EXHIBIT 10.1
EXECUTION COPY
INVESTORS' AGREEMENT
dated as of
April 30, 1998
among
LAMINATES ACQUISITION CO.,
LMS I, CO.,
DLJ MERCHANT BANKING PARTNERS II, L.P.,
DLJ MERCHANT BANKING PARTNERS II - A, L.P.,
DLJ OFFSHORE PARTNERS II, X.X.,
XXX XXXXXXXXXXX XXXXXXXX, X.X.,
XXX DIVERSIFIED PARTNERS - A, L.P.,
DLJ MILLENNIUM PARTNERS, L.P.,
DLJ MILLENNIUM PARTNERS - A, L.P.,
DLJMB FUNDING II, INC.,
UK INVESTMENT PLAN 1997 PARTNERS,
DLJ EAB PARTNERS, L.P.,
DLJ FIRST ESC L.P.,
DLJ ESC II L.P.,
CVC EUROPEAN EQUITY PARTNERS L.P.,
CVC EUROPEAN EQUITY PARTNERS (JERSEY) L.P.,
MMI PRODUCTS, L.L.C.
AND
CERTAIN OTHER PERSONS NAMED HEREIN
TABLE OF CONTENTS
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PAGE
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions....................................................2
ARTICLE 2
CORPORATE GOVERNANCE AND MANAGEMENT
SECTION 2.01. Composition of the Board; Committees..........................10
SECTION 2.02. Removal.......................................................11
SECTION 2.03. Vacancies.....................................................11
SECTION 2.04. Action by the Board...........................................11
SECTION 2.05. Action by the Shareholders....................................14
SECTION 2.06. Conflicting Charter or Bylaw Provision........................15
SECTION 2.07. Subsidiary Governance.........................................15
SECTION 2.08. Notice of Meeting; Participation..............................15
SECTION 2.09. Voting of Common Stock Owned by Management
Stockholders..................................................15
ARTICLE 3
RESTRICTIONS ON TRANSFER
SECTION 3.01. General.......................................................16
SECTION 3.02. Legends.......................................................16
SECTION 3.03. Permitted Transferees.........................................17
SECTION 3.04. Restrictions on Transfers by Shareholders.....................17
SECTION 3.05. Restrictions on Transfers of After Acquired Securities by
Management Shareholders.......................................18
ARTICLE 4
TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS; PREEMPTIVE RIGHTS;
RIGHTS OF FIRST OFFER
SECTION 4.01. Rights to Participate in Transfer..............................19
SECTION 4.02. Right to Compel Participation in Certain Transfers.............21
SECTION 4.03. Preemptive Rights..............................................23
SECTION 4.04. Rights of First Offer..........................................25
SECTION 4.05. Certain Rights.................................................27
PAGE
ARTICLE 5
REGISTRATION RIGHTS
SECTION 5.01. Demand Registration...........................................28
SECTION 5.02. Piggyback Registration........................................31
SECTION 5.03. Holdback Agreements...........................................32
SECTION 5.04. Registration Procedures.......................................32
SECTION 5.05. Indemnification by the Issuer.................................35
SECTION 5.06. Indemnification by Participating Shareholders.................36
SECTION 5.07. Conduct of Indemnification Proceedings........................37
SECTION 5.08. Contribution..................................................38
SECTION 5.09. Participation in Public Offering..............................40
SECTION 5.10. Cooperation by the Issuer.....................................40
SECTION 5.11. No Transfer of Registration Rights............................40
ARTICLE 6
CERTAIN COVENANTS AND AGREEMENTS
SECTION 6.01. Confidentiality...............................................40
SECTION 6.02. Reports.......................................................41
SECTION 6.03. Limitations on Subsequent Registration........................41
SECTION 6.04. Exclusive Financial Advisor and Investment Banking
Advisor.......................................................42
SECTION 6.05. Regulatory Co-operation.......................................42
ARTICLE 7
MISCELLANEOUS
SECTION 7.01. Entire Agreement..............................................43
SECTION 7.02. Binding Effect; Benefit.......................................43
SECTION 7.03. Assignability.................................................43
SECTION 7.04. Amendment; Waiver; Termination................................44
SECTION 7.05. Notices.......................................................45
SECTION 7.06. Headings......................................................46
SECTION 7.07. Counterparts..................................................46
SECTION 7.08. Applicable Law................................................46
SECTION 7.09. Specific Enforcement..........................................46
SECTION 7.10. Consent to Jurisdiction; Expenses.............................46
SECTION 7.11. Severability..................................................47
ii
INVESTORS' AGREEMENT
AGREEMENT dated as of April 30, 1998 among (i) Laminates Acquisition Co.
(the "Company"), (ii) LMS I, Co., a wholly-owned subsidiary of the Company
(together with any successor, "LMS"), (iii) DLJ Merchant Banking Partners II,
L.P. ("DLJMB"), DLJ Offshore Partners II, C.V., DLJ Diversified Partners, L.P.,
DLJMB Funding II, Inc., DLJ Merchant Banking Partners II - A, L.P., DLJ
Diversified Partners - A., L.P., DLJ Millennium Partners, L.P., DLJ Millennium
Partners - A, L.P., UK Investment Plan 1997 Partners, DLJ EAB Partners, L.P.,
DLJ ESC II L.P. and DLJ First ESC L.P. (each a "DLJ Entity" and a "Shareholder"
and, collectively, the "DLJ Entities"), (iv) MMI Products, L.L.C., a Delaware
limited liability company ("MMI"), CVC European Equity Partners L.P. ("CVC")
and CVC European Equity Partners (Jersey) L.P. ("CVC Jersey" and each a
"Shareholder" and, collectively, the Shareholders listed in clauses (iii) and
(iv) are referred to as the "Institutional Shareholders") and (v) certain other
Persons listed on the signature pages hereof or who upon acquiring securities
of the Company after the date hereof become parties hereto (each a
"Shareholder" and, collectively, the "Management Shareholders").
W I T N E S S E T H :
WHEREAS, pursuant to the Subscription Agreement (as defined below) certain
parties hereto are or will be acquiring securities of the Company and LMS; and
WHEREAS, pursuant to the terms of the Share Purchase Agreement (as defined
below), the Company will acquire all of the outstanding capital stock of FM
Holdings, Inc. ("FM Holdings");
WHEREAS, simultaneously with the acquisition of FM Holdings by the
Company, LMS will be merged (the "FM Merger") with and into FM Holdings in
accordance with Delaware law with FM Holdings being the surviving corporation;
WHEREAS, the parties hereto desire to enter into this Agreement to govern
certain of their rights, duties and obligations after consummation of the
transactions contemplated by the Share Purchase Agreement and the Subscription
Agreement;
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. (a) The following terms, as used herein, have
the following meanings:
"Adverse Person" means any Person whom the Board determines is a
competitor or a potential competitor of the Company or its Subsidiaries.
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under common control with such
Person, provided that no securityholder of the Company shall be deemed an
Affiliate of any other securityholder solely by reason of any investment in the
Company. For the purpose of this definition, the term "control" (including with
correlative meanings, the terms "controlling", "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
"Affiliated Employee Benefit Trust" means any trust that is a successor to
the assets held by a trust established under an employee benefit plan subject
to ERISA or any other trust established directly or indirectly under such plan
or any other such plan having the same sponsor.
"After Acquired Shares" means any shares of Common Stock or Preferred
Stock acquired by a Management Shareholder that are not Purchased Shares.
"beneficially own" has the meaning set forth in Rule 13d-3 of the Exchange
Act.
"Board" means the board of directors of the Company.
"Bridge Notes" means the unsecured increasing rate notes to be issued by
LMS II, Co. on the Closing Date.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York City are authorized by law to close.
"Change of Control" means such time as (a) the Institutional Shareholders
and their Permitted Transferees shall own less than 10% of the
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outstanding shares of Common Stock on a Fully Diluted Basis, (b) the transfer
of all or substantially all of the assets of the Company to any Person or group
shall have been consummated, (c) the Company shall have been liquidated, or (d)
any Person, other than an Institutional Shareholder or its Permitted
Transferees, shall beneficially own more Company Equity Securities than the
Institutional Shareholder and its Permitted Transferees owning, in the
aggregate, the greatest amount of Company Equity Securities.
"Closing Date" means May 1, 1998.
"Common Stock" shall mean the Class A common stock and Class B non-voting
common stock, each with par value $.01 per share, of the Company and any stock
into which such Common Stock may thereafter be converted or changed. For
purposes of this Agreement the Class A and Class B Common Stock shall be
considered one class of Equity Securities.
"Company Equity Securities" means the Company Stock, the Derivatives,
securities convertible into or exchangeable for Common Stock and any other
equity security issued by the Company.
"Company Stock" means the Common Stock and the Preferred Stock.
"CVC Entities" means CVC, CVC Jersey and their respective Permitted
Transferees.
"Derivatives" means options, warrants (including the Warrants) or other
rights to acquire any Company Equity Securities.
"Drag-Along Portion" means, with respect to any class of Equity
Securities, the number of shares of such class beneficially owned by a
Shareholder multiplied by a fraction, the numerator of which is the number of
shares of such class proposed to be sold by the Institutional Shareholders or
the DLJ Entities, as the case may be, pursuant to Section 4.02 and the
denominator of which is the total number of shares of such class on a Fully
Diluted basis beneficially owned by the Institutional Shareholders or the DLJ
Entities, as the case may be.
"Equity Securities" means the Company Equity Securities and the LMS
Preferred Stock.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Formica" means Formica Corporation, a Delaware corporation.
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"Fountainhead Acquisition" means the purchase by the Company from
International Paper of all of the assets exclusively relating to International
Paper's Fountainhead solid surfacing operations.
"Fully Diluted" means, with respect to any class of Equity Securities and
without duplication, all outstanding shares of such class and all shares
issuable in respect of securities convertible into or exchangeable for such
class, stock appreciation rights or options, warrants and other irrevocable
rights to purchase or subscribe for such class or securities convertible into
or exchangeable for such class; provided that no Person shall be deemed to own
such number of Fully Diluted shares of such class as such Person has the right
to acquire from any Person other than the Company or LMS.
"Initial Ownership" means, with respect to any class of Equity Securities,
the number of shares of a class of Equity Securities beneficially owned (and
(without duplication) which such Persons have the right to acquire from any
Person) as of the date hereof, or in the case of any Person that shall become a
party to this Agreement on a later date, as of such date, taking into account
any stock split, stock dividend, reverse stock split or similar event.
"Initial Public Offering" means the initial sale after the date hereof of
Common Stock pursuant to an effective registration statement under the
Securities Act (other than a registration statement on Form S-8 or any
successor form).
"Issuer" means the Company as the issuer of the Company Equity Securities
and/or LMS as the issuer of the LMS Preferred Stock, as the context requires.
"LMS Board" means the board of directors of LMS.
"LMS Preferred Stock" means the 15% Senior Exchangeable Preferred Stock of
LMS which following the FM Merger will constitute 15% Senior Exchangeable
Preferred Stock of FM Holdings.
"MMI Entities" means MMI and its Permitted Transferees.
"Percentage Ownership" means, with respect to any Shareholder at any time,
(i) the number of shares of Fully Diluted Common Stock that such Shareholder
beneficially owns (and (without duplication) has the right to acquire from any
Person) at such time, divided by (ii) the total number of shares of Fully
Diluted Common Stock at such time.
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"Permitted Transferee" means (i) in the case of an Institutional
Shareholder other than a DLJ Entity (a) any nominee or trustee for or any
general or limited partner or shareholder of such Shareholder, and any
corporation, partnership or other entity that is an Affiliate of such
Shareholder (collectively, "Shareholder Affiliates"), (b) any general partner,
limited partner, employee, officer or director of such Shareholder or a
Shareholder Affiliate, or any spouse, lineal descendant, sibling, parent, heir,
executor, administrator, testamentary trustee, legatee or beneficiary of any of
the foregoing persons described in this clause (b) (collectively, "Shareholder
Associates"), (c) to a "Co-Investment Scheme" being a scheme under which
certain officers, employees or partners of a Shareholder or of its adviser or
manager are entitled (as individuals or through a body corporate or any other
vehicle) to acquire shares which such Shareholder would otherwise acquire and a
Co-Investment Scheme which holds shares for a body corporate or other vehicle
may transfer their shares to another body corporate or another vehicle which
holds or is to hold shares for the Co-Investment Scheme or the officers,
employees or partners entitled to the shares under the Co-Investment Scheme and
(d) any trust, the beneficiaries of which, or any corporation, limited
liability company or partnership, stockholders, members or general or limited
partners of which include only such Shareholder, such Shareholder Affiliates or
Shareholder Associates, provided, in the case of a transfer to any limited
partner, such transfer to such limited partner is not one whose primary purpose
is an evasion of the transfer restrictions set forth in Section 3.04;
(ii) in the case of a Management Shareholder (a) a spouse or lineal
descendant (whether natural or adopted), sibling, parent, heir, executor,
administrator, testamentary trustee, legatee or beneficiary of any of such
Management Shareholder, (b) any trust, the beneficiaries of which, or any
corporation, limited liability company or partnership, stockholders, members or
general or limited partners of which include only the Persons named in clause
(a) or (c) any charitable remainder trust; or
(iii) in the case of any DLJ Entity (a) any other DLJ Entity, (b) any
general or limited partner of any such entity (a "DLJ Partner"), and any
corporation, partnership, Affiliated Employee Benefit Trust or other entity
which is an Affiliate of any DLJ Partner (collectively, the "DLJ Affiliates"),
(c) any managing director, general partner, director, limited partner, officer
or employee of such DLJ Entity or a DLJ Affiliate, or the heirs, executors,
administrators, testamentary trustees, legatees or beneficiaries of any of the
foregoing Persons referred to in this clause (c) (collectively, "DLJ
Associates"), and (d) any trust, the beneficiaries of which, or any
corporation, limited liability company or partnership, the stockholders,
members or general or limited partners of which, include only such XXX Xxxxxx,
XXX Xxxxxxxxxx, XXX Associates, their spouses or
5
their lineal descendants, provided, in the case of a transfer to any limited
partner, such transfer to such limited partner is not one whose primary purpose
is an evasion of the transfer restrictions set forth in Section 3.04. The term
"DLJ Entities", to the extent such entities shall have transferred any of their
Shares to "Permitted Transferees", shall mean the DLJ Entities and the
Permitted Transferees of the DLJ Entities, taken together, and any right or
action that may be exercised or taken at the election of the DLJ Entities may
be exercised or taken at the election of the DLJ Entities and such Permitted
Transferees.
"Person" means an individual, corporation, limited liability company,
partnership, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Preferred Stock" means the 8% Preferred Stock of the Company.
"Pro Rata Portion" means the number of shares of After Acquired Securities
a Management Shareholder holds multiplied by a fraction, the numerator of which
is the number of shares of Company Equity Securities to be sold by the
Institutional Shareholders and their Permitted Transferees in a Public Offering
and the denominator of which is the total number of Company Equity Securities,
on a Fully Diluted basis, held in the aggregate by the Institutional
Shareholders and their Permitted Transferees prior to such Public Offering.
"Public Offering" means any primary or secondary public offering of
Company Equity Securities pursuant to an effective registration statement under
the Securities Act other than pursuant to a registration statement filed in
connection with a transaction of the type described in Rule 145 of the
Securities Act or for the purpose of issuing securities pursuant to an employee
benefit plan.
"Purchased Shares" means those shares of Common Stock and Preferred Stock
purchased by a Management Shareholder on the Closing Date for cash taking into
account any stock split, stock dividend, reverse stock split or similar event.
"Registrable Securities" means at any time, with respect to any
Shareholder or its Permitted Transferees, any shares of Common Stock, LMS
Preferred Stock, Preferred Stock or Warrants or Warrant Shares then owned by
such Shareholder or its Permitted Transferees until (i) a registration
statement covering such securities has been declared effective by the SEC and
such securities have been disposed of pursuant to such effective registration
statement, (ii) such securities are sold under circumstances in which all of
the applicable conditions of Rule 144 (or any similar provisions then in force)
under the Securities Act are met or (iii) such securities are otherwise
transferred, the
6
Company has delivered a new certificate or other evidence of ownership for such
securities not bearing the legend required pursuant to this Agreement and such
securities may be resold without subsequent registration under the Securities
Act.
"Registration Expenses" means (i) all registration and filing fees, (ii)
fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the securities registered), (iii) printing expenses, (iv)
internal expenses of the Company (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting
duties), (v) reasonable fees and disbursements of counsel for the Company and
customary fees and expenses for independent certified public accountants
retained by the Company (including expenses relating to any comfort letters or
costs associated with the delivery by independent certified public accountants
of a comfort letter or comfort letters requested pursuant to Section 5.04(g)
hereof), (vi) the reasonable fees and expenses of any special experts retained
by the Company in connection with such registration, (vii) reasonable fees and
expenses of up to one counsel for the Shareholders participating in the
offering, (viii) fees and expenses in connection with any review of
underwriting arrangements by the National Association of Securities Dealers,
Inc. (the "NASD") including fees and expenses of any "qualified independent
underwriter" and (ix) fees and disbursements of underwriters customarily paid
by issuers or sellers of securities, but shall not include any underwriting
fees, discounts or commissions attributable to the sale of Registrable
Securities, or any out-of-pocket expenses (except as set forth in clause (vii)
above) of the Shareholders or any fees and expenses of underwriter's counsel.
"Section 4.03 Portion" means the pro rata portion of any Company Equity
Securities proposed to be issued by the Company with respect to which
Shareholders shall be entitled to exercise their rights under Section 4.03
based upon such Shareholder's Initial Ownership as a percentage of the Initial
Ownership of all Shareholders.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Share Purchase Agreement" means the Share Sale and Purchase Agreement
dated as of March 16, 1998, between the Company and BTR Australia Ltd.
"Shareholder" means each Person (other than the Company and LMS) who shall
be a party to or bound by this Agreement, whether in connection with
7
the execution and delivery hereof as of the date hereof, pursuant to Section
7.03 or otherwise, so long as such Person shall beneficially own any Equity
Securities.
"Shares" means shares of Common Stock, Preferred Stock or LMS Preferred
Stock, as the context requires, held by the Shareholders.
"Subject Securities" means the class or classes of Equity Securities
beneficially owned by a Shareholder to be transferred in a Section 4.02 Sale.
"Subscription Agreement" means the Subscription Agreement dated as of
March 15, 1998 among the Company, LMS and the Institutional Shareholders, as
amended from time to time.
"Subsidiary" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person.
"Tag-Along Portion" means (i) where the Selling Person is selling a class
of Company Stock, the number of shares of such class held (or, without
duplication, that such Shareholder has the right to acquire from any Person) by
the Tagging Person or the Selling Person, as the case may be, multiplied by a
fraction, the numerator of which is the maximum number of shares of such class
proposed to be sold in the Tag-Along Offer, and the denominator of which is the
aggregate number of shares of such class on a Fully Diluted basis owned by all
Shareholders; and
(ii) where the Selling Person is selling Warrants, the number of shares of
Common Stock held (or, without duplication, acquirable under the Warrants) by
the Tagging Person or the Selling Person, as the case may be, multiplied by a
fraction the numerator of which is the number of shares of Common Stock for
which the Warrants proposed to be sold in the Tag-Along Offer are exercisable,
and the denominator of which is the aggregate number of shares of Common Stock
on a Fully Diluted basis owned by all Shareholders.
"Third Party" means a prospective purchaser of Equity Securities in an
arm's-length transaction from a Shareholder where such purchaser is not a
Permitted Transferee of such Shareholder.
"Underwritten Public Offering" means a firmly underwritten public offering
of Registrable Securities of the Company pursuant to an effective registration
statement under the Securities Act.
8
"Warrants" means the warrants issued to the Shareholders by the Company
for the purchase of an aggregate of 100,000 shares of Common Stock (subject to
adjustment as provided therein).
"Warrant Shares" means the shares of Common Stock issuable by the Company
upon exercise of the Warrants.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
Applicable Holdback Period 5.03
Bridge Equity Holder 7.03(d)
Bridge Warrant Agreement 7.03(d)
Cause 2.02
Confidential Information 6.01(b)
Demand Registration 5.01(a)
Drag-Along Rights 4.02(a)
Holders 5.01(a)(ii)
Incidental Registration 5.02(a)
Indemnified Party 5.07
Indemnifying Party 5.07
independent director 2.01(a)
Initial Order Period 4.04(a)
Initial Section 4.04 Offer 4.04(a)
Initial Section 4.04 Offer Notice 4.04
Inspectors 5.04(g)
Maximum Offering Size 5.01(e)
Nominee 2.01(a)
Piggyback Registration 5.02(a)
Public Offering Limitations 3.05(a)
Records 5.04(g)
Representatives 6.01(b)
Second Order Period 4.04
Second Section 4.04 Offer 4.04
Section 4.01 Response Notice 4.01(a)
Section 4.02 Notice 4.02(a)
Section 4.02 Notice 4.02(a)
Section 4.02 Sale 4.02(a)
Section 4.02 Sale Price 4.02(a)
Section 4.03 Notice 4.03
Section 4.03 Portion 4.03
9
Term Section
Section 4.04 Sale 4.04
Section 4.04 Sale Price 4.04
Section 4.04 Seller 4.04
Selling Person 4.01(a)
Selling Shareholder 5.01(a)
Shareholder 7.03
Tag-Along Notice 4.01(a)
Tag-Along Notice Period 4.01(a)
Tag-Along Offer 4.01(a)
Tag-Along Right 4.01(a)
Tag-Along Sale 4.01(a)
Tagging Person 4.01(a)
Transfer 3.01(a)
ARTICLE 2
CORPORATE GOVERNANCE AND MANAGEMENT
SECTION 2.01. Composition of the Board; Committees. (a) The Board shall
consist of seven members, of whom two shall be nominated by DLJMB, one shall be
nominated by each of CVC, MMI and the Management Shareholders, and two shall be
selected with the unanimous approval of the Institutional Shareholders and
nominated by such Institutional Shareholders and shall be individuals which are
not "Affiliates" or "Associates" (as those terms are used within the meaning of
Rule 12b-2 of the General Rules and Regulations under the Exchange Act) of any
Shareholder or its Affiliates (each, an "independent director"). Each
Shareholder entitled to vote for the election of directors to the Board agrees
that it will vote its shares of Common Stock or execute consents, as the case
may be, and take all other necessary action (including causing the Company to
call a special meeting of shareholders) in order to ensure that the composition
of the Board is as set forth in this Section 2.01; provided that no Shareholder
shall be required to vote for another Shareholder's nominee(s) if the number of
shares of Common Stock held by the Shareholder or group of Shareholders, as
applicable, making the nomination (or, in the case of a nomination by DLJMB or
CVC, of the DLJ Entities or the CVC Entities, respectively) is, at the close of
business on the day preceding such vote or execution of consents, less than 10%
of such Shareholder's or group of Shareholders' (or the DLJ Entities' or the
CVC Entities'), as applicable, Initial Ownership of Common Stock on a Fully
Diluted basis.
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(b) Each committee of the Board shall consist of at least four members, of
whom one shall be a DLJMB representative, one shall be the CVC representative,
one shall be the MMI representative, and one shall be the representative of the
Management Shareholders (except (i) no such representative shall serve on the
Audit Committee and (ii) any such representative to the Compensation Committee
shall recuse himself as appropriate).
(c) The Board shall meet at least four times in any year.
SECTION 2.02. Removal. Each Shareholder agrees that if, at any time, it is
then entitled to vote for the removal of directors of the Company, it will not
vote any of its shares of Common Stock in favor of the removal of any director
who shall have been designated or nominated pursuant to Section 2.01 unless
such removal shall be for Cause or the Person(s) entitled to designate or
nominate such director shall have consented to such removal in writing;
provided that if the Persons entitled to designate or nominate any director
pursuant to Section 2.01 shall request the removal, with or without Cause, of
such director in writing, such Shareholder shall vote its shares of Common
Stock in favor of such removal. Removal for "Cause" shall mean removal of a
director because of such director's (a) willful and continued failure
substantially to perform his duties with the Company in his established
position, (b) willful conduct which is injurious to the Company or any of its
Subsidiaries, monetarily or otherwise, (c) conviction for, or guilty plea to, a
felony or a crime involving moral turpitude, or (d) abuse of illegal drugs or
other controlled substances or habitual intoxication.
SECTION 2.03. Vacancies. 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:
(a) the Shareholder(s) entitled under Section 2.01 to nominate such
director whose death, disability, retirement, resignation or removal resulted
in such vacancy, may, subject to the provisions of Section 2.01, nominate
another individual (the "Nominee") to fill such vacancy and serve as a director
of the Company; and
(b) subject to Section 2.01, each Shareholder then entitled to vote for
the election of the Nominee as a director of the Company agrees that it will
vote its shares of Common Stock, or execute a written consent, as the case may
be, in order to ensure that the Nominee be elected to the Board.
SECTION 2.04. Action by the Board. (a) A quorum of the Board shall consist
initially of three directors of which at least (i) one shall be a DLJMB
11
representative and (ii) one shall be either the CVC representative or the MMI
representative.
(b) All actions of the Board shall require the affirmative vote of at
least a majority of the directors at a duly convened meeting of the Board at
which a quorum is present or the unanimous written consent of the Board;
provided that, in the event there is a vacancy on the Board and an individual
has been nominated to fill such vacancy, the first order of business shall be
to fill such vacancy.
(c) No action by the Company (including but not limited to any action by
the Board or any committee thereof) shall be taken after the date hereof with
respect to any of the following matters without the affirmative approval of the
Board, including, (I) by at least one DLJMB representative for so long as the
Percentage Ownership of the DLJ Entities equals or exceeds 331/3% of their
Initial Ownership of Common Stock on a Fully Diluted basis and (II) by at least
one of (A) the CVC representative for so long as the Percentage Ownership of
the CVC Entities equals or exceeds 331/3% of their Initial Ownership of Common
Stock on a Fully Diluted basis or (B) the MMI representative for so long as the
Percentage Ownership of the MMI Entities equals or exceeds 331/3% of their
Initial Ownership of Common Stock on a Fully Diluted basis:
(i) (x) any merger or consolidation of the Company with or into any
Person, other than a wholly owned Subsidiary, or of any Subsidiary
with or into any Person other than the Company or any other
wholly-owned Subsidiary (other than the merger of LMS II, Co. with and
into Formica Corporation and the merger of LMS III, Co. with and into
Formica International Corporation); or (y) any acquisition in excess
of $10,000,000 (other than the Fountainhead Acquisition) or any sale
of any Subsidiary or any significant operations of the Company or any
Subsidiary or any disposition or distribution in excess of $5,000,000
of assets, businesses or operations by the Company or any Subsidiary
(in a single transaction or a series of related transactions), other
than products or supplies acquired, disposed of or distributed in the
ordinary course of business;
(ii) any liquidation, dissolution, commencement of bankruptcy,
liquidation or similar proceedings with respect to the Company or any
Subsidiary;
(iii) any incurrence, refinancing or alteration of material terms by
the Company or any Subsidiary of indebtedness for borrowed money in
excess of $5,000,000 in the aggregate (or the guaranty by the Company
or any Subsidiary of any such indebtedness), or the issuance of any
security
12
by the Company or any Subsidiary (not including issuances of such
securities in connection with employee or stock option plans
previously approved by the Board pursuant to clause (vi) below), in
each case other than as specifically contemplated by this Agreement,
the Warrants or the LMS Preferred Stock;
(iv) any capital expenditure in excess of $5,000,000, which is not
specifically contemplated by the annual business plan of the Company
or any Subsidiary;
(v) any entering into, amending or modifying in any material respect
any agreements of the Company or any Subsidiary providing for payments
by or to the Company or such Subsidiary in excess of $5,000,000 per
annum;
(vi) any determination of compensation, benefits, perquisites and
other incentives for senior management of the Company or any
Subsidiary and the approval or amendment of any plans or contracts in
connection therewith, including the award of any option or similar
rights to subscribe for shares (excluding grants to Xxxxxxx Xxxxxxx
and Xxxxx Xxxxxxxxx on the Closing Date);
(vii) any transaction between the Company or any Subsidiary, on the one
hand, and any stockholder or Affiliate of the Company or any
Subsidiary, on the other hand, other than transactions involving an
amount less than $25,000;
(viii) any appointment or removal of any of the Chairman of the Board,
Chief Executive Officer, President, Chief Financial Officer or Chief
Operating Officer or any other executive officer in any similar
capacity of the Company, FM Holdings or Formica;
(ix) any change in accounting or tax principles, policies with respect
to the financial statements, records or affairs of the Company or any
Subsidiary, except as required by generally accepted accounting
principles or by law or any other matters which could affect any
regulatory status or tax liability of the Company or any Subsidiary,
or any Shareholder with respect to the investment by such Shareholder
in the Company;
(x) any appointment or removal of the auditors, regular legal
counsel, financial advisors, underwriters, investment bankers or
company-wide insurance providers of the Company, FM Holdings or
Formica;
13
(xi) any approval of the annual business plan, budget and long term
strategic plan of the Company, FM Holdings or Formica;
(xii) any modification of the long-term business strategy or scope of
the business of the Company, FM Holdings or Formica or any material
customer relationships thereof;
(xiii) the commencement of any litigation with claims in excess of
$10,000,000 or the settlement of litigation or arbitration proceedings
with damages in excess of $5,000,000;
(xiv) any delegation by the Board or the board of directors of FM
Holdings or Formica of any of its respective powers to a committee; or
(xv) the determination of "Fair Market Value" for purposes of Section
4.05.
(d) Notwithstanding Section 2.04(c), if any action set forth therein
arises in connection with the Company's exercise of its rights pursuant to
Section 4.04, such action shall not require the approval of the Section 4.04
Seller's representative to the Board.
SECTION 2.05. Action by the Shareholders. Notwithstanding Section 2.04(c),
the following matters will require the affirmative approval of each of (i) the
DLJMB Entities for so long as the Percentage Ownership of the DLJMB Entities
equals or exceeds 331/3% of their Initial Ownership of Common Stock on a Fully
Diluted Basis (ii) the CVC Entities for so long as the Percentage Ownership of
the CVC Entities equals 331/3% of their Initial Ownership of Common Stock on a
Fully Diluted Basis and (iii) the MMI Entities for so long as the Percentage
Ownership of the MMI Entities equals or exceeds 331/3% of their Initial
Ownership of Common Stock on a Fully Diluted Basis:
(i) any issuance of any equity security by, or the reduction of
capital of, the Company or FM Holdings;
(ii) any material change in the nature of the business of the Company
and its Subsidiaries;
(iii) any amendment to the certificate of incorporation or bylaws of
the Company or any adoption of or amendment to the certificate of
incorporation or bylaws of any Subsidiary;
14
(iv) any liquidation, dissolution, commencement of bankruptcy,
liquidation or similar proceedings with respect to the Company or any
Subsidiary;
(v) except as provided in Section 4.04, any purchase, disposal or
distribution of assets having a value in excess of $50,000,000
provided that the approval of the CVC Entities shall not be required
for any transaction involving the acquisition of Laminex (Australia)
Pty. Ltd. or any assets related to the Laminex business; or
(vi) except as provided in Section 4.04, any material transaction
between the Company, on the one hand, and any Institutional
Shareholder or its Affiliates, on the other hand, that is not on an
arms-length basis, it being understood that ordinary course investment
banking transactions that are on terms not in excess of market terms
and that are not objected to by any Institutional Shareholder shall be
considered on an arms-length basis.
SECTION 2.06. Conflicting Charter or Bylaw Provision. Each Shareholder
shall vote its shares of Common Stock, and shall take all other actions
reasonably necessary, to ensure that the Company's and LMS' respective
certificate of incorporation and bylaws (copies of which are attached hereto as
Exhibits A, B, C and D) facilitate and do not at any time conflict with any
provision of this Agreement.
SECTION 2.07. Subsidiary Governance. Each of the Company and each
Shareholder agrees that the board of directors of FM Holdings and Formica shall
be comprised of the individuals who are serving as directors on the Board in
accordance with Section 2.01. Each Shareholder agrees to vote its shares of
Common Stock and to cause its representatives on the Board, subject to their
fiduciary duties, to vote and take other appropriate action to effectuate the
agreements in this Section 2.07 in respect of each such Subsidiary.
SECTION 2.08. Notice of Meeting; Participation. (a) Each director will
receive notice and the agenda of each meeting of the Board of Directors or any
committee thereof at least 5 days prior to such meeting.
(b) Each DLJMB, CVC and MMI representative will be permitted to invite
alternates to participate in the meetings, provided such alternates will not be
permitted to vote at such meeting.
SECTION 2.09. Voting of Common Stock Owned by Management Stockholders.
Until the occurrence of a Change in Control, each of the
15
Management Shareholders agrees, with respect to any issue presented for a vote
(or consent) of Shareholders, to vote (or execute consents with respect to) its
shares of Common Stock in the same proportions as those shares owned by
Institutional Shareholders are voted (or consented).
ARTICLE 3
RESTRICTIONS ON TRANSFER
SECTION 3.01. General. (a) Each Shareholder understands and agrees that
the Equity Securities purchased pursuant to the Subscription Agreement have not
been registered under the Securities Act and are restricted securities. Each
Shareholder agrees that it will not, directly or indirectly, sell, assign,
transfer, grant a participation in, pledge or otherwise dispose of ("transfer")
any Equity Securities (or solicit any offers to buy or otherwise acquire, or
take a pledge of any Equity Securities) except in compliance with the
Securities Act and the terms and conditions of this Agreement.
(b) Any attempt to transfer any Equity Securities not in compliance with
this Agreement shall be null and void and the Company or LMS, as the case may
be, shall not, and shall cause any transfer agent not to, give any effect in
the Company's or LMS's stock records to such attempted transfer.
(c) Notwithstanding anything in this Agreement to the contrary, neither
the Company nor LMS, as the case may be, shall redeem or exchange any Equity
Securities (other than pursuant to the FM Merger) unless the Institutional
Shareholders obtain an opinion of counsel recognized as an expert in federal
income tax matters to the effect that the redemption or exchange will not
result in any Institutional Shareholder recognizing, for federal income tax
purposes, an amount of dividend income in excess of the amount of accrued and
unpaid dividends on the Equity Securities subject to the redemption or
exchange.
SECTION 3.02. Legends. (a) In addition to any other legend that may be
required, each certificate for Equity Securities that is issued to any
Shareholder shall bear a legend in substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD EXCEPT
IN COMPLIANCE THEREWITH. THIS SECURITY IS ALSO SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER AS SET FORTH IN THE INVESTORS'
16
AGREEMENT DATED AS OF MAY 1, 1998, COPIES OF WHICH MAY BE
OBTAINED UPON REQUEST FROM [LAMINATES ACQUISITION CO.]
[LMSI, CO.] OR ANY SUCCESSOR THERETO."
(b) If any Equity Securities shall cease to be Registrable Securities
under clause (i) or clause (ii) of the definition thereof, the Company or LMS,
as the case may be, shall, upon the written request of the holder thereof,
issue to such holder a new certificate evidencing such Equity Securities
without the first sentence of the legend required by Section 3.02(a) endorsed
thereon. If any Equity Securities cease to be subject to any and all
restrictions on transfer set forth in this Agreement, the Company or LMS, as
the case may be, shall, upon the written request of the holder thereof, issue
to such holder a new certificate evidencing such Equity Securities without the
second sentence of the legend required by Section 3.02(a) endorsed thereon.
SECTION 3.03. Permitted Transferees. Notwithstanding anything in this
Agreement to the contrary, any Shareholder may at any time transfer any or all
of its Equity Securities to one or more of its Permitted Transferees without
the consent of any Person, so long as (a) such Permitted Transferee shall have
agreed in writing to be bound by the terms of this Agreement and (b) the
transfer to such Permitted Transferee is not in violation of applicable federal
or state securities laws.
SECTION 3.04. Restrictions on Transfers by Shareholders. (a) Except as
provided in Section 3.03, each Shareholder and each Permitted Transferee of
such Shareholder may transfer its Company Equity Securities (other than, in the
case of the Management Shareholders, After Acquired Securities) only as
follows:
(i) following the third anniversary of the Closing Date, in a
transfer to any Third Party other than an Adverse Person for
consideration consisting solely of cash made in compliance with
Section 4.01;
(ii) in a transfer made after a Public Offering in compliance with
Rule 144 under the Securities Act;
(iii) in a Public Offering in connection with the exercise of its
rights under Article 5;
(iv) following a Change of Control, in a transfer to any Third Party;
or
17
(v) (A) in the case of any Tagging Person, as permitted by Section
4.01 or (B) in the case of the Institutional Shareholders or any
Management Shareholders, as permitted or required by Section 4.02;
provided that, notwithstanding the foregoing, (i) except as set forth in
(ii) below no Warrants may be transferred or exercised by any Shareholder or
its Permitted Transferees until such time as all of the Institutional
Shareholders and their respective Permitted Transferees have transferred 100%
of their LMS Preferred Stock to Third Parties other than Adverse Persons and
(ii) in connection with any such transfer of LMS Preferred Stock, each
Institutional Shareholder and its Permitted Transferees may (and shall be
required to) transfer such amount of their respective Warrants as is required
in connection with such transfer of LMS Preferred Stock.
(b) Except as provided in Section 3.03, each Shareholder and each
Permitted Transferee of such Shareholder may, at any time, only transfer its
LMS Preferred Stock in a transfer to any Third Party other than an Adverse
Person in a transfer for consideration consisting solely of cash made in
compliance with or required by Section 4.02.
SECTION 3.05. Restrictions on Transfers of After Acquired Securities by
Management Shareholders. (a) Each Management Shareholder and each Permitted
Transferee of such Management Shareholder may transfer any After Acquired
Securities only as follows:
(i) in a transfer made in compliance with Section 4.01 or 4.02, or in
a transfer to the Company required or permitted by an employment
agreement between such Management Shareholder and the Company or any
Subsidiary or by any stock purchase, option, stock option or other
compensation plan of the Company or any Subsidiary.
(ii) subject to the Public Offering Limitations (as defined below), in
a Public Offering in connection with the exercise of its rights under
Article 5 hereof ; or
(iii) in a transfer made at the conclusion of the Applicable Holdback
Period (as defined in Section 5.03) following a Public Offering, in
compliance with Rule 144 promulgated under the Securities Act;
provided that the number of shares of any class of After Acquired
Securities transferred by such Management Shareholder pursuant to this
Section 3.05(a)(iii) in any twelve-month period shall not exceed 20%
of such Management Shareholder's Percentage Ownership of such class on
the date of this Agreement, it being understood that the foregoing
proviso
18
shall cease to have effect after the earlier of (A) the fourth
anniversary of this Agreement and (B) the second anniversary of an
Initial Pubic Offering.
For purposes of this Agreement, "Public Offering Limitations" means (A) no
Management Shareholder shall be permitted to exercise its rights under Section
5.02 hereof (x) with respect to the Initial Public Offering and (y) until such
time as the Percentage Ownership of the Institutional Shareholders and their
Permitted Transferees shall be less than 50% of their aggregate Initial
Ownership of Company Equity Securities and (B) in each Public Offering
following the Initial Public Offering, such Management Shareholder shall be
entitled to transfer a number of shares of After Acquired Securities not
exceeding such Management Shareholder's Pro Rata Portion of After Acquired
Securities.
(b) The provisions of Section 3.05(a) shall terminate upon a Change of
Control.
ARTICLE 4
TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS; PREEMPTIVE RIGHTS;
RIGHTS OF FIRST OFFER
SECTION 4.01. Rights to Participate in Transfer. (a) Subject to and after
compliance with Section 4.04, if any Institutional Shareholder (the "Selling
Person") proposes to transfer any shares (or securities) of a class of Company
Equity Securities (other than transfers of shares (or securities)) of such
class (i) in a Public Offering or pursuant to Rule 144 after an Initial Public
Offering, (ii) to any Permitted Transferee of such Shareholder or (iii) up to
2.5% in the aggregate of such Institutional Shareholder's Initial Ownership of
such class (such percentage, the "Free Percentage")), in a transaction
otherwise permitted by Article 3 hereof, (a "Tag-Along Sale"), the other
Shareholders may, at their option, elect to exercise their rights under this
Section 4.01 (each such Shareholder, a "Tagging Person"). In the event of such
a proposed transfer, the Selling Person shall provide each other Shareholder
written notice of the terms and conditions of such proposed transfer
("Tag-Along Notice") and offer each Tagging Person the opportunity to
participate in such sale. The Tag-Along Notice shall identify the number of
shares (or securities) of such class of Company Equity Securities subject to
the offer ("Tag-Along Offer"), the cash price at which the transfer is proposed
to be made, and all other material terms and conditions of the Tag-Along Offer,
including the form of the proposed agreement, if any. From the date of the
Tag-Along Notice, each Tagging Person shall have
19
the right (a "Tag-Along Right"), exercisable by written notice ("Section 4.01
Response Notice") given to the Selling Person within 15 days (the "Tag-Along
Notice Period"), to request that the Selling Person include in the proposed
transfer the number shares (or securities) of such class of Company Equity
Securities held by such Tagging Person as is specified in such notice; provided
that if the aggregate number of shares (or securities) of such class of Company
Equity Securities proposed to be sold by the Selling Person and all Tagging
Persons in such transaction exceeds the number of shares (or securities) of
such class of Company Equity Securities which can be sold on the terms and
conditions set forth in the Tag-Along Notice, then only the Tag-Along Portion
of Company Equity Securities of the Selling Person and each Tagging Person
shall be sold pursuant to the Tag-Along Offer. In the event the Selling Person
shall propose to transfer a number of shares (or securities) of such class in
excess of the Free Percentage, the Tag-Along Portion shall be calculated with
respect to all of the shares (or securities) of such class proposed to be
transferred by the Selling Person. If the Tagging Persons exercise their
Tag-Along Rights hereunder, each Tagging Person shall deliver to the Selling
Person, together with its Section 4.01 Response Notice, the certificate or
certificates representing the shares (or securities) of such class of Company
Equity Securities such Tagging Person to be included in the transfer, together
with a limited power-of-attorney authorizing the Selling Person to transfer
such shares (or securities) on the terms set forth in the Tag-Along Notice.
Delivery of such certificate or certificates representing the shares (or
securities) of such class of Company Equity Securities to be transferred and
the limited power-of-attorney authorizing the Selling Person to transfer such
shares (or securities) shall constitute an irrevocable acceptance of the
Tag-Along Offer by such Tagging Persons. If, at the end of a 120-day period
after such delivery, the Selling Person has not completed the transfer of all
such shares (or securities) for at least 95% of the cash price set forth in the
Tag-Along Offer and otherwise on substantially the same terms and conditions
set forth in the Tag- Along Notice, the Selling Person shall return to each
Tagging Person the limited power-of-attorney (and all copies thereof) together
with all certificates representing the shares (or securities) which such
Tagging Person delivered for transfer pursuant to this Section 4.01.
(b) Concurrently with the consummation of the Tag-Along Sale, the Selling
Person shall notify the Tagging Persons thereof, shall remit to the Tagging
Persons the total consideration (by bank or certified check or wire transfer)
for the shares (or securities) of the class of Company Equity Securities of the
Tagging Persons transferred pursuant thereto, and shall, promptly after the
consummation of such Tag-Along Sale furnish such other evidence of the
completion and time of completion of such transfer and the terms thereof as may
be reasonably requested by the Tagging Persons.
20
(c) If at the termination of the Tag-Along Notice Period any Tagging
Person shall not have elected to participate in the Tag-Along Sale, such
Tagging Person will be deemed to have waived its rights under Section 4.01(a)
with respect to the transfer of its securities pursuant to such Tag-Along Sale.
(d) If any Tagging Person declines to exercise its Tag-Along Rights or
elects to exercise its Tag-Along Rights with respect to less than such Tagging
Person's Tag-Along Portion, the Selling Person shall be entitled to transfer,
pursuant to the Tag-Along Offer, a number of shares (or securities) of such
class of Company Equity Securities held by the Selling Person equal to the
number of such shares (or securities) constituting the portion of such Tagging
Person's Tag- Along Portion with respect to which Tag-Along Rights were not
exercised.
(e) The Selling Person may sell, on behalf of itself and any Tagging
Person who exercises the Tag-Along Rights pursuant to this Section 4.01, the
shares (or securities) of such class of Company Equity Securities subject to
the Tag-Along Offer on the terms and conditions set forth in the Tag-Along
Notice (provided that the cash price payable in any such sale may exceed the
cash price specified in the Tag-Along Notice by up to 10%) within 120 days of
the date on which Tag-Along Rights shall have been waived, exercised or expire.
(f) The provisions of this Section 4.01 shall terminate upon one or more
Public Offerings of Common Stock yielding aggregate gross proceeds to the
Company of at least $75,000,000.
SECTION 4.02. Right to Compel Participation in Certain Transfers. (a) If
(i) all the Institutional Shareholders acting together propose to transfer not
less than 50% of their Initial Ownership of a class of Company Equity
Securities to a Third Party in a bona fide sale or (ii) all the Institutional
Shareholders acting together propose a transfer in which the shares (or
securities) of the class of Company Equity Securities to be transferred by the
Institutional Shareholders and their Permitted Transferees constitute more than
50% of the outstanding shares (or securities) of such class or (iii) (x) either
the CVC Entities or the MMI Entities and (y) the DLJMB Entities, acting
together, propose to transfer 100% of their LMS Preferred Stock at a price
equal to or greater than the par value plus accrued by unpaid dividends (a
"Section 4.02 Sale"), such Institutional Shareholders, as the case be, may at
their option require (or in the case of a Section 4.02 Sale of LMS Preferred
Stock, shall require) all other Shareholders (w) to sell the Subject Securities
("Drag-Along Rights") then held by every other Shareholder, and (x) in the case
of a Section 4.02 Sale of LMS Preferred Stock, to sell such number of Warrants
as the DLJMB Entities deem necessary to sell the LMS Preferred Stock or (y)
(subject to and at the closing of the Section 4.02 Sale) to exercise all, but
not less than all, of the Derivatives held by every other Shareholder and to
sell all
21
of the shares of Common Stock received upon such exercise to such Third Party,
for the same consideration per share and otherwise on the same terms and
conditions as such Institutional Shareholders; provided that any other
Shareholder who holds Derivatives the exercise price per share of which is
greater than the per share price at which the shares of Common Stock are to be
sold to the Third Party may, if required by the relevant Institutional
Shareholders to exercise such Derivatives, in place of such exercise, submit to
irrevocable cancellation thereof without any liability for payment of any
exercise price with respect thereto. In the event the Section 4.02 Sale is not
consummated with respect to any shares acquired upon exercise of such
Derivatives, or the Section 4.02 Sale is not consummated, such Derivatives
shall be deemed not to have been exercised or canceled, as applicable. The
relevant Institutional Shareholders shall provide written notice of such
Section 4.02 Sale to the other Shareholders (a "Section 4.02 Notice") not later
than the 15th day prior to the proposed Section 4.02 Sale. The Section 4.02
Notice shall identify the transferee, the number of shares of the Subject
Securities, the consideration for which a transfer is proposed to be made (the
"Section 4.02 Sale Price") and all other material terms and conditions of the
Section 4.02 Sale. The number of shares of such class of Company Equity
Securities and/or LMS Preferred Stock to be sold by each other Shareholder will
be the Drag-Along Portion of the shares of such class of Company Equity
Securities and/or LMS Preferred Stock that such other Shareholder owns. Each
other Shareholder shall be required to participate in the Section 4.02 Sale on
the terms and conditions set forth in the Section 4.02 Notice and to tender all
its Subject Securities as set forth below. The price payable in such transfer
shall be the Section 4.02 Sale Price. Not later than the 10th day following the
date of the Section 4.02 Notice (the "Section 4.02 Notice Period"), each of the
other Shareholders shall deliver to a representative of the Company designated
in the Section 4.02 Notice certificates, and in the case of Warrants, the
applicable instrument, representing all Subject Securities held by such other
Shareholder, duly endorsed, together with all other documents required to be
executed in connection with such Section 4.02 Sale or, if such delivery is not
permitted by applicable law, an unconditional agreement to deliver such Subject
Securities pursuant to this Section 4.02 at the closing for such Section 4.02
Sale against delivery to such other Shareholder of the consideration therefor.
If an other Shareholder should fail to deliver such certificates to the
Company, the Company shall cause the books and records of the Company or LMS,
as the case may be, to show that such Subject Securities are bound by the
provisions of this Section 4.02 and that such Subject Securities shall be
transferred to the purchaser of the Subject Securities immediately upon
surrender for transfer by the holder thereof.
(b) The relevant Institutional Shareholders shall have a period of 90 days
from the date of receipt of the Section 4.02 Notice to consummate the Section
4.02 Sale on the terms and conditions set forth in such Section 4.02 Sale
Notice.
22
If the Section 4.02 Sale shall not have been consummated during such period,
the Company shall return to each of the other Shareholders all certificates or
other applicable instruments representing the relevant Equity Securities that
such other Shareholder delivered for transfer pursuant hereto, together with
any documents in the possession of the Company executed by the other
Shareholder in connection with such proposed transfer, and all the restrictions
on transfer contained in this Agreement or otherwise applicable at such time
with respect to such Equity Securities owned by the other Shareholders shall
again be in effect.
(c) Concurrently with the consummation of the transfer of the relevant
Equity Securities pursuant to this Section 4.02, the Company shall give notice
thereof to all Shareholders, shall remit to each of the Shareholders who have
surrendered their certificates the total consideration (by bank or certified
check) for such Equity Securities transferred pursuant hereto and shall furnish
such other evidence of the completion and time of completion of such transfer
and the terms thereof as may be reasonably requested by such Shareholders.
SECTION 4.03. Preemptive Rights. (a) The Company shall provide each
Shareholder with a written notice (a "Section 4.03 Notice") of any proposed
issuance by the Company of Company Equity Securities at least 10 Business Days
prior to the proposed issuance date. Such notice shall specify the price at
which the Company Equity Securities are to be issued and the other material
terms of the issuance. Each Shareholder shall be entitled to purchase such
Shareholder's Section 4.03 Portion of the Company Equity Securities proposed to
be issued (which, in the case of a purchase by Management Shareholders of
Common Stock, shall be non-voting Class B Common Stock). A Shareholder may
exercise its rights under this Section 4.03 by delivering written notice of its
election to purchase Company Equity Securities to the Company and each other
Shareholder within 5 Business Days of receipt of the Section 4.03 Notice. A
delivery of such a written notice (which notice shall specify the number of
shares (or amount) of Company Equity Securities to be purchased by the
Shareholder submitting such notice) by such Shareholder shall constitute a
binding agreement of such Shareholder to purchase at the price and on the terms
specified in the Section 4.03 Notice, the number of shares (or amount) of
Company Equity Securities specified in such Shareholder's written notice. In
the event the Company Equity Securities proposed to be issued by the Company
are not Common Stock, Preferred Stock or Warrants, it shall be a condition to
the consummation of the purchase of such Company Equity Securities pursuant to
this Section 4.03 by any Shareholder that such Shareholder shall execute an
amendment of this Agreement on the terms consistent with this Agreement
reasonably satisfactory to the Company and the other Shareholders.
23
(b) In the event any Shareholder declines to exercise its preemptive
rights under this Section 4.03 or elects to exercise such rights with respect
to less than such Shareholder's Section 4.03 Portion, each other Shareholder
shall be entitled to purchase from the Company its pro rata portion of equity
securities constituting the Section 4.03 Portion with respect to which such
Shareholder shall not have exercised its preemptive rights.
(c) In the case of any issuance of Company Equity Securities, the Company
shall have 90 days from the date of the Section 4.03 Notice to consummate the
proposed issuance of any or all of such securities which the Shareholders have
not elected to purchase at the price and upon terms that are not materially
less favorable to the Company than those specified in the Section 4.03 Notice.
At the consummation of such issuance, the Company shall issue certificates
representing the securities to be purchased by each Shareholder exercising
preemptive rights pursuant to this Section 4.03 registered in the name of such
Shareholder, against payment by such Shareholder of the purchase price for such
securities. If the Company proposes to issue securities after such 90-day
period, it shall again comply with the procedures set forth in this Section.
(d) Notwithstanding the foregoing, no Shareholder shall be entitled to
purchase Company Equity Securities as contemplated by this Section 4.03 in
connection with issuances of Company Equity Securities (i) to employees of the
Company or any Subsidiary pursuant to employee benefit plans or arrangements
approved by the Board (including upon the exercise of employee stock options),
(ii) in connection with any bona fide, arm's-length restructuring of
outstanding debt of the Company or any Subsidiary, (iii) in connection with any
bona fide, arm's-length direct or indirect merger, acquisition or similar
transaction or (iv) pursuant to a Public Offering. The Company shall not be
under any obligation to consummate any proposed issuance of Company Equity
Securities, regardless of whether it shall have delivered a Section 4.03 Notice
in respect of such proposed issuance.
(e) The Company will use its reasonable best efforts to provide the
Section 4.03 Notice at least 15 Business Days prior to any proposed issuance of
Company Equity Securities. In the event it is impracticable to provide the
Section 4.03 Notice at least 15 Business Days prior to such issuance, any
Shareholder may offer to finance or arrange to finance the purchase by any
other Shareholder of such other Shareholder's Section 4.03 Portion and such
financing or arranging Shareholder shall be entitled to receive as compensation
for such services reasonable and customary fees and expenses. No Shareholder
shall be under any obligation to provide or arrange such financing for any
other Shareholder.
24
(f) Any Institutional Shareholder may assign to any of its Permitted
Transferees its rights under this Section 4.03 provided that (i) such Permitted
Transferee grants to such Institutional Shareholder an irrevocable power of
attorney and proxy authorizing such Institutional Shareholder to act for all
purposes on behalf of such Permitted Transferee in connection with any matters
relating to the Company and (ii) the exercise of the rights under this Section
4.03 by such Permitted Transferee is permitted under applicable law.
SECTION 4.04. Rights of First Offer. If any Shareholder desires to
transfer any Company Equity Securities to any Third Party as permitted by
Section 3.04(a)(i), such Shareholder (the "Section 4.04 Seller") shall give
written notice (an "Initial Section 4.04 Offer Notice") to the Company and the
non- transferring Shareholders that such Section 4.04 Seller desires to effect
such a transfer (a "Section 4.04 Sale") and setting forth the number of Company
Equity Securities proposed to be transferred by the Section 4.04 Seller, the
consideration per share or Warrant that such Section 4.04 Seller proposes to be
paid for such Company Equity Securities (the "Section 4.04 Sale Price") and any
other material terms sought by the Section 4.04 Seller.
(a) The giving (pursuant to Section 7.05) of an Initial Section 4.04 Offer
Notice to the Company and each non-transferring Shareholder shall constitute an
offer (the "Initial Section 4.04 Offer") by such Section 4.04 Seller to sell to
each non-transferring Shareholder for cash on the terms set forth in the
Initial Section 4.04 Offer Notice the Company Equity Securities subject to the
Section 4.04 Sale at the Section 4.04 Sale Price. Each Shareholder receiving an
Initial Section 4.04 Offer shall have a 30-day period (the "Initial Order
Period") in which to accept such offer as to all of such Shareholder's Pro Rata
Portion by giving a written notice of acceptance to such Section 4.04 Seller
(together with a copy thereof to the Company) prior to the expiration of such
30-day period.
If every Shareholder receiving an Initial Section 4.04 Offer Notice does
not elect to purchase Company Equity Securities in such Initial Section 4.04
Offer, the Section 4.04 Seller shall not be required to sell any Company Equity
Securities accepted pursuant to the Initial Section 4.04 Offer, but shall,
within 5 days of the expiration of the Initial Order Period, provide written
notice to all Shareholders that did accept the Initial Section 4.04 Offer,
informing them that they have the right to increase the number of Company
Equity Securities that they accepted pursuant to the Initial Section 4.04 Offer
(the "Second Section 4.04 Offer"). Each such Shareholder will then have a 5-day
period (the "Second Order Period") in which to accept such offer as to all of
such Shareholder's portion of the Company Equity Securities not accepted
pursuant to the Initial Section 4.04 Offer (on the basis of such Shareholder's
Pro Rata Portion (as defined below) compared to the Pro Rata Portion of all
other Shareholders
25
receiving the Second Section 4.04 Offer) plus any additional portion not
accepted by any other Shareholder during the Second Order Period by giving
written notice of acceptance to the Section 4.04 Seller prior to the expiration
of such 5-day period.
If any Shareholder fails to notify the Section 4.04 Seller or the Company
prior to the expiration of the Initial Order Period or the Second Order Period,
as applicable, referred to above, it will be deemed to have declined the
Section 4.04 Offer or Second Section 4.04 Offer, as applicable.
For purposes of this Section 4.04 only, "Pro Rata Portion" means that
fraction that results from dividing (i) the number of relevant Company Equity
Securities, on a Fully Diluted basis, that such non-transferring Shareholder
beneficially owns (or, without duplication, has the right to acquire) by (ii)
that number of shares of such Company Equity Securities, on a Fully Diluted
basis, owned by all non-transferring Shareholders (or which, without
duplication, they have the right to acquire).
In the event any Shareholder declines (or is deemed to decline) to
exercise its right of first offer with respect to the Company Equity Securities
it is entitled to purchase under this Section 4.04, the Section 4.04 Seller
shall immediately notify the Company thereof and the Company may, upon receipt
of such notice, following the expiration of the Second Order Period, by giving
notice of acceptance to such Section 4.04 Seller within five days of the
expiration of the Second Order Period, exercise the right of first offer with
respect to the number of shares of Company Equity Securities, which such
Shareholder has not elected to purchase.
(b) If Shareholders and/or the Company elect to purchase of all the
Company Equity Securities subject to the Section 4.04 offer, the Shareholders
and/or the Company, as the case may be, exercising their rights of first offer
as to such shares shall purchase and pay, by bank or certified check, for all
Company Equity Securities subject to the 4.04 Offer within a 10-day period of
the date on which all Company Equity Securities subject to the right of first
offer having been accepted; provided that if the purchase and sale of such
Company Equity Securities is subject to any prior regulatory approval, subject
to Section 4.04(d)(iv) the time period during which such purchase and sale may
be consummated shall be extended until the expiration of five Business Days
after all such approvals shall have been received.
(c) Upon the earlier to occur of (i) full rejection of any Section 4.04
Offer by all recipients thereof, (ii) the expiration of any Order Period
without Shareholders and/or the Company electing to purchase all the Company
Equity
26
Securities subject to the Section 4.04 Offer, (iii) the deemed rejection of
rights of first offer pursuant to Section 4.04(b) or (iv) the failure to obtain
any required consent or regulatory approval for the purchase of the Company
Equity Securities subject thereto within 45 days of full acceptance of any
Section 4.04 Offer, the Section 4.04 Seller shall have a 45-day period during
which to effect a transfer of any or all of the Company Equity Securities
subject to the Section 4.04 Sale on substantially the same or more favorable
(as to the Section 4.04 Seller) terms and conditions as were set forth in the
Section 4.04 Offer Notice at a price in cash; provided that if the transfer is
subject to regulatory approval, the 45-day period in which it may be
consummated shall be extended until the expiration of five Business Days after
all such approvals shall have been received. If the Section 4.04 Seller does
not consummate the sale of the Company Equity Securities subject to the Section
4.04 Offer in accordance with the foregoing time limitations, such Shareholder
may not prior to the third anniversary of the Closing Date sell any Company
Equity Securities in accordance with Section 3.04(a)(i) without repeating the
foregoing procedures.
SECTION 4.05. Certain Rights.
(a) Notwithstanding anything to the contrary set forth in the charter
documents of LMS, LMS may, at its option, to the extent it shall have funds
legally available for such payment, repurchase from the Institutional
Shareholders, in whole but not in part, all shares of LMS Preferred Stock at
any time at a repurchase price of 115.00% of the Liquidation Value (as defined
in the Certificate of Designations of the LMS Preferred Stock) as of the date
of repurchase thereof in cash, together with accrued and unpaid cash dividends
thereon to the date fixed for such repurchase, without interest and such
Institutional Shareholders agree to sell their shares of LMS Preferred Stock to
LMS.
(b) It is understood and agreed that the employment agreements or
associated restricted stock purchase agreements between one or more Management
Shareholders and the Company or any Subsidiary may contain provisions
permitting or requiring, under certain circumstances, such Management
Shareholders to sell to the Company or a Subsidiary, and permitting or
requiring, under certain circumstances, the Company or such Subsidiary to
purchase from such Management Shareholder, Company Equity Securities. Such
provisions may, by the terms of such agreements, remain effective
notwithstanding that the employment relationship created by such employment
agreements has been terminated, in which event such provisions are deemed to be
incorporated herein and made a part hereof, to the extent appropriate.
27
ARTICLE 5
REGISTRATION RIGHTS
SECTION 5.01. Demand Registration. (a) If the Issuer shall receive a
written request by the DLJ Entities, the CVC Entities, or the MMI Entities or
their respective Permitted Transferees (any such requesting Person, a "Selling
Shareholder") that the Issuer effect the registration under the Securities Act
of all or a portion of such Selling Shareholder's Registrable Securities, and
specifying the intended method of disposition thereof, (x) in the case of a
request with respect to Registrable Securities other than the LMS Preferred
Stock following the earlier to occur of (i) the third anniversary of the
Closing Date and (ii) the Initial Public Offering or (y) in the case of a
request with respect to the LMS Preferred Stock (and, if applicable in
connection therewith, Warrants, to the extent permitted in Section 5.01(f)), at
any time following the Closing Date, then the Issuer shall promptly give
written notice of such requested registration (a "Demand Registration") at
least 10 days prior to the anticipated filing date of the registration
statement relating to such Demand Registration to the other Shareholders and
thereupon will use its best efforts to effect, as expeditiously as possible,
the registration under the Securities Act of:
(i) the Registrable Securities which the Issuer has been so requested
to register by the Selling Shareholders, then held by the Selling
Shareholders; and
(ii) subject to the restrictions set forth in Section 5.02, all other
Registrable Securities of the same type as that to which the request
by the Selling Shareholders relates which any other Shareholder
entitled to request the Issuer a Piggyback Registration (as such term
is defined in Section 5.02) pursuant to Section 5.02 (all such
Shareholders, together with the Selling Shareholders, the "Holders")
has requested the Issuer to register by written request received by
the Issuer within 5 days (one of which shall be a Business Day) after
the receipt by such Holders of such written notice given by the
Issuer,
all to the extent necessary to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities so to be
registered; provided that, subject to Section 5.01(d) hereof, the Issuer shall
not be obligated to effect more than (A) two Demand Registrations for the DLJ
Entities, (B) one Demand Registration for each of (I) the CVC Entities and (II)
the MMI Entities and (C) one Demand Registration for the DLJ Entities and the
CVC Entities or the MMI Entities acting together with respect to Registrable
Securities which consist only of LMS Preferred Stock (and, if applicable in
connection
28
therewith, Warrants to the extent permitted by Section 5.01(f)) and provided
further that the Issuer shall not be obligated to effect a Demand Registration
unless the aggregate proceeds expected to be received from the sale of the
Registrable Securities requested to be included in such Demand Registration, in
the reasonable opinion of the Board exercised in good faith, equals or exceeds
(x) $25,000,000 if such Demand Registration would constitute the Initial Public
Offering, or (y) $25,000,000 in all other cases provided that if the
Registrable Securities required to be registered have a fair market value of
less than $25,000,000, the Issuer will be required to register such additional
securities as necessary to meet the $25,000,000 minimum. In no event will the
Issuer be required to effect more than one Demand Registration within any
four-month period. In addition to the foregoing, with respect to the LMS
Preferred Stock (and Warrants, to the extent permitted in Section 5.01(f)), the
Issuer shall undertake to effect a Demand Registration at a later date on
behalf of those Persons who purchase LMS Preferred Stock and Warrants pursuant
to Rule 144A in lieu of the Demand Registration referred to in clause (C)
above.
(b) Promptly after the expiration of the 5-day period referred to in
Section 5.01(a)(ii) hereof, the Issuer will notify all the Holders to be
included in the Demand Registration of the other Holders and the number of
Registrable Securities requested to be included therein. The Selling
Shareholders requesting a registration under Section 5.01(a) may, at any time
prior to the effective date of the registration statement relating to such
registration, revoke such request, without liability to any of the other
Holders, by providing a written notice to the Issuer revoking such request, in
which case such request, so revoked, shall be considered a Demand Registration
unless such revocation arose out of the fault of the Issuer or unless the
participating Shareholders reimburse the Issuer for all costs incurred by the
Issuer in connection with such registration, in which case such request shall
not be considered a Demand Registration.
(c) The Issuer will pay all Registration Expenses in connection with any
Demand Registration.
(d) A registration requested pursuant to this Section 5.01 shall not be
deemed to have been effected (i) unless the registration statement relating
thereto (A) has become effective under the Securities Act and (B) has remained
effective for a period of at least 180 days (or such shorter period in which
all Registrable Securities of the Holders included in such registration have
actually been sold thereunder); provided that if after any registration
statement requested pursuant to this Section 5.01 becomes effective (x) such
registration statement is interfered with by any stop order, injunction or
other order or requirement of the SEC or other governmental agency or court and
(y) less than 75% of the Registrable Securities included in such registration
statement has been sold thereunder, (ii) if
29
the Maximum Offering Size (as defined below) is reduced in accordance with
Section 5.01(e) such that less than 66 2/3% of the Registrable Securities of
the Selling Shareholders sought to be included in such registration are
included or (iii) if as a result of other Shareholders effecting a Piggyback
Registration, the Selling Shareholder is able to register less than 75% of the
Registrable Securities it requested to be registered pursuant to its Demand
Registration, such registration statement shall not be considered a Demand
Registration.
(e) If a Demand Registration involves an Underwritten Public Offering and
the managing underwriter shall advise the Issuer and the Selling Shareholders
that, in its view, (i) the number of shares of Registrable Securities requested
to be included in such registration (including any securities which the Issuer
proposes to be included which are not Registrable Securities) or (ii) the
inclusion of some or all of the shares of Registrable Securities owned by the
Holders, in any such case, exceeds the largest number of shares which can be
sold without having an adverse effect on such offering, including the price at
which such shares can be sold (the "Maximum Offering Size"), the Issuer will
include in such registration, in the priority listed below, up to the Maximum
Offering Size:
(A) first, all Registrable Securities requested to be
registered by the parties requesting such Demand Registration
and all Registrable Securities requested to be included in
such registration by any other Holder (allocated, if
necessary for the offering not to exceed the Maximum Offering
Size, pro rata among such Holders on the basis of the
relative number of Registrable Securities so requested to be
included in such registration); and
(B) second, any securities proposed to be registered by
the Issuer.
(f) If, in connection with any Demand Registration pursuant to Section
5.01 with respect to the LMS Preferred Stock, any Selling Shareholder shall
seek to transfer any Warrants together with shares of LMS Preferred Stock, the
Issuer shall at the request of any such Shareholder effect a registration of
such Warrants to which the provisions of this Article 5 shall apply mutatis
mutandis and a registration, pursuant to a shelf registration statement, so as
to permit the resale of the shares of Common Stock for which any Warrants so
transferred may be exercisable. The Issuer shall maintain effective any such
shelf registration statement for so long as any Warrants remain outstanding,
and take all actions necessary to permit resale of such Common Stock as may be
required by applicable state securities laws.
30
(g) Upon written notice to each Selling Shareholder, the Issuer may
postpone effecting a registration pursuant to this Section 5.01 on one occasion
during any period of six consecutive months for a reasonable time specified in
the notice but not exceeding 90 days (which period may not be extended or
renewed), if (1) an investment banking firm of recognized national standing
shall advise the Issuer and the Selling Shareholders in writing that effecting
the registration would materially and adversely affect an offering of
securities of such Issuer the preparation of which had then been commenced or
(2) the Issuer is in possession of material non-public information the
disclosure of which during the period specified in such notice the Issuer
believes, in its reasonable judgment, would not be in the best interests of the
Issuer.
SECTION 5.02. Piggyback Registration. (a) If the Company proposes to
register any of its Registrable Securities under the Securities Act (including
pursuant to a Demand Registration), whether or not for sale for its own
account, it will each such time, subject to the provisions of Section 5.02(b)
hereof, give prompt written notice at least 5 days prior to the anticipated
filing date of the registration statement relating to such registration to all
Shareholders and their respective Permitted Transferees (or, in the case of a
Demand Registration, to all other Shareholders), which notice shall set forth
such Shareholders' rights under this Section 5.02 and shall offer all
Shareholders the opportunity to include in such registration statement such
number of shares of the relevant Registrable Securities as each such
Shareholder may request (a "Piggyback Registration"). Upon the written request
of any such Shareholder made within 2 days (one of which shall be a Business
Day) after the receipt of notice from the Company (which request shall specify
the number of shares of Registrable Securities intended to be disposed of by
such Shareholder), the Company will use its reasonable best efforts to effect
the registration under the Securities Act of all shares of Registrable
Securities which the Company has been so requested to register by such
Shareholders, to the extent requisite to permit the disposition of the shares
of Registrable Securities so to be registered; provided that (i) if such
registration involves an Underwritten Public Offering, all such Shareholders
requesting to be included in the Company's registration must sell their
Registrable Securities to the underwriters selected as provided in Section
5.04(f) on the same terms and conditions as apply to the Company, or the
Selling Shareholder, as applicable, and (ii) if, at any time after giving
written notice of its intention to register any stock pursuant to this Section
5.02(a) 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 such stock, the Company shall give written notice to all such
Shareholders and, thereupon, shall be relieved of its obligation to register
any Registrable Securities in connection with such registration. No
registration effected under this Section 5.02 shall relieve the Company of its
obligations to effect a Demand Registration to the extent required
31
by Section 5.01 hereof. The Company will pay all Registration Expenses in
connection with each registration of Registrable Securities requested pursuant
to this Section 5.02.
(b) If a registration pursuant to this Section 5.02 involves an
Underwritten Public Offering (other than in the case of an Underwritten Public
Offering requested by a Selling Shareholder in a Demand Registration, in which
case the provisions with respect to priority of inclusion in such offering set
forth in Section 5.01(e) shall apply) and the managing underwriter advises the
Company that, in its view, the number of shares of Registrable Securities which
the Company and the selling Shareholders intend to include in such registration
exceeds the Maximum Offering Size, the Company will include in such
registration, in the following priority, up to the Maximum Offering Size:
(i) first, so much of the Registrable Securities proposed to be
registered for the account of the Company as would not cause the
offering to exceed the Maximum Offering Size; and
(ii) second, all Registrable Securities requested to be included in
such registration by any Shareholder pursuant to Section 5.02
(allocated, if necessary for the offering not to exceed the Maximum
Offering Size, pro rata among such Shareholders on the basis of the
relative number of shares of Registrable Securities so requested to be
included in such registration).
SECTION 5.03. Holdback Agreements. With respect to each and every firmly
underwritten Public Offering, each Shareholder agrees and their Permitted
Transferees will agree not to offer or sell any shares of Registrable
Securities (except for shares of Registrable Securities, if any, sold in that
Public Offering) during the 14 days prior to the effective date of the
applicable registration statement for a public offering of shares of
Registrable Securities (except as part of such registration) and during the
period after such effective date equal to the lesser of: (i) 180 days or (ii)
any such shorter period as the Company and the lead managing underwriter of an
Underwritten Public Offering agree (such lesser period, the "Applicable
Holdback Period").
SECTION 5.04. Registration Procedures. Whenever Shareholders request that
any Registrable Securities be registered pursuant to Section 5.01 or 5.02
hereof, the Issuer will, subject to the provisions of such Sections, use its
reasonable best efforts to effect the registration and the sale of such
Registrable Securities in accordance with the intended method of disposition
thereof as quickly as practicable, and in connection with any such request:
32
(a) The Issuer will as expeditiously as possible prepare and file with the
SEC a registration statement on any form selected by counsel for the Company or
LMS and which form shall be available for the sale of the Registrable
Securities to be registered thereunder in accordance with the intended method
of distribution thereof, and use its reasonable best efforts to cause such
filed registration statement to become and remain effective for a period of not
less than 180 days (or such shorter period in which all of the Registrable
Securities of the Holders included in such registration statement shall have
actually been sold thereunder).
(b) The Issuer will, if requested, prior to filing a registration
statement or prospectus or any amendment or supplement thereto, furnish to each
Shareholder and each underwriter, if any, of the Registrable Securities covered
by such registration statement copies of such registration statement as
proposed to be filed, and thereafter the Issuer will furnish to such
Shareholder and underwriter, if any, such number of copies of such registration
statement, each amendment and supplement thereto (in each case including all
exhibits thereto and documents incorporated by reference therein), the
prospectus included in such registration statement (including each preliminary
prospectus) and such other documents as such Shareholder or underwriter may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Shareholder. Each Shareholder shall have the right to
request that the Issuer modify any information contained in such registration
statement, amendment and supplement thereto pertaining to such Shareholder and
the Issuer shall use its reasonable best efforts to comply with such request,
provided that the Issuer shall not have any obligation to so modify any
information if so doing would cause the prospectus to contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.
(c) After the filing of the registration statement, the Issuer will (i)
cause the related prospectus to be supplemented by any required prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under the
Securities Act, (ii) comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities covered by such
registration statement during the applicable period in accordance with the
intended methods of disposition by the sellers thereof set forth in such
registration statement or supplement to such prospectus and (iii) promptly
notify each Shareholder holding Registrable Securities covered by such
registration statement of any stop order issued or threatened by the SEC or any
state securities commission under state blue sky laws and take all reasonable
actions required to prevent the entry of such stop order or to remove it if
entered.
(d) The Issuer will use its reasonable best efforts to (i) register
or qualify the Registrable Securities covered by such registration statement
under such other
33
securities or blue sky laws of such jurisdictions in the United States as any
Shareholder holding such Registrable Securities reasonably (in light of such
Shareholder's intended plan of distribution) requests and (ii) cause such
Registrable Securities to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Issuer and do any and all other acts and things
that may be reasonably necessary or advisable to enable such Shareholder to
consummate the disposition of the Registrable Securities owned by such
Shareholder; provided that the Issuer will not be required to (A) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this paragraph (d), (B) subject itself to taxation
in any such jurisdiction or (C) consent to general service of process in any
such jurisdiction.
(e) The Issuer will immediately notify each Shareholder holding such
Registrable Securities covered by such registration statement, at any time when
a prospectus relating thereto is required to be delivered under the Securities
Act, of the occurrence of an event requiring the preparation of a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading and
promptly prepare and make available to each such Shareholder and file with the
SEC any such supplement or amendment.
(f) In connection with any Demand Registration the Issuer shall appoint
the underwriter or underwriters chosen by the Institutional Shareholder making
the Demand Registration. The Issuer will enter into customary agreements
(including an underwriting agreement in customary form) and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities, including the engagement of a
"qualified independent underwriter" in connection with the qualification of the
underwriting arrangements with the NASD.
(g) Upon execution of confidentiality agreements in form and substance
reasonably satisfactory to the Issuer, the Issuer will make available for
inspection by any Shareholder and any underwriter participating in any
disposition pursuant to a registration statement being filed by the Issuer
pursuant to this Section 5.04 and any attorney, accountant or other
professional retained by any such Shareholder or underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate documents
and properties of the Issuer (collectively, the "Records") as shall be
reasonably requested by any such Person, and cause the Issuer's officers,
directors and employees to supply all information reasonably requested by any
Inspectors in connection with such registration statement.
34
(h) The Issuer will furnish to each such Shareholder and to each such
underwriter, if any, a signed counterpart, addressed to such underwriter and
the participating Shareholders, of (i) an opinion or opinions of counsel to the
Issuer and (ii) a comfort letter or comfort letters from the independent public
accountants, each in customary form and covering such matters of the type
customarily covered by opinions or comfort letters, as the case may be, as a
majority of such Shareholders or the managing underwriter therefor reasonably
requests.
(i) The Issuer will otherwise use its reasonable best efforts to
comply all applicable rules and regulations of the SEC and the relevant
state sky commissions, and make available to its securityholders, as soon
as reasonably practicable, an earnings statement covering a period of 12
months, beginning within three months after the effective date of the
registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act.
(j) The Issuer may require each such Shareholder to promptly furnish
in writing to the Issuer information regarding the distribution of the
Registrable Securities as the Issuer may from time to time reasonably
request and such other information as may be legally required in connection
with such registration.
(k) Each such Shareholder agrees that, upon receipt of any notice
from the Issuer of the happening of any event of the kind described in
Section 5.04(e) hereof, such Shareholder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration
statement covering such Registrable Securities until such Shareholder's
receipt of the copies of the supplemented or amended prospectus
contemplated by Section 5.04(e) hereof, and, if so directed by the Issuer,
such Shareholder will deliver to the Issuer all copies, other than any
permanent file copies then in such Shareholder's possession, of the most
recent prospectus covering such Registrable Securities at the time of
receipt of such notice. In the event that the Issuer shall give such
notice, the Issuer shall extend the period during which such registration
statement shall be maintained effective (including the period referred to
in Section 5.04(a) hereof) by the number of days during the period from
and including the date of the giving of notice pursuant to Section 5.04(e)
hereof to the date when the Issuer shall make available to such
Shareholder a prospectus supplemented or amended to conform with the
requirements of Section 5.04(e) hereof.
SECTION 5.05. Indemnification by the Issuer. The Issuer agrees to
indemnify and hold harmless each Shareholder holding Registrable Securities
covered by a registration statement, its officers, directors, employees,
partners and
35
agents, and each Person, if any, who controls such Shareholder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
(and officers, directors, employees, partners and agents of such controlling
Persons) from and against any and all losses, claims, damages and liabilities
caused by any untrue statement or alleged untrue statement of a material fact
contained in any registration statement or prospectus relating to the
Registrable Securities (as amended or supplemented if the Issuer 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 or liabilities are
caused by any such untrue statement or omission or alleged untrue statement or
omission so made in strict conformity with information furnished in writing to
the Issuer by such Shareholder or on such Shareholder's behalf expressly for
use therein; provided that with respect to any untrue statement or omission or
alleged untrue statement or omission made in any preliminary prospectus, or in
any prospectus, as the case may be, the indemnity agreement contained in this
paragraph shall not apply to the extent that any such loss, claim, damage,
liability or expense results from the fact that a current copy of the
prospectus (or, in the case of a prospectus, the prospectus as amended or
supplemented) was not sent or given to the Person asserting any such loss,
claim, damage, liability or expense at or prior to the written confirmation of
the sale of the Registrable Securities concerned to such Person if it is
determined that the Issuer has provided such current copy of such prospectus
(or such amended or supplemented prospectus, as the case may be) to such
Shareholder in a timely manner prior to such sale and it was the responsibility
of such Shareholder under the Securities Act to provide such Person with a
current copy of the prospectus (or such amended or supplemented prospectus, as
the case may be) and such current copy of the prospectus (or such amended or
supplemented prospectus, as the case may be) would have cured the defect giving
rise to such loss, claim, damage, liability or expense. The Issuer also agrees
to indemnify any underwriters of the Registrable Securities, their officers and
directors and each person who controls such underwriters on substantially the
same basis as that of the indemnification of the Shareholders provided in this
Section 5.05.
SECTION 5.06. Indemnification by Participating Shareholders. Each
Shareholder holding Registrable Securities included in any registration
statement agrees, severally but not jointly, to indemnify and hold harmless the
Issuer, officers, directors and agents and each Person (other than such
Shareholder) if any, who controls the Issuer within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Issuer to such Shareholder, but only
(i) with respect to information furnished in writing by such Shareholder or on
such Shareholder's
36
behalf expressly for use in any registration statement or prospectus relating
to the Registrable Securities, or any amendment or supplement thereto, or any
preliminary prospectus or (ii) to the extent that any loss, claim, damage,
liability or expense described in Section 5.05 results from the fact that a
current copy of the prospectus (or, in the case of a prospectus, the prospectus
as amended or supplemented) was not sent or given to the Person asserting any
such loss, claim, damage, liability or expense at or prior to the written
confirmation of the sale of the Registrable Securities concerned to such Person
if it is determined that it was the responsibility of such Shareholder to
provide such Person with a current copy of the prospectus (or such amended or
supplemented prospectus, as the case may be) and such current copy of the
prospectus (or such amended or supplemented prospectus, as the case may be)
would have cured the defect giving rise to such loss, claim, damage, liability
or expense. Each such Shareholder shall be prepared, if required by the
underwriting agreement, to indemnify and hold harmless underwriters of the
Registrable Securities, their officers and directors and each person who
controls such underwriters on substantially the same basis as that of the
indemnification of the Issuer provided in this Section 5.06. As a condition to
including Registrable Securities in any registration statement filed in
accordance with Article 5 hereof, the Issuer or LMS, as the case may be, may
require that it shall have received an undertaking reasonably satisfactory to
it from any underwriter to indemnify and hold it harmless to the extent
customarily provided by underwriters with respect to similar securities.
No Shareholder shall be liable under Section 5.06 for any damage
thereunder in excess of the net proceeds realized by such Shareholder in the
sale of the Registrable Securities of such Shareholder.
SECTION 5.07. Conduct of Indemnification Proceedings. In case any
proceeding (including any governmental investigation) shall be instituted
involving any Person in respect of which indemnity may be sought pursuant to
this Article 5, such Person (an "Indemnified Party") shall promptly notify the
Person against whom such indemnity may be sought (the "Indemnifying Party") in
writing and the Indemnifying Party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to such Indemnified Party,
and shall assume the payment of all fees and expenses; provided that the
failure of any Indemnified Party so to notify the Indemnifying Party shall not
relieve the Indemnifying Party of its obligations hereunder except to the
extent that the Indemnifying Party is materially prejudiced by such failure to
notify. In any such proceeding, any Indemnified Party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such counsel
or (ii) in the reasonable judgment of such Indemnified Party representation of
both parties by
37
the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the Indemnifying Party shall not,
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
Indemnified Parties, such firm shall be designated in writing by the
Indemnified Parties. The Indemnifying Party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent, or if there be a final judgment for the plaintiff,
the Indemnifying Party shall indemnify and hold harmless such Indemnified
Parties from and against any and all losses, claims, damages, liabilities and
expenses or liability (to the extent stated above) by reason of such settlement
or judgment. No Indemnifying Party shall, without the prior written consent of
the Indemnified Party, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Party is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Party,
unless such settlement includes an unconditional release of such Indemnified
Party from all liability arising out of such proceeding.
SECTION 5.08. Contribution. If the indemnification provided for in this
Article 5 is held by a court of competent jurisdiction to be unavailable to the
Indemnified Parties in respect of any losses, claims, damages or liabilities
referred to herein, then each such Indemnifying Party, in lieu of indemnifying
such Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities
(i) as between the Issuer and the Shareholders holding Registrable Securities
covered by a registration statement and their related Indemnified Parties on
the one hand and the underwriters and their related Indemnified Parties on the
other, in such proportion as is appropriate to reflect the relative benefits
received by the Issuer and such Shareholders on the one hand and the
underwriters on the other, from the offering of the Shareholders' Registrable
Securities, or if such allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits but also
the relative fault of the Issuer and such Shareholders on the one hand and of
such underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations and (ii) as between the Issuer and
their related Indemnified Parties on the one hand and each such Shareholder and
their related Indemnified Parties on the other, in such proportion as is
appropriate to reflect the relative fault of the Issuer and of each such
Shareholder in connection with such statements or omissions, as well as any
other relevant equitable considerations. The relative benefits received by the
Issuer and such Shareholders on the one hand and such underwriters on the other
38
shall be deemed to be in the same proportion as the total proceeds from the
offering (net of underwriting discounts and commissions but before deducting
expenses) received by the Issuer and such Shareholders bear to the total
underwriting discounts and commissions received by such underwriters, in each
case as set forth in the table on the cover page of the prospectus. The
relative fault of the Issuer and such Shareholders on the one hand and of such
underwriters on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Issuer and such Shareholders or by such
underwriters. The relative fault of the Issuer on the one hand and of each such
Shareholder on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Issuer and the Shareholders agree that it would not be just and
equitable if contribution pursuant to this Section 5.08 were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an Indemnified Party as a
result of the losses, claims, damages or liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 5.08 no
underwriter shall be required to contribute any amount in excess of the
underwriting discount applicable to securities purchased by such underwriter in
such offering, less the aggregate amount of any damages which such underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission, and no Shareholder shall be required
to contribute any amount in excess of the amount by which the net proceeds
realized on the sale of the Registrable Securities of such Shareholder exceeds
the amount of any damages which such Shareholder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. Each
Shareholder's obligation to contribute pursuant to this Section 5.08 is several
in the proportion that the proceeds of the offering received by such
Shareholder bears to the total proceeds of the offering received by all such
Shareholders and not joint.
39
SECTION 5.09. Participation in Public Offering. No Person may participate
in any Underwritten Public Offering hereunder unless such Person (a) agrees to
sell such Person's securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and the provisions
of this Agreement in respect of registration rights.
SECTION 5.10. Cooperation by the Issuer. In the event any Shareholder
shall transfer any Registrable Securities pursuant to Rule 144A under the
Securities Act, the Issuer shall cooperate, to the extent commercially
reasonable, with such Shareholder and shall provide to such Shareholder such
information as such Shareholder shall reasonably request.
SECTION 5.11. No Transfer of Registration Rights. None of the rights of
Shareholders under this Article 5 shall be assignable by any Shareholder to any
Person acquiring securities of such Shareholder in any Public Offering or
pursuant to Rule 144A of the Securities Act.
ARTICLE 6
CERTAIN COVENANTS AND AGREEMENTS
SECTION 6.01. Confidentiality. (a) Each Shareholder hereby agrees that
Confidential Information (as defined below) furnished and to be furnished to it
was and will be made available in connection with such Shareholder's investment
in the Issuer. Each Shareholder acknowledges and agrees that it will not
disclose any Confidential Information to any Person; provided that Confidential
Information may be disclosed (i) to such Shareholder's Representatives (as
defined below) in the normal course of the performance of their duties or to
any financial institution providing credit to such Shareholder, (ii) to the
extent required by applicable law, rule or regulation (including complying with
any oral or written questions, interrogatories, requests for information or
documents, subpoena, civil investigative demand or similar process to which a
Shareholder is subject; provided that such Shareholder gives the Issuer prompt
notice of such request(s), to the extent practicable, so that the Issuer may
seek an appropriate protective order or similar relief), (iii) to any Person to
whom such Shareholder is contemplating a transfer of its Equity Securities
(provided that such transfer would not be in violation of the provisions of
this Agreement and as long as such potential transferee is advised of the
confidential nature of such information and
40
agrees to be bound by a confidentiality agreement in form and substance
satisfactory to the Issuer (it being understood that a confidentiality
agreement consistent with the provisions hereof shall be satisfactory to the
Issuer)) or (iv) to any regulatory authority to which the shareholder or any of
its affiliates is subject of with which it has regular dealings if the prior
written consent of the Board shall have been obtained. Nothing contained herein
shall prevent the use (subject, to the extent possible, to a protective order)
of Confidential Information in connection with the assertion or defense of any
claim by or against the Issuer or any Shareholder. The Company will furnish to
directors of the Company, as soon as they become prepared on a regular basis,
monthly management accounts in such form and containing such information as the
Board shall specify.
(b) "Confidential Information" means any information concerning the Issuer
and Persons which are or become its subsidiaries or the financial condition,
business, operations or prospects of the Issuer and Persons which are or become
its subsidiaries in the possession of or furnished to any Shareholder
(including, without limitation by virtue of its present or former right to
designate a director of the Issuer); provided that the term "Confidential
Information" does not include information which (i) is or becomes generally
available to the public other than as a result of a disclosure by a Shareholder
or its partners, directors, officers, employees, agents, counsel, investment
advisers or representatives (all such persons being collectively referred to as
"Representatives") in violation of the Subscription Agreement or this
Agreement, (ii) is or was available to such Shareholder on a nonconfidential
basis prior to its disclosure to such Shareholder or its Representatives by the
Issuer or (iii) was or becomes available to such Shareholder on a
non-confidential basis from a source other than the Issuer, provided that such
source is or was at the time of receipt of the relevant information not, to the
best of such Shareholder's knowledge, bound by a confidentiality agreement with
the Issuer or another Person.
SECTION 6.02. Reports. The Issuer will furnish the Institutional
Shareholders with the quarterly and annual financial reports that the Company
is required to file with the Securities and Exchange Commission pursuant to
Section 13 or Section 15(d) of the Exchange Act promptly after the filing
thereof or, in the event the Company is not required to file such reports,
quarterly and annual reports containing the same information as would be
required in such reports on the date that such reports would otherwise be
filed.
SECTION 6.03. Limitations on Subsequent Registration. The Issuer shall not
enter into any agreement with any holder or prospective holder of any
securities of the Issuer (a) that would allow such holder or prospective holder
to include such securities in any registration filed pursuant to Section 5.01
or 5.02 hereof, unless under the terms of such agreement, such holder or
prospective
41
holder may include such securities in any such registration only to the extent
that the inclusion of such securities would not reduce the amount of the
Registrable Securities of the Shareholders included therein or (b) on terms
otherwise more favorable than this Agreement.
SECTION 6.04. Exclusive Financial Advisor and Investment Banking Advisor.
As set forth in the Engagement Letter between Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation ("DLJSC") and the Company dated March 5, 1998 (the
"Engagement Letter"), during the period from and including the date hereof
through and including the date on which the Bridge Notes held by affiliates of
DLJ Bridge Finance, Inc. are no longer outstanding DLJSC or any Affiliate that
DLJMB may choose in its sole discretion, shall be engaged as the exclusive
financial advisor and investment banker for the Issuer on financial and other
terms customary in the industry to be agreed between the Issuer and DLJSC. Any
amendment to the terms of the Engagement Letter will be subject to Section
2.05(vi) herein.
SECTION 6.05. Regulatory Co-operation. In the event that MMI determines
that it has a Regulatory Problem (as defined below), the Company shall take all
such actions as are reasonably requested by MMI in order to (a) effectuate and
facilitate any transfer by MMI of any securities of the Company then held by
MMI to (x) any Affiliate designated by MMI or (y) any single Person other than
an Adverse Person with the consent of the other Institutional Shareholders
provided any transferee shall have agreed in writing to be bound by the terms
of this Agreement and any transfer pursuant to clause (y) shall be subject to
Section 4.04, (b) permit MMI (or any of its affiliates) to exchange all or any
portion of any voting security then held by it on a share-for-share basis for
shares of a nonvoting security of the Company, which nonvoting security shall
be identical in all respects to the voting security exchanged for it, except
that it shall be nonvoting and shall be convertible into a voting security on
such terms as are requested by MMI in light of regulatory consideration then
prevailing (so long as no such terms change the economic or voting relations
contemplated on the date of this Investors Agreement) and (c) amend this
Agreement, the Company's articles of incorporation, bylaws and any other
related documents to effectuate and reflect the foregoing. For purposes of this
Section, a "Regulatory Problem" means any set of facts or circumstances wherein
it has been asserted by any Governmental Body (or MMI believes that there is a
substantial risk of such assertion) that MMI is not entitled to hold, or
exercise any significant right with respect to, the securities of the Company
then held by MMI.
42
ARTICLE 7
MISCELLANEOUS
SECTION 7.01. Entire Agreement. This Agreement, the Subscription Agreement
and any employment agreement between the Company or any Subsidiary and a
Management Shareholder constitute the entire agreement among the parties with
respect to the subject matter hereof and thereof and supersede all prior and
contemporaneous agreements and understandings, both oral and written, between
the parties with respect to the subject matter hereof and thereof.
SECTION 7.02. Binding Effect; Benefit. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
successors, legal representatives and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer on any Person other than
the parties hereto, and their respective heirs, successors, legal
representatives and permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement. Persons who acquire shares of
Common Stock pursuant to the exercise of an option pursuant to the Laminates
Acquisition Co. Management Incentive Plan shall become parties hereto and be
bound by the provisions hereof and the addition of such parties to this
Agreement shall not constitute an amendment or modification of this Agreement.
SECTION 7.03. Assignability. (a) Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall be
assignable by the Company or any Shareholder; provided that any Person
acquiring shares of Equity Securities who is required by the terms of this
Agreement, the Bridge Warrant Agreement or any employment agreement or stock
purchase, option, stock option or other compensation plan of the Company or any
Subsidiary to become a party hereto shall (unless already bound hereby) execute
and deliver to the Company an agreement to be bound by this Agreement and shall
thenceforth be a "Shareholder".
(b) Any Permitted Transferee of a Management Shareholder who shall become
a party hereto shall be deemed a "Management Shareholder".
(c) Any Permitted Transferee of an Institutional Shareholder who shall
become a party to this Agreement shall be deemed an "Institutional
Shareholder".
(d) If, and to the extent that, the warrants to acquire Common Stock
issued pursuant to that Warrant Agreement dated May 1, 1998 (the "Bridge
Warrant Agreement") among Laminates Funding Inc., Credit Suisse First
43
Boston, Bankers Trust Company (together with their respective transferees, the
"Bridge Fund Equity Holders") and the Company are released from escrow to the
Bridge Fund Equity Holders, then, until an Initial Public Offering shall have
occurred, each Bridge Fund Equity Holder shall be bound by, and have the
benefits of, Sections 3.01(a) and 3.01(b) (insofar as each Section relates to
the Securities Act), 3.02, 4.01 and 4.02 hereof, and
(x) for purposes of Section 4.01 each Bridge Fund Equity
Holder shall be considered an "Institutional Shareholder",
but this Section 7.03(d)(x) shall apply to a Bridge Fund
Equity Holder only as a Tagging Person and shall not be
construed to permit other Shareholders to participate in
transfers by such Bridge Fund Equity Holder, and
(y) for purposes of Section 4.02 (but not 4.02 (iii)) each
Bridge Fund Equity Holder shall be considered to be a
"Management Shareholder" for purposes of the obligations to
sell Company Equity Securities thereunder and the warrants
issued under the Bridge Warrant Agreement shall be treated as
though they were "Warrants" hereunder.
Upon the occurrence of an Initial Public Offering, the rights and
obligations of the Bridge Fund Equity Holders under this Section 7.03(d) shall
terminate.
SECTION 7.04. Amendment; Waiver; Termination. (a) No provision of this
Agreement may be waived except by an instrument in writing executed by the
party against whom the waiver is to be effective. No provision of this
Agreement may be amended or otherwise modified except by an instrument in
writing executed by the Company with approval of the Board of Directors and
holders of at least 75% of the Shares held by the parties to this Agreement at
the time of such proposed amendment or modification.
(b) In addition, any amendment or modification of any provision of this
Agreement that would adversely affect any (i) Institutional Shareholder may be
effected only with the consent of 100% of the affected Institutional
Shareholders or (ii) Management Shareholder may be effected only with the
consent of Management Shareholders holding at least 50% of the shares held by
the Management Shareholders. Any amendment of Sections 3.01(a), 3.01(b), 3.02.
4.01, 4.02 and 7.03(d) in a manner adverse to any Bridge Fund Equity Holder
shall require the consent of 100% of the affected Bridge Fund Equity Holders.
44
(c) This Agreement shall terminate on the tenth anniversary of the date
hereof unless earlier terminated.
SECTION 7.05. Notices. (a) All notices and other communications given or
made pursuant hereto or pursuant to any other agreement among the parties,
unless otherwise specified, shall be in writing and shall be deemed to have
been duly given and received when sent by fax (with confirmation in writing via
first class U.S. mail) or delivered personally or on the third Business Day
after being sent by registered or certified U.S. mail (postage prepaid, return
receipt requested) to the parties at the fax number or address set forth below
or at such other addresses as shall be furnished by the parties by like notice:
if to the Company to:
Laminates Acquisition Co.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
if to any Shareholder, to such Shareholder at the address
specified by such Shareholder on the signature pages of this
Agreement or in a notice given by such Shareholder to the
Company for such purpose
Any Person who becomes a Shareholder shall provide its address and fax
number to the Company, which shall promptly provide such information to each
other Shareholder.
(b) Notices required to be given pursuant to Sections 5.01(a) and 5.01(b)
and Section 5.02 by the Company shall be deemed given only if such notices are
also be given telephonically and by fax to the following persons (or any other
individual the respective entities may designate in writing to the Company to
replace such person):
(i) for the benefit of the Management Shareholders, to Xxxxxxx
Xxxxxxx at 000-000-0000 and fax 000-000-0000;
(ii) for the benefit of the MMI Entities, to: Xxxxx Xxxx at 212-
000-0000, fax: 000-000-0000, with a copy to Xxxx Xxxxx at
000-000-0000, fax: 000-000-0000;
45
(iii) for the benefit of the CVC Entities, to: Xxxxxxx Xxxxx or Xxxxxx
XxxXxxxxx at fax: 000-00-000-000-0000; and
(iv) for the benefit of the DLJ Entities, to Xxxxxxxx Xxxx, at
000-000-0000, fax: 000-000-0000, with a copy to Xxxxxx X. Xxxxx, Xx.,
at 000-000-0000, fax: 000-000-0000.
SECTION 7.06. Headings. The headings contained in this Agreement are for
convenience only and shall not affect the meaning or interpretation of this
Agreement.
SECTION 7.07. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall be deemed to be one and the same instrument.
SECTION 7.08. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to the conflicts of laws rules of such state.
SECTION 7.09. Specific Enforcement. Each party hereto acknowledges that
the remedies at law of the other parties for a breach or threatened breach of
this Agreement would be inadequate and, in recognition of this fact, any party
to this Agreement, without posting any bond, and in addition to all other
remedies which may be available, shall be entitled to obtain equitable relief
in the form of specific performance, a temporary restraining order, a temporary
or permanent injunction or any other equitable remedy which may then be
available.
SECTION 7.10. Consent to Jurisdiction; Expenses. (a) Any suit, action or
proceeding seeking to enforce any provision of, or based on any matter arising
out of or in connection with, this Agreement or the transactions contemplated
hereby shall be brought in any Federal Court sitting in New York, New York, or
any New York State court sitting in New York, New York, and each of the parties
hereby consents to the exclusive jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be
served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party
agrees that service of process on such party by any method provided in Section
7.05 shall be deemed effective service of process on such
46
party and consents to the personal jurisdiction of any Federal Court sitting in
New York, New York, or any New York State court sitting in New York, New York.
(b) In any dispute arising under this Agreement among any of the parties
hereto, the costs and expenses (including, without limitation, the reasonable
fees and expenses of counsel) incurred by the prevailing party shall be paid by
the party that does not prevail.
SECTION 7.11. Severability. If one or more provisions of this Agreement
are held to be unenforceable to any extent under applicable law, such provision
shall be interpreted as if it were written so as to be enforceable to the
maximum possible extent so as to effectuate the parties' intent to the maximum
possible extent, and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms to the maximum extent permitted by law.
47
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
LAMINATES ACQUISITION CO.
By:
--------------------------------------
Name:
Title:
LMS I, CO.
By:
--------------------------------------
Name:
Title:
DLJ MERCHANT BANKING PARTNERS
II, L.P., a Delaware Limited Partnership
By: DLJ Merchant Banking II, Inc.,
as managing general partner
By:
--------------------------------------
Name:
Title:
Address:
c/o DLJ Merchant Banking II, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
with a copy of notice to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn; Xxxxxx X. Xxxxx, Xx.
48
DLJ MERCHANT BANKING PARTNERS
II-A, L.P., a Delaware Limited Partnership
By: DLJ Merchant Banking II, Inc.,
as managing general partner
By:
--------------------------------------
Name:
Title:
Address:
c/o DLJ Merchant Banking II, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
DLJ OFFSHORE PARTNERS II, C.V., a
Netherlands Antilles Limited Partnership
By: DLJ Merchant Banking II, Inc.,
as advisory general partner
By:
--------------------------------------
Name:
Title:
Address:
x/x XXX Merchant Banking, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
49
DLJ DIVERSIFIED PARTNERS, L.P., a
Delaware Limited Partnership
By: DLJ Diversified Partners, Inc.,
as managing general partner
By:
--------------------------------------
Name:
Title:
Address:
x/x XXX Merchant Banking, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
DLJ DIVERSIFIED PARTNERS-A, L.P., a
Delaware Limited Partnership
By: DLJ Diversified Partners, Inc.,
as managing general partner
By:
--------------------------------------
Name:
Title:
Address:
c/o DLJ Merchant Banking II, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
50
DLJ MILLENNIUM PARTNERS, L.P., a
Delaware Limited Partnership
By: DLJ Merchant Banking II, Inc.,
as managing general partner
By:
--------------------------------------
Name:
Title:
Address:
c/o DLJ Merchant Banking II, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
DLJ MILLENNIUM PARTNERS-A, L.P.,
a Delaware Limited Partnership
By: DLJ Merchant Banking II, Inc.,
as managing general partner
By:
--------------------------------------
Name:
Title:
Address:
c/o DLJ Merchant Banking II, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
51
DLJMB FUNDING II, INC., a Delaware
corporation
By:
--------------------------------------
Name:
Title:
Address:
c/o DLJ Merchant Banking II, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
DLJ FIRST ESC L.P.
By: DLJ LBO Plans Management Corporation,
as general partner
By:
--------------------------------------
Name:
Title:
Address:
c/o DLJ Merchant Banking II, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
52
UK INVESTMENT PLAN 1997
PARTNERS, INC.
By: UK Investment Plan 1997 Partners,
Inc., as general partner
By:
--------------------------------------
Name:
Title:
Address:
c/o DLJ Merchant Banking II, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
DLJ EAB PARTNERS, L.P.
By: DLJ LBO Plans Management
Corporation, as general partner
By:
--------------------------------------
Name:
Title:
Address:
c/o DLJ Merchant Banking II, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
53
DLJ ESC II L.P.
By: DLJ LBO Plans Management
Corporation, as general partner
By:
--------------------------------------
Name:
Title:
Address:
c/o DLJ Merchant Banking II, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
CVC EUROPEAN EQUITY PARTNERS L.P.
By:
--------------------------------------
Name:
Title:
Address:
CVC EUROPEAN EQUITY PARTNERS
(JERSEY) L.P.
By:
--------------------------------------
Name:
Title:
Address:
54
MMI PRODUCTS, L.L.C.
By:
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Name:
Title:
Address:
55
By:
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Xxxxxxx Xxxxxxx
Address:
By:
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Xxxxx Xxxxxxxxx
Address:
56
