EXHIBIT 7.3
STOCKHOLDERS AGREEMENT
This Stockholders Agreement (this "AGREEMENT") dated as of April 2, 2004 is made
by and among Energy Spectrum Partners, LP ("ENERGY SPECTRUM"), the Investors
Group (as defined in Section 1.1 below), the Directors Group (as defined in
Section 1.1 below), and Xxxxx-Xxxxxxxx Corporation, a Delaware corporation (the
"COMPANY"). Energy Spectrum, the Investors Group, and the Directors Group shall,
as long as each such Person or group of Persons owns Stock, be collectively
referred to herein as the "STOCKHOLDERS".
RECITALS
WHEREAS, the Company is currently required, pursuant to the terms of the
Certificate of Designation, Preferences and Rights, as amended (the "CERTIFICATE
OF DESIGNATION"), of the Series A 10% Cumulative Convertible Preferred Stock
($0.01 par value) of the Company (the "PREFERRED STOCK, SERIES A"), to redeem
all except one share of the shares of Preferred Stock, Series A held by Energy
Spectrum;
WHEREAS, the Company and its directors recognize and acknowledge that it is in
the best interest of the Company for Energy Spectrum to waive its right to
mandatory redemption, and to instead convert its shares of Preferred Stock,
Series A into shares of Common Stock pursuant to the conversion terms of the
Certificate of Designation;
WHEREAS, in light of the foregoing Recital, Energy Spectrum has agreed to waive
its right to mandatory redemption, and to convert all of its shares of Preferred
Stock, Series A into shares of Common Stock (as defined in Section 1.1 below),
on the conversion terms set forth in the Certificate of Designation and in the
Preferred Stock Conversion Agreement (the "Conversion Agreement"), by and
between Energy Spectrum and the Company, dated the date hereof;
WHEREAS, Energy Spectrum is willing to enter into the Conversion Agreement in
reliance upon the Company, the Directors Group and the Investors Group
fulfilling their respective obligations under this Agreement;
WHEREAS, it is a condition of the consummation of the transactions contemplated
hereby that A-C will, prior to or concurrently with the execution of this
Agreement: (1) obtain a one year extension on the maturity date of certain loan
obligations, and (2) enter into a Stock and Warrant Purchase Agreement (the "SWP
Agreement") pursuant to which it will issue and sell to the Investor Group
3,100,000 shares of its Common Stock and warrants (the "Warrants") to purchase
as additional 4,000,000 shares of Common Stock;
WHEREAS, the Company and its directors recognize and acknowledge that, in
waiving its right to mandatory redemption, Energy Spectrum is waiving a valuable
right, both in economic terms and in non-economic terms, and that Energy
Spectrum would not agree to waive its mandatory redemption right without
assurances that the Company would honor its obligations under this Agreement;
WHEREAS, the Company and its directors recognize and acknowledge that the
directors of the Company have certain fiduciary duties to the common
stockholders of the Company; including the duties of loyalty, care and good
faith;
WHEREAS, the Company and its directors recognize and acknowledge that under
certain circumstances, the fiduciary duties of the directors of the Company to
its stockholders may require the directors to sell or consider the sale of the
Company;
WHEREAS, the parties to this Agreement recognize that Energy Spectrum would not
agree to convert its shares of Preferred Stock, Series A pursuant to Article 3
of this Agreement without assurances that, if no Qualified Public Offering
occurs on or before September 30, 2005, Energy Spectrum will have the rights,
and the Company will perform its obligations under, Article 4 of this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants set
forth herein and other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto, intending to be legally bound,
agree as follows:
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1. DEFINITIONS; USAGE
1.1. DEFINITIONS. For the purposes of this Agreement, unless the context
otherwise requires, capitalized terms used and not otherwise defined in this
Agreement shall have the following meanings:
"AFFILIATE"--as defined in the rules promulgated under the Securities Act.
"AGREEMENT"--as defined in the first paragraph of this Agreement.
"ALTERNATIVE INVESTMENT BANK NOTICE"--as defined in Section 4.3(a).
"AS CONVERTED BASIS" -means after giving effect to the exercise and or
conversion of all securities exercisable for or convertible into Common Stock.
"BOARD"--the board of directors of the Company.
"CERTIFICATE OF DESIGNATION"--as defined in the Recitals above.
"COMMON STOCK"--the common stock of the Company, par value $0.15 per share, any
stock into which such stock shall have been converted or changed, or any stock
resulting from any reclassification of such stock and all other stock of any
class or classes (however designated) of the Company, the holders of which have
the right, without limitation as to amount, either to all or to a share of the
balance of current dividends and liquidating dividends after the payment of
dividends and distributions on any shares entitled to preference.
"COMPANY"--as defined in the first paragraph of this Agreement.
"COMPANY RESPONSE"--as defined in Section 4.2(a).
"CONSENT"--any approval, consent ratification, waiver, or other authorization.
"CORPORATE TRANSACTION"--either of the following transactions to which the
Company is a party:
(a) a merger, reorganization, consolidation or share exchange in which
securities possessing more than 50% of the total combined voting power of the
Company's securities outstanding immediately prior thereto are transferred to,
or in the event of a share exchange more than 50% of the total combined voting
power of the Company's outstanding securities immediately thereafter come to be
held by, a Person or Persons different from the Person or Persons holding such
voting power immediately prior to such transaction; or
(b) the sale, transfer or other disposition of all or substantially all of the
Company's assets.
"DIRECTORS GROUP"--each of Xxxxxxx X. Xxxxxxxxxxxx, Xxxx Xxxxxxxxx and Xxxxx
Xxxxxx.
"DIRECTORS GROUP DESIGNEE"--the director the Directors Group has the right to
designate for election to the Board pursuant to Section 2.2(c).
"ENERGY SPECTRUM"--as defined in the first paragraph of this Agreement.
"ENERGY SPECTRUM DESIGNEES"--the directors Energy Spectrum has the right to
designate for election to the Board pursuant to Section 2.2(a).
"ENERGY SPECTRUM RESPONSE"--as defined in Section 4.2(b).
"INVESTMENT BANK"--the investment banking firm retained pursuant to Section 3
hereof.
"INVESTMENT BANK NOTICE"--as defined in Section 4.1.
"INVESTORS GROUP"--each of the persons so designated on Exhibit "A."
"INVESTORS GROUP DESIGNEES"--the directors the Investors Group has the right to
designate for election to the Board pursuant to Section 2.2(b).
"PERSON"--any individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, or other entity or
Governmental Body.
"PREFERRED STOCK, SERIES A"--as defined in the Recitals above.
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"QUALIFIED PUBLIC OFFERING"--the closing of an underwritten public offering of
Common Stock by means of a registration statement filed by the Company under the
Securities Act, which offering: (i) does not exclusively relate to securities
under an employee stock option, bonus or other compensation plan; (ii) is at a
price of not less than $0.50 per share of Common Stock (such amount to be
ratably adjusted to reflect any stock splits, subdivisions, combinations or any
other action that would cause an adjustment pursuant to any antidilution
provisions); and (iii) yields net proceeds to the Company of not less than
$10,000,000 (net of underwriting discounts and other expenses and including
proceeds received by the Company upon exercise of any over-allotment option by
underwriters).
"SECURITIES ACT"--the Securities Act of 1933, as amended.
"STOCK"--means all capital stock of the Company held by a Stockholder.
"STOCKHOLDER"--Energy Spectrum, each Person in the Investors Group, each Person
in the Directors Group, and each additional stockholder of the Company who
becomes a party to this Agreement by executing a counterpart to this Agreement
and delivering it to the Company.
1.2. USAGE. In this Agreement, unless a clear contrary intention appears:
(a) the singular number includes the plural number and vice versa;
(b) reference to any Person includes such Person's successors and assigns but,
if applicable, only if such successors and assigns are not prohibited by this
Agreement, and reference to a Person in a particular capacity excludes such
Person in any other capacity or individually;
(c) reference to any gender includes each other gender or, in the case of an
entity, the neuter;
(d) reference to any agreement, document or instrument means such agreement,
document or instrument as amended or modified and in effect from time to time in
accordance with the terms thereof;
(e) reference to any law means such law as amended, modified, codified, replaced
or reenacted, in whole or in part, and in effect from time to time, including
rules and regulations promulgated thereunder and reference to any section or
other provision of any law means that provision of such law from time to time in
effect and constituting the substantive amendment, modification, codification,
replacement or reenactment of such section or other provision;
(f) "hereunder", "hereof", "hereto" and words of similar import shall be deemed
references to this Agreement as a whole and not to any particular Article,
Section or other provision thereof;
(g) "including" (and with correlative meaning "include") means including without
limiting the generality of any description preceding such term;
(h) "or" is used in the inclusive sense of "and/or";
(i) with respect to the determination of any period of time, "from" means "from
and including" and "to" means "to but excluding"; and
(j) references to documents, instruments or agreements shall be deemed to refer
as well to all addenda, exhibits, schedules or amendments thereto.
2. BOARD OF DIRECTORS; VOTING
2.1. BOARD SIZE. At all meetings (and written consents in lieu of meetings) of
stockholders of the Company, each Stockholder shall vote all of such
Stockholder's Stock and other securities entitled to vote in respect of the
election of the directors of the Company and take all other actions as may be
necessary to cause the number of directors on the Board to be not less than nine
(9) directors.
2.2. ELECTION OF DIRECTORS. At all meetings (and written actions in lieu of
meetings) of stockholders of the Company at which directors are to be elected,
each Stockholder shall vote all of such Stockholder's Stock and other securities
entitled to vote in respect of the election of the directors of the Company to
elect as directors of the Company the Energy Spectrum Designees, Investors Group
Designees and Directors Group Designees:
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(a) ENERGY SPECTRUM DESIGNEES. At each of the Company's annual or special
meetings of stockholders at which directors are to be elected, Energy Spectrum
shall have the right to designate in writing:
(i) three (3) nominees for election to the Board, so long as Energy Spectrum
and/or its Affiliates collectively hold a number of shares of Stock (on an As
Converted Basis) greater than 66% of the number of shares of Stock held by them
(on an As Converted Basis) at the date hereof, after making ratable adjustments
in the event of any stock splits, stock dividends or stock combinations;
(ii) two (2) nominees for election to the Board, so long as Energy Spectrum
and/or its Affiliates collectively hold a number of shares of Stock (on an As
Converted Basis) greater than 33%, but less than or equal to 66%, of the number
of shares of Stock held by them (on an As Converted Basis) at the date hereof,
after making ratable adjustments in the event of any stock splits, stock
dividends or stock combinations; and
(iii) one (1) nominee for election to the Board, so long as Energy Spectrum
and/or its Affiliates collectively hold a number of shares of Stock (on an As
Converted Basis) greater than five percent (5%) of the outstanding Common Stock
on an As Converted Basis, but less than or equal to 33%, of the number of shares
of Stock held by them (on an As Converted Basis) at the date hereof, after
making ratable adjustments in the event of any stock splits, stock dividends or
stock combinations.
This Agreement does not grant Energy Spectrum the right to have more than: three
(3) directors on the Board at any time if designating directors pursuant to
Section 2.2(a)(i), two (2) directors on the Board at any time if designating
directors pursuant to Section 2.2(a)(ii), or one (1) director on the Board at
any time if designating directors pursuant to Section 2.2(a)(iii).
(b) INVESTORS GROUP DESIGNEES. At each of the Company's annual or special
meetings of stockholders at which directors are to be elected, the Investors
Group shall have the right to designate in writing the following:
(i) two (2) nominees for election to the Board, so long as the Investors Group
and/or Affiliates of any member of the Investors Group collectively hold a
number of shares of Stock (on an As Converted Basis) greater than 50%, of the
number of shares of Stock held by them (on an As Converted Basis) at the date
hereof, after making ratable adjustments in the event of any stock splits, stock
dividends or stock combinations; and
(ii) one (1) nominee for election to the Board, so long as the Investors Group
and/or Affiliates of any member of the Investors Group collectively hold a
number of shares of Stock (on an As Converted Basis) greater than five percent
(5%) of the outstanding Common Stock on an As Converted Basis, but less than or
equal to 50%, of the number of shares of Stock held by them (on an As Converted
Basis) at the date hereof, after making ratable adjustments in the event of any
stock splits, stock dividends or stock combinations.
This Agreement does not grant the Investors Group the right to have more than:
two (2) directors on the Board at any time if designating directors pursuant to
Section 2.2(b)(i) or one (1) director on the Board at any time if designating
directors pursuant to Section 2.2(b)(ii).
(c) DIRECTORS GROUP DESIGNEE. At each of the Company's annual or special
meetings of stockholders at which directors are to be elected, the Directors
Group shall have the right to designate in writing one (1) nominee for election
to the Board, so long as the Directors Group and/or Affiliates of any member of
the Directors Group collectively hold a number of shares of Stock (on an As
Converted Basis) greater than five percent (5%) of the outstanding Common Stock
on an As Converted Basis.
2.3. REMOVAL. Each Stockholder agrees to vote such Stockholder's Stock
(calculated on an As Converted Basis), at all meetings (and written actions in
lieu of meetings) of stockholders of the company, for removal of a certain
director as directed by the Person or Persons having the right to designate such
director pursuant to Section 2.2(a), (b) or (c) above.
2.4. VACANCIES. Each Stockholder agrees to vote such Stockholder's Stock
(calculated on an As Converted Basis), at all meetings (and written actions in
lieu of meetings) of stockholders of the Company, to fill any vacancy on the
Board caused by the resignation, death or removal of any director designated
under 2.2(a), (b) or (c) with a nominee selected as provided therein.
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3. CORPORATE TRANSACTION
3.1. NO QUALIFIED PUBLIC OFFERING. If a Qualified Public Offering does not occur
on or before September 30, 2005, then at any time on or after October 1, 2005,
Energy Spectrum may send notice to the Company that the Energy Spectrum
recommends that the Company retain an Investment Bank (the "INVESTMENT BANK
NOTICE") to seek and report on candidates interested in entering into a
Corporate Transaction, with a view toward maximizing stockholder value.
3.2. INVESTMENT BANK PROCESS.
Within 45 days of receipt of the Investment Bank Notice, the Board of Directors
shall appoint an investment banking firm to seek and report on candidates
interested in entering into a Corporate Transaction, with a view toward
maximizing stockholder value. If the Company does not give Energy Spectrum the
Company's response of its selection (the "Company Response") within the 45-day
period described in this Section 3.2, Energy Spectrum may elect, in its sole
discretion, to give the Company the Alternative Investment Bank Notice as set
forth in Section 3.3(a). If Energy Spectrum elects to give the Company the
Alternative Investment Bank Notice, the Company shall relinquish its rights
under this Section 3.2, and the parties' rights under this Article 3 shall be
governed by Section 3.3.
3.3. ALTERNATIVE PROCESS.
(a) If the Company does not give Energy Spectrum the Company Response within the
45-day period set forth in Section 3.2 above, Energy Spectrum may elect, in its
sole discretion and at any time after the expiration of such 45-day period, to
give a list of three (3) investment banking firms to the Company (the
"ALTERNATIVE INVESTMENT BANK NOTICE"), each of which investment banking firms
shall, by virtue of being recommended by Energy Spectrum, be considered an
Investment Bank for purposes of this Agreement if eventually retained by the
Company pursuant to and for the purposes set forth in this Article 3.
(b) Within thirty 30 days of its receipt of the Alternative Investment Bank
Notice, the Company shall retain one (1) Investment Bank listed in the
Alternative Investment Bank Notice.
3.4 RETENTION. The Investment Bank selected pursuant to this Section 3 shall be
engaged to seek and report on candidates interested in entering into a Corporate
Transaction, with a view toward maximizing stockholder value.
4. GENERAL PROVISIONS
4.1. NOTICES. All notices, Consents, waivers, and other communications required
or permitted by this Agreement must be in writing and will be deemed to have
been given to a party when:
(a) Delivered to the appropriate address by hand or by nationally recognized
overnight courier service, costs prepaid (with written confirmation of receipt);
(b) Sent by facsimile or email with confirmation of transmission by the
transmitting equipment; or
(c) Received or rejected by the addressee, if sent by certified mail, return
receipt requested, in each case to the following addresses, facsimile numbers or
email addresses and marked to the attention of the designated Person (by name or
title), or to such other address, facsimile number, email address or Person as a
party may designate by notice to the other parties:
The Company: Allis Chalmers Corporation
0000 Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
with a copy to: Xxxxxx X. Xxxxxxxx
Xxxxxx Xxxxxxxxx Xxxxx & Xxxxxxxx LLP
0000 00xx Xxxxxx, Xxxxx 0000 Xxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
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Stockholders: The contact information of
each Stockholder is provided
on Exhibit A hereto, which
shall be updated by the
Company whenever a transferee
delivers a counterpart to this
Agreement to the Company.
4.2. RESTRICTIVE LEGEND ON STOCK CERTIFICATES. The Company and each Stockholder
agree that all certificates representing all shares of Common Stock of the
Company which at any time are subject to the provisions of this Agreement shall
have endorsed upon them in boldface type the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO RESTRICTIONS ON
TRANSFER AND OTHER OBLIGATIONS CONTAINED IN A STOCKHOLDERS AGREEMENT BETWEEN THE
CORPORATION AND CERTAIN OF ITS STOCKHOLDERS, A COPY OF WHICH IS ON FILE WITH THE
CORPORATION AND WILL BE FURNISHED WITHOUT COST TO THE HOLDER HEREOF UPON WRITTEN
REQUEST TO THE SECRETARY OF THE CORPORATION.
4.3. TRANSFEREES. Under no circumstances shall any sale or other transfer of any
Stock subject hereto be valid until the proposed transferee thereof shall have
executed a counterpart and become a party to this Agreement, and thereby shall
have become subject to all of the provisions hereof, unless the requirement is
waived by written consent of the parties hereto; provided that this Agreement
shall terminate with respect to any shares sold in an offering registered under
the Securities Act or in a broker's transaction pursuant to Rule 144 under the
Securities Act.
4.4. FURTHER ASSURANCES. Each party hereto agrees to perform any further acts
and to execute and deliver any further documents which may be reasonably
necessary to carry out the provisions of this Agreement.
4.5. REMEDIES. If a breach of any party to this Agreement occurs, any party may
pursue any available remedy by proceeding at law or in equity to enforce the
performance of any provision of this Agreement. Except as otherwise provided by
law or as otherwise provided in this agreement, a delay or omission by any such
party in exercising any right or remedy accruing upon any such breach shall not
impair the right or remedy or constitute a waiver of or acquiescence in any such
breach. No remedy is exclusive of any other remedy. All available remedies are
cumulative.
4.6. SEVERABILITY. In the event that any of the provisions, or portions thereof,
of this Agreement are held to be unenforceable or invalid by any court of
competent jurisdiction, the validity and enforceability of the remaining
provisions, or portions thereof, shall not be affected thereby.
4.7. GOVERNING LAW. This Agreement has been executed in and shall be governed by
the laws of the State of Delaware.
4.8. INUREMENT; ASSIGNMENTS. Subject to the restrictions against transfer or
assignment as herein contained, the provisions of this Agreement shall inure to
the benefit of and shall be binding on the heirs, assigns, successors in
interest, personal representatives, estates, heirs, and legatees of each of the
parties hereto.
4.9. AMENDMENT. This Agreement may only be amended by the written consent of all
then current parties to this Agreement.
4.10. ENTIRE AGREEMENT. This Agreement contains the entire understanding between
the parties hereto concerning the subject matter contained herein.
4.11. COUNTERPARTS. This Agreement may be executed simultaneously in multiple
counterparts, each of which when so executed shall be deemed to be an original
and such counterparts shall together constitute one and the same instrument.
4.12. REPRESENTATION BY COUNSEL. All of the Stockholders represent that they
have consulted, or have had an opportunity to consult, separate counsel in
negotiating and executing this Agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective on and after April 2, 2004.
THE COMPANY:
/S/ XXXXXXX XXXXXXXXXXXX
--------------------------------------------
MUNAWAR HIDYATALLAH, CHIEF EXECUTIVE OFFICER
DIRECTORS GROUP:
/S/ XXXXXXX XXXXXXXXXXXX
--------------------------------------------
XXXXXXX X. XXXXXXXXXXXX
/S/ XXXX X. XXXXXXXXX
--------------------------------------------
XXXX X. XXXXXXXXX
/S/ XXXXX X. XXXXXX
--------------------------------------------
XXXXX X. XXXXXX
INVESTORS GROUP:
/S/ XXXXXXX XXXXXXXX
--------------------------------------------
XXXXXXX XXXXXXXX
XXXXX INVESTORS DEFINED BENEFIT PLAN
/S/ XXXXXX XXXXX
--------------------------------------------
BY:
TITLE:
RER CORP.
/S/ XXXXXX XXXXXXXXXXX
--------------------------------------------
BY:
TITLE:
/S/ XXXXXX XXXXX
--------------------------------------------
XXXXXX XXXXX
/S/ XXXXXXXXXXX XXXXX
--------------------------------------------
XXXXXXXXXXX XXXXX
ENERGY SPECTRUM PARTNERS LP
By: Energy Spectrum Capital LP, General Partner
By: Energy Spectrum LLC, General Partner
BY: /S/ XXXXX X. XXXXX
----------------------------------------
NAME: XXXXX X. XXXXX
TITLE: CHIEF INVESTMENT OFFICER
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EXHIBIT A
LIST OF STOCKHOLDERS AND ADDRESS FOR NOTICE
------------------------------------------ -------------------------------------
STOCKHOLDER ADDRESS FOR NOTICE
------------------------------------------ -------------------------------------
Energy Spectrum 0000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx
------------------------------------------ -------------------------------------
Directors Group
Xxxxxxx X. Xxxxxxxxxxxx 0000 Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Xxxx X. Xxxxxxxxx 0000 Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Xxxxx X. Xxxxxx 0000 00xx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx XX 00000
------------------------------------------ -------------------------------------
Investors Group
RER Corp 0000 Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Xxxxx Investors Defined Benefit Plan 000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxx Xxxxx 000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxxxxxxx Xxxxx 0000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxxx Xxxxxxxx 00 X. Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
