EXHIBIT 4.2
EXECUTION COPY
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "Agreement") is made as of January 20,
2004 by and among PAV Republic, Inc., a Delaware corporation (the "Company"),
and Perry Partners LP, a Delaware limited partnership, Perry Partners
International Inc., a company registered under the laws of the British Virgin
Islands, and Contrarian Funds, LLC (collectively the "Stockholders", and each
individually, a "Stockholder"). Unless otherwise provided in this Agreement,
capitalized terms used herein shall have the meanings set forth in Section 7
hereof.
WHEREAS, the Company, as of the date hereof, is authorized by its
certificate of incorporation to issue capital stock consisting of 30,000 shares
of its Common Stock, par value $0.01 per share (the "Common Stock.")
WHEREAS, the Stockholders own as of the date hereof the number of shares
of Common Stock set forth opposite their names on Schedule I attached hereto and
desire to establish certain covenants and to provide for certain rights and
obligations in respect of the Company as hereinafter provided.
NOW, THEREFORE, the parties to this Agreement hereby agree as follows:
1. Voting Agreement. Each Stockholder shall vote all of such holder's Common
Stock and shall take all other necessary or desirable actions within such
holder's control (whether in such holder's capacity as a stockholder, director
or officer of the Company or otherwise, and including, without limitation,
attendance at meetings in person or by proxy for purposes of obtaining a quorum
and execution of written consents in lieu of meetings) and the Company shall
take all necessary and desirable actions within its control (including, without
limitation, calling special meetings of the Board and stockholder meetings).
2. Provisions Concerning the Transfer of Stockholder Shares.
(a) General Restrictions on Transfer. Without the prior written consent of
a majority of the Perry Holders, no holder of Common Stock (other than holders
of Perry Shares) shall directly or indirectly sell, transfer (including by
operation of law), assign, pledge, encumber or otherwise dispose of (including
to the Company or any of its Subsidiaries) any interest in (a "Transfer") any
Common Stock, other than (i) to one or more of its Affiliates, (ii) in
connection with an Approved Sale, or (iii) in accordance with the provisions of
Section 2(b), or 2(c) of this Agreement.
(b) Participation Rights.
(i) At least 15 days prior to any Transfer of any Perry Shares, the
holder(s) of Perry Shares intending to Transfer Perry Shares (the "Transferring
Stockholder") will deliver to the other Stockholders (collectively, the "Other
Stockholders") a written notice (a "Sale Notice") specifying in reasonable
detail the identity of the prospective transferee(s) and the terms and
conditions of the contemplated Transfer. The Other Stockholders may elect to
participate in the contemplated Transfer by delivering written notice to the
Transferring Stockholder within 15 days after delivery of the Sale Notice. If
any Other Stockholders have elected to participate in such Transfer, each of the
Transferring Stockholder and such Other Stockholders will be entitled
to sell in the contemplated Transfer, at the same price and on the same terms, a
number of shares of Common Stock being transferred equal to the product obtained
by multiplying (A) the quotient determined by dividing (x) the number of shares
of Common Stock owned by such Person by (y) the aggregate number of shares of
Common Stock then held by all Persons participating in such Transfer, including
the Transferring Stockholder (such Person's "Pro Rata Share") by (B) the number
of shares of Common Stock to be sold in the contemplated Transfer. If any Person
participating in such Transfer elects to Transfer less than its Pro Rata Share,
the shares which such Person had the right, but did not elect, to Transfer will
be reoffered to the Persons participating in such Transfer who ejected to
Transfer their full Pro Rata Share (pro rata among such Persons based On their
respective Pro Rata Shares), and so on until the Persons participating in such
Transfer have elected to Transfer all shares to be sold in the contemplated
Transfer. For purposes of determining the respective Pro Rata Shares, each
Person will be deemed to hold an Common Stock held by them and their Affiliates
(provided that no share of Common Stock shall be counted more than once for this
purpose) and all such affiliated Persons shall be treated as a single Person.
(ii) The Transferring Stockholder will use reasonable efforts to
obtain the agreement of the prospective transferee(s) to the participation of
the electing Other Stockholders in any contemplated Transfer, and the
Transferring Stockholder will not Transfer any of its shares of Common Stock to
the prospective transferee(s) unless simultaneously with such Transfer (A) the
prospective transferee(s) purchases, at the same price and on the same terms,
from the Other Stockholders the shares of Common Stock which they are entitled
to sell to such prospective transferee pursuant to Section 2(b)(i) above or (B)
the Transferring Stockholder purchases, at the same price and on the same terms,
the number of shares of Common Stock from the Other Stockholders which the Other
Stockholders would have been entitled to sell pursuant to Section 2(b)(i) above.
(iii) The provisions of this Section 2(b) shall not apply to any
Transfer by any holder of Perry Shares (A) in a Public Sale, (B) to any employee
of the Company or any of its Subsidiaries as part of any compensation
arrangement, (C) to any member of the Board as part of any compensation
arrangement, (D) to any Affiliate of such holder of Perry Shares (other than the
Company and those referred to in clause (E) of this sentence) and (E) to the
partners, members or beneficiaries of the holders of Perry Shares. The
provisions of this Section 2(b) will continue to be applicable to Perry Shares
after any Transfer thereof pursuant to clause (D) or (E) of the first sentence
of this Section 2(b)(iii). Any transferee of Perry Shares shall agree, prior to
any Transfer pursuant to this Section 2(b), in writing to be bound by the
provisions of this Agreement by executing and delivering to the Company a
joinder in customary form.
(iv) The Transferring Stockholder and the Other Stockholders will
bear their pro rata share (based upon the proceeds to be received by such
Persons) of the costs of any Transfer pursuant to this Section 2(b) to the
extent such costs are incurred for the benefit of all Persons participating in
the Transfer and are not otherwise paid by the Company or the acquiring party.
Costs incurred by Persons participating in the Transfer on their own behalf will
not be considered costs of the Transfer hereunder.
(c) Termination of Restrictions. The restrictions set forth in this
Section 2 shall continue with respect to each Stockholder Share until the
earlier of (i) the Transfer of such
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Stockholder Share in a Public Sale or an Approved Sale, or (ii) the consummation
of a Public Offering.
3. Approved Sale.
(a) If the Perry Holders request and the Board approves (i) a Transfer of
a majority of the Company's assets determined on a consolidated basis or a
majority of the Company's outstanding Common Stock (whether by merger (including
One in which the Company is the surviving corporation), recapitalization,
consolidation, reorganization, combination or otherwise) to any Independent
Third Party or group of Independent Third Parties or (ii) a Transfer of any
shares of Common Stock to any Independent Third Party or group of Independent
Third Parties (collectively an "Approved Sale"), each Stockholder, in such
holder's capacity as a stockholder of the Company and not in such holder's
capacity as a director if such holder then serves on the Board, will vote for,
consent to and raise no objections against such Approved Sale. If the Approved
Sale is structured as (i) a merger (including one in which the Company is the
surviving corporation) or consolidation, each Stockholder will waive any
dissenter's rights, appraisal rights or similar rights in connection with such
merger or consolidation and will not otherwise exercise any such right or (ii)
Transfer of stock (including by recapitalization, consolidation, reorganization,
combination or otherwise), each Stockholder will agree to sell all of its Common
Stock and rights to acquire Common Stock on the terms and conditions approved by
the Perry Holders, provided, that, if a Transfer made pursuant to this clause
(ii) involves a Transfer of less than all of the then outstanding Common Stock,
each Stockholder shall participate in such Transfer on a pro rata basis (based
on the number of shares of Common Stock held by such Stockholder). Each
Stockholder shall be obligated to join on a pro rata basis (based on the number
of shares of Common Stock to be sold) in any indemnification or other
obligations that the sellers of Common Stock are required to provide in
connection with the Approved Sale (other than any such obligations that relate
solely to a particular Stockholder, such as indemnification with respect to
representations and warranties given by a Stockholder regarding such
Stockholder's title to and ownership of Common Stock, in respect of which only
such Stockholder shall be liable); provided, that no holder shall be obligated
in connection with such indemnification or other obligations with respect to an
amount in excess of the consideration received by such holder in connection with
such transfer. Each Stockholder will take all reasonable actions in connection
with the consummation of the Approved Sale as requested by the Perry Holders
(which actions may include, at the request of the Perry Holders, continuing
arrangements among the stockholders of the Company substantially similar to the
terms of this Agreement).
(b) The obligations of the holders of Common Stock with respect to an
Approved Sale are subject to the satisfaction of the condition precedent that
upon the consummation of the Approved Sale, each Stockholder will Transfer such
Common Stock on the same terms and will receive the same form of consideration
and the same portion of the aggregate consideration that such holders of Common
Stock would have received if such aggregate consideration had been distributed
by the Company in a complete liquidation pursuant to the rights and preferences
set forth in the Certificate of Incorporation as in effect immediately prior to
such Approved Sale.
(c) If the Company or the holders of the Company's securities enter into
any negotiation or transaction for which Rule 506 (or any similar rule then in
effect) promulgated by
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the Securities and Exchange Commission may be available with respect to such
negotiation or transaction (including a merger, consolidation or other
reorganization), the Stockholders will, at the request of the Company, appoint a
purchaser representative (as such term is defined in Rule 501) reasonably
acceptable to the Company. If any Stockholder appoints a purchaser
representative designated by the Company, the Company will pay the fees of such
purchaser representative, but if any Stockholder declines to appoint the
purchaser representative designated by the Company such holder will appoint
another purchaser representative, and such holder will be responsible for the
fees of the purchaser representative so appointed. This Section 3(c) shall apply
only to Stockholders that are required to appoint a purchaser representative
under Regulation D (or any successor regulation then in effect) promulgated by
the Securities and Exchange Commission.
(d) Subject to Section 3(c) above, Stockholders will bear their pro rata
share (based upon the proceeds to be received by such Stockholders) of the costs
of any sale of Common Stock pursuant to an Approved Sale to the extent such
costs are incurred for the benefit of all Stockholders and are not otherwise
paid by the Company or the acquiring party. For purposes of this Section 3(d),
costs incurred in exercising reasonable efforts to take all necessary actions
for the consummation of an Approved Sale in accordance with Section 3(a) above
shall be deemed to be for the benefit of all Stockholders. Costs incurred by
Stockholders on their own behalf will not be considered costs of the transaction
hereunder.
(e) The terms and conditions of this Section 3 shall terminate upon a
Public Offering.
4. Public Offering/ Piggyback Rights.
(a) In the event that the Board approves a Public Offering, each
Stockholder win use reasonable efforts to take all necessary action in
connection with the consummation of a Public Offering. In the event that such
Public Offering is an underwritten offering and the managing underwriters advise
the Company or the holders of the Perry Shares determine that the Company's then
current Common Stock structure (other than the rights and obligations under this
Agreement) will adversely affect the marketability of the offering, each
Stockholder will consent to and vote for a recapitalization, reorganization
and/or exchange of the Common Stock into securities that the managing
underwriters, the Board and holders of a majority of the shares of Common Stock
then outstanding find acceptable and will take all necessary or desirable
actions in connection with the consummation of the recapitalization,
reorganization and/or exchange so long as in such recapitalization,
reorganization and/or exchange, all Stockholders receive the same equity
instruments in the same proportions. The parties agree that the rights and
obligations specified in this Agreement shall survive the consummation of a
Public Offering, except to the extent expressly provided herein.
(b) The Company will give prompt written notice to all Stockholders of its
intention to effect a registration of its Common Stock, whether as a primary or
secondary registration, and will include in such registration the Common Stock
of Stockholders requesting registration in writing within 30 days after the
receipt of the Company's Notice, pro rata among such Stockholders based upon the
number of shares of Common Stock held by each such Stockholder at the time of
such registration.
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5. Confidential Information.
(a) Subject to Section 5(f) below, each Stockholder hereby agrees that it
shall not, and shall cause each member of such Stockholder's Stockholder Group
not to, disclose any part of the Confidential Information to any person or
entity other than (i) as required by law or legal process in accordance with
Section 5(b) below or (ii) to a member of such Stockholder's Stockholder Group.
(b) In the event any Stockholder or member of such Stockholder's
Stockholder Group is compelled by law or legal process to disclose any
Confidential Information, such Stockholder (i) shall promptly notify the Company
prior to the disclosure of such Confidential Information so that the Company may
seek an appropriate protective order or waive compliance with the provisions of
this Section 5 and (ii) in the absence of a protective order, shall permit the
Company to seek an order or other assurance that confidential treatment will be
accorded to such portion of the Confidential Information required to be
disclosed and shall reasonably cooperate in the Company's effort to obtain such
an order or assurance.
(c) Each Stockholder hereby agrees to use its commercially reasonable
efforts to make sure each member of such Stockholder's Stockholder Group is
aware of the confidentiality provisions contained in this Section 5 and agrees
to be bound by them. Notwithstanding the foregoing each Stockholder remains
strictly liable for any breaches hereof by any member of that Stockholder's
Stockholder Group.
6. Legend. Each certificate evidencing Common Stock and each certificate issued
in exchange for or upon the transfer of any Common Stock (if such shares remain
subject to the restrictions set forth herein thereafter) shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN TRANSFERS AND VOTING RESTRICTIONS PURSUANT TO A STOCKHOLDERS
AGREEMENT DATED AS OF JANUARY __, 2004 AMONG THE ISSUER OF SUCH
SECURITIES (THE "COMPANY") AND CERTAIN OF THE COMPANY'S
STOCKHOLDERS, AS SUCH AGREEMENT MAYBE AMENDED FROM TIME TO TIME. A
COPY OF SUCH STOCKHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE
BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST."
The Company shall imprint such legend on certificates evidencing Common Stock
outstanding prior to the date hereof. The legend set forth above shall be
removed from the certificates evidencing any shares which cease to be subject to
the terms of this Agreement.
7. Definitions.
"Affiliate" shall mean with respect to any Person, any other Person
controlling, controlled by or under common control with the Person.
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"Business Day" means any day that is not a Saturday, a Sunday or any other
day on which banks are required or authorized by law to be closed in the State
of New York.
"Confidential Information" means all material confidential, non-public or
proprietary information (whether technical, marketing, business, financial or
otherwise), in whatever form (whether tangible, orally communicated, physically
communicated or disclosed in writing, electronically or otherwise, including,
without limitation, information disclosed by samples or demonstrations of
processes, techniques or equipment) which relates to the Company or any of its
Subsidiaries, including, without limitation, any document or other information
distributed to members of the Board. "Confidential Information" shall not
include: (i) information which can be shown to be in the public domain (provided
that such information has not or does not come into the public domain as the
result of improper disclosure) and (ii) information which becomes available on a
non-confidential basis from a Source other than the Company or any of its
Subsidiaries (provided that such source is not known by the person receiving
such information to be bound by a confidentiality arrangement with the Company
or any of its Subsidiaries).
"Independent Third Party" means any Person who, immediately prior to the
contemplated transaction, does not own in excess of 5% of the Company's Common
Stock on a fully-diluted basis (a "5% Owner"), who is not controlling,
controlled by or under common control with any such 5% Owner.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Perry Holders" means the holders of Perry Shares.
"Perry Shares" means any Common Stock initially held by Perry Partners LP
or Perry Partners International Inc., and any transferee thereof pursuant to
Section 2(iii)(D) and (E) hereof.
"Public Offering" means any underwritten sale of Common Stock pursuant to
an effective registration statement under the Securities Act filed with the
Securities and Exchange Commission on Form S-1 (or a Successor form adopted by
the Securities and Exchange Commission); provided, that the following shall not
be considered a Public Offering: (i) any issuance of Common Stock as
consideration or financing for a merger or acquisition and (ii) any issuance of
Common Stock or rights to acquire Common Stock to employees of the Company or
its Subsidiaries as part of an incentive or compensation plan. For the avoidance
of doubt, the term "Common Stock" as used in this definition shall be deemed to
include any securities into which the Common Stock may be restructured in
accordance with Section 4 hereof.
"Public Sale" means any sale of Stockholder Shares to the public pursuant
to an offering registered under the Securities Act or to the public pursuant to
the provisions of Rule 144 adopted under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
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"Stockholder Group" means, with respect to any Stockholder, such
Stockholder's and its Subsidiaries' employees, officers, directors, agents,
representatives, partners, shareholders, members and Affiliates, as applicable.
8. Transfers in Violation of Agreement. Any Transfer or attempted Transfer of
any Common Stock in violation of any provision of this Agreement shall be void,
and the Company shall not record such Transfer on its books or treat any
purported transferee of such Common Stock as the owner of such shares for any
purpose.
9. Amendment and Waiver. Except as otherwise provided herein, the provisions of
this Agreement may be amended or waived only upon the prior written consent of
the Company and a majority of the Stockholders. The failure of any party to
enforce any of the provisions of this Agreement shall in no way be construed as
a waiver of such provisions and shall not affect the right of such party
thereafter to enforce each and every provision of this Agreement in accordance
with its terms.
10. Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or the effectiveness or validity of any provision in any
other jurisdiction, and this Agreement shall be reformed, construed and enforced
in such jurisdiction as if such invalid, mega! or unenforceable provision had
never been contained herein.
11. Entire Agreement. Except as otherwise expressly set forth herein, this
Agreement embodies the complete agreement and understanding among the parties
hereto with respect to the subject matter hereof and supersedes and preempts any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
12. Successors and Assigns. Except as otherwise provided in this Agreement, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and permitted assigns and the Stockholders and any
subsequent holders of Common Stock and the respective Successors and permitted
assigns of each of them, so long as they hold Common Stock.
13. Counterparts. This Agreement may be executed in separate counterparts each
of which shall be an original and all of which taken together shall constitute
one and the same agreement.
14. Remedies. The parties hereto agree and acknowledge that money damages may
not be all adequate remedy for any breach of the provisions of this Agreement
and that the Company and any Stockholder shall have the right to injunctive
relief, in addition to all of its rights and remedies at law or in equity, to
enforce the provisions of this Agreement. Nothing contained in this Agreement
shall be construed to confer upon any Person who is not a signatory hereto any
rights or benefits, as a third party beneficiary or otherwise.
15. Notices. All notices, demands and other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have
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been given when personally delivered, sent by telecopy (with receipt confirmed)
on a Business Day during regular business hours of the recipient (or, if not, on
the next succeeding Business Day) or two Business Days after sent by reputable
overnight express courier (charges prepaid). Such notices, demands and other
communications shall be sent to the following Persons at the following
addresses:
If to the Company, to:
PAV Republic, Inc.
c/o Perry Partners LP
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000 0000
Attn: Xxxxx X. Xxxxxxxxxxxx
with a copy (which shall not constitute notice to the Company), to:
Xxxxxxxx & Xxxxx LLP
Citigroup Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attn: Xxxxxx xxx Xxxxx
If to any Xxxxx Xxxxxx, to:
Perry Partners LP
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxxxxxx
with a copy (which shall not Constitute notice to the Xxxx Group), to:
Xxxxxxxx & Xxxxx LLP
Citigroup Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attn: Xxxxxx xxx Xxxxx
If to Contrarian to:
000 Xxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
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with a copy (which shall not constitute notice to Contrarian), to;
_______________________________________
_______________________________________
_______________________________________
_______________________________________
16. Delivery by Facsimile. This Agreement and any signed agreement or instrument
entered into in connection thereto or contemplated thereby, and any amendments
hereto or thereto, to the extent signed and delivered by means of a facsimile
machine, shall be treated in all manner and respects as an original agreement or
instrument and shall be considered to have the same binding legal effect as if
it were the original signed version thereof delivered in person. At the request
of any party hereto or to any such agreement or instrument, each other party
hereto or thereto shall re-execute original forms thereof and deliver them to
all other parties. No party hereto or to any such agreement or instrument shall
raise the use of a facsimile machine to deliver a signature or the fact that any
signature or agreement or instrument was transmitted or communicated through the
use of a facsimile machine as a defense to the formation of a contract and each
such party forever waives any such defense.
17. Governing Law. THE CORPORATE LAW OF THE STATE OF DELAWARE WILL GOVERN ALL
ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS STOCKHOLDERS. ALL
OTHER ISSUES CONCERNING THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW
YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAW OF
ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
18. Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
* * * * *
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EXECUTION COPY
PAV REPUBLIC, INC.
By: /s/ Authorized Signatory
--------------------------------
Name:
Title:
PERRY PARTNERS, LP
By: /s/ Authorized Signatory
--------------------------------
Name:
Title:
PERRY PARTNERS INTERNATIONAL, INC.
By: /s/ Authorized Signatory
--------------------------------
Name:
Title:
CONTRARIAN FUNDS, LLC
By: /s/ Xxx Xxxxx
--------------------------------
Name: Xxx Xxxxx
Title:
EXECUTION COPY
SCHEDULE I
OWNERSHIP OF COMPANY COMMON STOCK
PARTY NUMBER OF SHARES OF COMMON STOCK
----- --------------------------------
Perry Partners LP 14,756.85
Perry Partners International Inc. 14,178.15
Contrarian Funds LLC 1,065.00
