AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of November 26, 1997, as amended and
restated as of February 20, 1998 (the "Agreement"), by and among XXXXXXX
HOLDINGS INC., a Delaware corporation (the "Company"), the parties identified as
"Non-Management Investors" on the signature pages hereof, the parties identified
as "Management Investors" on the signature pages hereof and any parties
identified on the signature pages of any joinder agreements executed and
delivered pursuant to Section 7.2 of this Agreement.
WHEREAS, pursuant to the Subscription Agreement, the Non-Management
Investors have purchased Common Stock and Preferred Stock;
WHEREAS, pursuant to the Option Agreements, the Management Investors have
rolled over their options to purchase common stock of KSCO into options to
purchase Common Stock and Preferred Stock;
WHEREAS, it is intended that, subject to attainment of certain performance
goals, certain management employees of the Company be granted options to
purchase Common Stock under a Long Term Incentive and Share Award Plan;
WHEREAS, the Company and the Investors desire to provide for certain
matters relating to the Capital Stock;
IN CONSIDERATION of the foregoing and of their mutual covenants set forth
in this Agreement, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Definitions. The following terms, as used herein, have the following
meanings:
Affiliate means, as to any Person, any other Person directly or indirectly
Controlling, Controlled by or under direct or indirect common Control with such
Person.
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Board means the Board of Directors of the Company.
Buyer means a Person that is not an Investor or an Affiliate of an Investor
that has offered to purchase or otherwise acquire for value shares of Capital
Stock of the Company.
Cause, with respect to any Management Investor, has the meaning set forth
in the such Management Investor's Option Agreement.
Capital Stock means (i) the Common Stock and the Preferred Stock and (ii)
any securities into or for which the Common Stock or the Preferred Stock is
convertible, exchangeable or exercisable (including vested stock options but
excluding unvested stock options).
Class means all of the Common Stock considered as a whole or all of the
Preferred Stock considered as a whole.
Commission means the Securities and Exchange Commission.
Common Stock means the common stock, par value $0.0001 per share, of the
Company.
Control means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of securities, partnership interests or by
contract, assignment or otherwise. The terms "Controlling" and "Controlled"
shall have meanings correlative to the foregoing.
Credit Facility means the Credit Facility dated as of November 26, 1997,
among the Company, Xxxxxxx Fasteners Inc., various banks, Swiss Bank
Corporation, as documentation and syndication agent, and Credit Agricole
Indosuez, as administrative agent, as the same may be amended, supplemented,
replaced or refinanced, in whole or in part, from time to time.
Exchange Debenture Indenture means the indenture to be entered into by the
Company upon the exchange, if any, of the Senior Preferred Stock into
Subordinated Exchange Debentures due 2009 of the Company.
Fair Market Value means either (i) if the trading has already taken place,
the trading price of the shares, and (ii) otherwise, (a) for preferred stock,
the liquidation preference
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plus accrued and unpaid dividends and (b) for common stock and vested stock
options, the appraised value of such shares.
Immediate Family Members of a Person means the spouse and lineal
descendants (including legally adopted descendants) of such Person.
Indenture means the Indenture dated as of November 26, 1997 among Xxxxxxx
Acquisition Inc. (to be merged with and into Xxxxxxx Fasteners Inc.), the
Company, and United States Trust Company of New York relating to 11 1/4% Senior
Notes due 2007.
Investors means the Non-Management Investors, the Management Investors and
any Permitted Transferees of such Persons who are party (including by joinder)
to this Agreement.
KSCO means KSCO Acquisition Corporation.
1933 Act means the Securities Act of 1933, as amended.
1934 Act means the Securities Exchange Act of 1934, as amended.
Notice of Offer means any bona fide written offer from a Buyer to purchase
or otherwise acquire for value, issued and outstanding shares of Capital Stock
from Saratoga, which offer shall identify the proposed transferee or
transferees, the Capital Stock covered thereby, all terms and conditions of the
offer and, in the case of an offer pursuant to which the consideration consists
in whole or in part of consideration other than cash, a description of the
non-cash component of such consideration, together with Saratoga's reasonable
estimate of the fair market value of such non-cash component and any information
requested by the other Investors, to allow it to make its own judgment as to the
value of such noncash component.
Option Agreements means the Option Agreements dated as of even date
herewith between the Company, on the one hand, and each of the Management
Investors, on the other hand.
Permitted Transferee means any transferee of Capital Stock acquired from
any Investor, in a transaction that is not prohibited pursuant to Section 2.1.
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Person means an individual, a corporation, a partnership, an association, a
trust or any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
Preferred Stock means the Series B Preferred Stock, par value $0.0001 per
share, of the Company.
Public Stock means any Capital Stock within a class of Capital Stock that
is listed on a national securities exchange or that has been accepted for
inclusion in the Nasdaq National Market or any similar national
over-the-counter-market.
Registrable Securities means shares of Capital Stock now owned or hereafter
acquired by the Investors, but only so long as such shares are restricted
securities. A share of Capital Stock shall be deemed to be a restricted security
until such time as such share (i) has been effectively registered under the 1933
Act and disposed of in accordance with the registration statement covering it or
(ii) has been sold publicly pursuant to Rule 144 (or any similar provision then
in force) under the 1933 Act.
Rollover Equity means, as to any Management Investor, (i) the option
("Option") granted to such Management Investor under the Option Agreement to
which he is party in substitution for options to purchase common stock of KSCO
and (ii) any securities issued upon exercise of the Option.
Saratoga means Saratoga Partners, III, L.P., a Delaware limited
partnership, and its Affiliates.
Senior Preferred Stock means the Series A Cumulative Redeemable
Exchangeable Preferred Stock, par value $0.0001 per share, of the Company.
Subscription Agreement means the Subscription Agreement, dated as of even
date herewith, between the Company and each of the Non-Management Investors.
Transfer means any direct or indirect transfer, sale, conveyance, pledge,
hypothecation or other disposition.
Unit means one share of Common Stock and one share of Preferred Stock.
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Warrants means the warrants entitling the holders thereof to purchase
shares of Common Stock.
ARTICLE II
COVENANTS OF THE INVESTORS
SECTION 2.1. Transfers by Investors. (a) No Investor shall Transfer any
Capital Stock now or hereafter owned by such Investor except as expressly
permitted in this Section 2.1.
(b) Without the consent of the Company or any other Investor and without
first offering such Capital Stock to the Company or any other Investor, each
Investor, at any time, may (i) Transfer to any Person any Capital Stock that
constitutes Public Stock and (ii) without regard to whether such Capital Stock
is Public Stock at such time, (x) in the case of any Investor that is not a
natural Person, Transfer any Capital Stock that it may now or hereafter own to
any Affiliate of such Investor which is a not a natural Person, and (y) in the
case of any other Investor that is a natural Person, Transfer any Capital Stock
to any Immediate Family Member or any trust or custodian account for the sole
benefit of such Investor or his Immediate Family Members and in accordance with
applicable laws of descent and distribution; provided, however, that the
transferee of any such Investor pursuant to clause (x) or (y) above shall join
in this Agreement by executing a joinder agreement in the form attached hereto
as Exhibit A.
(c) In addition to Transfers permitted by paragraph (b) above, (i) an
Investor may Transfer any Capital Stock with the prior approval of the Board by
resolution of a majority of the Board (which approval may be withheld or given
at the discretion of the Board); provided, however, that any Transfers by
Saratoga shall be subject to section 2.2(a) if otherwise applicable; (ii) an
Investor may make any Transfer required or permitted to be made by such Investor
pursuant to the provisions of Section 2.2; and (iii) an Investor that is
principally engaged in the United States in a regulated industry may make any
Transfer that, in the judgment of such Investor, upon the written advice of
counsel, is required or advisable in order for such Investor to comply with any
United States law, regulation or guideline applicable to such Investor.
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SECTION 2.2. Tag-Along and Take-Along Provisions. (a) If Saratoga shall
receive and determine to accept a Notice of Offer from a Buyer to purchase or
otherwise acquire in a transaction or series of related transactions for value
in the aggregate more than 20% of the issued and outstanding shares of Capital
Stock, the other Investors owning any Capital Stock shall have the right to
participate in such transaction in the manner set forth in this Section.
Saratoga shall, promptly after its receipt of a Notice of Offer, send a copy
thereof to the Company and the other Investors owning any Capital Stock. Each
such Investor shall have the right to cause Saratoga to condition its sale to
the Buyer of any Capital Stock owned by Saratoga on the simultaneous purchase by
the Buyer of such amount of Capital Stock owned by such Investor as such
Investor (each, an "Electing Investor") may designate by written notice
delivered to Saratoga within 5 days following the date on which the Notice of
Offer is received; provided, however, that no Electing Investor may so designate
for purchase an amount of Capital Stock greater than that number owned by such
Electing Investor multiplied by a fraction the numerator of which is the amount
of Capital Stock being sold by Saratoga pursuant to the Notice of Offer and the
denominator of which is the total amount of Capital Stock then owned by
Saratoga. The purchase price for each share of the Capital Stock subject to the
Notice of Offer and the terms of such purchase shall be the same as are set
forth in such Notice of Offer. No seller shall receive, in connection with sales
pursuant to this subsection, any material consideration which is not shared with
each other seller in proportion to the number of shares sold by each, except
that Saratoga or an Affiliate may receive customary investment banking fees. If
a Notice of Offer is for two or more classes of Capital Stock, then the number
of shares of Common Stock and Preferred Stock that any Electing Investor shall
have the right to sell shall be determined separately as though separate offers
have been made for each of the securities. Immediately after such sale, all sale
proceeds relating to the securities of each Electing Investor shall be remitted
to such Electing Investor. If any potential Electing Investor shall not have
accepted the tag-along offer, Saratoga shall have 120 days after receipt of the
Notice of Offer in which to sell the securities to be sold pursuant to such
Notice of Offer at a price not higher than that contained in the Notice of Offer
and on terms no more favorable to Saratoga than that contained in the Notice of
Offer. If, at the end of such period the sale has not been completed, this
Section 2.2(a) shall again apply to offers and sales of Capital Stock by
Saratoga.
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(b) If Saratoga shall receive and determine to accept a Notice of Offer to
sell or otherwise purchase or acquire for value in the aggregate more than 50%
of the issued and outstanding shares of the Capital Stock, then, at the written
request of Saratoga, each other Investor shall agree to sell to the Buyer
Capital Stock (to the extent then owned by such Investor) constituting the same
proportionate share of the Capital Stock which such Investor owns as Saratoga
agrees to sell for an amount equal to the same per share purchase price, and on
the terms, as are applicable to Saratoga's sale. No seller shall receive, in
connection with sales pursuant to this subsection, any material consideration
which is not shared with each other seller in proportion to the amount sold by
each, except that Saratoga or an Affiliate may receive customary investment
banking fees. Immediately following such sale, all sale proceeds relating to the
securities sold by each Investor shall be remitted to such Investor. For the
purposes of determining if the offer of the Buyer is for more than 50% of the
Capital Stock, the percentage of the issued and outstanding shares of Capital
Stock offered to be purchased by the Buyer shall include all shares of Capital
Stock sold to the Buyer by Saratoga in the same or a series of related
transactions.
(c) The provisions of this Section 2.2 shall terminate with respect to any
Class the first time that at least 20% of such Class is Public Stock.
SECTION 2.3. Transfers to Comply with Laws. Notwithstanding any contrary
provision herein, no Investor may Transfer or offer to Transfer any shares of
Capital Stock (or solicit any offers to Transfer any shares of Capital Stock),
except in compliance with the 1933 Act and rules and regulations promulgated
thereunder and in compliance with any applicable state securities laws and rules
and regulations promulgated thereunder.
SECTION 2.4. Closing. The closing of any purchase of shares of Capital
Stock pursuant to Article II hereof shall take place at the offices of the
Company (or at such other location as to which the parties shall mutually agree)
concurrently with the closing of any sale to a Buyer but in no event more than
90 days after the date on which a Non-Management Investor shall accept the offer
of such Buyer as set forth in the Notice of Offer.
SECTION 2.5. Restrictive Legend. In addition to any legend required by the
Subscription Agreement, each certificate
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evidencing shares of Capital Stock shall contain the following restrictive
legend:
"THE SALE, ASSIGNMENT, TRANSFER, PLEDGE, ENCUMBRANCE, OR OTHER
DISPOSITION OF THE SHARES EVIDENCED BY THIS CERTIFICATE, OR ANY
INTEREST IN SUCH SHARES, IS RESTRICTED BY THE TERMS OF THE STOCKHOLDERS
AGREEMENT DATED AS OF NOVEMBER 26, 1997, TO WHICH THE CORPORATION IS A
PARTY, COPIES OF WHICH ARE ON FILE AT THE OFFICES OF THE CORPORATION
AND MAY BE OBTAINED ON REQUEST."
ARTICLE III
CERTAIN REPURCHASES OF STOCK
SECTION 3.1. Management Stock. The following repurchase arrangements are
subject to the terms of the Credit Facility, the Indenture and the Senior
Preferred Stock and to the provisions of Section 3.2.
(a) Termination for Cause. If the employment of any Management Investor is
terminated for Cause, the Company shall have the right to repurchase such
Management Investor's Capital Stock at Fair Market Value.
(b) Termination Other than for Cause. If the employment of any Management
Investor is terminated other than for Cause:
(i) the Company shall have the right to repurchase such Management
Investor's Capital Stock at Fair Market Value; and
(ii) such Management Investor shall have the right to require the Company
to repurchase, at Fair Market Value, such number of Units the Fair Market Value
of which is not greater than (i) the value of his Rollover Equity on November
26, 1997 ($10.00 per Unit) plus (ii) interest at the applicable federal rate (as
determined in the Internal Revenue Code).
(c) Resignation of Management Investor. If any Management Investor resigns
his employment with the Company within thirty (30) days following the second
anniversary of the date hereof:
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(i) such Management Investor may require the Company to repurchase his
Rollover Equity at Fair Market Value; and
(ii) the Company shall have the right to repurchase such Management
Investor's Capital Stock at Fair Market Value.
(d) Death or Disability of Management Investor. Upon the death or permanent
disability of any Management Investor:
(i) such Management Investor (or his estate) shall have the right to
require the Company to repurchase such Management Investor's Capital Stock; and
(ii) the Company shall have the right to repurchase such Management
Investor's Capital Stock at Fair Market Value.
SECTION 3.2. Method of Repurchase. If any Management Investor desires to
exercise his rights under Section 3.1, he shall give notice to the Company of
such exercise within 30 days of his termination or resignation, as the case may
be. If the Company desires to exercise its rights under Section 3.1, it shall
give notice of such exercise to the applicable Management Investor within 30
days of such Management Investor's termination, resignation, disability or
death, as the case may be. Any repurchase pursuant to Section 3.1 shall be
consummated on a business day selected by the Company not less than 30 and not
more than 60 days after the date of notice; provided, however, that if any
Capital Stock becomes subject to repurchase pursuant to Section 3.1(d) as the
result of the death of any Management Investor, such Shares may be repurchased
within 90 days of the date the will of such Management Investor is admitted to
probate or, in the event of intestacy, within 90 days of such death. On the
repurchase date, the Management Investor selling Capital Stock (the "Seller")
shall deliver to the Company the certificate or certificates representing the
Capital Stock owned by such Seller (and any option agreements evidencing any
options constituting Capital Stock) on such date against delivery by the Company
to such Seller of the repurchase price in cash. All certificates for Capital
Stock to be repurchased shall be duly endorsed in favor of the Company by the
Seller. If any Seller shall fail to deliver such duly endorsed certificate or
certificates to the Company within the time required, the Company shall cause
its books and records to show that the Capital Stock subject to repurchase are
bound by the provisions of this Section 3.2 and that such Capital Stock, until
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transferred to the Company, shall not be entitled to any proxy, dividend or
other rights from the date by which such certificate or certificates should have
been delivered to the Company.
SECTION 3.3. Right of the Company to Designate Third Parties.
Notwithstanding anything contained herein to the contrary, the Company shall
have the right (but not any obligation) to designate any other Person to
purchase Capital Stock in lieu of purchases by the Company under this Article
III; provided, however, that no such designation shall relieve the Company of
its obligations hereunder and if the Company so designates any other Investor to
purchase Capital Stock, each Non-Management Investor shall be entitled (but not
obligated) to purchase such Capital Stock in proportion to the amount of Capital
Stock owned by each.
SECTION 3.4. No Implied Right of Employment. For purposes of this
Agreement, any Management Investor's employment with the Company or any of its
subsidiaries shall be deemed to be terminated at such time as the Management
Investor ceases to be an officer or salaried employee of the Company or any such
subsidiary, as the case may be. Neither this Agreement nor any provision hereof
nor any action taken or omitted to be taken hereunder shall be deemed to create
or confer on any Management Investor any right to be retained in the employ of
the Company or any Affiliate thereof, or to interfere with or limit in any way
the right of the Company or any Affiliate thereof to terminate the employment of
any Management Investor at any time (subject to any employment agreement between
the Management Investor and the Company or any of its subsidiaries).
ARTICLE IV
VOTING AND DIRECTORS
SECTION 4.1. Voting and Election of Directors. From and after the date
hereof and until such time as 25% of the outstanding Common Stock is Public
Stock, each of the Investors severally agrees that in exercising its voting
rights on the election of directors, whether or not at an annual or special
meeting of the Company and whether or not at an adjourned meeting, such Investor
shall vote its shares of the voting Capital Stock for and will take all other
necessary actions within its control to cause the nomination and the election of
the following individuals to the Board:
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(a) Xxxxx X. Xxxxxxx, but only for as long as he shall be an officer and an
employee of the Company or of a subsidiary of the Company;
(b) one director designated by Remington Investment Strategies, L.P. and
Xxxxx Global Investments, Ltd. (together, "Xxxxx") (acting together) so long as
they together own at least 50% of their original investment in the Company; and
(c) up to five directors (being all but two of the authorized number of
directors on the date hereof) designated by Saratoga;
Saratoga shall have the right to remove any or all of its designees at any
time and replace such designees. The initial designees as director by Saratoga
shall be Xxxxxxxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxxxx.
The initial designee as director by Xxxxx shall be Xxxx Xxxxxx. Xxxxx shall
have the right to remove, and replace, its designee at any time. If Xxxxx does
not designate a director, it shall be entitled to have a representative observe
Board meetings.
SECTION 4.2. Observor Status. From and after the date hereof and until such
time as 25% of the outstanding Common Stock is Public Stock, so long as
Co-Investment Partners, L.P. ("Co-Investment") owns at least 50% of its original
investment in the Company, (i) the Company shall give notice of each meeting of
the Board to Co-Investment and (ii) Co-Investment shall be entitled to have a
representative of Co-Investment attend each such meeting.
SECTION 4.3. Directors' and Officers' Insurance. The Company shall use its
reasonable best efforts to obtain and maintain directors' and officers'
insurance on such terms and in such amounts as are customary for companies of
its type.
ARTICLE V
REGISTRATION AND RELATED RIGHTS
SECTION 5.1. Holdback Agreement. If any shares of Capital Stock (or
securities exchangeable or convertible into or exercisable for Capital Stock)
are offered to the public pursuant to an effective registration statement under
the 1933
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Act, no Investor shall, without the consent of the Company, offer, sell,
transfer or otherwise dispose of, including pursuant to Rule 144 under the
Securities Act, any of its Capital Stock (other than securities covered by such
registration statement) within 30 days prior to, or within 180 days after, the
effective date of such registration statement (the "Holdback Period").
SECTION 5.2. Piggyback Registration
(a) Right to Piggyback. Subject to the provisions of Section 5.1, if at any
time the Company proposes to register any of its Capital Stock (or any
securities convertible into or exchangeable or exercisable for Capital Stock)
under the 1933 Act in connection with the offering of such Capital Stock (except
pursuant to a registration statement filed on Form S-4 or on Form S-8 or such
other forms as shall be prescribed under the 1933 Act for the same purposes or
for any exchange offer) (a "Piggyback Registration"), the Company shall at such
time provide promptly to all Investors with written notice of its intention so
to do. Upon the written request of any Investor given within 15 days after the
providing of any such notice by the Company, the Company shall use reasonable
best efforts to cause to be registered under the 1933 Act all of the Registrable
Securities held by such Investor that have been so requested to be registered,
subject to the provisions of subsection 5.2(c).
(b) Selection of Underwriters. If the Company in its sole discretion
decides a Piggyback Registration shall be underwritten, the Company shall have
sole discretion in the selection of any underwriter or underwriters to manage
such Piggyback Registration.
(c) Priority on Piggyback Registrations. If the managing underwriter or
underwriters of a Piggyback Registration advise the Company in writing that in
its or their opinion the number of Registrable Securities proposed to be sold in
such Piggyback Registration exceeds the number which can be sold, or adversely
affects the price at which the securities are to be sold in such offering, the
Company will include in such registration only the number of Registrable
Securities, which, in the opinion of such underwriter or underwriters, can be
sold in such offering or which will not adversely affect the price thereof. In
the event that the contemplated distribution does not involve an underwritten
offering, the determination that the inclusion of such Registrable Securities
shall adversely affect the price or the number of securities which may
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be sold by the Company in such offering shall be made by the Company in its
reasonable discretion. The Registrable Securities so included in such Piggyback
Registration shall be apportioned (i) first, to any shares of Capital Stock that
the Company proposes to sell and (ii) second, pro rata among any shares of
Capital Stock that any Investors propose to sell, according to the total amount
of Capital Stock requested for inclusion by said Investors, or in such other
proportions as shall mutually be agreed to among such Investors.
SECTION 5.3. Demand Registration
(a) Right to Demand. Any time after the expiration of the Holdback Period,
each of Saratoga, Xxxxx and Co-Investment may make a written request to the
Company for registration (a "Demand Registration"), under and in accordance with
the 1933 Act, of all or part of its Registrable Securities. Within 20 days after
receipt of such request, the Company will serve written notice (the "Written
Notice") of such registration request to all Investors who are holders of
Registrable Securities and the Company will include in such registration all
Registrable Securities of such Investors with respect to which the Company has
received written requests for inclusion therein within 15 business days after
receipt of the Written Notice. All requests made pursuant to this subsection
will specify the number of Registrable Securities to be registered and will also
specify the intended methods of disposition thereof; provided, however, that (x)
the Company need not effect any Demand Registration unless the Registrable
Securities requested to be registered pursuant to such Demand Registration shall
constitute at least 10% of the outstanding Capital Stock; and (y) the Company
may, if its Board of Directors so determines in the exercise of its reasonable
judgment, that due to a pending or contemplated acquisition or disposition it
would be inadvisable to effect such Demand Registration at such time, defer such
Demand Registration for a single period not to exceed 180 days.
(b) Number of Demand Registrations. Saratoga shall be entitled to three
Demand Registrations and the expenses of such registration will be borne by the
Company. Xxxxx shall be entitled to one Demand Registration and the expenses of
such registration will be borne by the Company. Co-Investment shall be entitled
to one Demand Registration and the expenses of such registration will be borne
by the Company. A Demand Registration shall not be counted as a Demand
Registration hereunder until such Demand Registration has been declared
effective and maintained for a period of at least six months, or such shorter
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period if all Registrable Securities included therein have been sold.
(c) Selection of Underwriters. If the Company in its sole discretion
decides a Demand Registration shall be underwritten, the Company shall have sole
discretion in the selection of any underwriter or underwriters to manage such
Demand Registration.
(d) Priority on Demand Registrations. If the managing underwriter or
underwriters of a Demand Registration advise the Company in writing that in its
or their opinion the number of Registrable Securities proposed to be sold in
such Demand Registration exceeds the number which can be sold, or adversely
affects the price at which the securities are to be sold, in such offering, the
Company will include in such registration only the number of Registrable
Securities which, in the opinion of such underwriter or underwriters, can be
sold in such offering or which will not adversely affect the price thereof. In
the event that the contemplated distribution does not involve an underwritten
offering, the determination that the inclusion of such Registrable Securities
shall adversely affect the price or the number of securities which may be sold
by the Company in such offering shall be made by the Company in its reasonable
discretion. The Registrable Securities so included in such Demand Registration
shall be apportioned (i) first, to any shares of Capital Stock that the Person
who requested the Demand Registration pursuant to Section 5.3(a) proposes to
sell, and (ii) second, pro rata, among any shares of Capital Stock that any
other Investors propose to sell, according to the total amount of Capital Stock
requested for inclusion by said Investors, or in such other proportions as shall
mutually be agreed to among such Investors.
SECTION 5.4. Registration of Stock Option Shares
(a) Right to Demand Stock Option Registration. Any time after the
expiration of the Holdback Period, Management Investors may make a written
request to the Company for the registration of shares of Capital Stock received
pursuant to the Company's stock option plan (the "Stock Option Registration").
The filing of the Stock Option Registration will be on Form S-8 (or another
appropriate form) under the 1933 Act.
(b) Selection of Underwriters. If the Company in its sole discretion
decides a Stock Option Registration shall be underwritten, the Company shall
have sole discretion in the
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selection of any underwriter or underwriters to manage such Stock Option
Registration.
SECTION 5.5. Registration Procedures. It shall be a condition precedent to
the obligations of the Company and any underwriter or underwriters to take any
action pursuant to this Article V that the Investors requesting inclusion in any
Piggyback Registration, Demand Registration or Stock Option Registration (each,
a "Registration," and collectively, the "Registrations") shall furnish to the
Company such information regarding them, the Registrable Securities held by
them, the intended method of disposition of such Registrable Securities, and
such agreements regarding indemnification, disposition of such securities and
the other matters referred to in this Article V as the Company shall reasonably
request and as shall be required in connection with the action to be taken by
the Company. With respect to any Registration which includes Registrable
Securities held by an Investor, the Company shall, subject to the provisions of
Section 5.5, as expeditiously as practicable:
(a) prepare and file with the Commission a registration statement on the
appropriate form prescribed by the Commission and use its reasonable best
efforts to cause such registration statement to become effective;
(b) prepare and file with the Commission such amendments, post-effective
amendments and supplements, to such registration statement and any documents
required to be incorporated by reference therein as may be necessary to keep the
registration statement effective until the distribution of Registrable
Securities shall have been completed or until the expiration of 180 days after
the effective date, whichever is earlier; cause the prospectus to be
supplemented by any required prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 under the 1933 Act (or any successor rule); and
comply with the provisions of the 1933 Act applicable to it 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 the prospectus;
(c) furnish to such Investor at least one conformed copy of the
registration statement and any post-effective amendment thereto, upon request,
and such number of copies of the prospectus (including each preliminary
prospectus and any amendments or supplements thereto), and any exhibits or docu-
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ments incorporated by reference therein and such other documents as such as the
Investor or underwriter or underwriters, if any, may reasonably request in order
to facilitate the disposition of the securities being sold by the Investor;
(d) on or prior to the date on which the registration is declared
effective, use its reasonable best efforts to register or qualify, and cooperate
with such Investor, the underwriter or underwriters, if any, and their counsel
in connection with the registration or qualification of the Registrable
Securities covered by the registration statement for offer and sale under the
securities or blue sky laws of each state and other jurisdiction of the United
States as such Investor or managing underwriter or underwriters, if any, may
reasonably request (considering the nature or size of the offering and the
expense and time involved in such qualification or registration), and to do any
and all other reasonable acts or things which may be necessary or advisable to
enable the disposition in all such jurisdictions of the Registrable Securities
covered by the applicable registration statement; provided, however, that the
Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which would
subject it to general service of process in any such jurisdiction where it is
not then so subject;
(e) use its reasonable best efforts to cause the Registrable Securities
covered by the registration statement to be registered with or approved by such
other governmental agencies or authorities within the United States, including,
without limitation, the National Association of Securities Dealers, Inc. (the
"NASD"), as may be necessary to enable the seller or sellers thereof or the
underwriter or underwriters, if any, to consummate the disposition of such
Registrable Securities;
(f) use its reasonable best efforts to cause the Registrable Securities
covered by the registration statement to be listed on any national securities
exchange on which the Capital Stock of the same class is listed;
(g) give the Investors who hold Registrable Securities registered under
such registration statement, the underwriters, if any, and their respective
counsel and accountants, the timely opportunity to participate in the
preparation of such registration statement, each prospectus included therein or
filed with the Commission, and each amendment thereof or supplement thereto, and
give each of them such access to its books and records and such opportunities to
discuss the busi-
-17-
ness of the Company with its officers and the independent public accountants who
have certified its financial statements as shall be reasonably necessary or
advisable, in the opinion of each of such Investors and such underwriters'
respective counsel, to conduct appropriate due diligence as contemplated by the
1933 Act; and
(h) provide to the Investors and underwriters with legal opinions and "cold
comfort" letters in customary form and substance.
The Investors, upon receipt of any notice from the Company that the
prospectus prepared pursuant to subsection (b) above contains an untrue
statement of a material fact or omits to state a material fact necessary to make
the statements therein not misleading, will forthwith discontinue disposition of
the Registrable Securities until the Investors receive copies of a supplemented
or amended prospectus or until they are advised in writing (the "Advice") by the
Company that the use of the prospectus may be resumed, and have received copies
of any additional or supplemental filings which are incorporated by reference in
the prospectus, and, if so directed by the Company, each Investor shall, or
shall request the managing underwriter or underwriters, if any, to, deliver to
the Company all copies, other than permanent file copies then in such Investor's
possession, of the prospectus covering such Registrable Securities current at
the time of receipt of such notice. In the event the Company shall give any such
notice, the time periods mentioned in subsection (b) of this Section 5.5 shall
be extended by the number of days during the period from and including any date
of the giving of such notice to and including the date when each seller of
Registrable Securities covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
the immediately preceding sentence or the Advice.
SECTION 5.6. Registration Expenses. Except where this Agreement specifies
otherwise, in the case of any Registration, the Company shall bear all expenses
in connection with its obligations in connection therewith, including, without
limitation, the expenses of preparing any registration statement; commission and
state "blue sky" filing, registration and qualification fees and expenses
(including, without limitation, fees and expenses of counsel in connection with
blue sky surveys); fees and expenses associated with filings required to be made
with the NASD; fees and expenses of counsel for the Company, one firm of counsel
for all selling stockholders and independent public accountants (including,
without limitation,
-18-
the cost of providing any legal opinions or "cold comfort" letters); and all
printing costs and expenses; provided, however, that the Company shall not be
responsible for the underwriting discounts and commissions or placement fees of
underwriters directly attributable to the Registrable Securities included in
such Registration.
SECTION 5.7. Participation in Registration. No Investor may participate in
any registration hereunder unless such Investor (a) agrees to sell its
securities on the basis provided in any underwriting arrangements approved by
the Company, 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. Nothing in this
Section 5.7 shall be construed to create any additional rights regarding the
registration of Registrable Securities in any Person otherwise than as set forth
in this Article V.
SECTION 5.8. Delay of Registration. No Investor shall have any right to
take any action to restrain, enjoin, or otherwise delay any registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Agreement.
SECTION 5.9. Specific Performance. The parties agree that the recovery of
damages would not be an adequate remedy for the breach of the covenants of the
Company contained in this Article V and, accordingly, agree that the Investors
shall be entitled to specific performance of the obligations contained herein.
ARTICLE VI
INDEMNIFICATION AND CONTRIBUTION
SECTION 6.1. Indemnification by the Company. In connection with any
registration statement filed to effect a Registration pursuant to this
Agreement, the Company agrees to indemnify and hold harmless, to the fullest
extent permitted by law, each holder of Registrable Securities registered
pursuant to a Registration hereunder, its officers, directors and partners, each
underwriter of such Registrable Securities and each Person who controls (within
the meaning of the 0000 Xxx) such holder or underwriter against all losses,
claims, damages, liabilities and expenses (as incurred or suffered and
including,
-19-
but not limited to, any and all expenses incurred in investigating, preparing or
defending any litigation or proceeding, whether commenced or threatened, or any
claim whatsoever) ("Losses") which arise out of or are based upon any untrue or
alleged untrue statement of a material fact contained in the registration
statement or any omission or alleged omission to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or by any untrue or alleged untrue statement of a material fact included in any
prospectus forming a part of such registration statement or preliminary
prospectus or any omission or alleged omission to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except insofar as the same are
caused by or contained in any information furnished in writing to the Company by
such holder or underwriter or its representative expressly for use therein;
provided, however, that the Company shall not be liable in any such case where
any such Loss arises out of or is based upon an untrue statement or alleged
untrue statement or an omission or alleged omission in a prospectus, if such
untrue statement or alleged untrue statement, omission or alleged omission is
corrected in an amendment or supplement to the prospectus and the holder of
Registrable Securities thereafter fails to deliver such prospectus as amended or
supplement prior to or concurrently with the sale of the Registrable Securities
to the Person asserting such loss, claim, damage, liability or expense after the
Company had furnished such holder with the number of copies of such amended or
supplemented prospectus reasonably requested by the holder of Registrable
Securities.
SECTION 6.2. Indemnification by Holders of Registrable Securities. In
connection with any registration statement filed pursuant to this Agreement to
effect a Registration, each holder participating in such Registration agrees to
(and, as a condition precedent to the filing of such registration statement, the
Company may require an undertaking satisfactory to it from each such
participating holder and from any prospective underwriter therefor agreeing to)
indemnify, to the fullest extent permitted by law, the Company and its officers,
directors and agents and each Person who controls (within the meaning of the
0000 Xxx) the Company or such agents against any Losses which arise out of or
are based upon any untrue or alleged untrue statement of a material fact
contained in such registration statement or any omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or by any untrue or alleged untrue statement
of a material fact included in any
-20-
prospectus or preliminary prospectus or any omission or alleged omission to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, to the
extent, but only to the extent, that such untrue statement or omission is
contained in any information or affidavit with respect to such holder so
furnished in writing by such holder or its representatives to the Company
specifically for inclusion in such registration statement or prospectus;
provided, however, that no such holder shall be responsible for Losses in excess
of the proceeds to be received by such holder from the sale of Registrable
Securities covered by such registration statement. The Company shall be entitled
to receive indemnities from underwriters, selling brokers, dealer-managers and
similar securities industry professionals participating in the distribution, to
the same extent as provided above with respect to information with respect to
such Persons so furnished in writing by such Persons specifically for inclusion
in any prospectus or Registration.
SECTION 6.3. Conduct of Indemnification Proceedings. Each Person entitled
to indemnification hereunder will (i) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
or contribution pursuant to this Agreement and (ii) permit such indemnifying
party to assume the defense of such claim with counsel reasonably satisfactory
to the indemnified party; provided, however, that any Person entitled to
indemnification hereunder shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such Person unless (x) the indemnifying party
has agreed in writing to pay such fees and expenses, (y) the indemnifying party
shall have failed to assume the defense of such claim and employ counsel
reasonably satisfactory to such Person or (z) in the reasonable judgment of any
such Person, based upon advice of its counsel, a conflict of interest may exist
between such Person and the indemnifying party with respect to such claims (in
which case, if the indemnified party notifies the indemnifying party in writing
that it elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such Person); provided, further, that an indemnifying
party who is not entitled to, or elects not to, assume the defense of a claim on
behalf of all indemnified parties shall not be obligated to pay the fees and
expenses of more than one counsel (in addition to local counsel) for all
indemnified parties. If the indemnifying party assumes the defense, or is not
pursuant to
-21-
clause (z) above entitled to assume the defense, it shall not be subject to any
liability for any settlement or compromise made by the indemnified party without
its consent (but such consent shall not be unreasonably withheld). No
indemnifying or indemnified party will be required to consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to the indemnified party of
a release from all liability in respect to such claim or litigation. In
addition, without the consent of the indemnified party (which consent will not
be unreasonably withheld), no indemnifying party will be permitted to consent to
entry of any judgment or enter into any settlement which provides for any action
on the part of the indemnified party other than the payment of money damages
which are to be paid in full by the indemnifying party. Likewise, no indemnified
party may enter into any settlement without the consent of the indemnifying
party (which consent may not be unreasonably withheld). If requested by the
indemnifying party, the indemnified party agrees to cooperate with the
indemnifying party and its counsel in contesting any claim which the
indemnifying party elects to contest.
SECTION 6.4. Contribution. If the indemnification provided for in this
Article VI from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any Losses, then the 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 in such proportion
as is appropriate to reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions which resulted in such
Losses, as well as any other relevant equitable considerations. The relative
fault of such indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact, has been made by, or relates to information
supplied by, such indemnifying party or indemnified parties, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such action. The amount paid or payable by a party as a result of the
Losses referred to above shall be deemed to include, without limitation, any
legal or other fees, costs or expenses reasonably incurred by such party in
connection with any investigation or proceeding. Notwithstanding anything to the
contrary in the foregoing, no holder shall be responsible for Losses in excess
of the proceeds to be received by such holder from the sale of Registrable
Securities covered by such registration statement.
-22-
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6.4 were determined by pro rata allocation
or by any other method of allocation which does not take into account the
equitable considerations referred to in the immediately preceding paragraph. No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 0000 Xxx) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Inspection Rights. The Company shall permit any authorized
representatives designated by any Investor to visit and inspect any of the
properties of the Company and its subsidiaries, including its and their
financial and accounting records, and to discuss its and their affairs, finances
and accounts with its and their officers and independent public accountants, all
upon reasonable notice and at reasonable times during normal business hours.
Each Investor agrees that it shall treat as confidential all non-public
information that such Investor obtains pursuant to the foregoing.
SECTION 7.2. Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including facsimile or similar writing) and
shall be given to such party at its address or facsimile number set forth on the
signature pages hereof (or in the case of any Management Investor, c/o the
Company at its address so set forth), or the signature page of any joinder
agreement executed and delivered pursuant to Section 7.2 of this Agreement or
such other address or facsimile number as such party may hereafter specify for
the purpose by notice to the party sending the communication. Each such notice,
request or other communication shall be effective (i) if given by facsimile,
when such facsimile is transmitted to the facsimile number specified in this
Section and receipt is confirmed, (ii) if given by mail, 72 hours after such
communication is deposited in the mail registered or certified, return receipt
requested, with postage prepaid, addressed as aforesaid, or (iii) if given by
any other means, when delivered at the address specified in this Section.
SECTION 7.3. Additional Parties. Only Persons (other than the initial
signatories hereto) that execute a
-23-
joinder agreement in the form of Exhibit A shall be deemed to be Investors.
Except to the extent limited in any joinder agreement, each Person that so
becomes an Investor after the date hereof shall be entitled to all rights and
privileges of an Investor as if such Investor had been an original signatory to
this Agreement.
SECTION 7.4. Amendments and Waivers. Any provision of this Agreement may be
amended if, but only if, such amendment is in writing and is signed by the
Company and each Investor affected. Any provision of this Agreement may be
waived if, but only if, such waiver is in writing and is signed by the Company
and each Investor sought to be charged with such waiver.
SECTION 7.5. Successors and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that no assignment of
rights under this Agreement will be valid unless made in connection with a
contemporaneous Transfer of Capital Stock which is not prohibited by this
Agreement; and provided, further, that upon any such assignment, the assignee
shall comply with Section 6.2 hereof. The Company may not assign or otherwise
transfer any of its rights under this Agreement.
SECTION 7.6. Captions. The captions of this Agreement are included for
convenience of reference only, do not constitute a part hereof and shall be
disregarded in the construction hereof.
SECTION 7.7. Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect an if the signatures thereto and hereto were upon the same instrument.
SECTION 7.8. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 7.9. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement, or affecting the validity or enforceability of
-24-
any of the terms or provisions of this Agreement in any other jurisdiction.
SECTION 7.10. Entire Agreement. This Agreement is intended by the parties
as a final expression of their agreement, and is intended to be a complete and
exclusive agreement and understanding of the parties hereto in respect of the
subject matter contained herein. Without limiting the foregoing, this Agreement
supersedes Sections 6 and 7 of the Subscription Agreement between the Company
and Co-Investment.
-25-
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.
XXXXXXX HOLDINGS INC.
By:_________________________________
Name: Xxxxxx X. Xxxxx
Title: Executive Vice Presi-
dent
Xxxxxxx Holdings Inc.
c/x Xxxxxxx Fasteners
0000 Xxxxxxx xxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
-26-
MANAGEMENT INVESTORS:
-----------------------------------
Xxxxx X. Xxxxxxx
-----------------------------------
Xxxxxx X. Xxxxx
-----------------------------------
Xxxxxxx Xxxxxx
-----------------------------------
Xxxx Xxxxxxxxx
-----------------------------------
Xxxxxx X. Xxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxx
-27-
NON-MANAGEMENT INVESTORS:
SARATOGA PARTNERS III, L.P.
By: DR Associates IV, L.P.
its General Partner
By: Xxxxxx, Read Inc.,
its General Partner
By:______________________________
Name: Xxxxxxxxx X. Xxxxxxxx
Title: Attorney-in-Fact
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxx,
Managing Director
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
-28-
SARATOGA PARTNERS III, C.V.
By: Selinus Corporation III, N.V.,
its General Partner
By: Curacao Corporation Company
N.V., its Managing Director
By:________________________________
Name: J.F.M. Horsten
Title: Attorney-in-Fact
By:________________________________
Name: S.H.P. Crijns
Title: Managing Director
c/o Curacao International Trust
Company, X.X.
Xx Xxxxxxxxxx 00
X.X. Xxx 000
Xxxxxxx, Xxxxxxxxxxx Antilles
Attention: J.F.M. Horsten
Telephone: 000-000-0-000-0000
Telecopier: 011-599-9-732-2500
-00-
XXXXX XXXXXX XXXXXXXXXXX, LTD.
By: Xxxxx Capital Advisors,
L.L.C., its general partner
By:________________________________
Name: Xxxxxx Xxxxxxxxxx
Title: Director of Operations
c/x Xxxxx Capital Management Inc.
1251 Avenue of the Americas
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
-00-
XXXXXXXXX XXXXXXXXXX STRATEGIES, L.P.
By: Xxxxx Capital Advisors,
L.L.C., its general partner
By:_______________________________
Name: Xxxxxx Xxxxxxxxxx
Title: Director of Operations
c/x Xxxxx Capital Management Inc.
1251 Avenue of the Americas
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
-00-
XXX XXXXXXXX, LTD.
By: WLD Partners GP, Inc., its
general partner
By:________________________________
Name: Xxxxx X. Xxxxxxx
Title: Vice President
Las Olas Centre
000 Xxxx Xxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxx Xxxxxxxxxx, XX 00000
Attention: Xxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
-32-
XXXXX UNIVERSITY THIRD CENTURY FUND
By: Saratoga Partners III, L.P.,
its Attorney-in-Fact
By: DR Associates IV, L.P., its
General Partner
By: Xxxxxx, Read Inc., its
General Partner
By:________________________________
Name: Xxxxxxxxx X. Xxxxxxxx
Title: Attorney-in-Fact
c/o Saratoga Partners III, L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
-33-
CO-INVESTMENT PARTNERS, L.P.
By: CIP Partners, LLC,
its general partner
By:______________________________
Name:
Title: Member
000 Xxxxxxx Xxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
EXHIBIT A
JOINDER AGREEMENT
THIS JOINDER AGREEMENT is made and entered into by the undersigned with
reference to the following facts:
A. I am acquiring simultaneously with the execution of this Joinder
Agreement [ ] shares of the [Preferred Stock] and [ ] shares of the [Common
Stock] (the "Shares") of XXXXXXX HOLDINGS INC., a Delaware corporation (the
"Company"); and
B. As a condition to the acquisition of the Shares I have agreed to join in
a stockholders agreement dated as of November 26, 1997 (the "Stockholders
Agreement"), a copy of which has been furnished to me, among the Company, the
Management Investors and the Non-Management Investors party thereto.
I therefore agree as follows:
1. I hereby join in the Stockholders Agreement and agree to be bound by all
of the terms and provisions thereof as though I were an original party thereto
and were included in the definition of [Management] [Non-Management] Investor,
as used therein.
2. I hereby consent that the certificate or certificates to be issued to me
representing the Shares shall bear the following legend in addition to any other
legend:
"THE SALE, ASSIGNMENT, TRANSFER, PLEDGE, ENCUMBRANCE, OR OTHER DISPOSITION
OF THE SHARES EVIDENCED BY THIS CERTIFICATE, OR ANY INTEREST IN SUCH
SHARES, IS RESTRICTED BY THE TERMS OF THE STOCKHOLDERS AGREEMENT DATED AS
OF NOVEMBER 26, 1997, TO WHICH THE COMPANY IS A PARTY, COPIES OF WHICH ARE
ON FILE AT THE OFFICES OF THE COMPANY AND MAY BE OBTAINED ON REQUEST."
IN WITNESS WHEREOF, the undersigned has executed this agreement
this day of , .
Name:____________________________________
Address for Notices: (1)
(i)
