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STOCKHOLDERS AGREEMENT
by and among
BLACKSTONE CAPITAL COMPANY II, L.L.C.,
HEARTLAND INDUSTRIAL PARTNERS, L.P.,
XXXXXXXXXXX/C&A HOLDINGS, L.L.C.,
and
XXXXXXX & XXXXXX CORPORATION
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Dated: February 23, 2001
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Table of Contents
Page
ARTICLE I
DEFINITIONS; TERMINATION
1.1 Definitions..........................................................2
1.2 Termination..........................................................8
ARTICLE II
TRANSFER
2.1 Limitation on Transfer...............................................8
2.2 Permitted Transfers..................................................9
2.3 Permitted Transfer Procedures........................................9
2.4 Transfers in Compliance with Law; Substitution of Transferee.........9
ARTICLE III
RIGHT OF FIRST REFUSAL; TAG-ALONG RIGHTS;
DRAG-ALONG RIGHTS; AFFILIATE TRANSACTIONS; ENCUMBRANCE
3.1 Proposed Voluntary Transfers........................................10
3.2 Involuntary Transfers...............................................15
3.3 Certain Transactions................................................17
3.4 Prohibition on Encumbrance..........................................19
ARTICLE IV
[INTENTIONALLY OMITTED]
ARTICLE V
AFTER-ACQUIRED SECURITIES; AGREEMENT TO BE BOUND
5.1 After-Acquired Securities...........................................20
5.2 Beneficial Ownership................................................20
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Page
ARTICLE VI
CORPORATE GOVERNANCE
6.1 General.............................................................20
6.2 Stockholder Actions.................................................21
6.3 Election of Directors; Number and Composition.......................21
6.4 Removal and Replacement of Director.................................22
6.5 Reimbursement of Expenses; D&O Insurance............................23
6.6 Quorum..............................................................23
6.7 Observer Rights.....................................................23
ARTICLE VII
COVENANTS
7.1 Financial Statements and Other Information..........................24
7.2 Inspection..........................................................24
ARTICLE VIII
STOCK CERTIFICATE LEGEND
8.1 ....................................................................24
ARTICLE IX
MISCELLANEOUS
9.1 Notices.............................................................25
9.2 Successors and Assigns; Third Party Beneficiaries...................27
9.3 Amendment and Waiver................................................28
9.4 Counterparts........................................................28
9.5 Specific Performance................................................28
9.6 Headings............................................................28
9.7 GOVERNING LAW.......................................................28
9.8 Severability........................................................29
9.9 Rules of Construction...............................................29
9.10 Entire Agreement....................................................29
9.11 Further Assurances..................................................29
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Page
EXHIBITS
A Form of Transfer Agreement
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STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT dated February 23, 2001, by and among Xxxxxxx &
Xxxxxx Corporation, a Delaware corporation (the "Company"), Heartland Industrial
Partners, L.P. ("Heartland") and the other investor stockholders listed on
Schedule 1 hereto (together with Heartland, the "Investors"), and Blackstone
Capital Company II, L.L.C. ("Blackstone Capital II"), Blackstone Family
Investment Partnership I L.P. ("Blackstone Family"), Blackstone Advisory
Directors Partnership L.P. ("Blackstone Advisory") and Blackstone Capital
Partners, L.P. ("Blackstone Capital") (together with Blackstone Capital II,
Blackstone Family and Blackstone Advisory, "Blackstone") and Xxxxxxxxxxx/C&A
Holdings, L.L.C. ("Xxxxxxxxxxx," together with Blackstone, the "Original
Stockholders").
WHEREAS, pursuant to the Stock Purchase Agreement, dated January 12, 2001,
(the "Company Stock Purchase Agreement"), by and among the Company and
Heartland, the Company has agreed to issue and sell to the Investors (x) an
aggregate of 1,000,000 shares of Non-Voting Convertible Preferred Stock, par
value $0.01 per share (the "Convertible Preferred Shares"), which are
convertible into 16,510,000 shares of Common Stock, par value $0.01 per share,
of the Company (the "Common Stock") and (y) 8,490,000 shares (the "Treasury
Shares") of Common Stock.
WHEREAS, pursuant to the Stock Purchase Agreement, dated January 12, 2001,
(the "Original Stockholders Stock Purchase Agreement," and, together with the
Company Stock Purchase Agreement, the "Stock Purchase Agreements"), by and among
the Original Stockholders and Heartland, the Original Stockholders have agreed
to sell to the Investors an aggregate of 27,000,000 shares of Common Stock;
WHEREAS, the Company, Xxxxxxx & Xxxxxx Products Co. ("C&A Products"),
Blackstone Capital and Xxxxxxxxxxx Xxxxxxx Partners, L.P. entered into an
Amended and Restated Stockholders Agreement dated as of June 29, 1994 (the
"Original Stockholders Agreement");
WHEREAS, the parties hereto wish to restrict the transfer of the Shares (as
hereinafter defined) and to provide for, among other things, first offer,
tag-along and preemptive rights, corporate governance rights and obligations and
certain other rights under certain conditions;
WHEREAS, in order to induce each of the Investors to purchase its shares of
Common Stock and the Original Stockholders to enter into this agreement, the
Company has agreed to grant registration rights with respect to the Common Stock
owned by the Investors and the Original Stockholders in a Registration Rights
Agreement (the "Registration Rights Agreement"); and
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WHEREAS, the Company, C&A Products, Blackstone Capital and Xxxxxxxxxxx
Xxxxxxx Partners, L.P. wish to terminate the Original Stockholders Agreement and
the Original Stockholders wish to enter into a new stockholders agreement with
the Investors.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; TERMINATION
1.1 Definitions. As used in this Agreement, and unless the context requires
a different meaning, the following terms have the meanings indicated:
"Affiliate" shall mean, when used with respect to any Person, any other
person which directly or indirectly beneficially owns or controls 25% or more of
the total voting power of shares of capital stock of such Person having the
right to vote for directors under ordinary circumstances, any Person
controlling, controlled by or under common control with any such Person (within
the meaning of Rule 405 of the Securities Act), and any director or executive
officer of any such person. Affiliate shall in any event include, when used with
respect to Xxxxxxxxxxx, Xxxxxxxxxxx Xxxxxxx Co., Inc., Xxxxxxxxxxx Xxxxxxx
Group, Inc. and Xxxxxxxxxxx Xxxxxxx Management Partners, Inc. and, when used
with respect to Blackstone, The Blackstone Group L.P. and Blackstone Group
Holdings L.P. and the successors of any of the above.
"Agreement" means this Agreement as the same may be amended, supplemented
or modified in accordance with the terms hereof.
"Big Five Accounting Firm" means Xxxxxx Xxxxxxxx, Deloitte & Touche LLP,
Ernst & Young LLP, KPMG Peat Marwick, LLP or PricewaterhouseCoopers, and any of
their successors.
"Blackstone" has the meaning set forth in the preamble to this Agreement.
"Blackstone Director" has the meaning set forth in Section 6.3.
"Board of Directors" means the Board of Directors of the Company.
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"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks in the State of New York are authorized or required by
law or executive order to close.
"Charter Documents" means the Restated Certificate of Incorporation and the
By-laws of the Company each as in effect on the date hereof.
"Commission" means the Securities and Exchange Commission or any similar
agency then having jurisdiction to enforce the Securities Act.
"Common Stock" has the meaning set forth in the recitals to this Agreement
and any other capital stock of the Company into which such stock is reclassified
or reconstituted and any other common stock of the Company.
"Common Stock Equivalents" means any security or obligation which is by its
terms convertible, exchangeable or exercisable into or for shares of Common
Stock, including any option, warrant or other subscription or purchase right
with respect to Common Stock and the Convertible Preferred Stock.
"Company" has the meaning set forth in the preamble to this Agreement.
"Company Option" has the meaning set forth in Section 3.1(c).
"Company Option Period" has the meaning set forth in Section 3.1(c).
"Contract Date" has the meaning set forth in Section 3.1(e).
"Convertible Preferred Stock" has the meaning set forth in the preamble to
this Agreement.
"Disinterested Members" has the meaning set forth in Section 3.3(a).
"Drag-Along Notice" has the meaning set forth in Section 3.1(g).
"Drag-Along Rightholders" has the meaning set forth in Section 3.1(g).
"Drag-Along Sellers" has the meaning set forth in Section 3.1(g).
"Excess Offered Securities" has the meaning set forth in Section 3.1(b).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission thereunder.
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"Exempt Issuances" has the meaning set forth in Section 3.3(d).
"Exempt Transfer" has the meaning set forth in Section 2.1.
"Fair Value" has the meaning set forth in Section 3.2(b).
"GAAP" means United States generally accepted accounting principles in
effect from time to time.
"Governmental Authority" means the government of any nation, state, city,
locality or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"Heartland" has the meaning set forth in the preamble.
"Heartland Entities" means Heartland Industrial Partners, L.P., Heartland
Industrial Partners (FF), L.P., Heartland Industrial Partners (E1), L.P.,
Heartland Industrial Partners (K1), L.P., Heartland Industrial Partners (C1),
L.P. and Permitted Transferees under clause (ii)(a) or (b) of the definition of
Permitted Transferees of any of the foregoing.
"Institutional Stockholder means any Stockholder that is not a natural
person (other than Sponsor).
"Investor Directors" has the meaning set forth in Section 6.3.
"Investor Selling Stockholder" has the meaning set forth in Section 3.1(f).
"Investor Stockholders" means each Investor and any Permitted Transferee
thereof to whom Shares are transferred in accordance with Section 2.2 of this
Agreement, and the term "Investor Stockholder" shall mean any such person.
"Investors" has the meaning set forth in the preamble to this Agreement.
"Involuntary Transfer" means any transfer, proceeding or action by or in
which a Stockholder shall be deprived or divested of any right, title or
interest in or to any of the Shares, including, without limitation, (i) any
seizure under levy of attachment or execution, (ii) any transfer in connection
with bankruptcy (whether pursuant to the filing of a voluntary or an involuntary
petition under the United States Bankruptcy Code of 1978, or any modifications
or revisions thereto) or other court proceeding to a debtor in possession,
trustee in bankruptcy or receiver or other officer or agency, (iii) any transfer
to a state or to a public officer
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or agency pursuant to any statute pertaining to escheat or abandoned property
and (iv) any transfer pursuant to a divorce or separation agreement or a final
decree of a court in a divorce action.
"Involuntary Transferee" has the meaning set forth in Section 3.2(a).
"IT Rightholder" has the meaning set forth in Section 3.2(a).
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or preference, priority,
right or other security interest or preferential arrangement of any kind or
nature whatsoever (excluding preferred stock and equity related preferences).
"Major Stockholders" means the Original Stockholders and any Permitted
Transferee or Partner Transferee thereof to whom Shares are transferred in
accordance with Section 2.2 of this Agreement, and the term "Major Stockholder"
shall mean any such Person.
"New Issuance Notice" has the meaning set forth in Section 3.3(d).
"New Securities" has the meaning set forth in Section 3.3.(d).
"Offer Price" has the meaning set forth in Section 3.1(a).
"Offered Securities" has the meaning set forth in Section 3.1(a).
"Offering Notice" has the meaning set forth in Section 3.1(a).
"Offering Stockholders" has the meaning set forth in the preamble.
"Original Stockholders" has the meaning set forth in the preamble.
"Partner Transferee" has the meaning set forth in Section 2.2.
"Partner Transferor" has the meaning set forth in Section 2.2.
"Permitted Transferee" means:
(i) with respect to any Stockholder who is a natural person, (1) the spouse
(or another individual designated in writing by a Stockholder who has no
spouse), parent or any lineal descendant (including by adoption and
stepchildren) of such Stockholder, (2) any trust of which such Stockholder is
the trustee and which is established solely for the benefit of any of the
foregoing individuals, (3) any charitable foundation selected by such
Stockholder, or (4) any partnership, all of the general partner(s) and limited
partner(s) (if any) of which are
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one or more Persons identified in this clause (i), provided that, in the case of
clause (1), (2), (3) or (4), such Person executes a Transfer Agreement;
(ii) with respect to Sponsor, (a) any Person which is an Affiliate of
Sponsor on the date hereof, (b) any controlled Affiliate of Sponsor, (c) any
investor in Sponsor in connection with a pro rata distribution of shares of
Common Stock to all investors in Sponsor at the time of the expiration or
termination of the fund or any Affiliate of such investor, or (d)(1) any Person
to whom Sponsor transfers any of its Shares within a year of the date hereof; or
(2) any partner or member of any investment fund of Sponsor to whom the Sponsor
transfers any of its Shares after the first anniversary hereof for a price of
$5.00 or less per Share (equitably adjusted for stock splits, stock combinations
and similar events) plus an amount payable to reflect any retention by Sponsor
or its Affiliates of liability to make payments under the Profit Participation
Agreement; provided that, in the case of clauses (d)(1) and (d)(2), immediately
after such transfer, the Sponsor will own at least 50% of the Shares owned by
the Sponsor on the date hereof after giving effect to the transactions
contemplated by the Stock Purchase Agreements; provided that, in the case of
clause (a), (b), (c) or (d) any such transferee executes a Transfer Agreement;
(iii) with respect to any Institutional Stockholder, (a) any Affiliate of such
Institutional Stockholder, (b) any investor of such Institutional Stockholder
that is an investment fund in connection with a pro rata distribution of shares
of Common Stock to all investors (a "Stockholder Investor" or collectively
"Stockholder Investors") in such Institutional Stockholder at the time of the
expiration or termination of the fund, or (c) any Person acquiring all or
substantially all of the investment portfolio of such Institutional Stockholder
provided, that, in the case of clause (a), (b) or (c), all such investors
execute a Transfer Agreement; and
(iv) with respect to any Stockholder, any institutional lender to which
such Stockholder pledges or grants a security interest in shares of Common Stock
in a bona fide transaction effected in good faith provided that (a) such pledgee
executes a Transfer Agreement and (b) prior to any subsequent foreclosure or
sale of such shares or any transfer resulting from such foreclosure is effected,
the provisions of Article III must be satisfied.
"Person" means any individual, firm, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
limited liability company, Governmental Authority or other entity of any kind,
and shall include any successor (by merger or otherwise) of such entity.
"Profit Participation Agreement" means the Profit Participation Interest
Agreement, dated the date hereof, any Heartland, Blackstone, Xxxxxxxxxxx and the
Company.
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"Proportionate Percentage" has the meaning set forth in Section 3.3(d).
"Proposed Price" has the meaning set forth in Section 3.3(d).
"Qualified Investor" means an Investor designated by Heartland who (x),
together with its Affiliates, at or prior to any date of determination, has made
an aggregate cash investment in Common Stock of the Company equal to at least
$25.0 million (based upon the original cost of such investment) or (y) owns,
together with its Direct Permitted Transferees, at least 10% or more of the
outstanding shares of Common Stock of the Company at the date of determination.
"Registration Rights Agreement" has the meaning set forth in the preamble.
"Rightholder(s)" has the meaning set forth in Section 3.1(b).
"Securities Act" means the United States Securities Act of 1933, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Selling Stockholder" has the meaning set forth in Section 3.1(a).
"Shares" means, with respect to each Stockholder, all shares, whether now
owned or hereafter acquired, of Common Stock of the Company and the Convertible
Preferred Shares (with the amount thereof calculated on an as-converted basis,
if applicable) and any other Common Stock Equivalents owned thereby; provided,
however, for the purposes of any computation of the number of Shares pursuant to
Sections 2, 3, 7 and 10.3, all outstanding Common Stock Equivalents shall be
deemed converted, exercised or exchanged as applicable and the shares of Common
Stock issuable upon such conversion, exercise or exchange shall be deemed
outstanding, whether or not such conversion, exercise or exchange has actually
been effected.
"Sponsor" means collectively the Heartland Entities or Heartland Industrial
Partners, L.P. acting on behalf of the other Heartland Entities.
"Stock Issuance Rightholder" has the meaning set forth in Section 3.3(d).
"Stock Purchase Agreements" has the meaning set forth in the recitals to
this Agreement.
"Stockholders" means the Investor Stockholders, the Major Stockholders and
any transferee thereof who has agreed to be bound by the terms and conditions of
this Agreement in accordance with Section 2.4.
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"Stockholders Meeting" has the meaning set forth in Section 6.1.
"Stockholder Option Period" has the meaning set forth in Section 3.1(b).
"Tag-Along Rightholder" has the meaning set forth in Section 3.1(f).
"Third Party Purchaser" has the meaning set forth in Section 3.1(a).
"transfer" has the meaning set forth in Section 2.1.
"Transferred Shares" has the meaning set forth in Section 3.2(a).
"Xxxxxxxxxxx" has the meaning set forth in the preamble.
"Xxxxxxxxxxx Director" has the meaning set forth in Section 6.3.
"Written Consent" has the meaning set forth in Section 6.1.
1.2 Termination. The Company, C&A Products, Blackstone Capital Partners,
L.P. and Xxxxxxxxxxx Xxxxxxx Partners, L.P. hereby terminate the Original
Stockholders Agreement and all the rights and obligations of each of the parties
thereto. Blackstone Capital Partners, L.P. and Xxxxxxxxxxx Xxxxxxx Partners,
L.P. hereby terminate the Voting Agreement, dated June 29, 1994, between them
and each hereby represents that the existing monitoring agreements between their
respective Affiliates and the Company have been terminated as of the date hereof
and that it and its Affiliates are not party to any other agreement with the
Company or any of its subsidiaries other than this Agreement, the Original
Stockholders Purchase Agreement, the Profit Participation Agreement, and the
Registration Rights Agreement.
ARTICLE II
TRANSFER
2.1 Limitation on Transfer. No Stockholder shall directly or indirectly
sell, give, assign, hypothecate, pledge, encumber, grant a security interest in,
subject to a Lien or otherwise dispose of (whether by operation of law or
otherwise) (each a "transfer") any Shares or any right, title or interest
therein or thereto, except (1) pursuant to (a) Sections 2.2, 2.3, 2.4, 3.1, 3.2
or 3.4 of this Agreement, (b) market sales in compliance with Rule 144 under the
Securities Act, (c) a registration statement filed under the Securities Act or
(d) a transaction in which all stockholders of the Company have a right to
transfer their shares on a pro rata basis and (2) otherwise in compliance with
this Agreement. Transfers referred to in clauses (1)(b),
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(c) and (d) are "Exempt Transfers." Any attempt to transfer any Shares or any
rights thereunder in violation of the preceding sentence shall be null and void
ab initio.
2.2 Permitted Transfers. Notwithstanding anything to the contrary contained
in this Agreement, but subject to Sections 2.3 and 2.4, at any time, (a) each
Stockholder may transfer all or a portion of its Shares to any of its Permitted
Transferees, and (b) each Major Stockholder (each in such capacity, a "Partner
Transferor") may Transfer any Common Stock held by it, in whole or in part, to
its or its successor's members, limited partners or general partners (a "Partner
Transferee").
2.3 Permitted Transfer Procedures. If any Stockholder wishes to transfer
Shares to a Permitted Transferee or Partner Transferee under Section 2.2, such
Stockholder shall give notice to the Company of its intention to make such a
transfer not less than five (5) days prior to effecting such transfer, which
notice shall state the name and address of each Permitted Transferee or Partner
Transferee to whom such transfer is proposed, the relationship of such Permitted
Transferee or Partner Transferee to such Stockholder, and the number of Shares
proposed to be transferred to such Permitted Transferee or Partner Transferee.
2.4 Transfers in Compliance with Law; Substitution of Transferee.
(a) Notwithstanding any other provision of this Agreement, no transfer may
be made pursuant to this Section 2 or Section 3 (except in an Exempt Transfer in
the case of the following clauses (a) and (b)) unless (a) if (1) to a Permitted
Transferee or Partner Transferee or (2) in a transfer by any person other than a
Major Stockholder, the transferee executes, prior to such transfer, a Transfer
Agreement substantially in the form attached hereto as Exhibit A, which shall
cause such transferee to be bound by the obligations of this Agreement, (b) the
transfer complies in all respects with the applicable provisions of this
Agreement and (c) the transfer complies in all respects with applicable federal
and state securities laws, including, without limitation, the Securities Act. If
requested by the Company, an opinion of counsel to such transferring Stockholder
shall be supplied to the Company, at such transferring Stockholder's expense, to
the effect that such transfer complies with the applicable federal and state
securities laws. Upon becoming a party to this Agreement, (i) the Permitted
Transferee or Partner Transferee of a Major Stockholder shall be substituted for
and deemed to be, and shall enjoy the same rights and be subject to the same
obligations as, the transferring Major Stockholder hereunder with respect to the
Shares transferred to such Permitted Transferee or Partner Transferee, subject
to the limitations of any voting proxy granted pursuant to Section 2.4(b) and
(ii) the transferee shall be substituted for and deemed to be, and shall enjoy
the same rights and be subject to the same obligations as, an Investor
Stockholder hereunder with respect to the Shares transferred to such transferee,
subject to the limitation of any voting proxy granted pursuant to Section
2.4(b).
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(b) Each Partner Transferee shall execute prior to a transfer by a Partner
Transferor an irrevocable proxy granting to Blackstone or Xxxxxxxxxxx or their
respective Affiliates all voting rights with respect to the Common Stock so
transferred.
ARTICLE III
RIGHT OF FIRST REFUSAL; TAG-ALONG RIGHTS;
DRAG-ALONG RIGHTS; AFFILIATE TRANSACTIONS; ENCUMBRANCE
3.1 Proposed Voluntary Transfers.
(a) Offering Notice. Subject to Sections 2.2, 2.3, 2.4 and 3.1(h), if any
Stockholder other than a Heartland Entity (a "Selling Stockholder") wishes to
transfer all or any portion of its Shares to any Person (other than to its
Permitted Transferee or in the case of a Major Stockholder, to its Partner
Transferee) (a "Third Party Purchaser") and such Selling Stockholder wants to
make any offer or has received a bona fide offer to purchase such Shares from a
Third Party Purchaser, such Selling Stockholder shall then offer to sell such
Shares by sending written notice (an "Offering Notice") to each Investor
Stockholder and the Company, which shall state (i) the number of Shares proposed
to be transferred (the "Offered Securities"); (ii) the proposed purchase price
per Share proposed by the Selling Stockholder or offered by the Third Party
Purchaser for the Offered Securities (the "Offer Price"); and (iii) the terms
and conditions of such sale. Upon delivery of the Offering Notice, such offer
shall be irrevocable unless and until the rights of first refusal provided for
herein shall have been waived or shall have expired.
(b) Stockholder Option; Exercise.
(i) For a period of ten (10) Business Days after the giving of the
Offering Notice pursuant to Section 3.1(a) (the "Stockholder Option
Period"), each of the Investor Stockholders (for the purpose of Section
3.1, each, a "Rightholder" and collectively, the "Rightholders") shall have
the right to purchase the Offered Securities at a purchase price equal to
the Offer Price and upon the terms and conditions set forth in the Offering
Notice. Each Rightholder shall have the right to purchase that percentage
of the Offered Securities determined by dividing (A) the total number of
Shares then owned by such Rightholder by (B) the total number of Shares
then owned by all such Rightholders. If the consideration consists wholly
or in material part of consideration other than cash or marketable
securities and the Rightholder or the Company would be willing to exercise
its rights hereunder based upon the value ascribed to such consideration by
the Selling Stockholders, the Company, Heartland or any Selling Stock-
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holder may require that a determination of Fair Value be made in the same
manner as would apply to a determination of Fair Value under Section 3.2(b)
(with Heartland substituted for IT Rightholders and the Selling
Stockholders requesting such an appraisal substituted for the Involuntary
Transferee), and in such event, all time periods under this Section 3.1(a)
through 3.1(e) shall be tolled pending the determination of Fair Value. If
any Rightholder does not fully subscribe for the number or amount of
Offered Securities it or he is entitled to purchase, then each other fully
participating Rightholder shall have the right to purchase that percentage
of the Offered Securities not so subscribed for (for the purposes of this
Section 3.1(b), the "Excess Offered Securities") determined by dividing (x)
the total number of Shares then owned by such fully participating
Rightholder by (y) the total number of Shares then owned by all fully
participating Rightholders. The calculation described in the preceding
sentence shall be made in successive proration calculations until there are
no remaining Excess Offered Securities or there is no remaining Rightholder
who indicated a willingness in the notice referred to in Section 3.1(b)(ii)
to subscribe for additional shares.
(ii) The right of each Rightholder to purchase the Offered Securities
under subsection (i) above shall be exercisable by delivering written
notice of the exercise thereof, prior to the expiration of the Stockholder
Option Period, to the Selling Stockholder with a copy to the Company. Each
such notice shall state (a) the number of Shares held by such Rightholder,
(b) the number of Shares that such Rightholder is willing to purchase
pursuant to this Section 3.1(b), including the number of Excess Offered
Shares, if any, such Rightholder shall wish to purchase. The giving of such
notice shall constitute a binding obligation to purchase the number of
Shares elected in accordance with Section 3.1(d). The failure of a
Rightholder to respond within the Stockholder Option Period to the Selling
Stockholder shall be deemed to be a waiver of such Rightholder's rights
under subsection (i) above, provided that each Rightholder may waive its
rights under subsection (i) above prior to the expiration of the
Stockholder Option Period by giving written notice to the Selling
Stockholder, with a copy to the Company.
(c) Company Option; Exercise. If the Rightholders do not elect to purchase
all of the Offered Securities, then on the Business Day next following the
earlier to occur of (A) the expiration of the Stockholder Option Period and (B)
the date upon which the Company shall have received written notice from each of
the Rightholders of its exercise of its right pursuant to Section 3.1(b) or its
waiver thereof (the "Company Option Period"), the Company shall have the right
(the "Company Option") but not the obligation to purchase any remaining Offered
Securities at a purchase price equal to the Offer Price and upon the terms and
conditions set forth in the Offering Notice. The right of the Company to
purchase any of the Offered Securities under this Section 3.1(c) shall be
exercisable by delivering written no-
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xxxx of the exercise thereof, prior to the expiration of the Company Option
Period, to the Selling Stockholder. The failure of the Company to respond within
the Company Option Period to the Selling Stockholder shall be deemed to be a
waiver of the Company Option, provided that the Company may waive its rights
under this Section 3.1(c) prior to the expiration of the Company Option Period
by giving written notice to the Selling Stockholder. If the Company and/or the
Rightholders do not purchase all of the Offered Securities pursuant to Section
3.1(b) and/or Section 3.1(c), then the Selling Stockholder may, subject to
Section 3.1(f), sell the remaining Offered Securities to a Third Party Purchaser
in accordance with Section 3.1(e).
(d) Closing. The closing of the purchases of Offered Securities subscribed
for by the Rightholders under Section 3.1(b) and/or the Company under Section
3.1(c) shall be held at the executive office of the Company at 11:00 a.m., local
time, on the fifteenth Business Day after the giving of the Offering Notice
pursuant to Section 3.1(a) or at such other time and place as the parties to the
transaction may agree. At such closing, the Selling Stockholder shall deliver
certificates representing the Offered Securities, duly endorsed for transfer and
accompanied by all requisite transfer taxes, if any, and such Offered Securities
shall be free and clear of any Liens (other than those arising hereunder and
those attributable to actions by the purchasers thereof) and the Selling
Stockholder shall so represent and warrant, and shall further represent and
warrant that it is the sole beneficial and record owner of such Offered
Securities. The Company and/or each Rightholder, as the case may be, purchasing
Offered Securities shall deliver at the closing payment in full for the Offered
Securities purchased by it or him. At such closing, all of the parties to the
transaction shall execute such additional documents as are otherwise necessary
or appropriate.
(e) Sale to a Third Party Purchaser. Unless the Company and/or the
Rightholders elect to purchase all the Offered Securities under Sections 3.1(b)
and 3.1(c), the Selling Stockholder may, subject to Section 3.1(f), sell any
remaining Offered Securities to a Third Party Purchaser at a price not less than
the price set forth in the Offering Notice and otherwise on terms and conditions
not materially more favorable to the Third Party Purchaser than those set forth
in the Offering Notice; provided, however, that such sale is bona fide and made
pursuant to a contract within thirty (30) days after the earlier to occur of (i)
the exercise or waiver by the Company and all of the Rightholders of their
options to purchase the Offered Securities and (ii) the expiration of the
Company Option Period (the "Contract Date"); and provided further, that such
sale shall not be consummated unless and until (x) such Third Party Purchaser
shall represent in writing to the Company and each Rightholder that it is aware
of the rights of the Company and the Stockholders contained in this Agreement
and (y) prior to the purchase by such Third Party Purchaser of any of such
Offered Securities such Third Party Purchaser shall become a party to this
Agreement and shall agree to be bound by the terms and conditions hereof in
accordance with Section 2.4. If such sale is not consummated within thirty (30)
days after the Contract Date for any reason, then the restrictions pro-
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vided for herein shall again become effective, and no transfer of such Offered
Securities may be made thereafter by the Selling Stockholder without again
offering the same to the Company and the Rightholders in accordance with this
Section 3.1.
(f) Tag-Along Rights.
(i) If an Investor (an "Investor Selling Stockholder") wishes to
transfer Shares to a Third Party Purchaser, the Company or any of its
subsidiaries other than in an Exempt Transfer, then each other Stockholder
(each, a "Tag-Along Rightholder") shall have the right to sell to such
Third Party Purchaser, the Company, or any of its subsidiaries, upon the
terms set forth in the Offering Notice, that number of Shares held by such
Tag-Along Rightholder equal to that percentage of the Offered Securities
determined by dividing (A) the total number of Shares then owned by such
Tag-Along Rightholder by (B) the sum of (x) the total number of Shares then
owned by all such Tag-Along Rightholders with respect to which Tag-Along
Rightholders are exercising their rights pursuant to this Section 3.1(f)
and (y) the total number of Shares then owned by the Investor Selling
Stockholder. The Investor Selling Stockholder and the Tag-Along
Rightholder(s) exercising their rights pursuant to this Section 3.1(f)
shall effect the sale of the Offered Securities and such Tag-Along
Rightholder(s) shall sell the number of Offered Securities required to be
sold by such Tag-Along Rightholder(s) pursuant to this Section 3.1(f)(i),
and the number of Offered Securities to be sold to such Third Party
Purchaser, the Company or any of its subsidiaries by the Investor Selling
Stockholder shall be reduced accordingly.
(ii) The Investor Selling Stockholder shall give notice to each
Tag-Along Rightholder of each proposed sale by it of Offered Securities
which gives rise to the rights of the Tag-Along Rightholders set forth in
this Section 3.1(f) at least ten (10) Business Days prior to the proposed
consummation of such sale, setting forth the name of such Investor Selling
Stockholder, the number of Offered Securities, the name and address of the
proposed Third Party Purchaser, the Company or its subsidiaries, as
applicable, the proposed amount and form of consideration and terms and
conditions of payment offered by or to such Third Party Purchaser, the
Company or its subsidiary, as applicable, the percentage of Shares that
such Tag-Along Rightholder may sell to such Third Party Purchaser, the
Company or its subsidiary, as applicable, (determined in accordance with
Section 3.1(f)(i)), and a representation that such Third Party Purchaser,
the Company or its subsidiary has been informed of the "tag-along" rights
provided for in this Section 3.1(f) and has agreed to purchase Shares in
accordance with the terms hereof. The tag-along rights provided by this
Section 3.1(f) must be exercised by any Tag-Along Rightholder wishing to
sell its Shares within ten (10) days following receipt of the notice
required by the preceding sentence by delivery of a written notice to the
Investor Selling Stockholder indicating such Tag-Along
-14-
Rightholder's wish to exercise its rights and specifying the number of
Shares (up to the maximum number of Shares owned by such Tag-Along
Rightholder required to be purchased by such Third Party Purchaser) it
wishes to sell, provided that any Tag-Along Rightholder may waive its
rights under this Section 3.1(f) prior to the expiration of such 10-day
period by giving written notice to the Investor Selling Stockholder, with a
copy to the Company. The failure of a Tag-Along Rightholder to respond
within such 10-day period shall be deemed to be a waiver of such Tag-Along
Rightholder's rights under this Section 3.1(f). If a Third Party Purchaser,
the Company or its subsidiary, as applicable, fails to purchase Shares from
any Tag-Along Rightholder that has properly exercised its tag-along rights
pursuant to this Section 3.1(f)(ii), then the Investor Selling Stockholder
shall not be permitted to consummate the proposed sale of the Offered
Securities, and any such attempted sale shall be null and void ab initio.
(g) Drag-Along Rights. For so long as Heartland is entitled to the right to
designate directors as set forth in Section 6.3, in the event that one or more
of the Heartland Entities (the "Drag-Along Rightholders") receive a bona fide
offer from a Third Party Purchaser to purchase (including a purchase by merger)
all of the Shares held by the Investor Stockholders or all or a substantial
portion of the consolidated assets of the Company, the Drag-Along Rightholders
may send written notice (the "Drag-Along Notice") to the Company and the other
Stockholders (the "Drag-Along Sellers") notifying them they will be required to
sell all (but not less than all) of their Shares in such sale (or, in the case
of a merger or asset sale, vote in favor of such sale). Upon receipt of a
Drag-Along Notice, each Drag-Along Seller receiving such notice shall be
obligated to (i) sell all of its Shares in the transaction (including a sale by
merger or asset sale) contemplated by the Drag-Along Notice for the same
consideration per share and otherwise on the same terms and conditions as the
Drag-Along Rightholders (including payment of its pro rata share of all costs
associated with such transaction); if, but only if, the Drag-Along Seller shall
receive cash and/or other freely tradable consideration having a fair market
value of at least $11 per Share, adjusted for stock splits, stock dividends,
reclassifications and other recapitalizations and (ii) otherwise take all
necessary action in its capacity as a stockholder to cause the consummation of
such transaction, including voting its Shares in favor of such transaction and
not exercising any appraisal rights in connection therewith. The obligations of
the Drag-Along Sellers in respect of a Transaction under this Section 3.1(g) are
subject to the satisfaction of the following conditions: (i) upon the
consummation of the Transaction, each Drag-Along Seller shall have the right to
receive cash and/or other consideration having a fair market value of at least
$11 per Share (adjusted for stock splits, stock dividends, reclassifications and
recapitalizations) in the same form and amount per share of consideration paid
to Drag-Along Rightholders in such transaction or any other transaction related
thereto (such as a payment for consulting or management services or non-compete
payments); (ii) if any Drag-Along Seller is given an option
-15-
as to the form and amount of consideration to be received, each other Drag-Along
Seller will be given the same option with respect to its applicable Pro Rata
Share; and (iii) no Drag-Along Seller shall be obligated under the terms of any
agreement respecting any transaction subject to this Section 3.1(g) to indemnify
any person in an amount greater than the proceeds to be received by such
Drag-Along Seller in such transaction.
(h) Notwithstanding anything to the contrary contained in this Agreement,
the following transfers will not be subject to the provisions of Section 2.4 or
Sections 3.1(a) through (e): a transfer of any Shares pursuant to Rule 144 or a
transfer pursuant to a registration statement filed under the Securities Act.
3.2 Involuntary Transfers.
(a) Rights of First Offer upon Involuntary Transfer. If an Involuntary
Transfer of any Shares (the "Transferred Shares") owned by any Stockholder shall
occur, then the Company and the Investor Stockholders (unless such Stockholder
is the Stockholder transferring the Transferred Shares) (for the purpose of
Section 3.2, each, a "IT Rightholder" and collectively, the "IT Rightholders")
shall have the same rights as specified in Sections 3.1(a), 3.1(b) and 3.1(c),
respectively, with respect to such Transferred Shares as if the Involuntary
Transfer had been a proposed voluntary transfer by a Selling Stockholder and
shall be governed by Section 3.1 except that (i) the time periods shall run from
the date of agreement as to the purchase price applicable to such Involuntary
Transfer with written determination of Fair Value in accordance with Section
3.2(b), (ii) such rights shall be exercised by notice to the transferee of such
Transferred Shares (the "Involuntary Transferee") rather than to the Stockholder
who suffered or will suffer the Involuntary Transfer and (iii) the purchase
price per Transferred Share shall be agreed upon by the Involuntary Transferee
and the Company and/or the purchasing IT Rightholders purchasing a majority of
the Transferred Shares, as the case may be; provided, however, that if such
parties fail to agree as to such purchase price, the purchase price shall be the
Fair Value thereof as determined in accordance with Section 3.2(b).
(b) Fair Value. If the parties fail to agree upon the purchase price of the
Transferred Shares in accordance with Section 3.2(a) hereof, then the Company or
the IT Rightholders, as the case may be, shall purchase the Transferred Shares
at a purchase price equal to the Fair Value thereof. The Fair Value of the
Transferred Shares shall be determined by a nationally recognized investment
banking firm or nationally recognized expert experienced in the valuation of
corporations engaged in the business conducted by the Company. Within five (5)
Business Days after the date the applicable parties determine that they cannot
agree as to the purchase price, the Involuntary Transferee and the Board of
Directors (in the case of a purchase by the Company), or the purchasing IT
Rightholders purchasing a majority of the Transferred Shares being purchased by
the purchasing IT Rightholders (if the Company
-16-
is not purchasing any Transferred Shares), or the Board of Directors and such
purchasing IT Rightholders jointly (in the case of a purchase by the Company and
IT Rightholders), as the case may be, shall designate one such appraiser that is
willing and able to conduct such determination. If either the Involuntary
Transferee or the Board of Directors or the purchasing IT Rightholders or both,
or all, as the case may be, fails to make such designation within such period,
then any other party may apply to the American Arbitration Association or a
court of appropriate jurisdiction for the appointment of such an appraiser. The
appraiser shall conduct its determination as promptly as practicable, and the
Fair Value of the Transferred Shares shall be determined by such appraiser. Such
determination shall be final and binding on the Involuntary Transferee, the
Company and the Rightholders. The Involuntary Transferee shall be responsible
for one-half the fees and expenses of the appraiser designated by or on behalf
of it, and the Company and/or the purchasing IT Rightholders in proportion to
the ratio in which they are purchasing Transferred Shares shall be responsible
for one-half of the fees and expenses of the appraiser. For purposes of this
Section 3.2(b), the "Fair Value" of the Transferred Shares means the fair market
value of such Transferred Shares determined in accordance with this Section
3.2(b) based upon all considerations that the appraiser determine to be
relevant.
(c) Closing. The closing of any purchase under this Section 3.2 shall be
held at the executive office of the Company at 11:00 a.m., local time, on the
earlier to occur of (a) the fifth Business Day after the purchase price per
Transferred Share shall have been agreed upon by the Involuntary Transferee and
the Company or the purchasing IT Rightholders, as the case may be, in accordance
with Section 3.2(a)(iii), or (b) the fifth Business Day after the determination
of the Fair Value of the Transferred Shares in accordance with Section 3.2(b),
or at such other time and place as the parties to the transaction may agree. At
such closing, the Involuntary Transferee shall deliver certificates, if
applicable, or other instruments or documents representing the Transferred
Shares being purchased under this Section 3.2, duly endorsed with a signature
guarantee for transfer and accompanied by all requisite transfer taxes, if any,
and such Transferred Shares shall be free and clear of any Liens (other than
those arising hereunder) arising through the action or inaction of the
Involuntary Transferee and the Involuntary Transferee shall so represent and
warrant, and further represent and warrant that it is the beneficial owner of
such Transferred Shares. The Company or each Rightholder, as the case may be,
purchasing such Transferred Shares shall deliver at closing payment in full in
immediately available funds for such Transferred Shares. At such closing, all
parties to the transaction shall execute such additional documents as are
otherwise necessary or appropriate.
(d) General. In the event that the provisions of this Section 3.2 shall be
held to be unenforceable with respect to any particular Involuntary Transfer,
the Company and the IT Rightholders shall have the rights specified in Sections
3.1(b) and 3.1(c), respectively, with
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respect to any transfer by an Involuntary Transferee of such Shares, and each IT
Rightholder agrees that any Involuntary Transfer shall be subject to such
rights, in which case the Involuntary Transferee shall be deemed to be the
Selling Stockholder for purposes of Section 3.1 of this Agreement and shall be
bound by the provisions of Section 3.1 and other related provisions of this
Agreement.
3.3 Certain Transactions.
(a) Without the consent of (1) Blackstone and Xxxxxxxxxxx for so long as
Sponsor directly or indirectly beneficially owns fifty (50%) percent or more of
the outstanding shares of Common Stock of the Company and (2) the members of the
Board of Directors of the Company that are disinterested with respect to the
applicable matter and not designated for election by Heartland Industrial
Partners, L.P. (the "Disinterested Members"), for so long as Sponsor directly or
indirectly owns 25% or more of the Shares (equitably adjusted for stock splits,
stocks combinations and similar events) that it beneficially owns on the date
hereof after giving effect to the transactions contemplated by the Stock
Purchase Agreements, the Company and its subsidiaries will not enter into any
transaction or series of related transactions with Sponsor or any of its
Affiliates involving payments or other consideration in excess of $500,000;
provided no such consent shall be required from Blackstone or Xxxxxxxxxxx for
any transaction that has been approved by a majority of the directors of the
Company who were not designated for election by Heartland Industrial Partners,
L.P. The foregoing restrictions will not apply to: (i) the payments to Sponsor
described in paragraph (b) below; (ii) from and after the first anniversary
hereof, the payment to Sponsor of advisory fees in connection with acquisitions
or divestiture by the Company or any of its subsidiaries in an amount not
exceeding 1% of the enterprise value thereof and out-of-pocket expense
reimbursement in connection therewith; (iii) reimbursement of out-of-pocket fees
and expenses by Sponsor in connection with the Transactions; (iv) transactions
involving the sale, purchase or lease of goods or services in the ordinary
course of business and on an arm's-length basis between or among the Company or
any of its subsidiaries and portfolio companies of Sponsor in an amount
involving not more than $1,250,000 in any transaction or series of related
transactions; (v) transactions between or among the Company or any of its
subsidiaries; (vi) issuances of securities in any rights offering made to all
stockholders of the Company; (vii) issuances of up to an aggregate of $25
million in value of Common Stock at fair market value in compliance with Section
3.3(d) if applicable; (viii) issuances of securities under the circumstances
contemplated by clauses (i), (ii)(x) and (iv) of Section 3.3(d); (ix) the
Company's entering into a Monitoring Fee Arrangement pursuant to which Heartland
will receive an annual monitoring fee of $4 million from the Company, payable
quarterly in advance; and (x) the Company's paying Heartland a transaction fee
not to exceed $12.0 million upon the closing of the Transaction. Heartland shall
not cause or permit the Company to take any action in contravention of Section
3.3(a)
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(b) [Intentionally omitted]
(c) Without the prior written consent of Blackstone and Xxxxxxxxxxx, the
Investors shall not cause or permit the Company to effect any transaction:
(i) which is a "Rule 13e-3 transaction," as defined in Rule
13e-3(a)(3) of the Exchange Act as in effect on the date hereof, unless
such transaction is a transaction in which the Major Stockholders and the
Investor Stockholders are entitled to receive the same form and amount per
Share of consideration in such transaction or any other transaction related
thereto (such as a payment for consulting or management services or
non-compete payments but disregarding the effect of the Profit
Participation Agreement); or
(ii) which requires or permits any holder of Common Stock to exchange
or sell any of such shares for an amount in cash and/or other consideration
having a fair market value of less than $5.00 per share (as adjusted for
stock splits, stock dividends, reclassifications and recapitalizations),
except that this Section 3.3(c)(ii) shall not restrict the Company from
engaging in open market purchase programs consistent with past practice; or
(iii) which causes the company to cease being required to file
periodic reports under Section 13(a) of the Exchange Act, except as
otherwise permitted by Section 3.3(c)(i).
(d) Except for (i) a subdivision of the outstanding shares of Common Stock
into a larger number of shares of Common Stock, including by way of stock split
or stock dividend, (ii) capital stock issued upon exercise, conversion or
exchange of any Common Stock Equivalent either (x) previously issued or (y)
issued in accordance with the terms of this Section 3.3(d) or pursuant to the
Stock Purchase Agreements, (iii) pursuant to an effective registration statement
filed under the Securities Act of 1933 , or (iv) issuance of capital stock to
all holders of Common Stock on a pro rata basis (each, an "Exempt Issuance"),
Sponsor shall not acquire from the Company or any of its subsidiaries any
capital stock or any other securities convertible into or exchangeable for
capital stock of the Company or its subsidiaries (collectively, "New
Securities") unless Sponsor shall offer each of the Investor Stockholders and
the Major Stockholders (each, a "Stock Issuance Rightholder" and collectively,
the "Stock Issuance Rightholders") an opportunity to participate therein on a
pro rata basis in the manner set forth in this Section 3.3(d) by sending a
written notice (the "New Issuance Notice") to the Stock Issuance Rightholders,
which New Issuance Notice shall state (x) the number of New Securities proposed
to be issued and (y) the proposed purchase price per security of the New
Securities (the "Proposed Price"). Upon delivery of the New Issuance Notice,
such offer shall be irrevocable unless and until the rights provided for in this
Section 3.3(d)
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shall have been waived or shall have expired. For a period of twenty (20) days
after the giving of the New Issuance Notice, each of the Stock Issuance
Rightholders shall have the right to purchase its Proportionate Percentage (as
hereinafter defined) of the New Securities, at a purchase price equal to the
Proposed Price and upon the same terms and conditions set forth in the New
Issuance Notice. Each such Stock Issuance Rightholder shall have the right to
purchase that percentage of the New Securities determined pro rata based on the
number of Shares then owned by the Investor Stockholders and the Major
Stockholders that were acquired in purchases directly from the Company or any
subsidiary of the Company, whether pursuant to the Stock Purchase Agreements or
in issuances made in compliance with this Section 3.3(d) or otherwise, as
applicable. The right of each Stock Issuance Rightholder to purchase the New
Securities shall be exercisable by delivering written notice of the exercise
thereof prior to the expiration of the 20-day period referred to above to the
Sponsor, which notice shall state the amount of New Securities that such Stock
Issuance Rightholder elects to purchase pursuant to this Section 3.3(d). The
failure of a Stock Issuance Rightholder to respond within such 20-day period
shall be deemed to be a waiver of such Stock Issuance Rightholder's rights under
this Section 3.3(d), provided that each Stock Issuance Rightholder may waive its
rights under Section 3.3(d) prior to the expiration of such 20-day period by
giving written notice to the Company. Where reasonably possible, the Sponsor
shall give the New Issuance Notice at least 20 days prior to the issuance of
capital stock to the Sponsor, but in any event, such notice shall be given not
later than five (5) days following any such issuance.
(e) Notwithstanding anything to the contrary in this Agreement, each of
Blackstone (together with its Permitted Transferees and Partner Transferees) and
Xxxxxxxxxxx (together with its Permitted Transferees and Partner Transferees)
shall cease having the rights granted under Section 3.3 if Blackstone or
Xxxxxxxxxxx, as applicable, together with its Permitted Transferees and Partner
Transferees, no longer holds at least 25% of the Shares (equitably adjusted for
stock splits, stock combinations and similar events) held by Blackstone or
Xxxxxxxxxxx, as applicable, on the date hereof after giving effect to the
transactions effected pursuant to the Original Stockholders Stock Purchase
Agreement.
3.4 Prohibition on Encumbrance. No Stockholder shall pledge, hypothecate,
grant a security interest in or subject to a Lien any of the shares of Common
Stock held by it; provided, however, that a Stockholder may pledge, hypothecate,
grant a security interest in or subject to a Lien such shares to a lender if
such lender agrees in writing to be bound by the terms of this Agreement (and
acknowledges that it shall not receive any of the rights granted to Stockholders
under this Agreement) and such lender is not granted any voting rights with
respect to Common Stock prior to foreclosure.
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ARTICLE IV
[Intentionally Omitted]
ARTICLE V
AFTER-ACQUIRED SECURITIES; AGREEMENT TO BE BOUND
5.1 After-Acquired Securities. Except as otherwise provided herein, all of
the provisions of this Agreement shall apply to all of the Shares and Common
Stock Equivalents now owned or which may be issued or transferred hereafter to a
Stockholder in consequence of any additional issuance, purchase, exchange or
reclassification of any of such Shares or Common Stock Equivalents, corporate
reorganization, or any other form of recapitalization, consolidation, merger,
share split or share dividend, or which are acquired by a Stockholder in any
other manner.
5.2 Beneficial Ownership. In making calculations under this Agreement, no
Shares or Common Stock Equivalents owned by any Stockholder shall be deemed to
be beneficially owned by any other Stockholder solely because of this Agreement
and the transactions contemplated hereby.
ARTICLE VI
CORPORATE GOVERNANCE
6.1 General. Blackstone and Xxxxxxxxxxx agree to vote their Shares to
approve the Company's proposals, to be considered at the Special Meeting of
Stockholders to be held on March 6, 2001, or at any adjournment thereof, (x) to
approve the issuance of 16,510,000 shares of Common Stock and (y) to approve
certain amendments to the Charter Documents. From and after the execution of
this Agreement, each Stockholder shall vote its Shares at any regular or special
meeting of stockholders of the Company (a "Stockholders Meeting") or in any
written consent executed in lieu of such a meeting of stockholders (a "Written
Consent"), and shall take all other actions necessary, to give effect to the
provisions of this Agreement (including, without limitation, Section 6.3 hereof)
and to ensure that the Charter Documents do not, at any time hereafter, conflict
in any respect with the provisions of this Agreement. In addition, each
Stockholder shall vote his, her or its Shares at any Stockholders Meeting or act
by Written Consent with respect to such Shares, upon any matter submitted for
action by the
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Company's stockholders or with respect to which such Stockholder may vote or act
by Written Consent, in conformity with the specific terms and provisions of this
Agreement and the Charter Documents.
6.2 Stockholder Actions. In order to effectuate the provisions of this
Section 6, each Stockholder (a) hereby agrees that when any action or vote is
required to be taken by such Stockholder pursuant to this Agreement, such
Stockholder shall use his, her or its reasonable best efforts to call, or cause
the appropriate officers and directors of the Company to call, a Stockholders
Meeting, or to execute or cause to be executed a Written Consent to effectuate
such stockholder action, (b) shall use his, her or its reasonable best efforts
to cause the Board of Directors to adopt, either at a meeting of the Board of
Directors or by unanimous written consent of the Board of Directors, all the
resolutions necessary to effectuate the provisions of this Agreement, and (c)
shall use his, her or its reasonable best efforts to cause the Board of
Directors to cause the Secretary of the Company, or if there be no secretary,
such other officer of the Company as the Board of Directors may appoint to
fulfill the duties of Secretary, not to record any vote or consent contrary to
the terms of this Section 6.
6.3 Election of Directors; Number and Composition.
(a) Each Stockholder shall vote its Shares at any Stockholders Meeting, or
act by Written Consent with respect to such Shares, and take all other actions
necessary to ensure that the number of directors constituting the entire Board
of Directors shall be nine (9) prior to conversion of the Convertible Preferred
Stock and thirteen after such conversion. Each Stockholder shall vote its Shares
at any Stockholders Meeting called for the purpose of filling the positions on
the Board of Directors, or in any Written Consent executed for such purpose, and
take all other actions necessary to ensure the election to the Board of
Directors of the following: four (4) individuals prior to conversion of the
Convertible Preferred Stock and seven (7) individuals after such conversion
designated by Heartland Industrial Partners, L.P. (collectively, the "Investor
Directors" and each an "Investor Director"), so long as in each case the
Heartland Entities continue to hold at least 25% of the Shares (subject to
equitable adjustments for stock splits, stock combinations and similar events)
which the Heartland Entities hold on the date hereof after giving effect to the
transactions contemplated by the Stock Purchase Agreements; one (1) individual
designated by Blackstone (the "Blackstone Director") as long as Blackstone and
its direct or indirect Permitted Transferees continue to hold at least 25% of
the Shares (subject to equitable adjustments for stock splits, stock
combinations and similar events) which Blackstone holds on the date hereof after
the transactions effected pursuant to the Stock Purchase Agreements; one (1)
individual designated by Xxxxxxxxxxx (the "Xxxxxxxxxxx Director") as long as
Xxxxxxxxxxx and its direct or indirect Permitted Transferees continue to hold at
least 25% of the Shares (subject to equitable adjustments for stock splits,
stock combinations and similar events) which Xxxxxxxxxxx holds on the date
hereof after the transactions effected pursuant to the Stock Purchase
Agreements; two outside directors prior
-22-
to conversion of the Convertible Preferred Stock and three outside directors
within 60 days of the dates hereof but in any event after such conversion, in
each case that satisfy the independent director requirements of any securities
exchange upon which the Common Stock is then listed as in effect from time to
time; and the person from time to time serving as the Company's chief executive
officer.
(b) Each of Blackstone and Xxxxxxxxxxx agrees that if the Charter Amendment
Effective Date (as defined in the Company Stock Purchase Agreement) has not
occurred on or prior to the date that is 45 days after the date of this
Agreement, it shall cause one of the two members of the Board of Directors
designated by them (the "B/W Director") to resign and shall thereafter at all
times prior to the Charter Amendment Effective Date vote its Shares at any
Stockholders Meeting called for the purpose of filling the positions on the
Board of Directors, or in any Written Consent executed for such purpose, and
take all other actions necessary to ensure the election to the Board of
Directors of five (5) individuals designated by Heartland Industrial Partners,
L.P. After the Charter Amendment Effective Date, Blackstone and Xxxxxxxxxxx'x
rights under Section 6.3(a) shall be fully restored. At such time as this clause
(b) shall be in effect Blackstone and Xxxxxxxxxxx shall have the right to
designate one Observer to the board who shall have the rights, and be subject to
the restrictions, set forth in Section 6.7.
6.4 Removal and Replacement of Director.
(a) Removal of Directors. If at any time the Investor Stockholders,
Blackstone or Xxxxxxxxxxx notifies the other Stockholders of their or its wish
to remove at any time and for any reason (or no reason) a director designated by
them or it, then each Stockholder shall vote, or execute a Written Consent for,
all of its Shares so as to remove such director.
(b) Replacement of Directors.
(i) If at any time, a vacancy is created on the Board of Directors by
reason of the incapacity, death, removal or resignation of any of the
director designated pursuant to Section 6.3 hereof, then the Stockholder(s)
who designated such director shall designate an individual who shall be
elected to fill the vacancy until the next Stockholders Meeting.
(ii) Upon receipt of notice of the designation of a nominee pursuant
to Section 6.4(b)(i), each Stockholder shall, as soon as practicable after
the date of such notice, take all reasonable actions, including the voting
of its Shares or executing a Written Consent, to elect the director so
designated to fill the vacancy.
-23-
6.5 Reimbursement of Expenses; D&O Insurance. The Company shall reimburse
the Investor Stockholders, Blackstone and Xxxxxxxxxxx or their respective
designees, for all reasonable travel and accommodation expenses incurred by the
Investor Directors, the Blackstone Director and the Xxxxxxxxxxx Director in
connection with attendance at meetings of the Board of Directors and committees
thereof upon presentation of appropriate documentation therefor. The Company
shall, and each Stockholder shall use reasonable commercial efforts to cause the
Board of Directors to cause the Company to, maintain a directors' liability
insurance policy that is reasonably acceptable to the Investor Directors, the
Blackstone Director and the Xxxxxxxxxxx Director.
6.6 Quorum. A quorum of the Board of Directors shall consist of six (6)
directors. All actions of the Board shall require approval by a majority of the
Board of Directors present at a meeting of the Board of Directors at which a
quorum is present.
6.7 Observer Rights. In the case of a Qualified Investor, for so long as
such Qualified Investor retains a number of shares of Common Stock equal to at
least a majority of the shares of Common Stock owned by such Person immediately
following the date hereof (subject to equitable adjustments for stock splits,
stock combinations and similar events), such Person will have right to send one
Representative on its behalf (the "Observer") to attend all meetings of the
Board of Directors, including all committees thereof (other than meetings at
which confidential matters related to the Qualified Investor or its Observer are
discussed and other than confidential audit and compensation committee
meetings), solely in a non-voting observer capacity. The Company will furnish to
the Observer copies of all notices, minutes, consents and other materials that
it generally makes available to its directors. The Observer may participate in
discussions of matters under consideration by the Board of Directors and any
matters brought before any committee thereof but will not be entitled to vote on
any matter presented to the Board of Directors. Any Qualified Investor will have
the right to remove and replace its Observer in its sole discretion and to
designate a substitute representative if its Observer is unable or unwilling to
attend any of the Board's meetings, including any committees thereof. In no
event shall there be at any time more than three Observers (in addition to any
Observer under Section 6.3(b) without the approval of a majority of the
directors not designated by Heartland Industrial Partners, L.P. Notwithstanding
the foregoing, if the Company is advised by counsel that the rules of the
Securities and Exchange Commission or other applicable securities laws require
that the Observer and/or the Qualified Investor appointing the same be subject
to a confidentiality agreement, then such Observer and/or the Qualified Investor
shall enter into such reasonable form of confidentiality agreement that the
Company shall request.
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ARTICLE VII
COVENANTS
7.1 Financial Statements and Other Information. The Company shall deliver
to each Investor Stockholder, Blackstone and Xxxxxxxxxxx such financial
statements (including monthly financial statements), reports and information as
may be reasonably requested by any of the Investor Stockholders, Blackstone or
Xxxxxxxxxxx including a copy of any filings by the Company with the Commission.
7.2 Inspection. The Company shall permit representatives of the Investor
Stockholders, Blackstone and Xxxxxxxxxxx to visit and inspect any of its
properties, to examine its corporate, financial and operating records and make
copies thereof or abstracts therefrom, and to discuss its affairs, finances and
accounts with their respective directors, officers and independent public
accountants, all at such reasonable times during normal business hours and as
often as may be reasonably requested upon reasonable advance notice to the
Company. No Stockholder beneficially owning less than 5% of the outstanding
Common Stock shall be entitled to any of the rights under this Section 7.2.
ARTICLE VIII
STOCK CERTIFICATE LEGEND
8.1 A copy of this Agreement shall be filed with the Secretary of the
Company and kept with the records of the Company. Each certificate representing
Shares now held or hereafter acquired by any Stockholder shall for as long as
this Agreement is effective (until a transfer pursuant to Rule 144 or an
effective registration statement filed under the Securities Act) bear legends
substantially in the following forms:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
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THE SALE, ASSIGNMENT, HYPOTHECATION, PLEDGE, ENCUMBRANCE OR OTHER
DISPOSITION (EACH A "TRANSFER") AND VOTING OF ANY OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY THE TERMS OF THE
STOCKHOLDERS AGREEMENT, DATED FEBRUARY 23, 2001, AMONG THE COMPANY AND
THE STOCKHOLDERS NAMED THEREIN, A COPY OF WHICH MAY BE INSPECTED AT THE
COMPANY'S PRINCIPAL OFFICE. THE COMPANY WILL NOT REGISTER THE TRANSFER
OF SUCH SECURITIES ON THE BOOKS OF THE COMPANY UNLESS AND UNTIL THE
TRANSFER HAS BEEN MADE IN COMPLIANCE WITH THE TERMS OF THE STOCKHOLDERS
AGREEMENT.
ARTICLE IX
MISCELLANEOUS
9.1 Notices. All notices, demands or other communications provided for or
permitted hereunder shall be made in writing and shall be by telecopier, courier
service, or personal delivery:
(a) Xxxxxxx & Xxxxxx Corporation
0000 Xxx Xxxx Xxxxx
Xxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxx, CEO
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx, General Counsel
with copies to:
Morris, Nichols, Arsht & Xxxxxxx
0000 X. Xxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxx
-00-
Xxxxxx Xxxxxxx & Xxxx LLP
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxxx
(b) if to the New Investor:
Heartland Industrial Partners, L.P.
00 Xxxxxxxx Xxxxxx
Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
with a copy to:
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: W. Xxxxxx Xxxxx, Esq.
Xxxxxxxx X. Xxxxxxxxx, Esq.
(c) if to Sellers:
Blackstone Capital Partners L.P.
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxxxxx
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with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxxxxx, Esq.
and
Wasserstein, Perella Management Partners
1301 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X'Xxxxxxx
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
(d) if to any other Stockholder, at its address as it appears on the record
books of the Company.
All such notices, demands and other communications shall be deemed to have been
duly given when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial courier service; and when receipt is
mechanically acknowledged, if telecopied. Any party may by notice given in
accordance with this Section 9.1 designate another address or Person for receipt
of notices hereunder.
9.2 Successors and Assigns; Third Party Beneficiaries. This Agreement shall
inure to the benefit of and be binding upon successors and permitted assigns of
the parties hereto. This Agreement is not assignable except in connection with a
transfer of Shares in accordance with this Agreement. No Person other than the
parties hereto and their successors and permitted assigns is intended to be a
beneficiary of this Agreement.
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9.3 Amendment and Waiver.
(a) No failure or delay on the part of any party hereto in exercising any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. The remedies provided for herein are cumulative and are not exclusive of
any remedies that may be available to the parties hereto at law, in equity or
otherwise.
(b) Any amendment, supplement or modification of or to any provision of
this Agreement, any waiver of any provision of this Agreement, and any consent
to any departure by any party from the terms of any provision of this Agreement,
shall be effective only if it is made or given in writing and signed by (i) the
Company, and (ii) each Stockholder who is adversely affected by such amendment,
supplement, modification, waiver, consent or departure. Any such amendment,
supplement, modification, waiver or consent shall be binding upon the Company
and all of the Stockholders.
9.4 Counterparts. This Agreement may be executed in any number of
counterparts, and by the parties hereto in separate counterparts each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
9.5 Specific Performance. The parties hereto intend that each of the
parties have the right to seek damages or specific performance in the event that
any other party hereto fails to perform such party's obligations hereunder.
Therefore, if any party shall institute any action or proceeding to enforce the
provisions hereof, any party against whom such action or proceeding is brought
hereby waives any claim or defense therein that the plaintiff party has an
adequate remedy at law.
9.6 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
9.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW THEREOF.
9.8 Severability. If any one or more of the provisions contained herein, or
the application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the
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provisions held invalid, illegal or unenforceable shall materially impair the
benefits of the remaining provisions hereof.
9.9 Rules of Construction. Unless the context otherwise requires,
references to sections or subsections refer to sections or subsections of this
Agreement.
9.10 Entire Agreement. This Agreement, together with the exhibits hereto,
is intended by the parties as a final expression of their agreement and intended
to be a complete and exclusive statement of the agreement and understanding of
the parties hereto in respect of the subject matter contained herein and
therein. There are no restrictions, promises, representations, warranties or
undertakings, other than those set forth or referred to herein or therein. This
Agreement, together with the exhibits hereto, supersede all prior agreements and
understandings among the parties with respect to such subject matter.
9.11 Further Assurances. Each of the parties shall, and shall cause their
respective Affiliates to, execute such documents and perform such further acts
as may be reasonably required or desirable to carry out or to perform the
provisions of this agreement.
[Remainder of page intentionally left blank]
S-1
IN WITNESS WHEREOF, the undersigned have executed, or have caused to be
executed this Agreement on the date first written above.
XXXXXXX & XXXXXX CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President
BLACKSTONE CAPITAL PARTNERS L.P.
By: Blackstone Management Associates L.P.,
its general partner
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Authorized Signatory
BLACKSTONE ADVISORY DIRECTORS PARTNERSHIP L.P.
By: Blackstone Management Associates L.P.,
its general partner
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Authorized Signatory
BLACKSTONE FAMILY INVESTMENT PARTNERSHIP I L.P.
By: Blackstone Management Associates I L.L.C.,
its general partner
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Authorized Signatory
S-2
BLACKSTONE CAPITAL COMPANY II L.L.C.
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Authorized Signatory
XXXXXXXXXXX/C&A HOLDINGS, L.L.C.
By: /s/ Xxxxxxx X. X'Xxxxxxx
--------------------------------------------------
Name: Xxxxxxx X. X'Xxxxxxx
Title: President
HEARTLAND INDUSTRIAL PARTNERS, L.P.
By: Heartland Industrial Associates, L.L.C.
its general partner
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Member
HEARTLAND INDUSTRIAL PARTNERS (FF), L.P.
By: Heartland Industrial Associates, L.L.C.
its general partner
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Member
S-3
HEARTLAND INDUSTRIAL PARTNERS (E1), L.P.
By: Heartland Industrial Associates, L.L.C.
its general partner
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Member
HEARTLAND INDUSTRIAL PARTNERS (K1), L.P.
By: Heartland Industrial Associates, L.L.C.
its general partner
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Member
HEARTLAND INDUSTRIAL PARTNERS (C1), L.P.
By: Heartland Industrial Associates, L.L.C.
its general partner
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Member
The undersigned hereby execute this Agreement on the date first written
above for purposes of Section 1.2 only.
XXXXXXX & XXXXXX PRODUCTS CO.
By:/s/ Xxxxxx X. Xxxxxxx
---------------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President
XXXXXXXXXXX XXXXXXX PARTNERS, L.P.
By: Xxxxxxxxxxx Management Partners, LP,
its general partner
By: /s/ Xxxxxx Xxxxxxx
---------------------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President
Exhibit A
ACKNOWLEDGMENT AND AGREEMENT
The undersigned wishes to receive from [name] ("Transferor") certain shares
or certain options, warrants or other rights to purchase [number] shares, par
value $[number] per share, of Common Stock (the "Shares") of Xxxxxxx & Xxxxxx
Corporation, a Delaware corporation (the "Company");
The Shares are subject to the Stockholders Agreement, dated [ ], 2001 (the
"Agreement"), among the Company and the other parties listed on the signature
pages thereto;
The undersigned has been given a copy of the Agreement and afforded ample
opportunity to read and to have counsel review it, and the undersigned is
thoroughly familiar with its terms;
Pursuant to the terms of the Agreement, the Transferor is prohibited from
transferring such Shares and the Company is prohibited from registering the
transfer of the Shares unless and until a transfer is made in accordance with
the terms and conditions of the Agreement and the recipient of such Shares
acknowledges the terms and conditions of the Agreement and agrees to be bound
thereby; and
The undersigned wishes to receive such Shares and have the Company register
the transfer of such Shares.
In consideration of the mutual promises contained herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and to induce the Transferor to transfer such Shares to the
undersigned and the Company to register such transfer, the undersigned does
hereby acknowledge and agree that (i) he[/she] has been given a copy of the
Agreement and afforded ample opportunity to read and to have counsel review it,
and the undersigned is thoroughly familiar with its terms, (ii) the Shares are
subject to the terms and conditions set forth in the Agreement, and (iii) the
undersigned does hereby agree fully to be bound thereby as [an " Investor"] [a
"Major Stockholder"] (as therein defined).
This ________ day of ________, 20__.
Exh. A-1
Schedule I
Investors
Heartland Industrial Partners (FF), L.P.
Heartland Industrial Partners (E1), L.P.
Heartland Industrial Partners (K1), L.P.
Heartland Industrial Partners (C1), L.P.