and trust, business trust or other organization,
whether or not a legal entity, or a government or agency or any political
subdivision thereof.
"Put Date" shall mean the date which is the eighth (8th) anniversary
of the date hereof.
"Put Rights" shall mean the rights granted by the Company to the RFE
Group and Equitable pursuant to Section 1.1 of the Investors Rights Agreement.
"Related Transferees" shall mean, (i) with respect to each Stockholder
who is a natural person, such Stockholder's spouse, any lineal descendant
(whether by birth or adoption), and trusts for the benefit of his spouse or
lineal descendants (whether by birth or adoption), and, upon the death,
disability or incompetence of such Stockholder, his estate or personal
representative and (ii) with respect to any Stockholder who is not a natural
person, the Affiliates of such Stockholder, any partner of any Stockholder which
is a partnership and any successor trustee of any Stockholder which is a
trustee.
"RFE" shall mean RFE Investment Partners V, L.P., a Delaware limited
partnership.
"RFE Group" shall mean RFE, Michigan and Sterling.
"Securities" shall mean and include (i) all Class A Common Shares,
Class B Common Shares, Class C Common Shares, Series A Preferred Shares, Series
B Preferred Shares and Warrants owned, of record or beneficially, by any
Stockholder, (ii) all Class A Common Shares, Class B Common Shares, Class C
Common Shares, Series A Preferred Shares, Series B Preferred Shares and Warrants
hereafter acquired, directly or indirectly, by any Stockholder, including the
Common Shares issuable upon conversion of the Series B Preferred Shares or upon
exercise of any Warrant, and (iii) all other Securities of the Company acquired
by any Stockholder by way of dividend or upon an increase, reduction,
substitution or reclassification of stock of the Company or upon any
reorganization of the Company.
"Securities Acts" shall mean any applicable statute, rule, regulation
or administrative or regulatory requirement applicable to the transfer of
securities of the Company, including the Act, and the rules and regulations
promulgated thereunder, and all applicable state securities or "blue sky" laws.
"Selling Stockholder Group" shall mean the following Employee
Stockholders: Xxxxxx X. Xxxxx, Xxxxx Xxxxx Xxxxxx, as Trustee, Xxxxxxx Xxxxx
Xxxxx and Xxxx Xxxx Xxxxx.
"Sterling" shall mean Sterling Commercial Capital, Inc., a New York
corporation.
"Stockholder Group" shall mean, with respect to any Stockholder, such
Stockholder, each of his or its Related Transferees and each of their respective
successor Related Transferees.
"transfer" shall mean any sale, assignment, transfer, pledge,
hypothecation, mortgage, charge, lien, encumbrance, gift, bequest, transmission
or other disposition of Securities, provided that the
encumbrances contemplated by, and transfers of Securities pursuant to the terms
and provisions of Section 4 hereof shall not be deemed to be "transfers".
"Voting Shares" shall mean the Series B Preferred Shares, the Class A
Common Shares, the Class B Common Shares issuable upon exercise of the Warrant
issued to Equitable (notwithstanding that the Class B Common Shares are non-
voting) and the Class C Common Shares, including (a) any Class C Common Shares
issued upon conversion of the Series B Shares or (b) Class A Common Shares or
Class B Common Shares issued upon exercise of the Warrants.
"Warrants" shall have the meaning set forth in the recitals hereto.
2. Representations of the Stockholders; Indemnity.
(a) Each Stockholder other than Michigan and Equitable, severally
represents and warrants as follows:
(i) this Agreement constitutes the valid and legally binding
obligation of such Stockholder, enforceable against such Stockholder in
accordance with its terms, subject to (A) laws of general application
relating to bankruptcy, insolvency, and the relief of debtors, and (B)
rules of law governing specific performance, injunctive relief or other
equitable remedies;
(ii) the execution, delivery and performance of this Agreement
by such Stockholder does not (A) violate or result in a breach of or
constitute a default under any of the organizational or constituent
documents of any Stockholder which is not a natural Person, or any
contract, agreement, indenture, mortgage, pledge, note, bond, license,
permit or other instrument or obligation to which such Stockholder is a
party or by which it or any of its assets are bound or affected or (B)
require any permit, consent, approval or authorization of, or designation,
declaration or filing with, any governmental authority or any other person
or entity, except for those which have already been obtained; and
(iii) such Stockholder, if not a natural person, has all
requisite power and authority to enter into and perform its obligations
under this Agreement in accordance with its terms.
(b) Each Stockholder, other than Michigan and Equitable, agrees to
indemnify and hold harmless the other Stockholders and the Company and its
directors, employees, affiliates and agents from and against any and all
damages, losses, costs and expenses (including reasonable attorneys' fees) which
any of them may incur by reason of the failure of such Stockholder to fulfill
any of the terms or conditions of this Agreement, or by reason of any breach of
the representations and warranties made by such Stockholder in this Agreement.
3. Restrictions on Transfers of Securities.
(a) General Restrictions. During the term of this Agreement, none of
the Securities may be the subject of a transfer unless:
(i) such transfer shall be made in accordance with the
provisions of this Agreement and Exhibit B hereto, relating to the
Stockholders' rights to register their Common Shares or Warrants under the
Securities Acts;
(ii) the proposed transferee shall deliver to the Company a
written acknowledgment that the Securities to be transferred are subject to
this Agreement and that the proposed transferee and his or its successors
in interest agree to be and are bound hereby and thereby to the same extent
and in the same manner as the transferor of such Securities; provided, that
from and after the Put Date, the restrictions contained in this Agreement
shall cease to apply to any Shares which are covered by the Put Rights; and
(iii) such transfer shall be made in compliance with the
Securities Acts, and prior to any such transfer, the Stockholder proposing
to transfer Securities shall give the Company (A) notice describing the
manner and circumstances of the proposed transfer and (B) if reasonably
requested by the Company, a written opinion of legal counsel reasonably
satisfactory to the Company and its counsel, in form and substance
reasonably satisfactory to the Company and its counsel, to the effect that
the proposed transfer of
Securities will be in compliance with the Securities Acts; provided,
however, that for transactions made pursuant to Rule 144 under the Act, an
opinion of counsel shall only be required if reasonably requested by the
Company and which shall be to the effect that the proposed transfer of
Securities may be effected without registration under the Act; and
provided, further, that no such opinion of counsel shall be necessary for a
transfer by a Stockholder which is (1) a partnership to its partners or
retired partners in accordance with partnership interests, (2) an
individual to a Related Transferee or trust for the benefit of such
individual or Related Transferee or (3) a trustee for the benefit of others
to a successor trustee.
Upon the transfer of Securities in accordance with this Agreement, the
transferee of such Securities shall be deemed a "Stockholder" hereunder. Any
attempted transfer of Securities other than in accordance with this Agreement
and the Registration Rights Agreement shall be null and void, and the Company
shall not recognize any such attempted transfer nor reflect in its records any
change in ownership of Securities pursuant thereto, nor issue any certificate or
other evidence of ownership of Securities in connection therewith.
(b) Restrictions on Stockholder Groups. Any Securities transferred
upon satisfaction of the conditions contained in this Agreement shall be held
subject to the terms of this Agreement and the holder thereof shall be deemed a
Stockholder for purposes of this Agreement, as follows:
(i) Any Securities transferred to, or any Securities held by,
any one of the A Stockholders shall be held by such A Stockholder subject
to the provisions hereof governing Securities held by A Stockholders.
(ii) Any Securities transferred to, or any Securities held by
any one of the B Stockholders shall be held by such B Stockholder subject
to the provisions hereof governing Securities held by B Stockholders.
(iii) Any Securities transferred to any Person that is not a
Stockholder prior to such transfer shall, unless otherwise provided herein,
be held by such Person subject to the provisions hereof governing
Securities held by the Stockholder that transferred Shares to such Person.
4. Permitted Transfers of Shares. Notwithstanding the provisions of
Section 3(a) hereof, during the term of this Agreement, any Stockholder may
transfer any or all of his or its respective Securities, subject to the
restrictions contained in Section 3 hereof and upon compliance with the
following terms and conditions:
(a) A Stockholder Transfers. Subject to the provisions of Section
11(a)(xiii), any A Stockholder may transfer any or all of his, her or its
Securities as follows:
(i) to any Related Transferee of the A Stockholder making
such transfer, provided that any Securities transferred to such Related
Transferee shall be held by such Related Transferee subject to the
provisions hereof governing A Stockholders;
(ii) to the Company in accordance with the procedures
described in Section 5 hereof;
(iii) Bulldog may transfer its Securities to the RFE Group in
accordance with the option granted to the RFE Group pursuant to Section 2
of the Investors Rights Agreement;
(iv) Equitable may transfer its Securities to a Person (A)
for whom Alliance Corporate Finance Group Incorporated is the sole
investment advisor and (B) in connection with such Person becoming the
holder of any of the Senior Subordinated Notes of GMH originally issued to
Equitable; or
(v) to any Person, including any Stockholder (other than
the Persons described in (i), (ii), (iii) and (iv) above), provided that
(A) such Securities are first offered for sale to the Group A Offerees
(excluding any member of the Group A Offerees who is the transferor), pro
rata in accordance with the procedures described in Section 6 hereof, (B)
if the Group A Offerees do not agree to purchase all of such Securities
offered for sale, the remainder of such Securities are next offered to all
other A Stockholders, pro rata in
accordance with the procedures described in Section 6 hereof, (C) if the
Group A Offerees and such other A Stockholders do not agree to purchase all
of such Securities offered for sale, the remainder of such Securities are
next offered for sale to all B Stockholders, pro rata in accordance with
the procedures described in Section 6 hereof and (D) if any such transfer
involves a Co-Sale Transfer, it shall be made in accordance with the
procedures described in Section 9 hereof; and provided, further, that from
and after the Put Date, the provisions of this Section 4(a)(iv) shall cease
to apply to any transfer of Voting Shares held by any A Stockholder which
are subject to the Put Rights.
(b) B Stockholder Transfers. Subject to the provisions of Section
11(a)(xiii), any B Stockholder may transfer any or all of his, her or its
Securities as follows:
(i) INTENTIONALLY DELETED
(ii) to any other B Stockholder; provided, that, (A) such
Securities are first offered for sale to the members of the Selling
Stockholder Group, pro rata in accordance with the procedures described in
Section 6 hereof and (B) if the members of the Selling Stockholder Group do
not agree to purchase all of such Securities offered for sale, the
remainder of such Securities are next offered for sale to the members of
the Non-Selling Stockholder Group, pro rata in accordance with the
procedures described in Section 6 hereof;
(iii) to the members of the Selling Stockholder Group in
accordance with the provisions of Section 7(a);
(iv) to any Related Transferee of the B Stockholder making such
transfer, provided that any Securities transferred to such Related
Transferee shall be held by such Related Transferee subject to the
provisions governing B Stockholders;
(v) to the Company in accordance with the procedures described
in Section 5 hereof; or
(vi) to any Person, including a Stockholder (other than the
Persons described in (i), (ii), (iii), (iv) and (v) above), provided that
(A) such Securities are first offered for sale to the Group A Offerees, pro
rata in accordance with the procedures described in Section 6 hereof
(except that if a member of the Non-Selling Stockholder Group is the
transferor, such Securities shall first be offered for sale to the members
of the Selling Stockholder Group, pro rata in accordance with the
procedures described in Section 6 hereof, and if the members of the Selling
Stockholder Group do not agree to purchase all of such Securities offered
for sale, the remainder of such Securities are then offered for sale to the
Group A Offerees), (B) if the Group A Offerees do not agree to purchase all
of such Securities offered for sale, the remainder of such Securities are
next offered for sale to all other B Stockholders, pro rata in accordance
with the procedures described in Section 6 hereof, (C) if the Group A
Offerees and such other B Stockholders do not agree to purchase all of such
Securities offered for sale, the remainder of such Securities are next
offered for sale to all A Stockholders (other than the Group A Offerees),
pro rata in accordance with the procedures described in Section 6 hereof
and (D) if such transfer involves a Co-Sale Transfer, it shall be made in
accordance with the procedures described in Section 9 hereof.
5. Transfers to the Corporation. Any Stockholder may transfer any
or all of his or its Securities to the Company, on such terms and conditions as
the Stockholder and the Corporation may agree; provided, however, that except
for (a) any redemption of the Series A Preferred Shares in accordance with the
Certificate of Incorporation or (b) any repurchase of Voting Shares pursuant to
the Put Rights, the Company shall not repurchase or redeem any Securities
without the written consent of the Stockholders required pursuant to the
provisions of Sections 11(a) or (b) hereof, as applicable. Any Securities
purchased or redeemed by the Company shall be retired and not be reissued. If
the Company is legally or contractually restricted from purchasing all of such
Securities, the Company shall, at such time, purchase the portion of the
Securities which it is legally or contractually permitted to purchase, and shall
purchase the balance of the Securities as soon thereafter as it is legally or
contractually able to do so.
6. Offer of Securities. Whenever any Stockholder is required
to offer Securities for sale to other Stockholders pursuant to Section 4 hereof,
the following procedures shall apply:
(a) The Stockholder proposing to make such a transfer (the
"Transferor") shall deliver a written notice of the proposed transfer (the
"Transfer Notice") to the Company and to each of the other Stockholders entitled
to receive an offer to purchase under the provisions of this Agreement. The
Transfer Notice shall contain a description of the proposed transaction and the
terms thereof, including the number of Securities to be transferred, the name of
each Person to whom or in favor of whom the proposed transfer shall be made (the
"Transferee"), and a description of the consideration to be received by the
Transferor upon transfer of the Securities which must be cash.
(b) At the same time as the delivery of the Transfer Notice, the
Transferor shall deliver a written offer to sell to each of the other
Stockholders entitled to receive such an offer under other provisions of this
Agreement, a pro rata (in accordance with the percentage of Voting Shares then
held by the other Stockholders) portion of the Securities offered for sale by
the Transferor, as required under other provisions of this Agreement. Such offer
to sell shall contain the same terms and conditions and shall be for the same
consideration as described in the Transfer Notice.
(c) For a period of twenty-five (25) days after the offer described
in (b) above is sent to Stockholders, each such Stockholder may, by written
notice to the Transferor and to the Company, accept in whole or in part the
offer to sell Securities. Such acceptance shall specify the amount of Securities
to be purchased by such Stockholder and a proposed date for closing such
purchase, which date shall not exceed sixty (60) days from the date the offer
described in (b) above is sent to Stockholders. If any Stockholder does not
accept the offer to purchase all of the Securities offered by the Transferor,
the Transferor shall make one or more additional offers of the remainder of such
Securities to Stockholders who have agreed to purchase all of the Securities
previously offered to them by the Transferor. Such additional offer or offers
shall be made for a period of ten (10) days to each of such Stockholders in the
same ratio that the amount of Voting Shares which such Stockholder has agreed to
purchase bears to the total amount of Voting Shares which all Stockholders to
whom such additional offer or offers are made have agreed to purchase.
(d) In the event that the other Stockholders do not agree to purchase
all of the Securities offered for sale by the Transferor, the Transferor shall
have the right at his or its election:
(i) to proceed with the sale of such Securities as other
Stockholders have agreed to purchase;
(ii) to cancel all of the offers to other Stockholders and not
sell; or
(iii) to cancel all of the offers to other Stockholders and make
a bona fide sale or other transfer of the Securities to the Transferee
named in the Transfer Notice, but only in strict accordance with the terms
and for the consideration stated in the Transfer Notice and within ninety
(90) days of the last offer to Stockholders hereunder.
7. Transfers with Respect to Employee Stockholders.
(a) If any member of the Non-Selling Stockholder Group voluntarily
ceases to serve as an employee or officer of the Company or GMH without the
consent of the Company or GMH, as applicable, or his employment is terminated
for any reason other than death or disability, in each case, on or prior to the
third anniversary of the date of this Agreement, all Securities held by such
Stockholder and his Related Transferees, if any, shall, immediately upon such
termination of employment, be transferred to the members of the Selling
Stockholder Group (pro rata in accordance with the percentage of Voting Shares
then held by the members of the Selling Stockholder Group) for a purchase price
equal to the total number of Shares so transferred multiplied by the par value
of such Shares.
(b) If (i) the employment of any member of the Non-Selling
Stockholder Group with the Company or GMH terminates by reason of death or
disability or (ii) after the third anniversary of the date of this Agreement but
prior to the earlier of (A) the fifth anniversary of the date of this Agreement
or (B) the date upon which a Co-Sale Transfer occurs, any member of the Non-
Selling Stockholder Group voluntarily ceases to serve as
an employee or officer of the Company or GMH without the consent of the Company
or GMH, as applicable, or his employment with the Company or GMH is terminated
for any reason other than death or disability, then such Person shall
immediately surrender to the Corporation all Shares held by him and his Related
Transferees, if any, in exchange for an equal number of Class B Common Shares.
(c) If prior to the earlier of (i) the fifth anniversary of the date
of this Agreement or (ii) the date upon which a Co-Sale Transfer occurs, any
member of the Selling Stockholder Group voluntarily ceases to serve as an
executive officer of the Company or GMH or his employment with the Company or
GMH is terminated for Cause, then such Person shall immediately surrender to the
Corporation all Shares held by him and his Related Transferees, if any, (and
who, in the case of Xxxxxx X. Xxxxx, shall mean his Related Transferees, if any,
who have acquired Securities by transfer from him after the date hereof), in
exchange for an equal number of Class B Common Shares.
(d) Immediately upon the occurrence of any event set forth in
paragraphs (b) or (c) above which requires the exchange of Class A Common Shares
for certificates of Class B Common Shares, the rights of the holder of such
Class A Common Shares shall automatically cease, and such Person shall be deemed
to have become a holder of Class B Common Shares.
8. Closing of Transfers. The closing for all purchases and sales of
Securities provided for in this Agreement hereof shall be held at the offices of
the Company. If any Stockholder (or a Related Transferee) who has become
obligated to purchase or sell Securities hereunder is deceased on the closing
date for such purchase or sale and such deceased person's personal
representative shall not have been appointed and qualified by such date, then
the closing shall be postponed until the 10th day after the appointment and
qualification of such personal representative. If the closing date of such
purchase or sale falls on a Saturday, Sunday or legal holiday, then the closing
shall be held on the next succeeding business day. The purchase price for the
Securities shall be paid at the closing by certified check or by cashier's or
official bank check. At the closing, the seller(s) shall deliver to the
purchaser(s) the certificate or certificates representing the Securities to be
sold, duly endorsed in blank and bearing the necessary documentary stamps. Any
Stockholder (or his personal representative or any Related Transferee of such
Stockholder) which transfers Securities shall (a) do all things and execute and
deliver all such papers as may be necessary or reasonably requested by the
Company in order to consummate such transfer, (b) pay to the Company such
amounts as may be required for any applicable stock transfer taxes and (c) pay
to the Company any expenses incurred by the Company in connection with such
transfer (including reasonable attorneys fees). In the event that a Stockholder
(or, his personal representative or any Related Transferee of such Stockholder)
having become obligated to sell Securities hereunder shall fail to deliver such
Securities in accordance with the terms of this Agreement, the purchasers may,
at their option, in addition to all other remedies they may have, send to the
sellers by personal delivery or registered mail, return receipt requested, the
purchase price of such Securities as is hereinabove specified. Thereupon, the
Company shall (i) cancel on its books the certificate or certificates
representing the Securities to be sold, (ii) issue, in lieu thereof, a new
certificate or certificates in the name of the purchasers representing such
Securities, (iii) deliver such new certificate or certificates to the Purchasers
and (iv) give notice thereof to the sellers, and thereupon all of the sellers'
rights in and to such Securities shall terminate.
9. Come Along.
(a) Come Along. If any Stockholder proposes to transfer Voting
Shares in a Co-Sale Transfer (the "Selling Stockholder"), it shall give notice
of such proposed sale (the "Sale Notice") to the Company and the other
Stockholders (the "Other Stockholders"), which notice shall set forth at least
the name and address of the proposed transferee (the "Buyer") and the price and
terms of such proposed sale. Any of the Other Stockholders shall then be
entitled to give, within 20 days after the giving of such Sale Notice, a
counter-notice to the Company, the Selling Stockholder, and to the Buyer at the
address specified in the Sale Notice, that it elects to have the Buyer choose to
purchase the number of Voting Shares owned by such Other Stockholder (and the
Voting Shares of his, her or its Related Transferees, if any) equal to (i) the
number of Voting Shares held by such Other Stockholder and his, her or its
Related Transferees, if any, multiplied by (ii) a fraction, the numerator of
which is the number of Voting Shares proposed to be acquired by the Buyer from
the Selling Stockholder and the denominator of which is the total number of
Voting
Shares held by the Selling Stockholder (before giving effect to the proposed
sale to the Buyer), at the same price and upon the same terms and conditions as
contained in the Sale Notice. In the event any Other Stockholder makes the
aforesaid election, the Buyer shall purchase and such Other Stockholder (and
his, her or its Related Transferees, if any) shall sell such number of Voting
Shares owned (or deemed owned) by them at the same price and upon the same terms
and conditions as contained in the Sale Notice; provided, that if the Buyer is
not willing to purchase the total number of Voting Shares held by the Selling
Stockholder and the Other Stockholders who have elected to participate in such
sale, the Buyer shall purchase that number of Voting Shares that it wishes to
purchase (but not less than the number set forth in the Sale Notice), and the
Selling Stockholder and the Other Stockholders shall each sell that number of
Voting Shares to the Buyer equal to the product of (x) the aggregate number of
Voting Shares to be purchased by the Buyer and (y) a fraction, the numerator of
which is the number of Voting Shares then owned by such Stockholder, and the
denominator of which is the aggregate number of Voting Shares owned by the
Selling Stockholder and the Other Stockholders who have elected to participate
in such sale.
(b) Warrants. For purposes of Section 9(a), any Stockholder which
holds Warrants and which, if such Warrants had been exercised, would be
permitted to sell the resulting Voting Shares under Section 9(a), shall have the
right to sell Warrants for the number of Voting Shares which, together with the
number of Voting Shares, if any, such Stockholder elects to sell, equals the
number of Voting Shares such Stockholder is permitted to sell under Section
9(a), without any requirement that such Warrants be exercised and converted to
Voting Shares before a sale under Section 9(a). The purchase price per Warrant
shall be the purchase price per Voting Share less the exercise price of the
Warrant.
10. Election of Directors and other Voting Requirements.
(a) Voting for Directors. During the term of this Agreement,
(i) there shall be seven directors of the Company and (ii) at each meeting of
the Stockholders of the Company for the election of directors, the Stockholders
shall vote all Voting Shares held by them for the election of the seven persons
nominated pursuant to Section 10(b).
(b) Nominations. During the term of this Agreement, directors
shall be nominated by the Stockholders as follows: the nominees for directors
shall be (i) the four persons nominated by Bulldog, (ii) the two persons
receiving a plurality of votes cast by all members of the RFE Group, including
one nominee designated by RFE and (iii) Xxxxxx X. Xxxxx.
(c) Vacancies. During the term of this Agreement, should a
vacancy in the Board of Directors be caused by death, resignation, removal or
any other reason, each of the Stockholders agrees to vote all Voting Shares
owned by such Stockholder for (i) the one person receiving a plurality of votes
cast by all B Stockholders at a meeting of B Stockholders held to nominate
directors, in the case of a vacancy caused by the death, resignation, removal or
other reason with respect to Xxxxxx X. Xxxxx or (ii) the nominee selected by
Bulldog or the RFE Group, as the case may be, as provided in Section 10(b)
hereof.
(d) Removal of Directors. If at any time any Stockholder
proposes to remove any director who was nominated by such Stockholder as
provided in Section 10(b) hereof, each Stockholder agrees to vote all of the
Voting Shares owned by such Stockholder for such removal if removal has been
approved by the persons who would be entitled to fill a vacancy pursuant to
Section 10(c) hereof.
(e) Written Consent. Notwithstanding any reference herein to
votes cast at a meeting of the Stockholders, directors may be chosen for
nomination by the Stockholders acting by written consent without a meeting and
directors may be elected by the Stockholders acting by written consent without a
meeting to the extent permitted by law, by the certificate of incorporation and
the by-laws of the Company; provided, however, that nothing in this Section
10(e) shall authorize the nomination, election or removal of directors other
than in accordance with the provisions of this Section 10.
(f) Directors Expenses. Each director of the Company (and any
observer pursuant to Section 10(j)) shall be reimbursed for his actual out of
pocket expenses incurred in attending each meeting of the Board of Directors or
any committee thereof. In addition, if any of the directors nominated by the RFE
Group pursuant to Section 10(b)(ii) is a person with
outside operating experience and not otherwise affiliated with any member of the
RFE Group, the Company will pay such director reasonable directors fees.
(g) Special Election Matters. Notwithstanding anything
contained in this Section 10 to the contrary, if an Event of Default, as defined
in the Certificate of Incorporation has occurred and not been cured, the
Stockholders shall (to the limited extent, if at all, necessary to accomplish
the following) vote all Voting Shares held by them at the time to accomplish the
nomination and election of that number of nominees of the holders of the Series
A Preferred Shares as constitute the smallest number of directors which shall
constitute a majority of the Company's Board of Directors (including, but not
limited to, voting to remove members of the Board of Directors serving prior to
such election).
(h) Committees of the Board. The Board of Directors of each of
the Company and GMH shall establish an Audit Committee and a Compensation
Committee in accordance with the By-laws of the Company and GMH and so long as
the RFE Group owns at least 10% of the issued and outstanding Voting Shares,
such committees shall include a representative of the RFE Group.
(i) GMH Board. Each of the Stockholders and the Company hereby
agrees to take such action as may be required so that the Board of Directors of
GMH is at all time identical to the Board of Directors of the Company.
(j) Equitable's Rights. So long as Equitable continues to own
at least 70% of the initial purchase percentage of the Warrants issued to it,
Equitable will have (i) the ability to have a representative attend meetings of
the Board of Directors of each of the Company and GMH as an observer, (ii) the
right to receive all materials sent to such Boards of Directors by the Company
or GMH, as applicable, (iii) the right to inspect the Company's and GMH's books
and records and, upon reasonable notice, visit the Company and GMH and (iv)
consult with management of the Company and GMH. Holders of the Warrants issued
to Equitable shall receive monthly unaudited financial statements and annually,
a copy of management's budget for the succeeding year, each at the same time as
such financial statements and budget are delivered to the Company's and GMH's
lenders.
11. Special Voting Requirements.
(a) Required Stockholder Approval While Series A Preferred
Shares are Outstanding. At any time during the term of this Agreement that
Series A Preferred Shares are outstanding, the approval by the affirmative vote
or written consent of the Stockholders holding not less than (x) 66-2/3 of all
of the issued and outstanding Series A Preferred Shares with respect to
paragraphs (ii), (iv), (vi), (vii), (viii) or (ix) below and (y) 50.1% of the
issued and outstanding Series A Preferred Shares with respect to paragraphs (i),
(iii), (v), (x), (xi), (xii) and (xiii) below shall be required to authorize any
of the following:
(i) the payment or declaration of any dividend on the Common
Shares, Series B Preferred Shares or any other equity securities (including
options or warrants) of the Company (other than the Series A Preferred
Shares) or the redemption, purchase or other acquisition for value (or the
payment into or setting aside for a sinking fund for such purpose) any of
the Common Shares, Series B Preferred Shares or any other equity securities
of the Company, or the application of any of the Company's assets to the
redemption, retirement, purchase or acquisition, directly or indirectly,
through subsidiaries or otherwise, of any of the Common Shares, Series B
Preferred Shares or other equity securities of the Company, except for (A)
redemptions of Series A Preferred Shares as provided in accordance with the
provisions of the Certificate of Incorporation, and (B) repurchases of
Common Shares pursuant to the Investors' Rights Agreement;
(ii) (A) any acquisition of the Company by means of a merger of
the Company with or into any other corporation or other entity or person or
other form of corporate reorganization in which the Company shall not be
the continuing or surviving entity of such merger or reorganization (other
than a mere reincorporation transaction) or a transaction in which the
Company is the surviving entity but the shares of the Company's capital
stock outstanding immediately prior to the transaction are exchanged or
converted by virtue of the transaction into other property, whether in the
form of securities, cash or otherwise or (B) a sale of all or substantially
all of the
assets of the Company, or in either case, any such action with respect to
any subsidiary of the Company;
(iii) the making of any loan, advance or capital contribution
to, or investment in, or permitting or causing any subsidiary of the
Company to make any loan, advance or capital contribution to, or investment
in any of the officers, directors, employees, providers, consultants,
agents or other representatives of the Company, other than (A) travel or
salary advances in the ordinary course of business in a manner consistent
with past practice, and (B) loans evidenced by promissory notes in
connection with the purchase of Common Shares under employment or
restrictive stock purchase agreements or the Investors' Rights Agreement;
(iv) any incurrence or assumption or permitting to exist of or
permitting or causing any subsidiary of the Company to incur or assume or
permit to exist any indebtedness for borrowed money (including capitalized
leases) other than the indebtedness owing to (A) First Source Financial LLP
pursuant to the terms of the Secured Credit Agreement dated as of the date
hereof by and between First Source Financial LLP and GMH, (B) Equitable
pursuant to the terms of the Note and Warrant Purchase Agreement dated as
of the date hereof by and between Equitable, the Company and GMH, and (C)
the RFE Group pursuant to the terms of the Securities Purchase Agreement
dated as of the date hereof between and among the RFE Group, the Company
and GMH in excess of $2,600,000 in the aggregate, or the issuance of any
debt securities or the assumption, guarantee, endorsement (other than in
the ordinary course of business consistent with past practice) or otherwise
as an accommodation becoming responsible for, liabilities of any other
Person;
(v) any purchase, holding or owning, or permitting or causing
any subsidiary of the Company to purchase, hold or own any capital stock,
evidence of indebtedness or other security of any subsidiary of the Company
or other corporation, partnership or other entity, unless such corporation,
partnership or other entity is a wholly owned subsidiary of the Company;
(vi) permitting or causing the Company, or any subsidiary of
the Company, to engage in any new line of business outside the
construction, manufacture, assembling, purchasing and selling all types of
manufactured buildings, structures and homes;
(vii) any authorization or issuance of any equity securities of
the Company, including any preferred stock, options or warrants to purchase
any such equity security;
(viii) any amendment or repeal of any provision of, the addition
of any provision to, or the waiver of any provision of the Company's
Certificate of Incorporation or By-Laws, or any alteration or change in the
rights, preferences, privileges or powers of, or the restrictions provided
for the benefit of, the Series A Preferred Shares, or causing or permitting
any subsidiary of the Company to do the same;
(ix) the making of any acquisition of, or loan, advance or
capital contribution to, or investment in or permitting any subsidiary of
the Company to make any acquisition of, or loan, advance or capital
contribution to, or investment in any business entity, which, individually
or together with any related series of such transactions, exceeds
$1,000,000;
(x) the making of or permitting or causing any subsidiary of
the Company to make any capital expenditures in any one fiscal year in
excess of the sum of (A) $500,000 plus (B) the difference between $500,000
and any unexpended amounts from prior years;
(xi) the entering into of any contract or transaction with an
Affiliate of the Company that does not deal at arm's length with the
Company or which exceeds $25,000 in amount, or causing or permitting any
subsidiary of the Company to do the same;
(xii) the reclassification of any shares of Common Stock or any
other shares of the Company into shares having any preference or priority
as to dividends or assets superior to or on a parity with any such
preference or priority of the Series A Preferred Stock; or
(xiii) the transfer of (A) any Shares of the Company held by any
of Xxxxxx X. Xxxxx, Xxxxxxx Xxxxx Xxxxx, Xxxx Xxxx Xxxxx or Bulldog, (B)
any membership interests in Bulldog held by SIHI-GMH LLC or (C) any
membership interest in SIHI-GMH LLC held by either Xxxx X. Xxxxx or Xxxxxx
X. Xxxxxx, in each case in excess of 10% of the Shares or membership
interests originally held by them, in any transaction or series of
transactions, except for (I) transfers to Related Transferees (or Persons
who would be Related Transferees of SIHI-GMH LLC, Xxxx X. Xxxxx or Xxxxxx
X. Xxxxxx if they were parties to this Agreement) and (II) transfers by
Bulldog to the RFE Group pursuant to the Investors Rights Agreement in any
transaction or series of transactions.
(b) Required Stockholder Approval After Series A Preferred Shares are
Redeemed. At any time during the term of this Agreement that there are no Series
A Preferred Shares outstanding, the approval by the affirmative vote or written
consent of the Stockholders holding not less than 70% of all of the issued and
outstanding Voting Shares shall be required to authorize any of the following:
(i) the repurchase or redemption of any of the Shares;
(ii) any amendment of the Certificate of Incorporation or By-Laws of
the Company or any consent by the Company to any amendment of the Certificate of
Incorporation or By-Laws of GMH;
(iii) any authorization of or any issuance of any authorized but
unissued capital stock of the Company, except the issuance of Securities upon
the exercise of the Warrants or upon conversion of any Series B Preferred
Shares;
(iv) any sale of the Company's entire interest in GMH;
(v) the sale, lease or exchange of all or substantially all of the
Company's assets or any consent by the Company to any sale, lease or exchange by
GMH of all or substantially all of the assets of GMH;
(vi) any merger or consolidation of the Company or GMH with or into
any other corporation;
(vii) the dissolution of the Company or GMH;
(viii) the adoption of a plan of liquidation of the Company or GMH;
(ix) any action by the Company to commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction relating
to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have
an order for relief entered with respect to it or GMH, or seeking to adjudicate
it or GMH a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding up, liquidation, dissolution, composition or other relief
with respect to it or GMH or its or GMH's debts, or (B) seeking appointment of a
receiver, trustee, custodian or other similar official for it or GMH or for all
or any substantial part of its or GMH's assets, or making a general assignment
for the benefit of its or GMH's creditors;
(x) any recapitalization of the Company or GMH; or
(xi) except as provided in the Registration Rights Agreement, any
public offering of securities of the Company or any consent by the Company to
GMH authorizing any public offering of securities of GMH.
(c) Any of the actions described in Section 11(b) above are herein
referred to as a "Fundamental Change".
(d) For purposes of Section 11(a), as to any matter set forth therein
which requires the approval or consent of the Stockholders holding not less than
66-2/3% of all of the issued and outstanding Series A Preferred Shares, such
matter shall be deemed approved or consented to unless the Company shall have
received written notice from the requisite percentage of holders of Series A
Preferred Shares that they do not approve or consent to such matter within ten
(10) Business Days after the holders of the Series A Preferred Shares have
received a written request from the Company asking for such approval or consent.
12. Share and Warrant Certificates.
(a) Restrictive Endorsement. Each certificate representing
Securities now or hereafter held by a Stockholder shall be stamped with legends
in substantially the following form:
"THE SHARES [WARRANTS] REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO A STOCKHOLDERS' AGREEMENT DATED AS OF
DECEMBER __, 1995, COPIES OF WHICH ARE AVAILABLE AT THE
OFFICE OF THE COMPANY AND MAY BE INSPECTED BY ANY
PROSPECTIVE TRANSFEREE OF THE SHARES [WARRANTS]
REPRESENTED HEREBY ON REQUEST. SUCH STOCKHOLDERS'
AGREEMENT PROVIDES, AMONG OTHER THINGS, FOR CERTAIN
RESTRICTIONS ON THE SALE, ASSIGNMENT, TRANSFER, PLEDGE,
HYPOTHECATION, MORTGAGE, CHARGE, LIEN, ENCUMBRANCE,
GIFT, BEQUEST, TRANSMISSION OR OTHER DISPOSITION OF THE
SHARES [WARRANTS] REPRESENTED BY THIS CERTIFICATE."
THE SALE AND ISSUANCE OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER THE SECURITIES LAW OF ANY STATE OR OTHER
JURISDICTION. THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION
WITH, THE DISTRIBUTION THEREOF. THESE SECURITIES MAY
NOT BE OFFERED, SOLD, PLEDGED, OR TRANSFERRED UNLESS
(I) A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT
AS TO THESE SECURITIES AND SUCH OFFER, SALE, PLEDGE, OR
TRANSFER IS IN COMPLIANCE WITH APPLICABLE SECURITIES
LAW OF ANY STATE OR OTHER JURISDICTION OR (II) THERE IS
AN OPINION OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY
TO THE CORPORATION, THAT AN EXEMPTION THEREFROM IS
AVAILABLE AND THAT SUCH OFFER, SALE, PLEDGE, OR
TRANSFER IS IN COMPLIANCE WITH APPLICABLE SECURITIES
LAW OF ANY STATE OR OTHER JURISDICTION.
Each Stockholder agrees that he or it will deliver all certificates for
Securities owned by him or it to the Company for the purpose of affixing such
legend thereto.
(b) Replacement Certificates. Upon presentation of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any certificate representing Securities and indemnity agreement
reasonably satisfactory to the Company, and upon reimbursement to the Company of
all its reasonable expenses incident thereto, and upon surrender of such
certificate or instrument, if mutilated, to the Company, each Stockholder agrees
to use his or its best efforts to cause the Company deliver a new certificate of
like tenor in lieu of such lost, stolen, destroyed or mutilated certificate.
13. No Default. Notwithstanding anything to the contrary contained
in this agreement, none of the Stockholders shall take any action hereunder
which would cause the Company or any of its subsidiaries or Affiliates to breach
any material agreement to which the Company, such subsidiary or Affiliate is a
party.
14. Preemptive Rights.
(a) In the event that the Company should determine to (i)
authorize and issue any shares of its capital stock or other equity securities
(other than securities issued (A) pursuant to the conversion of the Series B
Shares, (B) pursuant to the exercise of the Warrants, (C) pursuant to the
acquisition of another corporation by the Company or issued in connection with
any merger, consolidation, combination, purchase of all or substantially all of
the assets or other reorganization which has been approved by the Board of
Directors of the Company and the Stockholders in accordance with the provisions
of this Agreement, (D) pursuant to any rights or agreements, including without
limitation convertible securities, provided that the rights established by this
Section 14 apply with respect to the initial sale or grant by the Company of
such rights or agreements (other than the rights or agreements described in
clause (F) below), (E) in connection with any stock split, stock dividend or
recapitalization of the Company, (F) to employees, consultants, officers or
directors of the Company pursuant to any stock option, stock purchase or stock
bonus plan, agreement or arrangement for the primary purpose of soliciting or
retaining such employees, consultants, officers or directors services and which
are outstanding on the date hereof or are hereafter approved by the Board of
Directors and the Stockholders in accordance with the terms of this Agreement,
and (G) in a firm commitment underwritten public offering
pursuant to an effective registration statement under the Securities Act,
covering the offer and sale of securities for the account of the Company and/or
selling shareholders to the public) or (ii) to reissue any treasury shares
previously acquired by the Company, then the Company shall notify each
Stockholder holding Voting Shares and each Warrant holder of such proposed
offering and the price thereof, and for a period of 30 days after such notice,
each such Stockholder and Warrant holder may purchase a pro rata (in accordance
with the percentage of Voting Shares then held by such Stockholder and Warrant
holder) amount of the shares being offered by delivery of the purchase price
therefor to the Company. If any Stockholder or Warrant holder does not accept
the offer to purchase all of his or its pro rata share of the shares being
offered, the Company shall make one or more additional offers of the remainder
of such shares to Stockholders or Warrant holders who have agreed to purchase
all of the shares previously offered. Such additional offer or offers shall be
made for a period of 10 days to each of such Stockholders and Warrant holders in
the same ratio that the amount of shares which such Stockholder or Warrant
holder has agreed to purchase bears to the total amount of shares which all
Stockholders and Warrant holders to which such additional offer or offers are
made have agreed to purchase. Any shares not so purchased may be sold by the
Company to a third party who agrees to be bound by the terms of this Agreement
and who shall become a Stockholder hereunder.
(b) For purposes of any calculation of the number of shares of
Voting Shares held or outstanding under this Section 14, the conversion of all
securities convertible into or exchangeable for Voting Shares and the exercise
of all outstanding rights, options and warrants to acquire Voting Shares shall
be assumed.
15. Registration Rights. The Stockholders shall have the registration
rights set forth on Exhibit B hereto.
16. Miscellaneous.
(a) Notices. Wherever this Agreement provides for notice to any
party (except as expressly provided to the contrary), it shall be given in
writing by messenger, electronic transmission, telegraph, telex or postage
prepaid, registered or recorded delivery, air mail letter sent to the address
set forth under each Stockholder's name at the foot of this Agreement, or to
such other address as the party affected may hereafter designate in writing to
the Company and all other Stockholders; together with a copy to the Company at
the address set forth at the foot of this Agreement. Any such notice shall be
effective when received by the party to whom addressed; provided that if given
or made by postage prepaid, registered or recorded delivery, airmail letter or
by telegraph or telex, it shall be deemed to have been received at the earlier
of (i) when actually received or (ii) five (5) business days after the same was
posted or sent (and in proving such it shall be sufficient to prove that the
envelope containing the same was properly addressed and posted as aforesaid or
sent), and provided that if given or made by telegraph or telex, it shall be
deemed to have been received at the time of dispatch.
(b) Termination; Amendment. This Agreement (i) may be terminated
or amended at any time by the written consent of the Company and the holders of
seventy percent (70%) of the Voting Shares and notice of such to the Company and
all Stockholders, provided that no amendment that adversely affects the interest
of any Stockholder shall be effective against such Stockholder absent such
Stockholder's prior written consent, and (ii) shall be terminated (A) upon the
consummation of (1) a registered public offering of the Common Shares or (2) a
Fundamental Change of the type described in Section 11(b)(iv), (vi), (vii),
(viii) or (ix) of this Agreement or (B) ten years from the date hereof, unless,
at anytime within two years prior to any date upon which termination would occur
under this clause (B), all of the parties extend its duration for an additional
period, not to exceed ten years.
(c) Waiver. No failure or delay on the part of the Stockholders
or any of them in exercising any right, power or privilege hereunder, and no
course of dealing between the Stockholders or any of them shall operate as a
waiver thereof nor shall any single or partial exercise of any right, power or
privilege hereunder preclude the simultaneous or later exercise of any other
right, power or privilege. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which the Stockholders or
any of them would otherwise have. No notice to or demand in any case shall
entitle the recipient thereof to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the
Stockholders or any of them to take any other or further action in any
circumstances
without notice or demand.
(d) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
(e) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware.
(f) Benefit and Binding Effect. Except as expressly contemplated
herein, this Agreement may not be assigned or transferred. This Agreement shall
be binding upon and shall inure to the benefit of the Company and each of the
Stockholders and their respective executors, administrators and personal
representatives and heirs and their permitted successors and assigns hereunder
and shall be binding upon their successors and assigns. In the event that any
part of this Agreement shall be held to be invalid or unenforceable, the
remaining parts thereof shall nevertheless continue to be valid and enforceable
as though the invalid portions were not a part hereof.
(g) Further Assurances. Each party hereto agrees to use its best
efforts to take, and to use its best efforts to cause the Company to take, any
action which may be reasonably requested by any other party hereto in order to
effectuate or implement the provisions of this Agreement; provided that no party
shall be required to take any requested action or cause the Company to take any
requested action not specifically required under this Agreement if such
requested action might adversely affect the interest of such party or the
Company.
(h) Specific Performance. Due to the fact that the Securities
cannot be readily purchased or sold in the open market, and that legal remedies
may be inadequate to enforce this Agreement, the parties will be irreparably
damaged in the event that this Agreement is not specifically enforced. In the
event of a breach or threatened breach of the terms, covenants and/or conditions
of this Agreement by any of the parties hereto, the other parties shall, in
addition to all other remedies, be entitled to a temporary or permanent
mandatory injunction, or any appropriate decree of specific performance, without
any bond or security being required and without being required to show any
actual damage or that monetary damages would not provide an adequate remedy.
(i) Voting Percentages. Whenever any provision in this Agreement
provides for a specified percentage of Voting Shares to authorize or approve any
action, such percentage shall be calculated as if all Warrants had been
exercised and all shares convertible into Voting Shares had been converted. In
addition, each member of the RFE Group hereby grants to Bulldog the right to
vote 29.1667% of the Series B Preferred Shares and/or Class C Common Shares held
by it as if it were the record and beneficial owner thereof; provided, however,
that the rights granted to Bulldog under this sub-paragraph (i) shall not affect
the calculation of the number of Voting Shares owned by any member of the RFE
Group for purposes of any other provision of this Agreement; and provided,
further, that if Bulldog distributes the Series B Preferred Shares or Class C
Common Shares owned by it, the voting rights granted in this sub-paragraph (i)
shall cease to apply .
IN WITNESS WHEREOF, the parties hereto have signed this Agreement
as of the day and year first above written.
GMH HOLDINGS INC.
By: /s/ Xxxx X. Xxxxx
__________________________________
Name: Xxxx X. Xxxxx
Title: President
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
A STOCKHOLDERS:
BULLDOG HOLDINGS LLC
By: /s/ Xxxx X. Xxxxx
_________________________________
Name: Xxxx X. Xxxxx
Title: President
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
RFE INVESTMENT PARTNERS, V, L.P.
By: RFE Associates V, L.P., general partner
By: _________________________________
Name:
Title: General Partner
00 Xxxxx Xxxxxx
Xxx Xxxxxx, Xxxxxxxxxxx 00000
STERLING COMMERCIAL CAPITAL, INC.
By: _________________________________
Name: Xxxxxx Xxxxxxxxxx
Title: Executive Vice-President
000 Xxxxx Xxxx Xxxx
Xxxxx Xxxx, Xxx Xxxx 00000
STATE TREASURER OF THE STATE OF MICHIGAN,
CUSTODIAN OF THE MICHIGAN PUBLIC SCHOOL
EMPLOYEES' RETIREMENT SYSTEM, STATE EMPLOYEES
RETIREMENT SYSTEM, MICHIGAN STATE POLICE
RETIREMENT SYSTEM, AND MICHIGAN JUDGES'
RETIREMENT SYSTEM
By: _________________________________
Xxxx X. Xxxx
Administrator
Alternate Investments Division
000 Xxxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE
UNITED STATES
By: _________________________________
Name:
Title:
000 0xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
_____________________________________
Xxxxxx X. Xxxxx, Xx.
000 Xxxxx Xxxx
Xxxxxxxxxxx, Xxx Xxxx 00000
_____________________________________
Xxxxxx X. Xxxxxxx
00 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
_____________________________________
Xxxx X. Xxxxxxx
000 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
_____________________________________
Xxxxxx X. Xxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
B STOCKHOLDERS:
_____________________________________
Xxxxxx X. Xxxxx
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxx Xxxxx, XX 00000
_____________________________________
Xxxxx Xxxxx Xxxxxx, as Trustee
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
_____________________________________
Xxxxxxx Xxxxx Xxxxx
0000-X Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxx Xxxxx, XX 00000
_____________________________________
Drew Xxxx Xxxxx
0000-X Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxx Xxxxx, XX 00000
_____________________________________
Xxxxx Xxxxxxx
0000 Xxxxxxxxxx Xxxx.
Xxxxxxxx, XX 00000
_____________________________________
Xxxxxx Xxxxxx
0000 Xxxxxxxxxx Xxxx.
Xxxxxxxx, XX 00000
_____________________________________
Xxxxxx X. Xxxxxx
0000 Xxxxxxxxxx Xxxx.
Xxxxxxxx, XX 00000
_____________________________________
Xxxxx Xxxxxxx
0000 Xxxxxxxxxx Xxxx.
Xxxxxxxx, XX 00000
_____________________________________
Xxxxxxx X'Xxxxxx
0000 Xxxxxxxxxx Xxxx.
Xxxxxxxx, XX 00000
_____________________________________
Xxxxx Xxxxx
0000 Xxxxxxxxxx Xxxx.
Xxxxxxxx, XX 00000
_____________________________________
Xxxxx X. XxXxxxxxx
0000 Xxxxxxxxxx Xxxx.
Xxxxxxxx, XX 00000
EXHIBIT A
SCHEDULE OF STOCKHOLDERS
STOCKHOLDER NUMBER OF SHARES GROUP
SERIES A SERIES B CLASS A CLASS B CLASS C
PREFERRED PREFERRED COMMON COMMON COMMON WARRANTS
Bulldog Holdings LLC 1,400,000 A
RFE Investments
Partners V, L.P. 4,690,351 439,720 714,546 A
State Treasurer of
the State of
Michigan,
Custodian 3,076,922 288,462 468,750 A
Sterling Commercial
Capital, Inc. 232,727 21,818 35,454 A
The Equitable Life
Assurance Society of
the United States 350,000 A
Xxxxxx X. Xxxxxx 54,687 A
Xxxx X. Xxxxxxx 54,687 A
Xxxxxx X. Xxxxxxx 54,688 A
Xxxxxx X. Xxxxx 54,688 A
Xxxxxx X. Xxxxx 92,749 B
Xxxxx Xxxxx Xxxxxx,
as Trustee 71,167 B
Xxxxxxx Xxxxx Xxxxx 71,167 B
Drew Xxxx Xxxxx 71,167 B
Xxxxxx Xxxxxx 28,000 B
Xxxxx Xxxxxxx 28,000 B
Xxxxxx X. Xxxxx 21,000 B
Xxxxx Xxxxxxx 14,000 B
Xxxxxxx X'Xxxxx 14,000 B
Xxxxx Xxxxx 13,125 B
Xxxxx X. XxXxxxxx 13,125 B
_________ _________ _________ _________ _________ _______
TOTAL 8,000,000 2,150,000 1,656,250 0 0 568,750
EXHIBIT B
REGISTRATION RIGHTS
REGISTRATION RIGHTS
1. Definitions. Capitalized terms used without definition in
this Exhibit B shall have the meanings set forth in the Stockholders' Agreement
to which this Exhibit B is attached. The following terms shall have the
following respective meanings:
Commission: the Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act or the
Exchange Act, whichever is the relevant statute for the particular purpose.
Equitable Initiating Holders: any holder or holders of more
than 50% of the Warrants.
Exchange Act: the Securities Exchange Act of 1934, or any
similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time of determination.
Initiating Holders: each of (a) The Equitable Initiating
Holders and (b) the RFE Initiating Holders, together with their successors and
permitted assigns.
IPO: the issuance by the Company in a Public Offering under
the Act of a number of shares of Common Stock such that, after giving effect to
such Public Offering, there shall be outstanding pursuant to one or more such
Public Offerings shares of Common Stock equal to at least 20% of the capital
stock of the Company on a fully-diluted basis.
Other Securities: any stock (other than Common Stock) and
other securities of the Company or any other Person (corporate or otherwise)
which the holders of the Warrants at any time shall be entitled to receive, or
shall have received, upon the exercise of the Warrants, in lieu of or in
addition to Common Stock, or which at any time shall be issuable or shall have
been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 3 of the Warrant Agreement or otherwise.
Public Offering: any offering of Common Stock or Other
Securities, or any securities issued or issuable with respect to any Common
Stock or Other Securities by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise, in each case to the public pursuant to an
effective registration statement under the Act.
Registrable Securities: (a) any shares of Common Stock
issued and outstanding as of the date hereof, (b) the Warrants, (c) any shares
of Common Stock or Other Securities issued or issuable upon exercise of the
Warrants or upon conversion of the Series B Preferred Shares and (d) any
securities issued or issuable with respect to any Common Stock or Other
Securities referred to in subdivision (c) by way of stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise. As to any particular
Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (x) a registration statement with respect
to the sale of such securities shall have become effective under the Securities
Act and such securities shall have been disposed of in accordance with such
registration statement, (y) they shall have been sold as permitted under Rule
144 (or any successor provision) under the Securities Act, or (z) they shall
have ceased to be outstanding.
Registration Expenses: all expenses incident to the
Company's performance of or compliance with the provisions of this Exhibit B,
including, without limitation, all registration, filing and NASD fees, all fees
and expenses of complying with securities or blue sky laws, all word processing,
duplicating and printing expenses, messenger and delivery expenses, the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and compliance, the
reasonable fees and disbursements of a single counsel and single firm of
accountants retained by the holders of the Registrable Securities being
registered, premiums and other costs of policies of insurance against
liabilities arising out of the public offering of the Registrable Securities
being registered and any fees and disbursements of underwriters customarily paid
by issuers or sellers of securities, but excluding underwriting discounts,
commissions, transfer taxes and any other compensation paid to underwriters or
other agents or brokers to effect the sale, if any, provided that, in any case
where Registration Expenses are not to be borne by the Company, such expenses
shall not include salaries of Company personnel or general overhead expenses of
the Company, auditing fees, premiums or other expenses relating to liability
insurance required by underwriters of the Company, or other expenses for the
preparation of financial statements or other data normally prepared by the
Company in the ordinary course of its business or which the Company would have
incurred in any event.
Requesting Holder: the meaning in paragraph 7.
RFE Initiating Holders: RFE and Michigan.
Warrant Agreement: the Common Stock Purchase Warrant
expiring December 21, 2002 issued by the Company.
Warrants: the meaning specified in the opening paragraph of
the Warrant Agreement.
2. Registration on Request.
(a) Request. At any time and from time to time after the
180th day following the consummation of an IPO, upon the written request of one
or more Initiating Holders, requesting that the Company effect the registration
under the Securities Act of all or part of such Initiating Holders' Registrable
Securities and specifying the intended method of disposition thereof, the
Company will promptly give written notice of such requested registration to all
holders of outstanding Registrable Securities, and thereupon will use its best
efforts to effect its registration under the Securities Act of:
(i) the Registrable Securities which the Company has been
so requested to register by such Initiating Holder or Holders for
disposition in accordance with the intended method of disposition
stated in such request; and
(ii) all other Registrable Securities the Holders of which
have made written requests to the Company for registration thereof
within 20 Business Days after the giving of such written notice by the
Company (which request shall specify the intended method of
disposition thereof),
all to the extent required to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities so to be
registered; provided that the Company shall not be required to effect the
registration pursuant to this Section 2 of any Warrants (but shall be required
to effect the registration of Registrable Securities described in clauses (b)
and (c) of the definition of Registrable Securities), and provided, further,
that any holder of Registrable Securities to be included in any such
registration, may, by written notice to the Company within 10 Business Days
after its receipt of a copy of a notice from the managing underwriter delivered
pursuant to paragraph (g) below, withdraw such request and, on receipt of such
notice of the withdrawal of such request
from holders comprising at least a majority of the holders of Registrable
Securities to be included in such registration, the Company may elect not to
effect such registration. Subject to paragraph (g) below, the Company may
include in such registration other securities for sale for its own account or
for the account of any other Person.
(b) Number of Registrations. The Company shall not be
required to effect more than two registrations for the RFE Initiating Holders
and two registrations for the Equitable Initiating Holders pursuant to this
Section 2, provided that such registrations, taken together, shall permit the
disposition of at least 80% of the Registrable Securities which the Company has
been so requested to register, and provided, further, that if two such
registrations shall not permit the disposition of at least 80% of such
Registrable Securities, the Company shall be required to effect additional
registrations pursuant to this Section 2 until they have permitted the
disposition of at least 80% of such Registrable Securities.
(c) Registration Statement Form. Registrations under this
Section 2 shall be on such appropriate registration form of the Commission (i)
as shall be selected by the Company and as shall be acceptable to at least a
majority of the holders of Registrable Securities to be included in such
registration and (ii) as shall permit the disposition of the Registrable
Securities which the Company has been requested to register under this Section 2
in accordance with the intended method or methods of disposition specified in
the request for their registration. The Company may, if permitted by law, effect
any registration requested under this Section 2 by the filing of a registration
statement on Form S-3 (or any successor or similar short form registration
statement) unless the holders holding at least a majority (by number of shares)
of the Registrable Securities as to which such registration relates (and, if
such registration involves an underwritten Public Offering of such Registrable
Securities, the managing underwriter of such Public Offering) shall notify the
Company in writing that, in the judgment of such holders (and, if applicable,
such managing underwriter), the use of a more detailed form specified in such
notice is of material importance to the success of the Public Offering of such
Registrable Securities, in which case such registration shall be effected on the
form so specified. Upon the request of at least a majority of the holders of
Registrable Securities, registration under this Section 2 shall be by means of a
shelf registration pursuant to Rule 415 under the Securities Act (but only if
the Company is then eligible to use Form S-2 or S-3 (or any successor forms)).
(d) Expenses. The Company will pay all Registration
Expenses in connection with the first two registrations for each of the RFE
Initiating Holders and the Equitable Initiating Holders effected pursuant to
this Section 2, and, if such registrations, taken together, shall not permit the
disposition of at least 80% of the Registrable Securities which the Company has
been requested to register under this Section 2, the Company will pay all
Registration Expenses in connection with each additional registration pursuant
to this Section 2 until such registrations, taken together, shall have permitted
the disposition of at least 80% of such Registrable Securities.
(e) Selection of Underwriters. If, in the discretion of the
holders of a majority (by number of shares) of the Registrable Securities, any
offering pursuant to this Section 2 shall constitute an underwritten offering,
the underwriter or underwriters thereof shall be selected, after consultation
with such holders, by the Company and shall be acceptable to the holders of at
least a majority of the holders of Registrable Securities to be included in such
offering, who shall not unreasonably withhold their acceptance of such
underwriter or underwriters.
(f) Effective Registration Statement. A registration
requested pursuant to this Section 2 will not be deemed to have been effected
and a demand shall not be deemed to have been made (i) unless it has become
effective, (ii) if the registration does not remain effective for a period of at
least 120 days (or, with respect to any registration statement filed pursuant to
Rule 415 under the Securities Act, for a period of at least 2 years) or, if
earlier, until all the Registrable Securities requested to be registered in
connection therewith were sold, (iii) if, after it has become effective, such
registration is interfered with by any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court, or (iv) if
the conditions to closing specified in the purchase agreement or underwriting
agreement entered into in connection with such registration are not satisfied
other than by reason of some act or omission by such Initiating Holders.
(g) Priority in Requested Registrations. If a requested
registration pursuant to this Section 2 involves an underwritten offering, and
the managing underwriter shall advise the Company in writing (with a copy to
each holder of Registrable Securities requesting registration) that, in its
opinion, the number of securities requested to be included in such registration
(including securities of the Company which are not Registrable Securities)
exceeds the number which can be sold in such offering, the Company will include
in any such registration to the extent of the number which the Company is so
advised can be sold in such offering (i) first, Registrable Securities requested
to be included in such registration by the holder or holders of Registrable
Securities who are Initiating Holders, pro rata among such holders on the basis
of the number of Registrable Securities requested to be included by such
holders, and (ii) second, other securities of the Company proposed to be
included in such registration, in accordance with the priorities, if any, then
existing among the Company and the holders of such other securities.
3. Incidental Registration.
(a) Right to Include Registrable Securities.
Notwithstanding any limitation contained in Section 2, if the Company at any
time proposes to register any of its securities under the Securities Act (other
than by a registration on Form S-4 or S-8 or any successor or similar forms),
whether or not for sale for its own account, in a manner which would permit
registration of Registrable Securities for sale to the public under the
Securities Act, each such time, it will give prompt written notice to all
holders of Registrable Securities of its intention to do so and of such holders'
rights under this Section 3. Upon the written request of any such holder made
within 20 days after receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such holder and the
intended method of disposition thereof), the Company will use its best efforts
to effect the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by the holders
thereof, to the extent requisite to permit the disposition (in accordance with
the intended methods thereof as aforesaid) of the Registrable Securities so to
be registered, by inclusion of such Registrable Securities in the registration
statement which covers the securities which the Company proposes to register,
provided that (i) the Company shall not be required to effect the registration
pursuant to this Section 3 of any Warrants (but shall be required to effect the
registration of Registrable Securities described in clauses (b) and (c) of the
definition of Registrable Securities) and (ii) if, at any time after giving
written notice of its intention to register any securities and prior to the
effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register or to
delay registration of such securities, the Company may, at its election, give
written notice of such determination to each holder of Registrable Securities
and, thereupon, (x) in the case of a determination not to register, shall be
relieved of its obligation to register any Registrable Securities in connection
with such registration (but not from its obligation to pay the Registration
Expenses in connection therewith), without prejudice, however, to the rights of
any holder or holders of Registrable Securities entitled to request that such
registration be effected as a registration under Section 2, and (y) in the case
of a determination to delay registering, shall be permitted to delay registering
any Registrable Securities for the same period as the delay in registering such
other securities. No registration effected under this Section 3 shall relieve
the Company of its obligation to effect any registration statement upon request
under Section 2. The Company will pay all Registration Expenses in connection
with each registration of Registrable Securities requested pursuant to this
Section 3.
(b) Priority in Incidental Registrations. If a registration
pursuant to this Section 3 involves an underwritten offering and the managing
underwriter advises the Company in writing that, in its opinion, the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering, the Company will include in such
registration, to the extent of the number which the Company is so advised can be
sold in such offering, securities determined as follows:
(i) if such registration as initially proposed by the
Company was solely a primary registration of its securities, (x)
first, the securities proposed by the Company to be sold for its own
account, (y) second, any Registrable Securities requested to be
included in such registration, pro rata among the holders thereof
requesting such registration on the basis of the number of shares of
Registrable Securities requested to be included by such holders and
(z) third, any other securities of the Company proposed to be included
in such registration, pro rata among the holders thereof requesting
such registration on the basis of the number of shares of such
securities requested to be included by such holders; and
(ii) if such registration as initially proposed by the
Company was in whole or in part requested by holders of securities of
the Company, other than holders of Registrable Securities, pursuant to
Section 2 hereof, such securities held by the holders initiating such
registration, any Registrable Securities requested to be included in
such registration, and any other securities of the Company proposed to
be included in such registration, pro rata among the holders thereof
requesting such registration on the basis of the number of shares of
such securities requested to be included by such holders.
4. Registration Procedures. If and whenever (a) the
Company is required to use its best efforts to effect the registration of any
Registrable Securities under the Securities Act as provided in Sections 2 and 3
or (b) there is a Requesting Holder in connection with any other proposed
registration by the Company under the Securities Act, the Company will as
expeditiously as possible:
(i) prepare and file with the Commission the requisite
registration statement (including such audited financial statements as
may be required by the Securities Act or the rules and regulations
promulgated thereunder) to effect such registration and use its best
efforts to cause such registration statement to become effective,
provided that before filing such registration statement or any
amendments thereto, the Company will furnish to the counsel selected
by the holders of Registrable Securities whose Registrable Securities
are to be included in such registration copies of all such documents
proposed to be filed, which documents will be subject to the review of
such counsel, and provided, further, that the Company may discontinue
any registration of its securities which are not Registrable
Securities at any time prior to the effective date of the registration
statement relating thereto;
(ii) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to maintain the
effectiveness of such registration statement and to comply with the
provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement until the
earlier of (A) such time as all of such securities have been disposed
of in accordance with the intended methods of disposition by the
seller or sellers thereof set forth in such registration statement and
(B) the expiration of 120 days after such registration statement
becomes effective, except with respect to any such registration
statement filed pursuant to Rule 415 (or any successor Rule) under the
Securities Act, in which case such period shall be 2 years;
(iii) furnish to each seller of Registrable Securities
covered by such registration statement and each Requesting Holder such
number of conformed copies of such registration statement and of each
such amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus contained in such
registration statement (including each preliminary prospectus and any
summary prospectus) and any other prospectus filed under Rule 424
under the Securities Act, in conformity with the requirements of the
Securities Act, and such other documents, as such seller may
reasonably request;
(iv) use its best efforts to register or qualify all
Registrable Securities and other securities covered by such
registration statement under such other securities or blue sky laws of
such jurisdictions as each seller thereof and each Requesting Holder
shall reasonably request, to keep such registration or qualification
in effect for so long as such registration statement remains in
effect, and take any other action which may be reasonably necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of the securities owned by such seller, except that the
Company shall not for any such purpose be required to qualify
generally to do business as a foreign corporation in any jurisdiction
wherein it would not but for the requirements of this subdivision (iv)
be obligated to be so qualified or to consent to general service of
process in any such jurisdiction;
(v) use its best efforts to cause all Registrable
Securities covered by such registration statement to be registered
with or approved by such other governmental agencies or authorities as
may be necessary to enable the seller or sellers thereof to consummate
the disposition of such Registrable Securities;
(vi) furnish to each seller of Registrable Securities and
each Requesting Holder a signed counterpart, addressed to such seller
(and the underwriters, if any), of
(A) an opinion of counsel for the Company, dated the
effective date of such registration statement (and, if such
registration includes an underwritten Public Offering, dated the
date of any closing under the underwriting agreement), reasonably
satisfactory in form and substance to such seller, and
(B) a "comfort" letter, dated the effective date of
such registration statement (and, if such registration includes
an underwritten Public Offering, dated the date of any closing
under the underwriting agreement), signed by the independent
public accountants who have certified the Company's financial
statements included in such registration statement,
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in
the case of the accountants' letter, 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' letters delivered
to the underwriters in underwritten Public Offerings of securities
and, in the case of the accountants' letter, such other financial
matters, as such seller (or the underwriters, if any) may reasonably
request;
(vii) immediately notify each seller of such Registrable
Securities, and (if requested by any such seller) confirm such advice
in writing, (A) when the prospectus or any prospectus supplement or
post-effective amendment has been filed, and, with respect to the
registration statement or any post-effective amendment, when the same
has become effective, (B) of any request by the Commission for
amendments or supplements to the registration statement or the
prospectus or for additional information, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of the
registration statement or the initiation of any proceedings for that
purpose and (D) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose;
(viii) use its best efforts to obtain the withdrawal of any
order suspending the effectiveness of the registration statement at
the earliest possible time;
(ix) immediately notify each holder of Registrable
Securities covered by such registration statement and each Requesting
Holder, at any time when a prospectus relating thereto is required to
be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were
made, and at the request of any such holder promptly prepare and
furnish to such seller a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light
of the circumstances under which they were made;
(x) otherwise comply with all applicable rules and
regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months, but not more than
eighteen months, beginning with the first full calendar month after
the effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act, and not file any amendment or supplement to such
registration statement or prospectus to which any such seller or any
Requesting Holder shall have reasonably objected on the grounds that
such amendment or supplement does not comply in all material respects
with the requirements of the Securities Act or of the rules or
regulations thereunder, having been furnished with a copy thereof at
least five business days prior to the filing thereof;
(xi) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration
statement not later than the effective date of such registration
statement;
(xii) cooperate with the sellers of such Registrable
Securities to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold, which
securities shall not bear any restrictive legends and shall be in a
form eligible for deposit with The Depository Trust Company; and
enable such Registrable Securities to be in such denominations and
registered in such names as such sellers may request at least two
Business Days prior to any sale of Registrable Securities;
(xiii) use its best efforts (A) to cause all such
Registrable Securities covered by such registration statement to be
listed on a national securities exchange (if such Registrable
Securities are not already so listed) and on each additional national
securities exchange on which similar securities issued by the Company
are then listed, if the listing of such Registrable Securities is then
permitted under the rules of such exchange, or (B) to secure
designation of all such Registrable Securities covered by such
registration statement as a NASDAQ "national market system security"
within the meaning of Rule 11Aa2-1 of the Commission or, failing that,
secure NASDAQ authorization for such Registrable Securities and,
without limiting the generality of the foregoing, to arrange for at
least two market makers to register as such with respect to such
Registrable Securities with the NASD;
(xiv) provide a CUSIP number for all Registrable Securities,
not later than the effective date of the applicable registration
statement; and
(xv) enter into such agreements and take such other actions
as the Requisite Holders shall reasonably request in order to expedite
or facilitate the disposition of such Registrable Securities.
The Company may require each holder of Registrable Securities as to which any
registration is being effected to furnish the Company such information regarding
such holder and the distribution of such securities as the Company may from time
to time reasonably request in writing.
5. Underwritten Offerings.
(a) Requested Underwritten Offerings. If requested by the
underwriters for any underwritten offering by holders of Registrable
Securities pursuant to the registration requested under Section 2, the Company
will enter into an underwriting agreement with such underwriters for such
offering, such agreement to be satisfactory in substance and form to each such
holder and the underwriters and to contain such representations and warranties
by the Company and such other terms as are customarily contained in agreements
of this type, including, without limitation, indemnities to the effect and to
the extent provided in Section 8. The holders of Registrable Securities to be
distributed by such underwriters shall be parties to such underwriting agreement
and may, at their option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters shall also be made to and for the benefit of
such holders of Registrable Securities and that any or all of the conditions
precedent to the obligations of such underwriters under such underwriting
agreement be conditions precedent to the obligations of such holders of
Registrable Securities. No holder of Registrable Securities shall be required
(i) to make any representations or warranties to or agreements with the Company
or the underwriters other than representations, warranties or agreements
regarding such holder and such holder's intended method of distribution and any
other representation required by law or (ii) to indemnify (or to contribute with
respect to an indemnifiable claim) the Company or any underwriters of the
Registrable Securities, except as set forth in Section 8.
(b) Incidental Underwritten Offerings. If the Company at
any time proposes to register any of its securities under the Securities Act as
contemplated by Section 3 and such securities are to be distributed by or
through one or more underwriters, the Company will, subject to the provisions of
Section 3(b), use its best efforts, if requested by any holder of Registrable
Securities, to arrange for such underwriters to include the Registrable
Securities to be offered and sold by such holder among the securities to be
distributed by such underwriters. The holders of Registrable Securities to be
distributed by such underwriters shall be parties to the underwriting agreement
between the Company and such underwriters and may, at their option, require that
any or all of the representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such underwriters shall also
be made to and for the benefit of such holders of Registrable Securities and
that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to the
obligations of such holders of Registrable Securities. No holder of Registrable
Securities shall be required (i) to make any representations or warranties to or
agreements with the Company or the underwriters other than representations,
warranties or agreements regarding such holder and such holder's intended method
of distribution and any other representation required by law or (ii) to
indemnify (or to contribute with respect to an indemnifiable claim) the Company
or any underwriters of the Registrable Securities, except as set forth in
Section 8.
(c) Holdback Agreements.
(i) Each holder of Registrable Securities agrees, if so
required by the managing underwriter, not to effect any public sale or
distribution of securities of the Company of the same class as the
securities included in such Registration Statement, during the seven
days prior to the date on which any underwritten registration pursuant
to Section 2 or 3 has become effective and the 90 days thereafter,
except as part of such underwritten registration or to the extent that
such holder is prohibited by applicable law from agreeing to withhold
Registrable Securities from sale or is acting in its capacity as a
fiduciary or an investment adviser. Without limiting the scope of the
term "fiduciary," a holder shall be deemed to be acting as a fiduciary
or an investment adviser if its actions or the Registrable Securities
proposed to be sold are subject to ERISA, the Investment Company Act
of 1940 or the Investment Advisers Act of 1940 or if such Registrable
Securities are held in a separate account under applicable insurance
law or regulation.
(ii) The Company agrees (A) not to effect any public sale or
distribution of its equity securities or securities convertible into
or exchangeable or exercisable for any of such securities during the
seven days prior to the date on which any underwritten registration
pursuant to Section 2 or 3 has become effective and the 90 days
thereafter, except as part of such underwritten registration and
except pursuant to registrations on Form S-4 or S-8 or any successor
or similar forms thereto, and (B) to cause each holder of its equity
securities or of any securities convertible into or exchangeable or
exercisable for any of such securities, in each case purchased from
the Company at any time after the date of this Agreement (other than
in a Public Offering), to agree not to effect any such public sale or
distribution of such securities, during such period, except as part of
such underwritten registration.
6. Preparation; Reasonable Investigation. In connection with
the preparation and filing of each registration statement under the Securities
Act, the Company will give the holders of Registrable Securities to be
registered under such registration statement, their underwriters, if any, each
Requesting Holder and one firm of counsel and accountants on behalf of such
Requesting Holders, the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
of them such access to its books and records and such opportunities to discuss
the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be necessary,
in the opinion of such holders' and such underwriters' respective counsel, to
conduct a reasonable investigation within the meaning of the Securities Act. The
Company agrees to include in any such registration statement all information
which any holder of Registrable Securities being registered, upon advice of
counsel, shall reasonably request.
7. Rights of Requesting Holders. The Company will not file any
registration statement under the Securities Act, whether or not pursuant to
registration rights granted to other holders of its securities and whether or
not for sale for its own account (other than by a registration on Form X-0, X-0
or any successor form thereto), unless it shall first have given to each Person
which holds any Registrable Securities issued by the Company at least 30 days'
prior written notice thereof. Any such holder who shall so request within 30
days after such notice (a "Requesting Holder") shall have the rights of a
Requesting Holder provided in Sections 4, 6 and 8. In addition, if any
registration statement refers to any Requesting Holder by name or otherwise as
the holder of any securities of the Company, then such holder shall have the
right to require (a) the insertion therein of language, in form and substance
reasonably satisfactory to such holder, to the effect, if true, that the holding
by such holder of such securities does not necessarily make such holder a
"controlling person" of the Company within the meaning of the Securities Act and
is not to be construed as a recommendation by such holder of the investment
quality of the Company's debt or equity securities covered thereby and that such
holding does not imply that such holder will assist in meeting any future
financial requirements of the Company, or (b) in the event that such reference
to such holder by name or otherwise is not required by the Securities Act or any
rules and regulations promulgated thereunder, the deletion of the reference to
such holder.
8. Indemnification.
(a) The Company will, and hereby does, indemnify, to the
extent permitted by applicable law, each holder of Registrable Securities and
its Affiliates and their respective officers and directors, if any, and each
Person, if any, who controls such holder within the meaning of Section 15 of the
Securities Act, against all losses, claims, damages, liabilities (or proceedings
in respect thereof) and expenses (under the Securities Act or common law or
otherwise), joint or several, caused by any untrue statement or alleged untrue
statement of a material fact contained in any registration statement or
prospectus (and as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) or any preliminary prospectus or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities (or proceedings in
respect thereof) or expenses are caused by any untrue statement or alleged
untrue statement contained in or by any omission or alleged omission from
information furnished in writing to the Company by such holder expressly for use
therein. If the offering pursuant to any registration statement provided for
under this Agreement is made through underwriters, no action or failure to act
on the part of such underwriters (whether or not any such underwriter is an
Affiliate of any holder of Registrable Securities) shall
affect the obligations of the Company to indemnify any holder of Registrable
Securities or any other Person pursuant to the preceding sentence. If the
offering pursuant to any registration statement provided for under this
Agreement is made through underwriters, the Company agrees to enter into an
underwriting agreement in customary form with such underwriters, and the Company
agrees to indemnify such underwriters, their officers and directors, if any, and
each Person, if any, who controls such underwriters within the meaning of
Section 15 of the Securities Act to the same extent as hereinbefore provided
with respect to the indemnification of the holders of Registrable Securities;
provided that the Company shall not be required to indemnify any such
underwriter, or any officer or director of such underwriter or any Person who
controls such underwriter within the meaning of Section 15 of the Securities
Act, to the extent that the loss, claim, damage, liability (or proceedings in
respect thereof) or expense for which indemnification is claimed results from
such underwriter's failure to send or give a copy of the amended or supplemented
final prospectus to the Person asserting an untrue statement or alleged untrue
statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person if such
statement or omission was corrected in such amended or supplemented final
prospectus prior to such written confirmation and the underwriter was given
notice of the availability of such amended or supplemented final prospectus.
(b) In connection with any registration statement in which
a holder of Registrable Securities is participating, each such holder will
indemnify, to the extent permitted by applicable law, the Company, its officers
and directors and each Person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act, against any losses, claims,
damages, liabilities (or proceedings in respect thereof) and expenses (under the
Securities Act, common law or otherwise), caused by any untrue statement or
alleged untrue statement of a material fact or any omission or alleged omission
of a material fact required to be stated in the registration statement or
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or necessary to make the statements therein not misleading, but only to
the extent that such untrue statement is contained in or such omission is from
information so furnished in writing by such holder expressly for use therein;
provided that such holder's obligations hereunder shall be limited to an amount
equal to the net proceeds to such holder of the Registrable Securities sold
pursuant to such registration statement.
(c) Any Person entitled to indemnification under the
provisions of this Section 8 shall (i) give prompt notice to the indemnifying
party of any claim with respect to which it seeks indemnification (but the
failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the preceding
subdivisions of this Section 8, except to the extent that the indemnifying party
is actually prejudiced by such failure) and (ii) unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, permit such
indemnifying party to assume the defense of such claim, with counsel reasonably
satisfactory to the indemnified party; and if such defense is so assumed, such
indemnifying party shall not enter into any settlement without the consent of
the indemnified party if such settlement attributes liability to the indemnified
party, and such indemnifying party shall not be subject to any liability for any
settlement made without its consent (which shall not be unreasonably withheld);
and any underwriting agreement entered into with respect to any registration
statement provided for under this Agreement shall so provide. In the event an
indemnifying party shall not be entitled, or elects not, to assume the defense
of a claim, such indemnifying party shall not be obligated to pay the fees and
expenses of more than one counsel or firm of counsel for all parties indemnified
by such indemnifying party in respect of such claim, unless in the reasonable
judgment of any such indemnified party a conflict of interest may exist between
such indemnified party and any other of such indemnified parties in respect to
such claim. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of a participating holder of Registrable
Securities, its officers, directors or any Person, if any, who controls such
holder as aforesaid, and shall survive the transfer of such securities by such
holder.
(d) If the indemnification provided for in this Section 8
shall for any reason be held by a court to be unavailable to an indemnified
party under Section 8(a) or (b) hereof in respect of any loss, claim, damage or
liability, or any action in respect thereof, then, in lieu of the amount paid or
payable under Section 8(a) or (b), the indemnified party and the indemnifying
party under Section 8(a) or (b) shall contribute to the aggregate losses,
claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating the same), (i) in
such proportion as is appropriate to reflect the relative fault of the Company
and the prospective sellers of Registrable Securities covered by the
registration statement which resulted in such loss, claim, damage or liability,
or action or proceeding in respect thereof, with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or action or
proceeding in respect thereof, as well as any other relevant equitable
considerations or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as shall be appropriate to
reflect the relative benefits received by the Company and such prospective
sellers from the offering of the securities covered by such registration
statement, provided, that for purposes of clauses (i) or (ii), the relative
benefits received by the prospective sellers shall be deemed not to exceed the
amount of proceeds received by such prospective sellers, and no holder of
Registrable Securities shall be required to contribute any amount in excess of
the amount such holder would have been required to pay to an indemnified party
if the indemnity under subsection (b) of this Section 8 was available. 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. Such sellers' obligations to
contribute as provided in this Section 8(d) are several in proportion to the
relative value of their respective Registrable Securities covered by such
registration statement and not joint. In addition, no Person shall be obligated
to contribute hereunder any amounts in payment for any settlement of any action
or claim effected without such Person's consent, which consent shall not be
unreasonably withheld.
(e) Indemnification and contribution similar to that
specified in the preceding subdivisions of this Section 8 (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any required registration or other qualification
of securities under any federal or state law or regulation of any
governmental authority other than the Securities Act.
(f) An indemnifying party shall make payments of all
amounts required to be made pursuant to the foregoing provisions of this Section
8 to or for the account of the indemnified party from time to time promptly upon
receipt of bills or invoices relating thereto or when otherwise due or payable,
subject to an undertaking by the Indemnified Party to repay all such amounts if
a court of competent jurisdiction determines that such Indemnified Party is not
entitled to indemnity or the benefits of contribution hereunder.
9. Adjustments Affecting Registrable Securities. The Company
will not effect or permit to occur any combination or subdivision of shares
which would adversely affect the ability of the holders of Registrable
Securities to include such Registrable Securities in any registration of its
securities contemplated by this Exhibit B or the marketability of such
Registrable Securities under any such registration.
10. Registration Rights to Others. The Company shall not,
without the prior written consent of the holders of a majority of Registrable
Securities, provide to any holder of any securities of the Company rights with
respect to the registration of such securities under the Act which are more
favorable to such holder than the terms and conditions provided in this Exhibit
B to holders of Registrable Securities. The Company shall provide to the holders
of Registrable Securities copies of any agreements which purport to grant rights
with respect to the registration of any of the Company's securities to any
holder or prospective holder thereof promptly upon executing the same.
11. Other Registration of Common Stock. If any shares of the
Common Stock required to be reserved for purposes of issuance upon exercise of
the Warrants in connection with their sale in a registration pursuant to Section
2 or 3 require registration with or approval of any governmental authority under
any federal or state law (other than the Securities Act) before such shares may
be issued upon such exercise, the Company will, at its expense and as
expeditiously as possible, use its best efforts to cause such shares to be duly
registered or approved, as the case may be.
12. Nominees for Beneficial Owners. For purposes of this Exhibit
B, in the event that any Registrable Securities are held by a nominee for the
beneficial owner thereof, the beneficial owner thereof may, at its election, be
treated as the holder of such Registrable Securities for purposes of any request
or other action by any holder or holders of Registrable Securities pursuant to
this Exhibit B or any determination of any number or percentage of shares of
Registrable Securities held by any
holder or holders of Registrable Securities contemplated by this Exhibit B. If
the beneficial owner of any Registrable Securities so elects, the Company may
require assurances reasonably satisfactory to it of such owner's beneficial
ownership of such Registrable Securities.
13. Rule 144 and Rule 144A. The Company shall take all actions
reasonably necessary to enable holders of Registrable Securities to sell such
securities without registration under the Securities Act within the limitation
of the provisions of Rule 144 and Rule 144A under the Securities Act, as such
Rules may be amended from time to time, or any similar rules or regulations
hereafter adopted by the Commission, including, without limitation, filing on a
timely basis all reports required to be filed pursuant to the Exchange Act.
14. Transfer; Assignment. Upon a transfer of Registrable
Securities by the holder thereof, the rights granted hereunder to the holders of
Registrable Securities may be transferred to such transferee.
15. Amendment. Notwithstanding the provisions of the
Stockholders Agreement to which this Exhibit B is attached, this Exhibit B may
not be amended or modified without the prior written consent of holders of more
than 50% of the Registrable Securities. Any approval, action or waiver of any
provision contained in this Exhibit B shall require the prior approval or
consent of holders of more than 50% of the Registrable Securities, and upon
receiving such approval or consent, such approval, action or waiver shall be
binding upon all holders of Registrable Securities; provided, that if any
amendment is adverse to any holder of Registrable Securities, the same must be
approved by such holder.
EXHIBIT F
COMPLIANCE CERTIFICATE
The undersigned officer of GMH HOLDINGS, INC., a Delaware corporation
(the "Corporation"), hereby delivers this Certificate as required by Section 5.3
of that certain Securities Purchase Agreement among the Corporation, General
Manufactured Housing, Inc., a Georgia corporation, and the Purchasers listed on
Schedule A thereto (the "Purchase Agreement"). The undersigned hereby certifies
on behalf of the Corporation that all of the conditions precedent to the closing
of the transactions at the Closing (as defined in the Purchase Agreement), set
forth in Section 5 of the Purchase Agreement, have been satisfied by the
Corporation.
IN WITNESS WHEREOF, the undersigned has hereunto affixed his signature
to this Certificate of the President as of this ____ day of December, 1995.
________________________________
Xxxx X. Xxxxx
EXHIBIT G
DRAFT
12/17/95
[Form of Opinion of NHD&D]
December __21, 1995
RFE Investment Partners V, L.P.
00 Xxxxx Xxxxxx
Xxx Xxxxxx, XX 00000
State Treasurer of the State of Michigan
c/o Alternate Investments Division
000 Xxxx Xxxxxxx
Xxxxxxx, XX 00000
Sterling Commercial Capital, Inc.
000 Xxxxx Xxxx Xxxx
Xxxxx Xxxx, Xxx Xxxx 00000
Re: Securities Purchase Agreement Between and Among GMH
Holdings, Inc., General Manufactured Housing, Inc. and the
Purchasers Named Therein
Ladies and Gentlemen:
We have acted as counsel to GMH Acquisition Corp., a Delaware
corporation ("Acquisition Co.") and its successor by merger, General
Manufactured Housing, Inc., a Georgia corporation (together with Acquisition
Co., "GMH"), GMH Holdings, Inc., a Delaware corporation (the "Company") and
Bulldog Holdings LLC, a New York limited liability company ("Bulldog"), in
connection with execution and delivery of that certain Securities Purchase
Agreement of even date herewith (the "Securities Purchase Agreement") between
GMH, Holdings and the Purchasers named therein. All capitalized terms used but
not elsewhere defined herein shall have the respective meanings ascribed to such
terms in the Securities Purchase Agreement.
The following documents (collectively, the "Applicable Documents")
each dated of even date herewith, have been executed and delivered in connection
with the purchase of the Securities and the Junior Notes:
1. the Securities Purchase Agreement;
2. the Junior Notes;
3. the Investors Rights Agreement; and
4. the Stockholders Agreement.
In rendering these opinions, we have examined the following (each of
which is dated as of the Closing Date unless another date is indicated):
(a) the Applicable Documents;
(b) the Certificate of Incorporation and By-Laws of each of
Acquisition Co. and the Company and all amendments thereto and restatements
thereof, each dated as set forth therein; and
(c) the Operating Agreement of Bulldog, together with all amendments
thereto, each dated as set forth therein (the "Operating Agreement").
In addition, we have examined such other records and documents as we
have deemed relevant or material in order to enable us to render the opinions
herein, including, without limitation, originals or copies, certified or
otherwise identified to our satisfaction, of all such records of Acquisition
Co., the Company and Bulldog, certificates of public officials, certificates of
officers or other representatives of Acquisition Co., the Company and Bulldog,
and such other documents, certificates and corporate or other records as we have
deemed necessary or appropriate as a basis for the opinions set forth herein,
including (i) certified copies of certain resolutions duly adopted by the
Stockholders and Board of Directors of each of Acquisition Co. and the Company,
(ii) the Articles of Organization of Bulldog filed with the Secretary of State
of the State of New York on December __November 27, 1995 and (iii) certified
copies of certain resolutions duly adopted by SIHI-GMH LLC, the Managing Member
of Bulldog.
We have obtained and relied on evidence or advice satisfactory to us
from the Secretary of State of the States of Delaware, Georgia and South
Carolina, as the case may be, with respect to: (a) the corporate good standing
of Acquisition Co. in Delaware; (b) the corporate good standing of the Company
in Delaware; (c) the authority to do business and good standing of the Company
in New York; (d) the good standing of Bulldog in New York and (e) the
effectiveness of the Merger in Delaware.
In all such examinations, we have assumed the genuineness of all
signatures by each party (other than signatures of Acquisition Co., the Company
and Bulldog), the authenticity of all documents submitted to us as originals and
the conformity to original documents of all documents submitted to us as
conformed or photostatic copies. For the purposes of the opinions hereinafter
expressed, we have further assumed (a) the due formation, organization or
qualification to do business, valid existence and good standing of each entity
which is a party to any of the Applicable Documents (other than Acquisition Co.,
the Company and Bulldog) under the laws of each jurisdiction in which such
entity does business; (b) the legal capacity of all natural persons executing
the Applicable Documents; (c) due execution and delivery, pursuant to due
authorization, of each Applicable Document referred to in this opinion by each
party thereto (other than Acquisition Co., the Company and Bulldog) and (d) that
each Applicable Document constitutes the valid and binding obligation of each
party thereto (other than Acquisition Co., the Company and Bulldog), enforceable
against such party in accordance with its terms.
Based upon and subject to the foregoing, and to the qualifications and
limitations set forth below, we are of the opinion that:
1. Each of Acquisition Co. and the Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company is qualified to do business and in good standing as a
foreign corporation in the State of New York. Each of Acquisition Co. and the
Company possesses corporate powers which are adequate for the carrying on of its
respective business and the ownership of its respective property. The Company
has the requisite right, corporate power and authority to execute and deliver
the Applicable Documents to which it is a party, and to enter into and perform
its obligations thereunder.
2. Bulldog is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of New York. We note
that under the New York Limited Liability Company Act, within 120 days after the
effectiveness of the Articles of Organization, Bulldog is required to publish a
notice in two newspapers of general circulation in the county in which its
principal place of business is located, for six consecutive weeks. Bulldog
possesses the requisite powers which are adequate for the carrying on of its
business and the ownership of its property. Bulldog has the requisite right,
power and authority to execute and deliver the Applicable Documents to which it
is a party, and to enter into and perform its obligations thereunder.
3. The Applicable Documents to which the Company and Bulldog are a
party have been duly executed and delivered by such Person, and such Applicable
Documents, as executed and delivered, are the valid and binding obligations of
such Person, enforceable against such Person, in accordance with their
respective terms. The execution and delivery by the Company and Bulldog of the
Applicable Documents to which such Person is a party and the performance of
their respective obligations thereunder have been duly authorized and approved
by all necessary corporate or limited liability company action, as applicable.
Each of Acquisition Co. and the Company has taken all requisite corporate action
on its part to authorize the merger of Acquisition Co. with and into GMH (the
"Merger") pursuant to the Plan of Merger (the "Plan of Merger") and the
performance of Acquisition Co.'s performance thereunder. The Plan of Merger has
been duly and validly executed by Acquisition Co. and the Company and
constitutes the valid and binding obligation of Acquisition Co. and the Company,
enforceable against them in accordance with its terms.
4. The authorized capital stock of the Company consists of
1,656,250 shares of Class A Common Stock, $.001 par value, 787,500 shares of
Class B Common Stock, $.001 par value, 2,150,000 shares of Class C Common Stock,
$.001 par value, and 10,150,000 shares of Preferred Stock, $.001 par value, of
which 8,000,000 shares are designated Series A Redeemable Preferred Stock and
2,150,000 shares are designated Series B Convertible Preferred Stock.
Immediately prior to the Closing, no shares of Class A Common Stock, no shares
of Class B Common Stock, no shares of Class C Common Stock, no shares of Series
A Preferred Stock, and no shares of Series B Preferred Stock were issued and
outstanding. The Class C Common Stock issuable upon conversion of the Series B
Shares has been duly and validly reserved, and when issued in accordance with
the Company's Restated Certificate of Incorporation (the "Restated Certificate")
will be validly issued, fully paid and nonassessable. The Securities issued
under the Securities Purchase Agreement are validly issued, fully paid and
nonassessable and free of any liens, encumbrances and preemptive or similar
rights, except as contained in the Stockholders Agreement. To our knowledge,
except for rights described in the Securities Purchase Agreement, the Exhibits
thereto, the Investors Rights Agreement, the Stockholders Agreement and the
Restated Certificate, there are no other options, warrants, conversion
privileges or other rights presently outstanding to purchase or otherwise
acquire any authorized but unissued shares of capital stock or other securities
of the Company or any other agreements to issue any such securities or rights.
The respective rights, privileges, preferences and limitations of the Class A
Common Stock, the Class B Common Stock the Class C Common Stock, the Series A
Shares and the Series B Shares are stated in the Company's Restated Certificate
of Incorporation. The certificates representing the Securities are in due and
proper form and have been validly executed.
(b) As of the Closing Date, immediately prior to the Merger, the
authorized capital stock of Acquisition Co. will consist of 200 shares of common
stock, without par value, of which one share is outstanding and owned of record
by the Company.
5. (a) The Company is not in violation of any term of its Restated
Certificate or Bylaws, or, to our knowledge, in any material respect of any term
or provision of any material contract, agreement, instrument, judgment or decree
to which such Person is a party or which is binding on it. The execution and
delivery by the Company of the Applicable Documents to which it is a party do
not: (A)(i) result in a breach or a violation of the provisions of the Restated
Certificate or By-Laws of the Company, (B)(ii) to our knowledge, result in a
breach or default under any material contract, agreement, instrument, judgment
or decree to which the Company is a party or by which it is bound, except for
such breaches or defaults which would not have a Material Adverse Effect, or
(C)(iii) to our knowledge, result in a violation of any applicable law, statute
or regulation of any governmental authority or regulatory body.
(b) Bulldog is not in violation of any term of its Articles of
Organization or Operating Agreement, or, to our knowledge, in any material
respect of any term or provision of any material contract, agreement,
instrument, judgment or decree to which it is a party or which is binding on it.
The execution and delivery by Bulldog of the Applicable Documents to which it is
a party do not: (A)(i) result in a breach or a violation of the provisions of
the Articles of Organization or Operating Agreement of Bulldog, (B)(ii) to our
knowledge, result in a breach or default under any material contract, agreement,
instrument, judgment or decree to which Bulldog is a party or by which it is
bound, except for such breaches or defaults which would not have a Material
Adverse Effect, or (C)(iii) to our knowledge, result in a violation of any
applicable law, statute or regulation of any governmental authority or
regulatory body.
(c) To our knowledge, the execution and delivery by GMH of the
Securities Purchase Agreement and the Junior Notes does not result in a breach
or default under any material contract, agreement, instrument, judgment or
decree to which GMH is a party or by which it is bound except for such breaches
or defaults which would not have a Material Adverse Effect.
6. No consent, approval or authorization of or designation,
declaration or filing with any governmental authority on the part of the Company
[or GMH ] is required in connection with the valid execution and delivery of the
Securities Purchase Agreement, the Stockholders Agreement, the Plan of Merger,
the Junior Notes or the Investors' Rights Agreement or any other Applicable
Document to which such Person is a party or the offer, sale or issuance of the
Junior Notes or the Securities (and the Class C Common Stock issuable upon
conversion of the Series B Shares) or the consummation of any other transaction
contemplated thereby (including the Merger), except (a) filing of the Restated
Certificate in the Office of the Delaware Secretary of State, (b) qualification
(or taking such action as may be necessary to secure an exemption from
qualification., if available) under applicable blue sky laws of the offer and
sale of the Junior Notes and the Shares (and the Class C Common Stock issuable
upon conversion of the Series B Shares) which may be effected after the Closing
and (c) filing of the Certificate of Ownership and Merger. The filing referred
to in clause (a) above has been accomplished and is effective, and to our
knowledge there are no proceedings or threat thereof which question the validity
of such filing.
7. To our knowledge there are no actions, suits, proceedings or
formal investigations pending or threatened against Acquisition Co., the Company
or GMH, before any federal, state or other governmental authority or regulatory
body other than as disclosed in the Applicable Documents.
8. Subject to the accuracy of the Purchaser representations in
Section 4 of the Securities Purchase Agreement, we are of the opinion that the
offer, sale and issuance of the Junior Notes and the Securities in conformity
with the terms of the Securities Purchase Agreement constitute transactions
exempt from the registration requirements of Section 5 of the Securities Act of
1933, as amended.
[9. The Senior Loan Agreement ] and the Senior Subordinated Note
Agreement ] are valid and binding obligations of GMH, enforceable against GMH in
accordance with their respective terms.]
10. Each of the Investors' Rights Agreement and the Stockholders
Agreement has been duly executed and delivered by Bulldog and is a valid and
binding obligation of Bulldog, enforceable against Bulldog in accordance with
its terms.
11. The Certificate of Ownership and Merger attached to the Plan
of Merger as Exhibit A is in proper form for filing with the Secretary of State
of the State of Delaware. Upon the due and proper filing of the Certificate of
Ownership and Merger (including the payment of any appropriate filing fees) with
the Secretary of State of the State of Delaware, the merger of Acquisition Co.
into GMH will be effective under applicable law.
Our opinions are qualified as follows:
a. The enforceability of the Applicable Documents is subject to or
limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
arrangement, moratorium or other similar laws relating to or affecting the
rights of creditors generally and general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in equity).
b. The enforceability of the Applicable Documents is further
subject to the qualification that certain waivers, remedies and other similar
post default provisions of the Applicable Documents may be unenforceable under
or that enforceability of such provisions may be limited by applicable law. In
particular, we call your attention to the fact that we express no opinion with
respect to the enforceability of (i) the indemnification provisions contained in
the Applicable Documents to the extent that such provisions may be construed to
include indemnification for liabilities arising under federal or state
securities or blue sky laws, (ii) any Applicable Document against any person or
entity who or which is not a party thereto or with respect to any provisions
thereof requiring a party thereto to cause such person or party to take or
further refrain from taking specified actions or (iii) any provisions which
expressly purport to waive statutory rights, including without limitation, the
statutory right of redemption. Notwithstanding the foregoing, in our opinion,
the Applicable Documents contain adequate provisions to permit the practical
realization of the benefits intended to be conferred by the Applicable
Documents.
c. With respect to our opinions regarding the enforceability of
the Applicable Documents, we have assumed compliance by all persons other than
Acquisition Co., the Company and Bulldog with the terms, conditions and
restrictions set forth in the Applicable Documents.
d. We express no opinion regarding the status of title to any real
or personal property.
e. We express no opinion with respect to the Investment Advisors
Act of 1940 or the provisions of the Securities Exchange Act of 1934 regarding
registration of brokers and dealers.
f. No opinion is expressed herein as to the enforceability of
choice of law provisions or any waivers of jurisdiction or venue.
g. We express no opinion with respect to Paragraph 6 hereof as to
any authorization, consent, approval, license, exemption of or filing or
registration by [either GMH or] the Company which they may be required to obtain
as a result of the involvement of parties other than such Person, and the
transactions contemplated by the Applicable Documents because of any of such
other party's legal or regulatory status or because of any other facts
specifically pertaining to any of such other parties.
h. We express no opinion with respect to statutes and ordinances,
administrative decisions and rules and regulations, in each
case of counties, towns, municipalities and special political subdivisions, and
judicial decisions to the extent they deal with any of the foregoing.
As to any facts material to our opinions, we have relied upon oral or
written statements and certifications of officers and other representatives of
Acquisition Co., GMH, the Company and Bulldog and others, upon certificates and
other documents from public officials and upon the accuracy of the
representations and warranties contained in the Applicable Documents. We have
not independently investigated or verified such facts and do not opine as to
their accuracy.
The phrases "to our knowledge" or "known to us," when used herein,
mean that our opinion is based solely on matters within the actual knowledge of
the attorneys in this Firm actively involved in the transactions contemplated by
the Applicable Documents which, in the case of factual information with respect
to Acquisition Co., GMH, the Company and Bulldog, is derived from inquiry of the
appropriate officers of Acquisition Co., GMH, the Company and Bulldog (without
independent investigation), reviewing certificates of such officers, reviewing
our files, and reviewing the documents described herein.
In rendering the opinions expressed in Paragraphs 1 and 2 above, we
have relied solely upon certificates of public officials as to the qualification
to do business and good standing of Acquisition Co., the Company and Bulldog.
We are licensed to practice law under the laws of the State of New
York. The opinions herein expressed are limited to the laws of the State of New
York, the General Corporation Law of the State of Delaware and to the extent not
otherwise excluded herein, the federal laws of the United States of America. To
the extent that any of the Applicable Documents are governed by laws of a state
other than the State of New York and the General Corporation Law of the State of
Delaware, we have assumed, without independent investigation and with your
permission, that the laws of such state are identical to the laws of the State
of New York.
The opinions expressed in this letter are based upon the law in effect
on the date hereof, and we assume no obligation to revise or supplement this
opinion should such law be changed by legislative action, judicial decision or
otherwise.
This opinion is being furnished to you at the direction, and with the
authorization of the Company pursuant to Section 5.9 of the Securities Purchase
Agreement, solely for your benefit and may be relied upon by you with respect to
the transactions recited herein and therein. This opinion may not be relied upon
by, quoted in any manner to or delivered to, any person or entity without, in
each instance, our prior written consent.
Very truly yours,
[Letterhead of Powell, Goldstein, Xxxxxx & Xxxxxx]
December 21, 1995
RFE Investment Partners V, L.P.
00 Xxxxx Xxxxxx
Xxx Xxxxxx, XX 00000
The Treasurer of the State of Michigan, Custodian
000 Xxxx Xxxxxxx
0xx Xxxxx
Xxxxxxx, XX 00000
Sterling Commercial Capital, Inc.
000 Xxxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Re: General Manufactured Housing, Inc.
Ladies and Gentlemen:
We have served as Georgia local counsel to General Manufactured Housing,
Inc., a Georgia corporation and successor by merger to GMH Acquisition Corp., a
Delaware corporation ("GMH"), in connection with the issuance and sale by GMH of
$5,000,000 aggregate principal amount of the Junior Subordinated Notes of GMH
(the "Junior Notes") pursuant to the terms and conditions of that certain
Securities Purchase Agreement of even date herewith (the "Securities Purchase
Agreement") to RFE Associates V, L.P., The Treasurer of the State of Michigan as
Custodian for the Michigan Public School Employees Retirement System, the
Michigan State Police Retirement System and the Michigan Judges Retirement
System and Sterling Commercial Capital, Inc. (the "Transaction").
This opinion letter is limited by, and is in accordance with, the January
1, 1992 edition of the Interpretive Standards applicable to Legal Opinions to
Third Parties in Corporate Transactions adopted by the Legal Opinion Committee
of the Corporate and Banking Law Section of the State Bar of Georgia, which
Interpretive Standards are incorporated in this opinion letter by this reference
and are attached hereto as Exhibit A. Capitalized terms used in this opinion
letter and not otherwise defined herein shall have the meanings assigned to such
terms in the Interpretive Standards or the Securities Purchase Agreement, as the
case may be.
The Junior Notes, each dated of even date herewith, have been executed and
delivered in connection with the Transaction. The Junior Notes, the Securities
Purchase Agreement and the Plan of Merger hereinafter are referred to
collectively as the "Documents."
In rendering this opinion we have examined copies of the Documents
forwarded to us by your counsel dated December 21, 1995, certified copies the
articles of incorporation, by-laws and corporate resolutions of GMH and a
certificate of good standing for GMH from the State of Georgia. In giving the
opinions hereinafter expressed, we have relied only upon our examination of the
foregoing documents and certificates, and we have made no independent
verification of the factual matters set forth in such documents or certificates
and no other investigation or inquiry. With respect to the due execution and
delivery of the Documents by GMH, we have relied solely upon a facsimile copy of
an officer's certificate from an officer of GMH in the form of Exhibit B hereto.
For purposes of this opinion, we have assumed that:
(i) The execution and delivery of the Documents and other documents
reviewed by us, and the entry into and performance of the transactions
contemplated by the Documents, by all parties other than GMH have been duly
authorized by all necessary actions and constitute the valid and binding
obligations of all parties other than GMH.
(ii) The necessary merger documents were duly filed with the Secretary of
State of Delaware to effect the merger of Acquisition with and into GMH as of
the Closing Date under the laws of the State of Delaware.
(iii) All of the Documents are enforceable, to the extent not
controlled by the laws of the State of Georgia.
Based upon the foregoing, but subject to the assumptions, limitations and
qualifications set forth below, we are of the opinion that:
1. GMH is a Georgia corporation organized and validly existing under the
laws of the State of Georgia and is in good standing under such laws. GMH has
all requisite corporate power to own and use its properties and assets, and to
carry on its business as presently conducted.
2. GMH has all requisite corporate power to execute and deliver the
Documents, to issue and sell the Junior Notes and to perform its obligations
under the terms of the Documents.
3. As of the Closing Date, the authorized capital stock of GMH will
consist of 100,000 shares of common stock, par value $100.00 per share. On the
Closing Date after giving effect to the Acquisition and the transactions
contemplated by the Securities Purchase Agreement, 5,250 shares of such common
stock will be issued and outstanding. As of the Closing Date, GMH will not have
outstanding securities convertible into, or exchangeable for, any shares of its
capital stock.
4. GMH has duly authorized the execution and delivery of the Documents
including without limitation the issuance and sale of the Junior Notes, and GMH
has duly executed and delivered the Documents. The consummation of the merger of
Acquisition into GMH (the "Merger") has been authorized by all necessary
corporate action on the part of GMH.
5. The execution and delivery of the Documents, the issuance of Junior
Notes and the consummation of the merger of Acquisition with and into GMH, do
not violate or conflict with, or give rise to a default under, any provision of
the Articles of Incorporation or Bylaws of GMH, or any applicable Georgia law,
rule or regulation.
6. No consent, approval or authorization or other action by or filing
with, any government authority of the State of Georgia is required for (i) the
execution and delivery by GMH of the Documents to which it is a party, (ii) the
issuance and sale of the Junior Notes, or (iii) the consummation of the
transactions contemplated by the Documents, except filing of Articles Merger
with the Secretary of State of Georgia.
7. The Documents are valid and binding obligations of GMH enforceable
against GMH in accordance with their respective terms.
8. The Articles of Merger attached hereto as Exhibit C are in proper form
for filing with the Secretary of State of Georgia. Upon the due and proper
filing of the Articles of Merger (including the payment of my appropriate filing
fees) with the Secretary of State of Georgia, the Merger will be effective under
the laws of the State of Georgia.
Our opinions expressed in this letter are subject to the following
qualifications:
(a) We express no opinion as to the enforceability of (A) provisions
which purport to appoint the Lender, in any capacity, as the attorney-in-
fact or proxy of the Borrower, and (B) provisions which purport to waive
rights which cannot be waived by law. In particular, we point out that in
an opinion issued July 11, 1994, the Supreme Court of Georgia held that
pre-litigation contractual waivers of trial by jury are not enforceable in
Georgia, Bank South, N.A. vs. Xxxxxx, 264 Ga. 339 (1994).
(b) We point out that O.C.G.A. 13-1-11 limits the enforceability of
attorneys fees provisions to an amount not in excess of 15 percent of the
principal and interest owing on the evidence of indebtedness [the statutory
definition of the term "reasonable attorneys fees" in a note or other
evidence of indebtedness in O.C.G.A. 13-1-11(a)(2) being an amount equal
to 15 percent of the first $500.00 of principal and interest owing and 10
percent of the principal and interest owing in excess of $500.00]. We
further point out that a lender's right to collect attorneys fees in the
event of a default under an evidence of indebtedness is limited by O.C.G.A.
13-1-11, in that, upon acceleration of payment of an indebtedness under
Georgia law, the obligated party has a period of ten days from the receipt
of notice of acceleration within which to pay all principal and interest
without the payment of attorneys fees. We express no opinion as to the
ability of the Lender to collect actual attorneys fees, regardless of their
reasonableness, incurred in enforcing rights under the Documents.
Our opinion is limited to the laws of the State of Georgia. We shall have
no continuing obligation to inform you of changes in law or fact subsequent to
the date hereof or facts of which we become aware after the date hereof.
This opinion is limited to the matters set forth herein. No opinions may be
inferred or implied beyond the matters expressly contained herein. This opinion
letter is provided to you for your exclusive use solely in connection with the
Transaction, and may not be relied upon by any other person or for any other
purposes without our prior written consent.
Very truly yours,
Powell, Goldstein, Xxxxxx & Xxxxxx
EXHIBIT H
RELIANCE CERTIFICATE
The undersigned XXXXXX X. XXXXX, hereby delivers this Certificate as
required by Section 5.15 of that certain Securities Purchase Agreement among the
GMH Holdings, Inc., a Delaware corporation, General Manufactured Housing, Inc.,
a Georgia Corporation, and the Purchasers listed on Schedule A thereto (the
"Purchase Agreement"). The undersigned hereby certifies that he has reviewed
each of the representations and warranties of the Sellers contained in that
certain Stock Purchase Agreement dated as of October 10, 1995, as amended, among
GMH Acquisition Corp., a Delaware corporation, and the Sellers who are a party
thereto, and, to the best of the undersigned's knowledge, such representations
and warranties are true, correct and complete.
IN WITNESS WHEREOF, the undersigned has hereunto affixed his signature
to this Certificate as of this ____ day of December, 1995
/s/ Xxxxxx X. Xxxxx
_____________________________
Xxxxxx X. Xxxxx
EXHIBIT I
RELIANCE CERTIFICATE
The undersigned, XXXX X. XXXXX, hereby delivers this Certificate as
required by Section 5.15 of that certain Securities Purchase Agreement among the
GMH Holdings, Inc., a Delaware corporation, General Manufactured Housing, Inc.,
a Georgia Corporation, and the Purchasers listed on Schedule A thereto (the
"Purchase Agreement"). The undersigned hereby certifies that he has reviewed
each of the representations and warranties of the GMH Companies contained in the
Purchase Agreement and, to the best of the undersigned's knowledge, such
representations and warranties are true, correct and complete.
IN WITNESS WHEREOF, the undersigned has hereunto affixed his signature
to this Certificate as of this ____ day of December, 1995.
/s/ Xxxx X. Xxxxx
_______________________________
Xxxx X. Xxxxx
