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EXHIBIT 10.38
BOARD NOMINATION AGREEMENT
THIS BOARD NOMINATION AGREEMENT dated as of February 28, 2001 (this
"Agreement") is made by and among UTI Corporation, a Maryland corporation, (the
"Company"), KRG Capital Fund I, L.P., a Delaware limited partnership ("KRG Fund
I"), KRG Capital Fund I (PA), L.P., a Delaware limited partnership ("KRG (PA)"),
KRG Capital Fund I (FF), L.P., a Delaware limited partnership ("KRG (FF)"), KRG
Capital Fund I (GER), a limited partnership formed under the laws of Germany
("KRG (GER)"), and KRG Co-Investment, L.L.C., a Delaware limited liability
company ("KRG Co-Investment" and, together with KRG Fund I, XXX (XX), XXX (XX)
xxx XXX (XXX), "XXX").
RECITALS
WHEREAS, as of the date hereof, KRG beneficially owns the
shares of capital stock of the Company set forth on SCHEDULE A hereto;
WHEREAS, the shares of capital stock of the Company
beneficially owned by KRG is held in the name of KRG/CMS L.P., a Delaware
limited partnership, and KRG/CMS L.P. anticipates distributing the shares of
capital stock of the Company held by it to its limited partners, including KRG;
and
WHEREAS, KRG and the Company desire to establish the
composition of the board of directors of the Company.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, the parties hereby agree as follows:
AGREEMENT
1. NOMINATION OF DIRECTORS.
(a) BOARD REPRESENTATION. KRG and Company agree that at each
annual meeting of the stockholders of the Company, or at any meeting of the
stockholders of the Company at which members of the Board of Directors of the
Company are to be elected, or whenever members of the Board of Directors are to
be elected by written consent, KRG and the Company shall use their best efforts
and shall take all necessary action within in their power, so as to effectuate
and carry out the following provisions:
(i) In connection with the election of members to the
Company's Board of Directors, the Company shall, at the request of KRG, include
in the slate of directors recommended for election by the Board of Directors to
the stockholders of the Company up to four (4) members of the Company's Board of
Directors designated by KRG. As of the date hereof, KRG has exercised that right
with respect to only two directors, which two directors are Xxxxx X. Xxxxxx and
Xxxx X. Xxxx; and
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(ii) The remaining persons to be recommended for election
by the Board of Directors to the stockholders shall be designated by a majority
of the Company's Board of Directors.
(b) TERMINATION OF DESIGNATION RIGHTS. At such time as KRG
beneficially owns less than 25% of the shares of the Company's common stock that
it beneficially owns on the date hereof, then KRG shall lose its rights provided
in Section 1(a)(i). Notwithstanding anything in this Section 1(b) to the
contrary, in the event KRG loses its director nomination right pursuant to
Section 1(a)(i) above KRG shall be entitled to participate in the designation of
directors pursuant to Section 1(a)(ii) of this Agreement. For purposes of this
Section 1(b), beneficial ownership shall be determined under the rules of the
Securities and Exchange Commission.
(c) REPLACEMENT AND REMOVAL OF DIRECTORS. In the event of
resignation, death, removal or disqualification of a director nominated in
accordance with Section 1(a)(i) and subsequently elected to the Company's board
of directors, KRG shall promptly designate a replacement director. Any director
nominated in accordance with Section 1(a)(i) may be removed at any time and from
time to time, with or without cause (subject to the bylaws of the Company as in
effect from time to time and any requirements of law), in KRG's sole discretion.
A director designated by a majority vote of the directors may be removed at any
time and from time to time, with or without cause (subject to the bylaws of the
Company as in effect from time to time and any requirements of law) by a
majority vote of the directors and shall be replaced in accordance with the
bylaws of the Company.
2. REPRESENTATIONS AND WARRANTIES. KRG represents and warrants that it
has all necessary authority and approvals necessary to enter into this Agreement
and that it is not subject to any agreement or arrangement that conflicts with
this Agreement. KRG acknowledges that it is a party to that certain
Shareholders' Agreement of the Company, dated July 6, 1999, as amended May 31,
2000, and further acknowledges that because such Shareholders' Agreement shall
terminate immediately before and conditioned upon the Company's initial public
offering, that such Shareholders' Agreement shall not be deemed to conflict with
the provisions hereof.
3. NOTICES. All notices, demands or 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 been given when delivered personally to the
recipient, sent to the recipient by a reputable overnight courier service
(charges prepaid), mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid, or transmitted by facsimile or
electronic mail (with request for immediate confirmation of receipt in a manner
customary for communications of such type and with physical delivery of the
communication being made by one of the other means specified in this Section 3
as promptly as practicable thereafter). Such notices, demands and other
communications shall be addressed (i) in the case of a KRG, to its address as is
set forth on SCHEDULE A hereto or designated in writing from time to time by KRG
and (ii) in the case of the Company, to its principal office at 000 X. 0xx
Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 Attn: Chief Executive Officer.
4. NO RESTRICTIONS ON TRANSFER. This Agreement shall not be deemed to
restrict the transfer of shares of capital stock of the Company in market
transactions (or pursuant to a
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registration statement filed with the Securities and Exchange Commission) free
and clear of the nomination agreement described in Section 1 hereof, subject to
the provisions of this Section 4 and to the provisions of Section 5 hereof. The
effect of any such transfer shall only be as provided in Sections 1(b) and 6(b)
hereof.
5. SUCCESSORS & ASSIGNS. Except as expressly otherwise provided in this
Agreement, this Agreement may not be assigned by a party without the written
consent of the parties, and shall inure to the benefit of, and be binding upon,
the parties hereto and their respective successors, permitted assigns and legal
and personal representatives.
6. TERM. This Agreement shall terminate upon any of the following:
(a) unanimous agreement of the parties;
(b) at such time as KRG's beneficial ownership of the Company's
common stock falls below the percentage thresholds set forth in Section 1(b)
hereof;
(c) ten (10) years from the date hereof; or
(d) May 15, 2001 if the Company's initial public offering shall not
have occurred by such date.
7. ATTORNEYS' FEES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
8. FURTHER INSTRUMENTS AND ACTIONS. The parties agree to execute such
further instruments and to take such further action as may reasonably be
necessary to carry out the intent of this Agreement. The parties further agree
to cooperate affirmatively with the Company, to the extent reasonably requested
by the Company to enforce the rights and obligations to this Agreement.
9. AMENDMENT. This Agreement constitutes the entire Agreement among the
parties pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written of the parties. This Agreement may only be amended or altered in any of
its provisions with the prior written consent of KRG and the Company. No waiver
of any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision hereof (whether or not similar) nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided.
10. GOVERNING LAW. This Agreement shall be construed and enforced with,
and the rights of the parties shall be governed by, the laws of the State of
Maryland, without giving effect to conflicts of law principles thereof.
11. SEVERABILITY. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
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12. SPECIFIC PERFORMANCE. The Company acknowledges and agrees that KRG
would be damaged irreparably in the event any of the provisions of this
Agreement are not performed in accordance with their specific provisions or
otherwise are breached. Accordingly, the Company agrees that KRG shall be
entitled to an injunction or injunctions, provided KRG is not then in default,
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof.
13. REMEDIES CUMULATIVE. All rights and remedies of either party hereto
are cumulative of each other and of every other right or remedy such party may
otherwise have at law or in equity, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise of
other rights or remedies.
14. COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed
in counterparts, all of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
Agreement. This Agreement may be executed and delivered by facsimile
transmission.
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[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date and year first written above.
UTI CORPORATION
By: /s/ XXXXXX X. XXXXX
Name: Xxxxxx X. Xxxxx
Title: President & Chief Executive Officer
KRG CAPITAL FUND I, L.P.
By: KRG Capital Partners, LLC
Its: General Partner
By: /s/ XXXXX X. XXXXXX
Name: Xxxxx X. Xxxxxx
Title: Managing Director
KRG CAPITAL FUND I (FF), L.P.
By: KRG Capital Partners, LLC
Its: General Partner
By: /s/ XXXXX X. XXXXXX
Name: Xxxxx X. Xxxxxx
Title: Managing Director
KRG CAPITAL FUND I (PA), L.P.
By: KRG Capital Partners, LLC
Its: General Partner
By: /s/ XXXXX X. XXXXXX
Name: Xxxxx X. Xxxxxx
Title: Managing Director
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KRG CAPITAL FUND I (GER)
By: KRG Capital Partners, LLC
Its: General Partner
By: /s/ XXXXX X. XXXXXX
Name: Xxxxx X. Xxxxxx
Title: Managing Director
KRG CO-INVESTMENT, L.L.C.
By: Xxxxxx Management Company
Its: Managing Member
By: /s/ XXXXX X. XXXXXX
Name: Xxxxx X. Xxxxxx
Title: President
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SCHEDULE A
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Name & Address Voting Class A-1 Class A-2 Class A-3 Class A-4 Class A-5 Class AA
Common 5% 5% 5% 5% 5% Convertible
Convertible Convertible Convertible Convertible Convertible Preferred
Preferred Preferred Preferred Preferred Preferred
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KRG 149,184 293,141 419,961 0 1,431,686 324,954 0
c/o KRG Capital Fund I, L.P.
0000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
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Name & Address Class B-1 Class B-2 TOTAL SHARES
Convertible Convertible
Preferred Preferred
[NON-VOTING] [NON-VOTING]
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KRG 51,541 0 2,670,467
c/o KRG Capital Fund I, L.P.
0000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
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