EXHIBIT 10.4
SHAREHOLDERS VOTING AGREEMENT
This Shareholders Voting Agreement, dated as of June 23, 2004, is made by
and between Xxxxxx X. Xxxxx, of Louisville, Kentucky ("Xxxxx") and Onex Partners
LP, a Delaware limited partnership ("Onex").
- PRELIMINARY STATEMENTS -
As of the date hereof, Xxxxx is the legal and/or beneficial owner of
774,073 shares of common stock of Res-Care, Inc. (the "Company"), a Kentucky
corporation, and options to purchase 601,702 shares of Company common stock (the
"Options").
Onex, along with other affiliated entities (the "Purchasers"), is entering
into a Preferred Stock Purchase Agreement with the Company dated March 10, 2004,
under which the Purchasers will purchase and the Company will sell 48,905 shares
of Series A convertible preferred stock of the Company, subject to the terms of
such Preferred Stock Purchase Agreement.
Concurrently, the Purchasers are entering into a Stock Purchase Agreement
dated March 10, 2004 (the "Shareholder Stock Purchase Agreement") with Xxxxx
wherein the Purchasers will purchase and Xxxxx will sell 300,000 shares of
common stock of the Company of which he is the legal and beneficial owner,
subject to the terms of such Shareholder Stock Purchase Agreement.
As a condition to entering into the Preferred Stock Purchase Agreement as
well as the Stock Purchase Agreement, Onex is requiring that Xxxxx enter into
this Shareholders Voting Agreement which shall provide Onex: (i) the right to
vote the Shares (as hereinafter defined) in all matters regarding the
composition of the Board of Directors of the Company, and (ii) the first right
to purchase any and all of the Shares that Xxxxx desires to sell during the term
of this Agreement.
NOW THEREFORE, in consideration of the premises, and for good and valuable
consideration, the parties agree as follows:
-- AGREEMENT --
1. Voting. Xxxxx hereby grants Onex, or its authorized representative, and
its successors and assigns, the sole legal right to vote the Shares (including
any pledged Shares with respect to which Xxxxx has retained voting rights), in
person or by proxy, at any meeting of the Shareholders or by written consent,
with respect to any matter involving or associated with the election, removal
and/or replacement of any of the members of the Company's Board of Directors or
any matter affecting the number of directors or composition of the Board. For
purposes of this Agreement, the term "Shares" shall mean (i) those shares of
common stock of the Company owned by Xxxxx, personally (or owned by an entity
controlled by Xxxxx) as of the date of this Agreement and any and all shares of
common stock of the Company acquired by Xxxxx personally (or acquired by an
entity controlled by Xxxxx) during the term of this Agreement, and (ii) any
shares of the common stock of the Company acquired upon the exercise of Options
(net of any shares sold in effecting a cashless exercise of Options).
2. Proxy.
(a) Xxxxx shall execute a proxy (with the full power of
substitution) in favor of Onex, or its designated representatives, in the form
attached hereto as Exhibit A (the "Proxy") with the full power to vote and
otherwise act with respect to the Shares on all matters specifically set forth
in Section 1. The proxy shall only be exercisable in accordance with this
Agreement, shall not be revoked prior to the termination of this Agreement, and
shall automatically be revoked upon the termination or expiration of this
Agreement.
(b) Xxxxx hereby revokes all other proxies and powers of attorney to
vote and otherwise act with respect to the Shares on all matters specifically
set forth in Section 1 which Xxxxx may have heretofore appointed or granted and
no subsequent proxy or power of attorney shall be given or written consent
executed by Xxxxx with respect to such matters prior to the termination or
expiration of this Agreement.
(c) Xxxxx covenants and agrees that, except as contemplated by this
Agreement, Xxxxx has not entered into any voting agreement or granted a proxy or
power of attorney with respect to the Shares which is inconsistent with this
Agreement.
3. Right of First Refusal.
(a) In General. The parties intend to give the Purchasers a right of
first refusal to acquire any Shares that Xxxxx proposes to sell, but the parties
do not intend to otherwise restrict any transactions involving the Shares or to
otherwise limit Xxxxx'x full exercise of all rights of ownership, including the
right to pledge the Shares as collateral, the right to transfer the shares to
controlled entities or affiliates for estate planning purposes, and the right to
contract for the sale or transfer of the Shares provided the Purchasers' right
of first refusal is acknowledged and remains effective at all times.
(b) Exclusive Right to Purchase the Shares. Xxxxx hereby grants Onex
the sole and exclusive first right to purchase any of the Shares Xxxxx desires
to sell or otherwise transfer during the term of this Agreement. If Xxxxx
desires to sell any or all of the Shares, Xxxxx will deliver to Onex written
notice of his intent to sell which shall specify (i) the number of Shares owned
by Xxxxx which Xxxxx wishes to sell (the "Offered Shares"), (ii) the proposed
cash purchase price per share of the Offered Shares or the proposed method and
terms of sale if the purchase price will be set at the market or otherwise based
on future events (the "Offer Price") and (iii) all other terms and conditions of
the offer. The notice shall be given not less than five days prior to the date
of the proposed sale. Onex shall have the right to purchase the Offered Shares
on the same terms and conditions as the proposed sale, which right shall
automatically expire if not exercised by the payment to Xxxxx of the Offer Price
at the same time and otherwise under the same conditions as the proposed sale.
For example, if Xxxxx proposes to sell the Shares at the market in a Rule 144
transaction, Xxxxx shall give Onex at least five days notice of his intention to
sell the Shares, specifying a date and time or method of executing the
transaction, and Onex shall have the right to purchase the shares at the price
that would have been received by Xxxxx had the Shares been sold in accordance
with Rule 144 in a market transaction at the specified time or in accordance
with the specified method. If Onex does not accept the offer prior to the date
of the proposed sale, Onex's right of first refusal shall automatically expire
and Xxxxx may execute the transaction as proposed. Provided, that if the Offer
Price is to be received in a transaction with respect to which gain or loss will
not be recognized by Xxxxx for federal income purposes, the Offer Price to be
paid by Onex shall be equal to the value of the consideration to be received and
shall be grossed up to include an additional amount (the "gross up amount")
sufficient to reimburse Xxxxx for all federal, state, and local income or excise
taxes payable on the sale to Onex, taking into account taxes payable on the
Offer Price and the gross up amount. If for any reason a proposed transaction by
Xxxxx is not executed, Onex's right of first refusal shall apply to any
subsequent proposed transaction.
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(c) Legend on Share Certificates. The certificates evidencing all
Shares owned by Xxxxx shall bear the following legend:
"The shares represented by this Certificate are subject to a
Shareholders Voting Agreement dated June 23, 2004 by and
between Xxxxxx X. Xxxxx and Onex Partners LP, a Delaware
limited partnership. The Agreement contains certain provisions
which (i) assign certain voting rights and (ii) a right of
first refusal with respect to the shares.
(d) Pledges, Permitted Transfers, and Contracts for Sale. If Xxxxx
pledges the Shares as collateral, or transfers the Shares to a family member or
to an entity controlled by Xxxxx or a family member, or contracts for the sale
or other disposition of the Shares (such as a straddle transaction or for the
delivery of the Shares to settle an obligation such as a prepaid variable share
forward contract), or transfers the Shares to a charitable organization or in
exchange for a partnership interest or other interest in an exchange fund or
similar entity, Xxxxx shall cause the pledgee, transferee, or other party to (i)
acknowledge Onex' right of first refusal to purchase the Shares prior to any
sale by such pledgee, transferee, or other party, and (ii) agree to be bound by
the provisions of this Agreement with respect to the voting of the Shares and
Onex' right of first refusal.
(e) Currently Pledged Shares. Xxxxx has previously pledged 700,000
of the Shares to (i) National City Bank, (ii) Stock Yards Bank & Trust, and
(iii) Old National Bank Corp. Onex is granted a right of first refusal with
respect to such pledged Shares, but Onex takes its rights under this Agreement
subject to the existing rights of such pledgee. Xxxxx shall have no obligation
whatsoever to cause such pledgee to grant Onex any rights with respect to the
pledged Shares.
4. Representations and Warranties of Xxxxx. Xxxxx hereby represents and
warrants to Onex as follows:
(a) Authority Relative to This Agreement. Xxxxx is an adult, is a
citizen of the United States of American and is competent to execute and deliver
this Agreement, to perform his obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Xxxxx, and, constitutes a legal, valid and binding
obligation of Xxxxx, enforceable against Xxxxx in accordance with its terms.
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(b) No Conflict.
(i) The execution and delivery of this Agreement by Xxxxx does
not, and the performance of this Agreement by Xxxxx does not, (A) conflict with
or violate any law, rule, regulation, order, judgment or decree applicable to
Xxxxx or by which the Shares are bound or affected, or (B) result in any breach
of or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or encumbrance on any of the Shares pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Xxxxx is a party or by which Xxxxx or the
Shares are bound or affected, except, in the case of each of the foregoing, for
any such conflicts, violations, breaches, defaults or other occurrences which
would not prevent or delay the performance by Xxxxx of his obligations under
this Agreement.
(ii) The execution and delivery of this Agreement by Xxxxx
does not, and the performance of this Agreement by Xxxxx shall not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any third party.
(c) Title to the Shares. As of the date hereof, Xxxxx is the record
and/or beneficial owner of the Shares and Options, which are all of the
securities of the Company owned, either of record or beneficially, by Xxxxx, and
which are set forth on Exhibit 1. Except as provided in this Agreement, Xxxxx
has not appointed or granted any proxy, which appointment or grant is still
effective, with respect to the Shares. The Shares and the Options are free and
clear of all liens and encumbrances, except (i) the liens and encumbrances on
the pledged Shares identified in Section 3(e), and (ii) the liens and
encumbrances of the agreements pursuant to which the Options were issued.
5. Conditions Precedent. The obligations of the parties under this
Agreement to enter into and complete the transactions contemplated herein are
conditioned upon the closing of the Shareholder Stock Purchase Agreement.
6. Miscellaneous.
(a) Term and Termination. This Agreement shall become effective upon
the closing of the Shareholder Stock Purchase Agreement. All obligations
hereunder shall terminate upon the earliest to occur of the following: (i) the
mutual written consent of all parties; (ii) at such time as the Purchasers own
legally or beneficially less than 14,428 shares of the outstanding Series A
Convertible Preferred stock of the Company (determined on an as converted
basis); (iii) upon the termination of Xxxxx'x employment by the Company for any
reason whatsoever, with or without cause; (iv) upon Xxxxx'x resignation or
termination of his employment by the Company for good reason; (v) upon a change
in control of the Company; (vi) upon Xxxxx'x retirement as an employee of the
Company upon the normal termination of his current employment contract, or (vii)
a merger, consolidation, share exchange, or other business combination in which
the Company is not the acquiror. Provided, that if the obligations hereunder
terminate as a result of the events described in clauses (iii), (iv), or (vi),
then (A) Purchasers shall have the right (but not the obligation) to submit an
offer to Xxxxx to purchase any Shares then held by Xxxxx, and Xxxxx shall have
the right (but not the obligation) to submit an offer to Purchasers to sell any
Shares then held by Xxxxx, and (B) the recipient of the offer shall give such
offer due consideration.
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(b) Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
specific performance of the terms and provisions hereof in addition to any other
remedy to which they are entitled at law or in equity.
(c) Successors and Affiliates. This Agreement shall inure to the
benefit of and shall be binding upon the parties hereto and their respective
heirs, legal representatives and assigns. If Xxxxx shall acquire ownership of,
or voting power with respect to, any additional shares of Company common stock
in any manner, whether by the exercise of any Options or any securities or
rights convertible into or exchangeable for Company common stock, operation of
law or otherwise, such shares shall be held subject to all of the terms of this
Agreement, and by taking and holding such shares, Xxxxx shall be conclusively
deemed to have agreed to be bound by and to comply with all of the terms and
provisions of this Agreement. Without limiting the foregoing, Xxxxx specifically
agrees that his obligations hereunder shall not be terminated by operation of
law, whether by his death or incapacity or otherwise.
(d) Entire Agreement. This Agreement constitutes the entire
agreement between Onex and Xxxxx with respect to the subject matter hereof and
supercedes all prior agreements and understandings, both written and oral,
between Onex and Xxxxx with respect to the subject matter hereof.
(e) Amendment. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
(f) Waivers. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
(g) Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in a mutually acceptable manner in order that the
terms of this Agreement remain as originally contemplated to the fullest extent
possible.
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(h) Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made and shall be effective upon receipt, if delivered personally, mailed by
registered or certified mail (postage prepare, return receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like changes of address) or sent by electronic
transmission (provided that a confirmation copy is sent by another approved
means) to the telecopier number specified below:
If to Xxxxx at: 000 Xxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
With a copy to: C. Xxxxxxxxxxx Xxxxxx, Esq.
0000 Xxxxxx Xx. XX
Xxxxxxx, Xxxxxxx 00000-0000
If to Onex at: 000 Xxxxx Xxx., 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xx Xxxxx
With a copy to: Xxxxx X. Xxxxxxxx, Esq.
XXXXXX & XXXXXXXX PLLC
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000-0000
(i) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Kentucky
regardless of the laws that might otherwise govern under applicable principles
of conflicts of law.
(j) Submission To Jurisdiction; Consent To Service Of Process. Each
of the parties hereto hereby irrevocably and unconditionally consents to submit
to the exclusive jurisdiction of the courts of the Commonwealth of Kentucky and
of the United States District Court in the Commonwealth of Kentucky, for any
actions, suits or proceeding arising out of or relating to this Agreement and
the transactions contemplated hereby (and agrees not to commence any action,
suit or proceeding relating thereto except in such courts) and further agrees
that service of any process, summons, notice or document by U.S. registered mail
to its respective address set forth in Section 6(h) of this Agreement shall be
effective service of process for any action, suit or proceeding brought against
it in any such court. Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the venue of any action, suit or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby in the court of the Commonwealth of Kentucky or in the
United States District Court for the Commonwealth of Kentucky, and hereby
further irrevocably and unconditionally waives and agrees not to plead or claim
in any such court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.
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IN WITNESS WHEREOF, each of the parties hereto have caused this Agreement
to be duly executed on the date hereof.
/s/ Xxxxxx X. Xxxxx
--------------------------------------------
Xxxxxx X. Xxxxx
ONEX PARTNERS LP
By: ONEX PARTNERS GP LP, its General Partner
By: ONEX PARTNERS MANAGER, LP, its Agent
By: ONEX PARTNERS MANAGER GP, INC.,
its General Partner
By:
/s/ Xxxxxx X. Xx Xxxxx
--------------------------------------------
Name: Xxxxxx X. Xx Xxxxx
Title: Managing Director
By:
/s/ Xxxx X. Xxxxx
--------------------------------------------
Name: Xxxx X. Xxxxx
Title: Xxxxxxx Director
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EXHIBIT 10.4
APPOINTMENT OF PROXY
The undersigned, as a shareholder of RES-CARE, INC., a Kentucky
corporation (the "Corporation"), appoints Xxxxxx X. Xx Xxxxx, Vice President of
ONEX PARTNERS GP, INC., an affiliate of ONEX PARTNERS LP, a Delaware limited
partnership ("ONEX") as my attorney-in-fact, agent, and proxy, with the full
power of substitution and revocation, to attend any and all meetings, annual or
special, of the shareholders of the Corporation, and to vote and otherwise act
in accordance with his judgment or provide his consent with respect to all
shares of common stock of the Corporation which the undersigned is then entitle
to vote on all questions, propositions, resolutions or any other matters which
may come before any such meeting (or any adjournment thereof) or are the subject
of any written consent, which deal specifically with the election, removal or
replacement of members of the Company's Board of Directors or any mater
affecting the number of directors or composition of the Board, and act in my
behalf and in my name as fully as I could act as if I were present at such
meeting or meetings.
This appointment of an proxy is issued in accordance with the terms of a
Shareholders Voting Agreement by and between the undersigned and ONEX, dated
June 23, 2004, (the "Agreement") and is coupled with an interest. This
appointment will terminate in accordance with the termination or expiration of
the Agreement.
/s/ Xxxxxx X. Xxxxx
------------------------------
Xxxxxx X. Xxxxx
Dated June 23, 2004
Witness:
/s/ Xxxx X. Xxxxxx
--------------------------
/s/ Xxxx X. XxxXxxxxx
--------------------------
