EXHIBIT 4.1
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Execution Version
TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
VOTING AGREEMENT
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This Agreement dated as of May 31, 2006 is entered into by
and among Touchstone Applied Science Associates, Inc., a
Delaware corporation (the "Company"), the persons and entities
listed on Exhibit A hereto (individually, a "Purchaser" and
collectively, the "Purchasers") and the persons and entities
listed on Exhibit B hereto (individually, a "Stockholder" and
collectively, the "Stockholders").
RECITALS:
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A. The Purchasers are purchasing, concurrently herewith,
certain shares of capital stock of the Company pursuant to the
Series A-1 Convertible Preferred Stock Purchase Agreement of
even date herewith (the "Purchase Agreement");
B. The Stockholders are currently stockholders of the
Company, each of whom (i) is the beneficial owner and controls
the vote of the Shares set forth on Exhibit B; and (ii) will
benefit from the consummation of the transactions contemplated
by the Purchase Agreement; and
C. The Purchasers, the Stockholders and the Company wish
to provide for the Purchasers representation on the Board of
Directors of the Company (the "Board of Directors") in the
manner set forth below.
In consideration of the mutual covenants contained herein
and the consummation of the sale and purchase of shares of
capital stock of the Company pursuant to the Purchase Agreement,
and for other valuable consideration, receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. BOARD OF DIRECTORS.
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(a) Until the next annual meeting of stockholders of
the Company, the Company shall be governed by a Board of
Directors consisting of not less than seven nor more than ten
members (each a "Director"). Without the consent of the
Purchaser Directors (as hereinafter defined), the number of
Directors constituting the full Board of Directors shall not be
increased beyond ten; without the consent of the Company
Directors (as hereinafter defined), the number of Directors
constituting the full Board of Directors shall not be reduced
below seven. Regular meetings of the Board shall be held at
least two times per year, on a semi-annual basis.
(b) Notwithstanding the provisions of Section 1(a)
above, the Company agrees that it, concurrent with the next
annual meeting of the stockholders of the Company, the Company
shall take all necessary actions to reduce the maximum number of
Directors constituting the full Board of Directors to nine.
From and after such annual meeting, without the consent of the
Purchaser Directors (as hereinafter defined), the number of
Directors constituting the full Board of Directors shall not be
increased beyond nine.
2. NOMINATION AND ELECTION OF DIRECTORS.
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(a) For so long as the Purchasers own at least
833,333 shares of Series A-1 Convertible Preferred Stock of the
Company or the equivalent shares of Common Stock of the Company
if converted, the Purchasers shall have the right to nominate up
to a maximum of three Directors (each, a "Purchaser Director").
Two of the Purchaser Directors shall initially be Xxxxx X.
Xxxxxxx and Xxxxxx X. Xxxxxx. The third Purchaser Director
shall be named at a later date.
(b) The Company agrees that it shall cause the Board
of Directors to endorse the nominees designated by the
Purchasers pursuant to Section 2(a) to serve as Directors. The
Board of Directors (other than the Purchaser Directors) shall
have the right to nominate no less than four nor more than seven
Directors (each a "Company Director"), to serve until their
respective successors are elected and qualified, provided, that
at such time as the number of Directors constituting the Board
of Directors is reduced to nine directors, the Board of
Directors (other than the Purchaser Directors) shall have the
right to nominate no less than four nor more than six Directors.
(c) On the date hereof and at each annual meeting of
stockholders of the Company or any special meeting called for
the purpose of electing directors of the Company or at such
other time or times as directors may be elected in accordance
with the Company's By-Laws and the General Corporation Law of
the State of Delaware, the Purchasers and the Stockholders agree
to cast all of their Shares in favor of the nominees for
Directors nominated pursuant to paragraphs (a) and (b) hereof,
and for no other persons. As used in this Agreement, the term
"Shares" shall mean and include any and all shares of capital
stock of the Company (including Common Stock, Series A-1
Convertible Preferred Stock and Series A-2 Convertible Preferred
Stock), by whatever name called, which carry voting rights and
shall include any such shares now owned or subsequently acquired
by a Purchaser or a Stockholder, however acquired, including
without limitation stock splits and stock dividends.
(d) So long as each of Xxxxxx, Xxxxxxx Strategic
Partners Fund, L.P. and Strategic Associates, L.P. are entitled
to elect two directors to the Board of Directors pursuant to
that certain Investor Rights Agreement, dated as of September 4,
1998, the Purchasers shall be required to designate the same two
directors designated by each of Xxxxxx, Xxxxxxx Strategic
Partners Fund, L.P. and Strategic Associates, L.P. (who are
initially Xxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxx) as directors
pursuant to Section 2(a).
3. REMOVAL. The Purchaser Directors shall at all times
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have the right to recommend the removal, with or without cause,
of a Purchaser Director only, and the Company Directors shall at
all times have the right to recommend the removal, with or
without cause, of a Company Director only. If a Director's
removal shall have been recommended in accordance with the
preceding sentence, then the Board of Directors shall take such
corporate actions as may be required under the Company's By-Laws
and the General Corporation Law of the State of Delaware to
effect such removal and the Purchasers and Stockholders shall
cast all of their Shares in favor of such removal.
4. VACANCY. If any vacancy occurs in the Board of
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Directors because of the death, disability, resignation,
retirement or removal of a Purchaser Director, then the
Purchasers shall nominate a successor, and the Board of
Directors shall vote to elect such successor to the Board of
Directors, or if a vote of the stockholders of the Company is
held, the (a) Board of Directors shall recommend to the
stockholders that such successor be elected to the Board of
Directors; and (b) Purchasers and Stockholders shall cast all of
their Shares in favor of the nominees for Directors nominated by
the Purchasers, and for no other persons. If any vacancy occurs
in the Board of Directors because of the death, disability,
resignation, retirement or removal of a Company Director, then
the Company Directors shall either (i) nominate a successor, and
the Board of Directors shall vote to elect such successor to the
Board, or if a vote of the stockholders of the Company is held,
the Board of Directors shall recommend to the stockholders that
such successor be elected to the Board of Directors, or (ii)
decide expressly not to fill such vacancy at such time.
5. TERMINATION. This Agreement shall terminate and
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thereafter be of no force and effect, except as set forth below,
upon the earlier to occur of the following:
(a) The Purchasers shall cease to own beneficially at
least 833,333 shares of Series A-1 Convertible Preferred Stock
of the Company or the equivalent shares of Common Stock of the
Company if converted (the "Purchaser Shares"); or
(b) The closing of a Company Sale (as defined in the
Investor Rights Agreement of even date herewith among the
Company and the Purchasers).
6. NO REVOCATION. The voting agreements contained herein
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are coupled with an interest and may not be revoked, except by
an amendment, modification or termination effected in accordance
with Section 5 or 9(f) hereof. Nothing in this Section 6 shall
be construed as limiting the provisions of Section 5 or 9(f)
hereof.
7. RESTRICTIVE LEGEND. All certificates representing
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Shares as owned or hereafter acquired by the Purchasers,
Stockholders or any transferee of any of them bound by this
Agreement shall have affixed thereto a legend substantially in
the following form:
"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO CERTAIN VOTING AGREEMENTS AS SET FORTH
IN THE VOTING AGREEMENT, AS AMENDED FROM TIME TO TIME,
BY AND AMONG THE REGISTERED OWNER OF THIS CERTIFICATE,
THE COMPANY AND CERTAIN OTHER STOCKHOLDERS OF THE
COMPANY, A COPY OF WHICH IS AVAILABLE FOR INSPECTION
AT THE OFFICES OF THE SECRETARY OF THE COMPANY."
8. OBLIGATIONS BINDING ON TRANSFEREES. Any person or
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entity to which Purchaser Shares, Registrable Shares (as defined
in the Investor Rights Agreement) or Shares are transferred by a
Purchaser or a Stockholder, as the case may be, whether
voluntarily or by operation of law, shall be bound by the voting
obligations imposed upon the transferor under this Agreement, to
the same extent as if such transferee were a Purchaser or
Stockholder hereunder, as the case may be; and no Purchaser or
Stockholder shall transfer any Purchaser Shares, Registrable
Shares or Shares unless the transferee provides a written
instrument to the Company notifying the Company of such transfer
and agreeing in writing to be bound by the terms of this
Agreement.
9. GENERAL.
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(a) SEVERABILITY. The invalidity or unenforceability
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of any provision of this Agreement shall not affect the validity
or enforceability of any other provision of this Agreement.
(b) SPECIFIC PERFORMANCE. In addition to any and all
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other remedies that may be available at law in the event of any
breach of this Agreement, each Purchaser shall be entitled to
specific performance of the agreements and obligations of the
Company and the Stockholders hereunder and to such other
injunctive or other equitable relief as may be granted by a
court of competent jurisdiction.
(c) GOVERNING LAW. This Agreement shall be governed
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by and construed in accordance with the General Corporation Law
of the State of Delaware (without reference to the conflict of
law provisions thereof), and to the extent a matter is not
addressed by the General Corporation Law of the State of
Delaware, this Agreement shall be governed by and construed in
accordance with the laws of the State of New York (without
reference to the conflict of laws provisions thereof).
(d) NOTICES. All notices, requests, consents and
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other communications under this Agreement shall be in writing
and shall be deemed delivered (i) three business days after
being sent by registered or certified mail, return receipt
requested, postage prepaid or (ii) one business day after being
sent via a reputable nationwide overnight courier service
guaranteeing next business day delivery, in each case to the
intended recipient as set forth below:
If to the Company, at 4 Hardscrabble Heights, XX Xxx 000,
Xxxxxxxx, XX 00000-0000 Attention: President, Facsimile: 1-
000-000-0000, or at such other address as may have been
furnished in writing by the Company to the other parties hereto,
with a copy (which shall not constitute notice) to Vedder,
Price, Xxxxxxx & Kammholz, P.C., 000 Xxxxx Xxxxxx, Xxx Xxxx, XX
00000-0000, Attention: Xxxxxx X. Xxxxxx, Esq., Facsimile: (212)
407-7799; or
If to a Purchaser, at its address set forth on Exhibit A, or at
such other address as may have been furnished in writing by such
Purchaser to the other parties hereto, with a copy (which shall
not constitute notice) to Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx
LLP, Attention: Xxxxxxx X. Xxxxx, Esq., 0000 Xxxxxx Xxxxxxxxx,
Xxxxx 0000, XxXxxx, XX 00000, Facsimile No. (000) 000-0000.
If to a Stockholder, at its address set forth on Exhibit B, or
at such other address as may have been furnished in writing by
such Stockholder to the other parties hereto.
Any party may give any notice, request, consent or other
communication under this Agreement using any other means
(including, without limitation, personal delivery, messenger
service, telecopy or first class mail), but no such notice,
request, consent or other communication shall be deemed to have
been duly given unless and until it is actually received by the
party for whom it is intended. Any party may change the address
to which notices, requests, consents or other communications
hereunder are to be delivered by giving the other parties notice
in the manner set forth in this Section 9(d).
(e) COMPLETE AGREEMENT. This Agreement constitutes
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the entire agreement and understanding of the parties hereto
with respect to the subject matter hereof and supersedes all
prior agreements and understandings relating to such subject
matter.
(f) AMENDMENTS AND WAIVERS. This Agreement may be
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amended or terminated and the observance of any term of this
Agreement may be waived with respect to all parties to this
Agreement (either generally or in a particular instance and
either retroactively or prospectively), with the written consent
of the Company and Purchasers holding Shares representing at
least 50% of the voting power of all Shares then held by
Purchasers and the Stockholders, voting together.
Notwithstanding the foregoing, this Agreement may not be amended
or terminated and the observance of any term hereunder may not
be waived with respect to any Purchaser without the written
consent of such Purchaser unless such amendment, termination or
waiver applies to all Purchasers in the same fashion. The
Company shall give prompt written notice of any amendment or
termination hereof or waiver hereunder to any party hereto that
did not consent in writing to such amendment, termination or
waiver. Any amendment, termination or waiver effected in
accordance with this Section 9(f) shall be binding on all
parties hereto, even if they do not execute such consent. No
waivers of or exceptions to any term, condition or provision of
this Agreement, in any one or more instances, shall be deemed to
be, or construed as, a further or continuing waiver of any such
term, condition or provision.
(g) PRONOUNS. Whenever the context may require, any
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pronouns used in this Agreement shall include the corresponding
masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural, and vice versa.
(h) COUNTERPARTS; FACSIMILE SIGNATURES. This
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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 constitute one and the same document. This
Agreement may be executed by facsimile signatures.
(i) SECTION HEADINGS AND REFERENCES. The section
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headings are for the convenience of the parties and in no way
alter, modify, amend, limit or restrict the contractual
obligations of the parties. Any reference in this agreement to
a particular section or subsection shall refer to a section or
subsection of this Agreement, unless specified otherwise.
(signature page follows)
IN WITNESS WHEREOF, this Agreement has been executed by the
parties hereto as of the day and year first above written.
COMPANY:
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TOUCHSTONE APPLIED SCIENCE
ASSOCIATES, INC.
By: /s/ XXXXX X. XXXXXXX
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Xxxxx X. Xxxxxxx
Secretary
PURCHASERS:
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CAMDEN PARTNERS STRATEGIC
FUND III, L.P.
By: Camden Partners Strategic III, LLC,
its General Partner
By: Camden Partners Strategic Manager, LLC,
its Managing Member
By: /s/ XXXXXX X. XXXXXX
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Name: Xxxxxx X. Xxxxxx
Title: Managing Member
CAMDEN PARTNERS STRATEGIC FUND III-A, L.P.
By: Camden Partners Strategic III, LLC,
its General Partner
By: Camden Partners Strategic Manager, LLC,
its Managing Member
By: /s/ XXXXXX X. XXXXXX
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Name: Xxxxxx X. Xxxxxx
Title: Managing Member
STOCKHOLDERS:
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XXXXXX, XXXXXXX STRATEGIC PARTNERS FUND, L.P.
By: XXXXXX XXXXXXX STRATEGIC
PARTNERS, L.P.,
its sole General Partner
By: /s/ XXXXXX X. XXXXXX
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Name: Xxxxxx X. Xxxxxx
Title: General Partner
STRATEGIC ASSOCIATES, L.P.
By: XXXXXX XXXXXXX STRATEGIC
PARTNERS, L.P., its sole General
Partner
By: /s/ XXXXXX X. XXXXXX
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Name: Xxxxxx X. Xxxxxx
Title: General Partner
/s/ XXXXXX X. XXXXX
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Xxxxxx X. Xxxxx
/s/ XXXXX X. XXXXXXX
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Xxxxx X. Xxxxxxx
/s/ XXXXXXX X. XXXX
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Xxxxxxx X. Xxxx
EXHIBIT A
List of Purchasers
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Name and Address
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CAMDEN PARTNERS
STRATEGIC FUND III, L.P.
c/o: Camden Partners Holdings LLC
000 Xxxx Xxxxx Xxxxxx,
Xxxxx 0000
Xxxxxxxxx, XX 00000
CAMDEN PARTNERS
STRATEGIC FUND III-A, L.P.
c/o: Camden Partners Holdings LLC
000 Xxxx Xxxxx Xxxxxx,
Xxxxx 0000
Xxxxxxxxx, XX 00000
EXHIBIT B
List of Stockholders
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Name Number of Shares held
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Xxxxxx, Xxxxxxx Strategic Partners
Fund, L.P.
000 Xxxx Xxxxx Xxxxxx,
Xxxxx 0000
Xxxxxxxxx, XX 00000
Strategic Associates, L.P.
000 Xxxx Xxxxx Xxxxxx,
Xxxxx 0000
Xxxxxxxxx, XX 00000
Xxxxxx X. Xxxxx 93,263 shares owned of record
c/o Touchstone Applied Science
Associates, Inc.
4 Hardscrabble Heights,
XX Xxx 000
Xxxxxxxx, XX 00000-0000
Xxxxx X. Xxxxxxx 50,694 shares owned of record
c/o Touchstone Applied Science
Associates, Inc.
4 Hardscrabble Heights,
XX Xxx 000
Xxxxxxxx, XX 00000-0000
Xxxxxxx X. Xxxx 94,750 shares owned of record
c/o Touchstone Applied Science
Associates, Inc.
4 Hardscrabble Heights,
XX Xxx 000
Xxxxxxxx, XX 00000-0000
