EXHIBIT 10.19
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT, dated as of February 28, 1994, by and among
ATLANTIC EXPRESS TRANSPORTATION GROUP INC., a New York corporation (the
"Company"), and each of the parties signatory hereto.
R E C I T A L S:
WHEREAS, the Company is authorized by its Certificate of
Incorporation to issue 300 shares of capital stock, consisting of (a) 228 shares
of Common Stock, no par value ("Common Stock"), and (b) 72 shares of Series A
Cumulative Convertible Preferred Stock, par value $.01 per share (Preferred
Stock);
WHEREAS, the Company has issued an aggregate of 101.0287 shares of
Common Stock to Xxxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxx Xxxxx (collectively, the
"Xxxxx Group") and Xxxxxxx Xxxxx, such shares being all the shares of Common
Stock issued and outstanding;
WHEREAS, Busco Capital Inc., a corporation organized under the laws
of the British Virgin Islands ("Busco") has acquired an aggregate of 13.5287
shares of Common Stock from Xxxxxxx Xxxxx and the Xxxxx Group;
WHEREAS, pursuant to a Stock Purchase Agreement, dated as of
February 28, 1994 (the "Stock Purchase Agreement"), between the Company and
Busco, Busco is purchasing from the Company 72 shares of Preferred Stock
(representing 100% of the authorized Preferred Stock, and upon conversion, 45%
of the issued and outstanding Common Stock, on a fully diluted basis) in
exchange for $12,750,000 and 13.5287 shares of Common Stock with a value of
$2,950,000; and
WHEREAS, the Company, Busco and the Xxxxx Group desire to set forth
their agreement concerning the management of the Company and such other matters
as are set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual and
dependent promises set forth in this Agreement, the Company, Busco and the Xxxxx
Group agree as follows:
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ARTICLE I
DEFINITIONS AND OTHER GENERAL MATTERS
SECTION 1.01. Definitions. The following terms shall be used in this
Agreement with the meanings set forth in this Section 1.01:
"Affiliate" means, with respect to any person or entity, any other
person or entity that directly or indirectly through one or more
intermediates controls, is specified by or is under common control with
the first person or entity.
"Board" means the Board of Directors of the Company.
"Business" means (i) the provision of bus, van or car transportation
and related services under contract to state or local government agencies
as well as to private sector purchasers of such transportation services
and (ii) the operation of a bowling center complex and joint venture
interests in two multiplex movie theaters in Staten Island.
"By-laws" means the restated by-laws of the Company.
"CEO" means the officer elected by the Board to the post designated
in the By-laws as the chief executive officer of the Company. Xxxxxxx
Xxxxx will be the initial CEO and Chairman of the Board.
"Certificate of Incorporation" means the Restated Certificate of
Incorporation of the Company.
"Closing" shall have the meaning given in the Stock Purchase
Agreement, dated as of February 28, 1994, between the Company and Busco.
"Common Stock" means the common stock, no par value, of the Company.
"Consenting Stockholder" means any beneficial owner of shares of
Voting Securities that is a party to this Agreement.
"Conversion Price" means the conversion price per share of Common
Stock for which the Preferred Stock is convertible, as such Conversion
Price is initially set and may be adjusted under the Certificate of
Designation.
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"Default" means any failure of the Company to pay debt for borrowed
money when due and any event which would permit acceleration of debt for
borrowed money. A Default shall not occur with respect to any failure to
pay debt for borrowed money when due or any event which would permit
acceleration of debt for borrowed money:
(a) where the failure or event has been cured or waived and
such cure or waiver is effective as to all cross defaults;
(b) if the total amount of outstanding debt to which the
failure or event related (together with cross defaults) does not
exceed $500,000;
(c) if the applicable grace period with respect to such
Default has not expired; and/or
(d) with respect to any debt which the Company, with the
reasonable concurrence of the directors designated by Busco disputes
in good faith.
No event shall be a Default (other than a money default) if the Company
shall cure within the greater of thirty (30) days or the cure period
provided in the subject contract or instrument.
"Employment Agreements" means the Employment Agreements, dated
February 28, 1994, between the Company and each of Xxxxxxx Xxxxx, Xxxxxxx
Xxxxx, Xxxxxxx Xxxxx and Xxxxxx Xxxxxxxxx.
"Public Offering" means the offering of Common Stock pursuant to a
registration statement on a form applicable to the sale of securities to
the general public.
"Purchase Agreements" means the Stock Purchase Agreement, together
with the letter agreements, each dated February 28, 1994, between Busco,
Xxxxxxx Xxxxx and each member of the Xxxxx Group.
"Preferred Stock" means the Series A Cumulative Convertible
Preferred Stock, par value $.01 per share, of the Company.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated February 28, 1994, between the Company, Busco and the
members of the Xxxxx Group.
"Significant Transaction" means, with respect to the Company or any
affiliates, any of the following actions:
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(A) conducting any business other than the Business;
(B) (i) any creation of (x) any additional class of capital
stock or (y) any security having a direct or indirect equity
participation in the Company or any affiliate or (ii) the sale or
issuance of shares of capital stock or warrants, options or rights
to acquire shares of capital stock or securities convertible into or
exchangeable for capital stock or any security having a direct or
indirect equity participation in the Company or any affiliate;
(C) any declaration or issuance of any dividend or other
distribution on any shares of capital stock or any payment on
account of the purchase, redemption, retirement or other acquisition
for value of any shares of capital stock;
(D) except as provided in paragraph (E) below, any acquisition
(including, by way of merger or consolidation) outside of the
ordinary course of business or the addition of any new participants
or partners in any entity controlled by the Company;
(E) any transaction with a value of $3,500,000 or more that
relates to the operations of the Company or any affiliates,
including without limitation financing, bidding, acquisitions, new
contracts and contract renewal arrangements (except renewals of
transportation contracts); provided that any offering, borrowing or
other transaction entered into by the Company or its affiliates for
the purpose of redeeming Busco's shares of Voting Securities shall
not be deemed a "Significant Transaction"; provided further that (1)
for so long as there is a non-compliance or projected non-compliance
with Schedule B attached hereto, the foregoing amount of $3,500,000
shall be reduced to $2,000,000, (2) for so long as Busco is unable
to redeem any of its unconverted Preferred Stock as set forth in
Section 3.04, the foregoing amount of $3,500,000 shall be reduced to
$1,000,000, and (3) in the event that Xxxxxxx Xxxxx shall no longer
be the CEO of the Company, the foregoing amount of $3,500,000 shall
be reduced to $350,000;
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(F) any amendment to or modification of any provision of the
Certificate of Incorporation or By-laws of the Company;
(G) any change in the auditors for, or in the accounting
policies or procedures of, the Company;
(H) entering into any agreement or obtaining any license or
franchise which restricts the transfer of shares of Common Stock or
Preferred Stock;
(I) (i) an extension of any Employment Agreement on its then
current terms for a period of time greater than three years beyond
its scheduled termination date or (ii) any amendment or modification
of any such Employment Agreement;
(J) any consolidation or merger of the Company or its
affiliates with any other entity in which the Company or its
affiliates will not be the continuing or surviving corporation or
the sale of all or substantially all of the assets of the Company or
its affiliates;
(K) any sale of all or substantially all of the assets of the
Company or its affiliates; or
(L) any transaction or transactions inconsistent with Section
5.01 of this Agreement.
"Voting Securities" means the Common Stock and Preferred Stock.
"Wafra Direct Equity Group" means Division of Wafra Investment
Advisory Group Inc., which purchases large block positions of private and
public securities for investment purposes, and any successors.
SECTION 1.02. Voting; Written Consent. (a) Any agreement by the
Consenting Stockholders herein to vote their shares of Voting Securities in a
certain manner shall be deemed, in each instance, to include an agreement by
each Consenting Stockholder to use such Consenting Stockholder's best efforts
and to take all actions necessary to call, or cause the Company and the
appropriate officers and directors of the Company to call, as promptly as
practicable, a special or annual meeting of stockholders or to act by written
consent.
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(b) When any action is required to be taken by a Consenting
Stockholder pursuant to this Agreement, such Consenting Stockholder shall take
all steps necessary to implement such action, including, without limitation,
executing or causing to be executed, as promptly as practicable, a consent in
writing in lieu of an annual or special meeting of the stockholders pursuant to
Section 615 of the Business Corporation Law of New York or any successor statute
thereto to effect such stockholder action.
(c) Unless expressly stated to the contrary herein, any action
requiring the vote of the directors (or any committee thereof) may be effected
by consent in lieu of a meeting of the directors or committee members, as the
case may be, pursuant to Section 708 of the Business Corporation Law of New York
or any successor statute thereto.
(d) Except as otherwise provided in Section 2.01(b), each share of
Preferred Stock will have the same vote as a share of Common Stock and shall be
convertible on a share for share basis at any time to Common Stock at the option
of Busco or any subsequent holder of the Preferred Stock. The Company may
require conversion at the time of a Public Offering provided (i) the Public
Offering shall provide at least $20,000,000 in net proceeds to the Company from
a sale underwritten by an underwriter listed on Schedule A hereto and (ii) (A)
the per share issue price shall be equal to or greater than Busco's price to
convert to Common Stock at the time of such offering compounded at the rate of
30% annually from the date of this Agreement to the date of such offering and
(B) Busco has the opportunity to sell 75% of its Voting Securities at such
price.
ARTICLE II
BOARD OF DIRECTORS AND STOCKHOLDERS
SECTION 2.01. Composition of the Board of Directors. (a) General.
The Board shall initially consist of five directors, of which (i) Busco shall
have the right to designate two individuals to serve as directors and (ii)
except as provided in Section 2.03(a), the Xxxxx Group shall have the right to
designate three individuals to serve as directors. In no event shall the Board
be composed of fewer than five directors. Except as otherwise provided in this
Section 2.01, the ratio of directors designated by Busco to those designated by
the Xxxxx Group shall be maintained as set forth in this Section 2.01(a) should
the Board be increased in number.
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(b) Event of Default. From and after a Default the Preferred Stock
shall be entitled to vote on shareholder issues as if it had four times the vote
it would have on conversion. The Board shall be increased in number so that the
ratio of Busco designated directors to Xxxxx Group designated directors is
maintained at a level of 4:3. During the period in which the additional Busco
designated directors serve, the Busco designees will take such measures in their
capacity as directors as are reasonably available to have cured or to have
waived any such default, provided that Busco shall have no obligation to either
make any concession with respect to its equity position or to advance additional
funds to the Company.
(c) Default Cured. The additional Busco designated directors shall
be retired and the additional voting rights terminated in the event that a
Default is cured without the need for additional capital or financing, and
without any concession materially adverse to the equity interest of Busco.
(d) Transactions During Default Period. Any loan transaction, sale
of equity or an investment convertible into equity during the period in which
the Busco designees control the Board, shall be based upon an independent
appraisal conducted by an appraiser (selected from Schedule A hereto) mutually
acceptable to the Xxxxx Group and Busco. If they are unable to agree, the
appraiser shall be selected by lot. The Xxxxx Group shall have a right of first
refusal to purchase such position or fund such loan or to secure a third party
to purchase such position or fund such loan provided that Busco shall have the
right, superior to any such third party, to purchase the position if it agrees
to abide by the same terms and conditions relating to control of the Company as
provided in the third party offer. In the event the Xxxxx Group shall purchase
the position, fund such loan or arrange third party financing for such loan or
position, control of the Board shall be as provided in such arrangement.
(f) Public Offering. In the event the Company shall consummate a
Public Offering, Busco and the Xxxxx Group agree that until Busco has disposed
of 75% of its shares of Preferred Stock, representatives on the Board (excluding
"independent directors") shall continue to be 40% Busco designees and 60% Xxxxx
Group designees. After Default Busco shall be entitled to 60% of the
non-independent directors and the Xxxxx Group 40%. Independent directors shall
be nominated jointly by Busco and the Xxxxx Group.
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(g) Election of Directors. Each Consenting Stockholder hereby agrees
to vote all shares of Voting Securities owned by such Consenting Stockholder to
cause the election to the Board of Directors of the individuals designated by
the Consenting Stockholders in accordance with this Section 2.01.
SECTION 2.02. Removal of Directors. Each Consenting Stockholder
shall vote all shares of Voting Securities owned by such Consenting Stockholder
for the removal (with or without cause) of any director designated and elected
pursuant to Section 2.01 hereof if the Consenting Stockholder entitled to
designate such director pursuant to Section 2.01 requests such removal by
written notice to the other Consenting Stockholders.
SECTION 2;03. Vacancies. (a) If, as a result of death, disability,
retirement, resignation, removal (with or without cause) of Xxxxxxx Xxxxx, there
is a vacancy on the Board and the position of CEO.
(i) a special committee shall be formed consisting of a Busco
designee and such of the following, as remain in the employ of the
Company: Xxxxxxx Xxxxx, Xxxxxxx Xxxxx and Xxxxxx Xxxxxxxxx, to select a
successor CEO who shall also serve, with the unanimous consent of such
committee and with the approval of the Board, as a neutral director upon
the Board, along with any other neutral directors unaminously selected by
such committee and with the approval of the Board (together, the "neutral
directors"). The Board shall thereafter be configured of two Busco
designated directors, two Xxxxx Group designated directors and one or more
neutral directors. The vote of the committee must be unanimous, provided
that if no successor CEO has been chosen within three months of such
vacancy, an executive search company shall be retained from Schedule C
attached hereto to recommend a new CEO which recommendation shall be
subject to approval by the vote of 75% of such committee. If there is no
agreement as to the search company, the same shall be chosen by lot from
Schedule C, and
(ii) each Consenting Stockholder shall vote its respective shares in
favor of the individual designated in accordance with clause (i) above to
fill such vacancy.
(b) If, as a result of death, disability, retirement, resignation,
removal (with or without cause) or otherwise there shall exist or occur any
vacancy on the Board other than as provided in Section 2.03(a),
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(i) the Consenting Stockholders entitled to designate (pursuant to
Section 2.01 hereof) the director whose death, disability, retirement,
resignation or removal resulted in such vacancy may designate another
individual to fill such capacity and to serve as a director of the
Company, and
(ii) each Consenting Stockholder shall vote its respective shares in
favor of the individual designated in accordance with clause (i) above to
fill such vacancy.
SECTION 2.04. Conflicting Charter or By-law Provisions. Each
Consenting Stockholder, shall vote its shares of Common Stock, and shall take
all other actions necessary, to ensure that the Certificate of Incorporation and
By-laws facilitate and do not at any time conflict with the provisions of this
Agreement.
SECTION 2.05. Action by the Board of Directors. (a) Except as
otherwise provided in Sections 2.05(b) and 2.05(c), all actions of the Board of
Directors shall require the affirmative vote of the majority of directors
present at a duly convened meeting of the Board at which a quorum is present or,
in lieu of a meeting, by the unanimous written consent of the members of the
Board of Directors.
(b) Neither the Company nor any entity controlled by the Company
shall take, and no party to this Agreement shall cause the Company or any entity
controlled by the Company to take, any action with respect to any Significant
Transaction without
(i) providing to the directors at least 5 business days' notice of
any meeting of the Board at which a Significant Transaction is proposed to
be approved, which notice shall describe such proposed Significant
Transaction and
(ii) the prior approval of 66 2/3% of the directors;
provided, however, that in each case the approval of all of the directors
appointed by the Consenting Stockholders shall be required (x) to amend the
Certificate of Incorporation and By-laws and (y) to enter into any agreement or
to obtain any license or franchise which restricts the transfer of shares of
Common Stock or Preferred Stock in a manner that discriminates among Consenting
Stockholders; and
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(c) Notwithstanding the provisions of Sections 2.05(a) and 2.05(b),
in lieu of any other approval provided in such Sections, the approval of a
majority of disinterested members of the Board of Directors shall be required to
approve any transaction between the Company and a Consenting Stockholder or an
Affiliate of a Consenting Stockholder, except in the case of the renewal of any
Employment Agreement, in which the approval of a majority of directors present
at a meeting of the Board shall be sufficient.
SECTION 2.06. Action Following Termination of Certain Employees. The
Busco designated directors shall not unreasonably withhold their consent to the
purchase by the Company of the shares of Common Stock by a member of the Xxxxx
Group pursuant to Section 7.3 or 7.5 of the applicable Employment Agreement,
provided the price paid for such shares shall be for 90% of the fair market
value as determined by an appraiser selected by lot from Schedule A annexed
thereto.
ARTICLE III
TRANSFERS
Section 3.01. Restrictions on Transfers. Members of the Xxxxx Group
may transfer Common Stock only if a sale or transfer (other than to a family
member) shall include a cash offer to bring Busco along on the same terms for
that percentage of its ownership (as converted) as the sale represents of the
total Xxxxx Group holdings, and provided that the Xxxxx Group shall retain
ownership interest of at least 51% of the equity securities of the Company prior
to a Public Offering. The foregoing limitation shall not apply to a sale or
transfer of shares from the Xxxxx Group to Xxxxxx Xxxxxxxxx upon his exercise of
options issued by the Xxxxx Group to purchase the equivalent of 1% of the
outstanding Voting Securities, provided Xxxxxx Xxxxxxxxx agrees to be bound by
this Agreement.
Section 3.02. First Refusal. Busco shall have a right of first
refusal on all shares held by any member of the Xxxxx Group, excluding shares
transferred in accordance with Section 3.01 or shares transferred to a family
trust, provided the transferee shall be bound by this Agreement and be a member
of the Xxxxx Group. Xxxxxxx Xxxxx, Xxxxxxx Xxxxx and Xxxxxxx Xxxxx shall have a
right of first refusal on all shares held by Busco in proportion to their
respective Common Stock ownership. The foregoing rights of first refusal shall
not apply to sales in Public Offerings or to sales in the public market
subsequent to such a Public Offering.
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SECTION 3.03. Busco Transfer. Notwithstanding Section 3.02, Busco
may transfer any shares held hereunder to any Affiliate without the application
of a right of first refusal, provided Busco retains the right to vote such
shares under this Agreement and provided the transferee shall remain subject to
a right of first refusal of the Xxxxx Group to this Agreement.
SECTION 3.04. Redemption. (a) Busco shall have the right, upon six
months' prior written notice, to require redemption of any shares of unconverted
Preferred Stock. Such right shall be to put 100% of those shares on the fifth
anniversary of the date of this Agreement but payment therefor shall, except to
the extent Section 3.04(b) may be applicable, be made 50% on the fifth
anniversary and 50% on the sixth anniversary of the date of this Agreement. Any
amount not paid to Busco as set forth in this Section 3.04 on such put date
shall be evidenced by a note from the Company (such note to be non-interest
bearing) evidencing such indebtedness. The redemption price (valued as of the
date of such redemption) shall be the higher of (i) fair market value of the
Company, appraised as a public company if there is a reasonable basis upon which
the Company by such fifth anniversary could have been a public company,
otherwise appraised as privately held; (ii) if then publicly traded, valued at
market multiplied by the number of shares redeemed or (iii) liquidation
preference value.
(b) At the option of the Company, the redemption right, if exercised
by Busco shall provide for payment for the redeemed shares in three annual
installments commencing on the fifth anniversary of the date of this Agreement
provided that the valuation of the Company shall be computed as set forth in
Section 3.04(a) and then increased at a per annum rate consistent with an equity
return appropriate in these circumstances as to all funds not received by the
date of the sixth anniversary of this Agreement, but not to exceed a return of
27.5% annually for payments beyond the sixth anniversary date of this Agreement.
(c) Valuation of the Company shall be determined by an appraiser
selected by the Company and Busco from the list of appraisers in Schedule A
attached hereto. In the event the Company and Busco cannot agree upon a single
appraiser they shall each select an appraiser from the annexed list and the
average valuation of such appraisers shall be utilized. The Xxxxx Group and
Busco shall share equally the expense of the appraisal.
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(d) In the event the Company is legally precluded from redeeming the
shares of Voting Securities held by Busco as a result of insufficient surplus:
(i) The Company shall reduce the compensation package of the Xxxxx
Group by $250,000 annually; and
(ii) Busco's shares shall be redeemed at the rate of 60% of the
Company's cash flow, but not to exceed, on a cumulative basis, the amount
payable under Section 3.04(b).
SECTION 3.05. Legend. Each certificate evidencing outstanding shares
of Voting Securities held by a Consenting Stockholder shall bear the following
legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO
REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE
BOOKS OF THE ISSUER UNLESS SUCH TRANSFER IS MADE IN CONNECTION WITH
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH ACT
DOES NOT APPLY.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AS SET FORTH IN A STOCKHOLDERS' AGREEMENT,
DATED AS OF FEBRUARY 28, 1994, AS IT MAY BE AMENDED FROM TIME TO
TIME, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES
OF THE ISSUER. NO REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL
BE MADE ON THE BOOKS OF THE ISSUER UNLESS AND UNTIL SUCH
RESTRICTIONS SHALL HAVE BEEN COMPLIED WITH."
All certificates evidencing shares of Voting Securities hereafter issued by the
Company to a Consenting Stockholder shall bear the legend set forth above. Upon
termination of this Agreement or upon registration of such shares of Voting
Securities in accordance with this Agreement and then upon surrender to the
Company of any certificates bearing the legend set forth above, the Company
shall reissue such certificates to the owner thereof without such legend.
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ARTICLE IV
PREEMPTIVE RIGHTS; ANTIDILUTION
SECTION 4.01. Busco Subscription Right. Busco shall have a right of
first refusal on all issuances of shares of New Common Stock (as defined below)
by the Company (except on shares of New Common Stock issued in a Public
Offering) so long as Busco shall own the equivalent, in Voting Securities, of
25% of its initial Preferred Stock. There is to be no further issuance of any
series of preferred stock which has any rights equal to or superior to those of
the Preferred Stock unless there is an active market for Common Stock.
SECTION 4.02. Preemptive Rights. (a) Subject to Section 4.01, each
Consenting Stockholder shall have a right to purchase its aggregate pro rata
portion, based on the ratio of the number of shares of Common Stock or Preferred
Stock held by such stockholder to the total number of shares of Voting
Securities held by all Consenting Stockholders, of any new common stock ("New
Common Stock") which the Company may, from time to time, propose to issue. This
right shall be transferable and shall terminate if unexercised within 30 days
after receipt of the Preemption Notice (as defined below).
(b) In the event the Company proposes to undertake an issuance of
New Common Stock, it shall give each Consenting Stockholder written notice (a
"Preemption Notice") of its intention, describing the type of New Capital Stock,
the price and the general terms upon which the Company proposes to issue the
same. Each Consenting Stockholder shall have 30 days after receipt of the
Preemption Notice to agree to purchase all or any portion of the Consenting
Stockholder's pro rata share of such New Common Stock for the price and upon the
terms specified in the Preemption Notice by giving written notice to the Company
and stating therein the quantity (including amounts, if any, such Consenting
Stockholder would be willing to purchase over and above such Consenting
Stockholder's pro rata portion) of New Common Stock to be purchased.
SECTION 4.03. Busco Antidilution Rights. The Conversion Price shall
be subject to adjustment as set forth in the Certificate of Incorporation.
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ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Use of Proceeds. The Company agrees that the aggregate
proceeds from the Preferred Stock issued pursuant to the Purchase Agreements
shall be used only for (a) purchase of equipment and facilities to service new
contracts; (b) acquisition of other transportation companies; (c) working
capital; (d) early retirement of debt up to $2MM for FDIC; $1.5MM for taxes;
$2MM for Deutsche Credit and $4MM for Marine Midland Bank (not to exceed $7MM in
the aggregate); and (e) subject to Section 2.05 hereof, such other non-ordinary
course uses as the Board shall approve. The Company agrees that the proceeds
from the Preferred Stock not otherwise put to use in accordance with the terms
of this Agreement shall be invested in investments having a maturity of not
greater than 12 months from the date of acquisition thereof in (x) obligations
issued or unconditionally guaranteed by the United States or any agency thereof,
(y) certificates of deposit of any commercial bank organized under the laws of
the United States or any State thereof and having combined capital and surplus
of at least $1,000,000,000 or (z) commercial paper with a rating of at least
"B-1" by Standard & Poor's Corporation.
SECTION 5.02. Management Fee. Wafra Investment Advisory Group, Inc.
("Wafra") shall receive an annual management fee of (a) $223,166, subject to the
same percentage adjustment, on an annual basis, as the average of the two
highest salaries paid by the Company to its employees (other than Xxxxxxx Xxxxx)
plus (b) $120,000, which fee shall be payable in twelve equal installments of
$28,597.17 each (or otherwise, as the management fee may be adjusted pursuant to
clause (a)) to an account designated by Wafra. The first installment shall be
due upon the Closing, and each installment thereafter will be due on the last
day of each successive calendar month following the Closing; provided, however,
that if the day on which any installment would otherwise become due is a day on
which banks are required or authorized to close in New York City, such
installment shall instead be due on the prior day on which banks are not so
required or authorized to close.
SECTION 5.03. Right of Audit. Busco shall have rights upon
reasonable notice to inspect the Company books and records during normal
business hours and to audit at its own expense provided that such inspection or
audit shall not unduly interfere with the conduct of the Company's business.
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SECTION 5.04. Non-Compete. Neither the Wafra Direct Equity Group
(for the later of (i) for so long as it (or Busco) shall retain beneficial
ownership of 25% of its (or Busco's) shares of Preferred Stock owned the date of
this Agreement or (ii) for so long as the Wafra Direct Equity Group shall
exercise a management or consulting position with respect to the Busco
investment) nor any member of the Xxxxx Group shall acquire an interest in, nor
shall it be a lender to, any company engaged in (a) the school bus
transportation business in the East Coast of the United States or (b) any other
transportation business in which the Company is engaged in any state wherein the
Company operates such business.
SECTION 5.05. Irrevocable Proxy. Xxxxxxx and Xxxxxxx Xxxxx each
agree to the irrevocable appointment of Xxxxxxx Xxxxx, until termination of this
Agreement, as his attorney and proxy pursuant to the provisions of Section 609
and in compliance with Section 620 of the Business Corporation Law of the State
of New York, with full power of substitution, to vote, and otherwise act (by
written consent or otherwise) with respect to the Common Stock and the other
securities which Xxxxxxx or Xxxxxxx Xxxxx is entitled to vote at any meeting of
stockholders of the Company (whether annual or special and whether or not an
adjourned or postponed meeting) or consent in lieu of any such meeting or
otherwise, on the matters and in the manner specified in Section 1.02 hereof.
THIS PROXY AND POWER OF ATTORNEY IS IRREVOCABLE AND COUPLED WITH AN INTEREST.
Xxxxxxx and Xxxxxxx Xxxxx each hereby revokes all other proxies and powers of
attorney with respect to the Common Stock and all other securities which he may
have heretofore appointed or granted, and no subsequent proxy or power of
attorney shall be given or written consent executed (and if given or executed,
shall not be effective) by Xxxxxxx or Xxxxxxx Xxxxx with respect thereto. All
authority herein conferred or agreed to be conferred shall survive the death or
incapacity of Xxxxxxx or Xxxxxxx Xxxxx and any obligation of Xxxxxxx or Xxxxxxx
Xxxxx under this Agreement shall be binding upon the heirs, personal
representatives and successors of each of them.
SECTION 5.06. Death of a Member of the Xxxxx Group. In the event of
the death of a member of the Xxxxx Group, the surviving members agree to
purchase the shares of Common Stock of the decedent in proportion to each
surviving member's holdings of Common Stock. Further, in the event of the death
of either Xxxxxxx or Xxxxxxx Xxxxx, such shares of Common Stock shall remain
subject to the requirements of Section 5.05. In the event of the death of
Xxxxxxx Xxxxx, Xxxxxxx and Xxxxxxx Xxxxx as shareholders agree to vote their
16
shares of Common Stock to support Board positions and shall not, in their
position decisions or deadlocks to support Board positions and shall as
shareholders, act to override of the Board.
SECTION 5.07. Public Offering. Without being required to convert its
shares of Preferred Stock, Busco and the Busco designated directors shall
consent to a Public Offering which does not allow for the sale of 75% of such
shares of Preferred Stock, provided (a) the Company and the Xxxxx Group are in
compliance with Section 13 of the Registration Rights Agreement and (b) the
terms and conditions of the second sentence of Section 1.02(d) hereof are met.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Representations. Each of the parties hereto represents
that this Agreement has been duly authorized, executed and delivered by such
party and constitutes a legal, valid and binding obligation of such party,
enforceable against it in accordance with the terms of this Agreement.
SECTION 6.02. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of their terms hereof, in addition to any other
remedy at law or in equity.
SECTION 6.03. Amendments and Waivers. Any term of this Agreement may
be amended and the observance of any such term may be waived (either generally
or in a particular instance and either retroactively or prospectively) only with
the written consent of the Company and Busco. Each Consenting Stockholder shall
be bound by any amendment or waiver authorized by this Section 6.03, whether or
not such Consenting Stockholder shall have consented thereto.
SECTION 6.04. Notices. All notices and other communications provided
for herein shall be in writing and shall be delivered by hand, telecopied or
sent by certified or registered mail, return receipt requested, postage prepaid,
addressed in the manner set forth on the signature pages of this Agreement (or
in such other manner for a party as shall be specified in a notice given in
accordance with
17
this Section 6.04). All such notices shall be conclusively deemed to be received
and shall be effective, if sent by hand delivery or telecopied, upon receipt, or
if sent by registered or certified mail, on the fifth day after the day on which
such notice is mailed.
SECTION 6.05. Benefit; Successors and Assigns. Except as otherwise
provided herein, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns; provided, however, that this Agreement shall not inure to the benefit
of any prospective transferee unless such prospective transferee shall have
agreed in writing to be bound by the terms of this Agreement. No Consenting
Stockholder may assign any of its rights hereunder to any person other than a
transferee that has complied with the requirements of this Section 6.05 in all
respects. Nothing in this Agreement either express or implied is intended to
confer on any person other than the parties hereto and their respective
successors and permitted assigns, any rights, remedies or obligations under or
by reason of this Agreement.
SECTION 6.06. Termination. This Agreement shall terminate on
February 28, 2045, or such earlier time as Busco and its Affiliates no longer
own at least 25% of the Preferred Stock.
SECTION 6.07. Miscellaneous. This Agreement sets forth the entire
agreement and understanding among the parties hereto, and supersedes all prior
agreements and understandings, relating to the subject matter hereof. If any
term or other provision of this Agreement is held invalid, all other conditions
and provisions of this Agreement shall nevertheless remain in full force and
effect, unless the term or provision held invalid shall substantially impair the
benefits of the remaining portions of this Agreement and shall not limit or
otherwise affect the meaning hereof. This Agreement shall be governed by the law
of the State of New York. This Agreement may be executed in any
18
number of counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement in their individual capacity or caused it to be duly executed by their
respective authorized signatories thereunto duly authorized as of the day and
year first above written.
ATLANTIC EXPRESS TRANSPORTATION
GROUP INC.
/s/ Xxxxxxx Xxxxx
-----------------------------------------
Name: Xxxxxxx Xxxxx
Title: President, Chief Executive Officer
0 Xxxxx Xxxxxx
Xxxxxx Xxxxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxx Xxxxx
Fax: (000) 000-0000
Telephone: (000) 000-0000
19
BUSCO CAPITAL INC.
/s/ Xxxx X. Xxxx
-----------------------------------
Name: Xxxx X. Xxxx
Title: Director
Citco Building
Wickhams Cay
P.O Box 662
Road Town,
Tortola
British Virgin Islands
with a copy to:
Wafra Investment Advisory Group, Inc.
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
attn: Mr. Xxxx Xxxx
Fax: (000) 000-0000
Telephone: (000) 000-0000
/s/ Xxxxxxx Xxxxx
-----------------------------------
Xxxxxxx Xxxxx
000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
/s/ Xxxxxxx Xxxxx
-----------------------------------
Xxxxxxx Xxxxx
000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
/s/ Xxxxxxx Xxxxx
-----------------------------------
Xxxxxxx Xxxxx
0 Xxxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
20
Agreed and Accepted By
WAFRA DIRECT EQUITY GROUP
as to, but only to the extent of,
the terms of Section 5.04 hereof:
/s/ Xxxx X. Xxxx
-----------------------------------
Name: Xxxx X. Xxxx
Title: Director
SCHEDULE A
UNDERWRITERS AND APPRAISERS
1. Xxxxxxx Xxxxx
2. Xxxxxx Brothers
3. Xxxxxx, Read & Co., Inc.
4. Bear, Xxxxxxx & Co., Inc.
5. Xxxxxxxxx, Xxxxxx & Xxxxxxxx Inc.
6. Xxxxx Xxxxxx Incorporated
7. Wertheim Xxxxxxxx & Co. Incorporated
8. Alex, Xxxxx & Sons Incorporated
9. Josephthal, Lyon & Xxxx, Inc.
10. Xxxxx Xxxxxx/Shearson
SCHEDULE B
FINANCIAL PERFORMANCE CRITERIA
Year ended 6/30/94 and year ended 12/31/94 net income plus
depreciation plus $13MM shall equal 120% of principal debt payments for
comparable periods.
Commencing 6/30/95 and quarterly thereafter on one-year rollover
basis, cash balance at beginning of year less $2MM plus income for year plus
depreciation shall equal 120% of principal debt payments.
SCHEDULE C
EXECUTIVE SEARCH
1. Canny Xxxxx Inc.
2. Xxxxxxx Xxxxxxxx Assoc., Inc.
3. Xxxxxxx Xxxxxx & Assoc.
4. Xxxxxx International
5. Xxxxx & XxXxx, Inc.
6. Hiedrick & Struggles. Inc.
