EXHIBIT 10.22
STOCKHOLDERS AGREEMENT
This Stockholders Agreement ("Agreement") is entered into as of this
24th day of November, 1999, by and among Panolam International Holdings, Inc., a
Delaware corporation (the "Company"), Panolam Acquisition Company, L.L.C., a
Delaware limited liability company ("PAC"), Genstar Capital Partners II, L.P., a
Delaware limited partnership ("Genstar") and StarGen II LLC, a Delaware limited
liability company ("Stargen") (Genstar and Stargen each, individually, a
"Stockholder," and collectively the "Stockholders"). These parties are
sometimes referred to herein individually by name or as a "Party" and
collectively as the "Parties."
RECITALS
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WHEREAS, PAC, the Company and the Stockholders are parties to that
certain Stock Purchase and Redemption Agreement dated as of October 14, 1999
(the "Stock Purchase Agreement");
WHEREAS, as a condition of consummating the transactions contemplated
by the Stock Purchase Agreement, the Stockholders are executing this Agreement;
WHEREAS, as a result of the consummation of the transactions
contemplated by the Stock Purchase Agreement, the Stockholders will retain
shares of Class A Common Stock, par value $0.01 per share, of the Company
("Stockholders Common Stock") issued and outstanding prior to the date hereof;
WHEREAS, as a result of the consummation of the transactions
contemplated by the Stock Purchase Agreement, PAC will be the record and
beneficial holder of shares of Class A Common Stock, par value $0.0l per share,
of the Company (together with the Stockholders Common Stock, the "Common
Stock"); and
WHEREAS, the Company, PAC and the Stockholders desire to enter into
this Agreement to provide for certain matters with respect to the ownership and
transfer of the shares of Common Stock now held of record or beneficially by, or
hereafter acquired by, the Parties (collectively, the "Restricted Shares").
NOW, THEREFORE, in consideration of the foregoing, and the mutual
agreements set forth herein and other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Parties hereto,
intending to be legally bound hereby, agree as follows:
SECTION 1. RIGHT OF FIRST REFUSAL.
(a) In the event that at any time prior to the Company's
consummation of an initial public offering, any Stockholder desires
to transfer convey, assign, pledge or otherwise dispose of
(collectively, "Transfer") any Restricted Shares to any third party
other than a Permitted Transferee (as defined below), such
Stockholder (the "Offeror") shall provide written notice (the
"Notice") to PAC and the Company, which notice shall set forth (i)
confirmation that such Offeror
intends to Transfer all or certain of its Restricted Shares in a
bona fide transaction with a third party (the "Third Party
Purchaser"), (ii) the number of Restricted Shares proposed to be
Transferred (the "Offered Shares"), (iii) the proposed amount and
form of consideration to be paid for the Offered Shares and (iv) all
other material terms of the proposed Transfer. Within forty-five
(45) days of receipt of the Notice (the "PAC Election Period"), PAC
may elect to purchase all, but not less than all, of the Offered
Shares at the price and on the terms and conditions set forth in the
Notice by delivery of a written notice to the Offeror (the "PAC
Election Notice"), which PAC Election Notice shall constitute the
binding agreement of PAC and Offeror to purchase and sell all of
such Offered Shares at the price and on the terms and conditions set
forth in the Notice. Within forty-five (45) days of delivery of the
PAC Election Notice, PAC shall deliver a certified check payable to
such Offeror, or to such other person as such Offeror may request,
in the amount of the purchase price (as calculated below) of such
Offered Shares to be purchased by PAC. Upon receipt of payment for
the Offered Shares, such Offeror shall deliver instruments of
transfer duly endorsed in blank, together with the corresponding
certificate(s) representing all such Offered Shares to PAC.
Notwithstanding the foregoing, if any approval, consent or other
action by, or filing with, any governmental authority (a
"Governmental Action") is required in connection with any such
purchase of Offered Shares and such Governmental Action has not been
completed or obtained on or prior to the date scheduled for closing,
the closing of the purchase of all Offered Shares shall take place
on the second (2nd) business day after such Governmental Action has
been completed or obtained. The Parties shall use reasonable efforts
to complete or obtain any such required Governmental Actions;
provided that no Party shall be required to agree to any divestiture
or operational constraint or pay any material amount of money (other
than the filing fee payable in connection with any notification
required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended) as a condition of obtaining such Governmental
Action. If each of the Parties have acted in good faith to complete
or obtain any such required Governmental Action and such
Governmental Action has not been completed or obtained on or before
the date which is ninety (90) days after the delivery to the Offeror
of the PAC Election Notice, the proposed sale of Offered Shares
subject to such required Governmental Action shall be canceled and,
for all purposes, PAC shall be deemed to have elected not to
purchase such Offered Shares pursuant to this Section 1 and the
Offeror shall be free to Transfer the Offered Shares to the Third
Party Purchaser. The Parties acknowledge that, if PAC delivers a PAC
Election Notice, it may, at the election of PAC, cause the Company,
its subsidiaries or any PAC Affiliate to purchase all or any part of
the Offered Shares in lieu of PAC in accordance with the time
periods set forth above.
(b) If the PAC Election Notice is not received by such Offeror
from PAC within the period specified in paragraph (a) above, or if
PAC (together with any of its designees) elects to purchase less
than all of the Offered Shares or fails to deliver the purchase
price of the Offered Shares in accordance with the terms hereof, the
Offeror shall have the right to Transfer the Offered Shares
specified in
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the Notice to the Third Party Purchaser in accordance with the terms
of this Agreement, but only at a price and upon terms and conditions
no less favorable to the Offeror than those stated in the Notice and
only if the consummation of sale occurs on a date within 90 days
from the end of the PAC Election Period.
(c) For purposes of calculating the purchase price of any such
transfer, sale or disposition, if any portion of the consideration
consists of other than cash, the fair market value of any non-cash
consideration shall be determined in accordance with Section 7(m)
below.
(d) The closing of the transactions contemplated by this
Section 1 shall occur at the principal place of business of the
Company unless otherwise agreed to in writing by PAC and the parties
to such transaction.
(e) Notwithstanding the foregoing, nothing in this Section 1
shall prevent the Transfer of any Restricted Shares by any
Stockholder to a Permitted Transferee. As used herein, the term
"Permitted Transferee" shall mean (i) for any Stockholder, the
Company or any of its wholly-owned Subsidiaries, (ii) for any
Stockholder that is an individual, his or her spouse, or his or her
lineal descendants (which term shall include biological as well as
adopted descendants) or trusts for their benefit provided that such
Stockholder retains the sole and exclusive right to vote or dispose
of any Restricted Shares transferred to such trust or any family
member, (iii) for any Stockholder that is an individual, upon such
Stockholder's death, such Stockholder's executors, administrators,
testamentary trustees, legatees and beneficiaries, (iv) for any
Stockholder that is an entity, any person or entity that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with such Stockholder, and
(v) for any Stockholder that is an entity, its stockholders,
partners or members.
(f) As a condition of any Transfer to a Permitted Transferee or
a Third Party Purchaser permitted hereunder, the transferee shall,
if requested by the Company, deliver to the Company an opinion of
counsel reasonably acceptable to a majority of the Board of
Directors to the effect that such Transfer is not in violation of
this Agreement, the Securities Act or the securities laws of any
state and shall agree to be bound by this Agreement by executing a
copy of a signature page to this Agreement as provided in Section
7(k) hereof. Upon the delivery of such counterpart agreement (and
the opinion of counsel, if any, required pursuant to this subsection
(f)) and so long as such person or entity is the record holder of
Restricted Shares, the Permitted Transferee of a Stockholder shall
be deemed a "Stockholder" for all purposes hereunder. Any purported
Transfer in violation of the provisions of this Section 1 without
the written waiver executed by PAC of its rights hereunder shall be
null and void and shall have no force or effect.
SECTION 2. "TAG-ALONG" RIGHTS.
(a) Sales of PAC Shares by PAC Holders. In the event that any
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PAC Holder or PAC Holders (as hereinafter defined) shall propose to
transfer, sell or
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otherwise dispose, in one or more transactions, of PAC Shares (as
hereinafter defined) comprising ten percent (10%) or more of the
outstanding Common Stock, for value (a "Tag-Along Sale") to a third
party or third parties (a "Proposed Purchaser"), other than pursuant
to an Exempt Transfer (as hereinafter defined), each Stockholder
Holder (as hereinafter defined) shall have the right and option
("Tag-Along Rights"), but not the obligation, to participate in such
Tag-Along Sale, on the same terms and subject to the same conditions
as the Tag-Along Sale proposed by such PAC Holder, by transferring
up to a number of Stockholder Shares (as hereinafter defined) owned
by such Stockholder Holder equal to the number derived by
multiplying (x) the total number of PAC Shares which the PAC Holder
proposes to transfer in connection with such Tag-Along Sale (the
"Proposed Number of Transferred Shares"), by (y) a fraction, the
numerator of which is the total number of Stockholder Shares owned
by such Stockholder Holder, and the denominator of which is the
total number of PAC Shares then held by the PAC Holder proposing
such Tag-Along Sale(the "Proposed Stockholder Tag-Along Shares").
(b) Notices. A PAC Holder shall notify, or cause to be notified,
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each Stockholder Holder in writing of any proposed Tag-Along Sale at
least ten (10) Business Days (as such term is defined in the Stock
Purchase Agreement) prior to the effective date of such proposed
Tag-Along Sale (a "PAC Tag-Along Notice"). Any such PAC Tag-Along
Notice delivered to a Stockholder Holder in connection with a
proposed Tag-Along Sale shall set forth: (i) the Proposed Number of
Transferred Shares and the Proposed Stockholder Tag-Along Shares
which such Stockholder Holder is entitled to transfer in connection
with such Tag-Along Sale, (ii) the name and address of the Proposed
Purchaser of such Proposed Stockholder Tag-Along Shares in
connection with such Tag-Along Sale, (iii) the proposed amount and
form of consideration to be delivered by the Proposed Purchaser in
exchange for such Proposed Stockholder Tag-Along Shares in
connection with such Tag-Along Sale, setting forth the terms of any
proposed non-cash consideration, (iv) the material terms and
conditions of such proposed Tag-Along Sale; (v) the proposed
effective date of the proposed Tag-Along Sale, and (vi) that the
Proposed Purchaser has been informed of the Tag-Along Rights set
forth in Section 2(a) hereof, and has agreed to purchase Stockholder
Shares held by Stockholder Holders in accordance with the terms
hereof. Any Stockholder Holder may exercise the Tag-Along Rights set
forth in Section 2(a) in connection with a Tag-Along Sale described
in a PAC Tag-Along Notice by delivery of a written notice to the PAC
Holder proposing to transfer PAC Shares (a "Stockholder Tag-Along
Notice") within (5) Business Days following receipt of a PAC Tag-
Along Notice from such PAC Holder, as prescribed by the immediately
preceding sentence. Any Stockholder Tag-Along Notice delivered by a
Stockholder Holder to a PAC Holder in connection with a proposed
Tag-Along Sale shall set forth the number of Stockholder Shares that
such Stockholder Holder proposes to include in such proposed Tag-
Along Sale, which number shall not exceed the Proposed Stockholder
Tag-Along Shares which such Stockholder Holder is entitled to
transfer in connection with such proposed Tag-Along Sale pursuant to
Section 2(a) hereof.
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(c) Number of Shares to be Sold. In the event that one or more
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Stockholder Holders shall deliver a Stockholder Tag-Along Notice
pursuant to Section 2(b) hereof in connection with a proposed Tag-
Along Sale, (i) each such Stockholder Holder shall be permitted to
transfer to the Proposed Purchaser in connection with such proposed
Tag-Along Sale up to the maximum number of Proposed Stockholder Tag-
Along Shares applicable to such Stockholder Holder, and (ii) the PAC
Holder proposing to transfer PAC Shares in connection with such
proposed Tag-Along Sale shall be permitted to transfer to the
Proposed Purchaser for a 180-day period immediately following the
five (5) Business Day period set forth in Section 2(b) hereof up to
a number of PAC Shares equal to (x) the Proposed Number of
Transferred Shares, less (y) the aggregate number of Proposed
Stockholder Tag-Along Shares proposed to be transferred by all
Stockholder Holders pursuant to Section 2(b) hereof upon the
exercise of Tag-Along Rights in connection with such proposed Tag-
Along Sale, on terms and subject to conditions no more favorable to
the PAC Holder than those terms and conditions described in the PAC
Tag-Along Notice delivered by such PAC Holder pursuant to Section
2(b) hereof.
(d) Purchase Agreement and Stockholder Share Certificates. In
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the event that any Stockholder Holder shall elect to exercise Tag-
Along Rights in connection with a proposed Tag-Along Sale, such
Stockholder Holder shall (i) prior to closing of any such proposed
Tag-Along Sale, execute any purchase agreement or other certificate,
instrument or other agreement required by the Proposed Purchaser to
consummate the proposed Tag-Along Sale; provided, however, that any
such purchase agreement or other certificates instruments and other
agreements shall be on terms no less favorable to the Stockholder
Holder than as those executed by the PAC Holder with respect to the
PAC Shares proposed to be sold or otherwise disposed of in
connection with such Tag-Along Sale, including, without limitation,
the amount and form of the purchase price therefor, the provision
of, and representation and warranty as to, information requested by
such PAC Holder from the Proposed Purchaser, and the provision of
requisite indemnifications from the Proposed Purchaser; and
provided, further, that any indemnification provided by each PAC
Holder and Stockholder Holder participating in such proposed Tag-
Along Sale to the Proposed Purchaser shall be made pro rata in
proportion to the number of PAC Shares and Stockholder Shares to be
sold or otherwise disposed of in connection with such Tag-Along
Sale, and (ii) at the closing of any such proposed Tag-Along Sale,
deliver to the PAC Holder the certificate or certificates
representing the Stockholder Shares to be sold or otherwise disposed
of in connection with such proposed Tag-Along Sale by such
Stockholder Holder, duly endorsed for transfer with signatures
guaranteed, against receipt of the purchase price therefor.
(e) Custody Agreement and Power of Attorney. Upon delivery of a
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Stockholder Tag Along Notice in connection with a proposed Tag Along
Sale pursuant to Section 2(b) hereof, the Stockholder Holder
delivering such Stockholder Tag-Along Notice shall, if requested by
the PAC Holder proposing to effect such Tag-Along Sale, execute and
deliver a custody agreement and power
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of attorney in form and substance reasonably satisfactory to such
PAC Holder with respect to Stockholder Shares which are to be sold
or otherwise disposed of in connection with such Tag-Along Sale to
the Proposed Purchase.
(f) Certain Definitions. As used in this Agreement, the
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following terms shall have the respective meanings:
"Exempt Transfer" means (i) a transfer by a PAC Holder to any PAC
Affiliate, or a transfer by a Stockholder Holder to any Stockholder Affiliate,
(ii) a transfer by any PAC Affiliate to another PAC Affiliate, or by any
Stockholder Affiliate to another Stockholder Affiliate, (iii) a transfer in the
form of dividends or distributions (whether upon liquidation or otherwise) by
PAC and a PAC Affiliate, or by a Stockholder and a Stockholder Affiliate, to its
stockholders, members, or partners, as the case may be (and any subsequent
transfer by any such stockholder, member, or partner), (iv) a transfer by any
PAC Holder or Stockholder Holder (a "Holder") effected pursuant to Rule 144
under the Securities Act, (v) a transfer by any PAC Holder or Stockholder Holder
effected pursuant to a Registration Statement declared or ordered effective by
the United States Securities and Exchange Commission (the "SEC") under the
Securities Act, (vi) a transfer by a Stockholder Holder to a Proposed Purchaser
pursuant to Section 2 or Section 3 hereof, (vii) upon the death of a PAC Holder
or Stockholder Holder that is an individual to his or her executors,
administrators, testamentary trustees, legatees or beneficiaries, or (viii) a
transfer by a PAC Holder or Stockholder Holder that is an individual to a trust,
the beneficiaries of which may include only the transferring Holder, his or her
spouse, or his or her lineal descendants (which term shall include biological as
well as adoptive descendants), or from the trustee of such trust to the
beneficiaries of such trust, or to another trustee of a trust with identical
beneficiaries (provided that such Holder retains the sole and exclusive right to
vote or dispose of any Restricted Shares transferred to such trust,
beneficiaries, spouse or lineal descendant); provided, however, that in the case
of clauses (i), (ii), (vii) and (viii) of this definition, the transferee agrees
in writing to be bound by the terms and provisions of this Agreement in the same
manner as the transferor.
"PAC Affiliate" means, (i) PAC, (ii) a person or entity that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, PAC, including, without
limitation, any of PAC's members or any other corporation, limited liability
company, limited partnership, general partnership or other entity, directly or
indirectly, controlled by TC Group, L.L.C. or CEP General Partner L.P., or (iii)
any stockholder, partner or member of any PAC Affiliate.
"PAC Holder" means, as of any date of determination, (i) PAC, (ii)
any PAC Affiliate and (iii) any other person or entity to whom PAC or any other
PAC Holder transfers PAC Shares, which person or entity is required by this
Agreement to be bound by the terms and provisions of this Agreement in the same
manner as the transferor.
"PAC Shares" means, as of any date of determination, (i) the shares
of Common Stock then held by any PAC Holders, and (ii) the shares of Common
Stock issuable upon the conversion, exercise or exchange of any options,
warrants, and other securities or any other rights to purchase or otherwise
acquire shares of Common Stock then held by any PAC Holders.
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"Stockholder Affiliate" means, with respect to any Stockholder, a
person or entity that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
such Stockholder, including, without limitation, any of Genstar's partners or
Stargen's members.
"Stockholder Holder" means, as of any date of determination, (i) any
Stockholder, (ii) any Stockholder Affiliate, and (iii) any other person or
entity to whom any Stockholder or any other Stockholder Holder transfers
Stockholder Shares, which person or entity is required by this Agreement to be
bound by the terms and provisions of this Agreement in the same manner as the
transferor.
"Stockholder Shares" means, as of any date of determination, (i) the
shares of Common Stock then held by any Stockholder Holders, and (ii) the shares
of Common Stock issuable upon the conversion, exercise or exchange of any
options, warrants, and other securities or any other rights to purchase or
otherwise acquire shares of Common Stock then held by any Stockholder Holders.
SECTION 3. "DRAG-ALONG" RIGHTS.
(a) Sales of PAC Shares by PAC Holders. Notwithstanding Section
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2 hereof, in the event that any PAC Holder or PAC Holders shall
propose to transfer, sell or otherwise dispose, in one or more
transactions, of PAC Shares comprising ten percent (10%) or more of
the outstanding Common Stock, for value (a "Drag-Along Sale") to a
Proposed Purchaser, other than pursuant to an Exempt Transfer, then
upon the request of such PAC Holder, each Stockholder Holder shall
sell to such Proposed Purchaser in connection with such Drag-Along
Sale, at the same price, upon the same terms and subject to the same
conditions applicable to the PAC Holder in connection therewith, the
number of Stockholder Fully-Diluted Shares (as hereinafter defined)
equal to the number derived by multiplying (x) the number of
Stockholder Fully-Diluted Shares then held by such Stockholder
Holder, by (y) a fraction, the numerator of which is the total
number of PAC Shares that the PAC Holder proposes to transfer to
such Proposed Purchaser in connection with such proposed Drag-Along
Sale, and the denominator of which is the total number of PAC Shares
(the "Stockholder Drag-Along Shares"). The rights set forth in this
Section 3(a) shall be referred to herein as "Drag-Along Rights."
(b) Notice. A PAC Holder shall notify, or cause to be notified,
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each Stockholder Holder in writing of any proposed Drag-Along Sale
at least ten (10) Business Days prior to the effective date of such
proposed Drag-Along Sale (a "PAC Drag-Along Notice"). Any such Drag-
Along Notice delivered to a Stockholder Holder in connection with a
proposed Drag-Along Sale shall set forth: (i) the Stockholder Drag-
Along Shares to be transferred by such Stockholder Holder in
connection with such Drag-Along Sale, (ii) the name and address of
the Proposed Purchaser in connection with such Drag-Along Sale,
(iii) the proposed amount and form of consideration to be delivered
by the Proposed Purchaser in exchange for such Stockholder Drag-
Along Shares, setting
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forth the terms of any non-cash consideration, (iv) the material
terms and conditions of such Drag-Along Sale, (v) the proposed
effective date of the proposed Drag-Along Sale and the date upon
which the Stockholder Holders shall deliver to the PAC Holder the
certificates or other documentation representing the Stockholder
Fully-Diluted Shares to be transferred in connection with such Drag-
Along Sale, duly endorsed for transfer, and (vi) that the Proposed
Purchaser has been informed of the Drag-Along Rights, and has agreed
to purchase all of the applicable Stockholder Fully-Diluted Shares
in accordance with the terms hereof.
(c) Stockholder Share Certificates. In the event that any PAC
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Holder shall elect to exercise Drag-Along Rights in connection with
a Drag-Along Sale, upon receipt of a PAC Drag-Along Notice, each
Stockholder Holder shall deliver to the PAC Holder the certificate
or certificates (or other documentation) representing the applicable
Stockholder Fully-Diluted Shares to be sold in connection with such
Drag-Along Sale, duly endorsed for transfer with signatures
guaranteed against receipt of the purchase price therefor, on or
before the date set forth in the Drag-Along Notice for such
delivery.
(d) Purchase Agreement and Stockholder Share Certificates. In
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the event that any PAC Holder shall elect to exercise Drag-Along
Rights in connection with a proposed Drag-Along Sale, such
Stockholder Holder shall (i) prior to closing of any such proposed
Drag-Along Sale, execute any purchase agreement or other
certificates, instruments and other Agreement required by the
Proposed Purchaser to consummate the proposed Drag-Along Sale;
provided, however, that any such purchase agreement or other
certificates instruments and other agreements shall be on terms no
less favorable to the Stockholder Holder than are those executed by
the PAC Holder with respect to the PAC Shares proposed to be sold or
otherwise disposed of in connection with such Drag-Along Sale,
including, without limitation, the amount and form of the purchase
price therefor, the provision of, and representation and warranty as
to, information requested by such PAC Holder from the Proposed
Purchaser, and the provision of requisite indemnifications from the
Proposed Purchaser; and provided, further, that any indemnification
provided by each PAC Holder and Stockholder Holder participating in
such proposed Drag-Along Sale to the Proposed Purchaser shall be
made pro rata in proportion to the number of PAC Shares and
Stockholder Shares to be sold or otherwise disposed of in connection
with such Drag-Along Sale, and (ii) at the closing of any such
proposed Drag-Along Sale, deliver to the PAC Holder the certificate
or certificates representing the Stockholder Shares to be sold or
otherwise disposed of in connection with such proposed Drag-Along
Sale by such Stockholder Holder, duly endorsed for transfer with
signatures guaranteed, against receipt of the purchase price
therefor.
(e) Effect of Drag-Along Sale. In the event that a Stockholder
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Holder shall receive such Stockholder Holder's proportionate share
of the purchase price from a Drag-Along Sale, but has failed to
deliver a certificate or certificates (or other documentation, if
applicable) representing the Stockholder Fully-Diluted Shares sold
by such Stockholder Holder in connection with such Drag-Along
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Sale, as described in this Section 3, such Stockholder Holder shall
thereafter no longer be deemed to be the holder of such Stockholder
Fully-Diluted Shares for any purposes, shall have no voting rights,
shall not be entitled to any dividends or other distributions and
shall have no other rights or privileges granted to stockholders
under law or this Agreement with respect to such Stockholder Fully-
Diluted Shares.
(f) As used in this Section 3, "Stockholder Fully-Diluted
Shares" means, as of any date of determination, (i) all shares of
Common Stock then held by all Stockholder Holders, plus (ii) all
shares of Common Stock issuable upon the conversion, exercise or
exchange of any options, warrants, and other securities or any other
rights to purchase or otherwise acquire shares of Common Stock then
held by all Stockholder Holders.
SECTION 4. COMPANY SALE.
(a) If the Board of Directors and the holders of a majority of
the outstanding shares of Common Stock approve a Company Sale (as
defined below), each Stockholder agrees that he shall consent to and
raise no objections against such Company Sale, and if the Company
Sale is structured as a sale of stock, each Stockholder shall sell
all or any portion of the Restricted Shares in connection with such
Company Sale on the terms and conditions approved by the Board of
Directors and the holders of a majority of the outstanding shares of
Common Stock. Following approval of a Company Sale by holders of a
majority of the outstanding shares of Common Stock, each Stockholder
hereby agrees to take all actions that the Board of Directors and
the holders of a majority of the outstanding shares of Common Stock
reasonably deem necessary or desirable in connection with the
consummation of such Company Sale. Notwithstanding anything herein
to the contrary, a Stockholder shall be obligated under this Section
4 only if such Stockholder shall receive in connection with the
Company Sale the same consideration (or, with the Stockholder's
approval, an amount of cash of equivalent value) per share of Common
Stock held by such Stockholder to the consideration received by each
PAC Affiliate for each share of Common Stock held by such PAC
Affiliate in connection with such Company Sale.
(b) If the Company or the holders of the Company's securities
enter into any negotiation with respect to a Company Sale which
involves the issuance of Securities (as defined in the Securities
Act) to the holders of shares of Common Stock for which Rule 506 (or
any similar rule then in effect) promulgated under the Securities
Act may be available, each Stockholder that is unable to represent
that it is an accredited investor shall, if requested by the
Company, appoint a stockholder representative (as such term is
defined in Rule 501 of the Securities Act) reasonably acceptable to
the Company to advise Stockholder in connection with such Company
Sale. If such stockholder representative was designated by the
Company, the Company shall pay the fees of such stockholder
representative, but if Stockholder appoints another stockholder
representative, Stockholder shall be responsible for the fees of the
stockholder representative so appointed.
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(c) Stockholders shall bear their pro-rata share (based upon
the number of shares held by Stockholders that are sold in such
Company Sale) of the costs of any sale of Common Stock pursuant to a
Company Sale to the extent such costs are incurred for the benefit
of all holders of Common Stock and are not otherwise paid by the
Company, the acquiring party, or any other person.
(d) For the purpose hereof, "Company Sale" shall mean the
consummation of any transaction or series of transactions pursuant
to which one or more persons or entities or group of persons or
entities (other than any PAC Affiliate) acquires (i) capital stock
of the Company possessing the voting power sufficient to elect a
majority of the members of the Board of Directors of the Company or
its successor(s) (whether such transaction is effected by merger,
consolidation, recapitalization, sale or transfer of the Company's
capital stock or otherwise) or (ii) all or substantially all of the
assets of the Company and its subsidiaries.
SECTION 5. REGISTRATION RIGHTS.
(a) Piggyback Registrations. If the Company at any time proposes to
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register under the Securities Act any shares of Common Stock or any security
convertible into or exchangeable or exercisable for shares of Common Stock,
whether or not for sale for its own account, on a form and in a manner which
would permit registration of shares of Common Stock held by a Stockholder or PAC
Affiliate for sale to the public under the Securities Act other than in an
initial public offering, the Company shall give written notice of the proposed
registration to each Stockholder and PAC Affiliate not later than thirty (30)
days prior to the filing thereof. Each Stockholder and each PAC Affiliate shall
have the right to request that all or any part of his or its Common Stock be
included in such registration. Each Stockholder and each PAC Affiliate can make
such a request by giving written notice to the Company within ten (10) business
days after the giving of such notice by the Company (any Stockholder or PAC
Affiliate giving the Company a notice requesting that shares of Common Stock
owned by it be included in such proposed registration being hereinafter referred
to in this Section 5 as a "Registering Stockholder"); provided, however, that if
the registration is an underwritten registration and the managing underwriters
of such offering determine that the aggregate amount of securities of the
Company which the Company, all Registering Stockholders and all other
stockholders of the Company entitled to register securities in connection with
any offering ("Other Registering Stockholders") propose to include in such
registration statement exceeds the maximum amount of securities that may be sold
without having a material adverse effect on the success of the offering,
including, without limitation, the selling price and other terms of such
offering, the Company will include in such registration, first, the securities
which the Company proposes to sell and, second, the shares of Common Stock of
such Registering Stockholders and the shares of Common Stock to be sold for the
account of Other Registering Stockholders, pro rata among all such Registering
Stockholders and such Other Registering Stockholders, taken together, on the
basis of the relative number of shares of Common Stock owned by all Registering
Stockholders and such Other Registering Stockholders who have requested that
securities owned by them be so included (it being further agreed and understood,
however, that such underwriters shall have the right to eliminate entirely the
participation of the Registering Stockholders in such registration of all
Registering Stockholders if such underwriters eliminate entirely the
participation in such
10
registration of all such Other Registering Stockholders). Shares of Common Stock
proposed to be registered and sold pursuant to an underwritten offering for the
account of any Registering Stockholder shall be sold to the prospective
underwriters selected or approved by the Company and on the terms and subject to
the conditions of one or more underwriting agreements negotiated between the
Company and the prospective underwriters. Any Registering Stockholder who holds
shares being registered in any offering shall have the right to receive a copy
of the form of underwriting agreement and shall have an opportunity to hold
discussions with the lead underwriter of the terms of such underwriting
agreement. The Company may withdraw any registration statement at any time
before it becomes effective, or postpone or terminate the offering of
securities, without obligation or liability to any Registering Stockholder.
(b) Holdback Agreements. Notwithstanding any other provision of this
-------------------
Section 5, each Stockholder and each PAC Affiliate agrees that (if so required
by the underwriters in an underwritten offering) he or she will not (and it
shall be a condition to the rights of each Stockholder or PAC Affiliate under
this Section 5 that such Stockholder or PAC Affiliate do not) offer for public
sale any shares of Common Stock during a period not to exceed one-hundred and
eighty (180) days after the effective date of any registration statement filed
by the Company in connection with an underwritten public offering (except as
part of such underwritten registration or as otherwise permitted by such
underwriters).
(c) Expenses. Except as otherwise required by state Securities or blue
--------
sky laws or the rules and regulations promulgated thereunder, all expenses,
disbursements and fees incurred by the Company and the Stockholders and PAC
Parties in connection with any registration under this Section 5 shall be borne
by the Company, except that the following expenses shall be borne by the
Stockholder or PAC Affiliate incurring the same: (i) the costs and expenses of
counsel to such Stockholder or PAC Affiliate to the extent such Stockholder or
PAC Affiliate retains counsel (other than (i) counsel to the Company, (ii) one
counsel representing the Stockholders and selected by the holders of a majority
of the Stockholder Shares and (iii) one counsel representing the PAC Parties,
whose reasonable fees and expenses shall be paid by the Company); (ii)
discounts, commissions, fees or similar compensation owing to underwriters,
selling brokers, dealer managers or other industry professionals, to the extent
relating to the distribution or sale of such Stockholder's or PAC Affiliate's
securities; (iii) transfer taxes with respect to the securities sold by such
Stockholder or such PAC Affiliate; and (iv) other expenses incurred by such
Stockholder or such PAC Affiliate and incidental to the sale and delivery of the
securities to be sold by such Stockholder or such PAC Affiliate.
(d) Registration Procedures. In connection with any registration of
shares of Common Stock under the Securities Act pursuant to this Agreement, the
Company will consult with each Registering Stockholder whose Common Stock is to
be included in any such registration concerning the form of underwriting
agreement, shall provide to such Registering Stockholder the form of
underwriting agreement prior to the Company's execution thereof and shall
provide to such Registering Stockholder and its representatives such other
documents (including comments by the SEC on the Registration Statement) as such
Registering Stockholder shall reasonably request in connection with its
participation in such registration. The Company will furnish each Registering
Stockholder whose Common Stock is registered thereunder and each underwriter, if
any, with a copy of the registration statement and all amendments thereto and
will supply each such Registering Stockholder and each underwriter, if any, with
copies of any
11
prospectus included therein (a "Prospectus") (including a preliminary prospectus
and all amendments and supplements thereto), in such quantities as may be
reasonably necessary for the purposes of the proposed sale or distribution
covered by such registration. The Company shall not, however, be required to
maintain the registration statement effective or to supply copies of a
prospectus for a period beyond ninety (90) days after the effective date of such
registration statement and, at the end of such period, the Company may
deregister any securities covered by such registration statement and not then
sold or distributed. In the event that the Company prepares and files with the
SEC a registration statement or registration statements on any appropriate form
under the Securities Act (a "Registration Statement"), which provides for the
sale of shares of Common Stock held by any Registering Stockholder pursuant to
its obligations under this Section 5 and such Registration Statement becomes
effective under the Securities Act, the Company will:
(i) upon filing a Registration Statement or any Prospectus or any
amendments or supplements thereto, the Company will furnish to
the Registering Stockholders whose Common Stock is covered by
such Registration Statement and the underwriters, if any,
copies of all such documents;
(ii) prepare and file with the SEC such amendments and post-
effective amendments to a Registration Statement as may be
necessary to keep such Registration Statement effective for
the ninety (90) day period referenced in paragraph (a) above;
cause the related Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 under the Securities Act; and
comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such
Registration Statement during the applicable period in
accordance with the intended methods of disposition by the
sellers thereof set forth in such Registration Statement or
supplement to such Prospectus;
(iii) notify the Registering Stockholders and the managing
underwriters, if any, promptly, and (if requested by any such
person or entity) confirm such advice in writing, (A) when a
Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has
become effective, (B) of any request by the SEC or any state
blue sky commission for amendments or supplements to a
Registration Statement or related Prospectus or for additional
information, (C) of the issuance by the SEC or any state blue
sky commission of any stop order suspending the effectiveness
of a Registration Statement or the initiation of any
proceedings for that purpose, (D) of the receipt by the
Company of any notification with respect to the suspension of
the qualification of any of the Common Stock for sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose, and (E) of the existence of any
fact which results in a Registration Statement, a Prospectus
or any document incorporated therein by reference containing
an untrue statement of a material fact or omitting to state a
material fact required to
12
be stated therein or necessary to make the statements therein
not misleading;
(iv) use its reasonable best efforts to obtain the withdrawal of
any order suspending the effectiveness of a Registration
Statement;
(v) if requested by the managing underwriters or a Registering
Stockholder, promptly incorporate in a Prospectus supplement
or post-effective amendment such information as the managing
underwriters or the Registering Stockholders holding a
majority of the Common Stock being sold by Registering
Stockholders agree should be included therein relating to the
sale of such Common Stock, including without limitation,
information with respect to the amount of Common Stock being
sold to such underwriters, the purchase price being paid
therefor by such underwriters and with respect to any other
terms of the underwritten (or best efforts underwritten)
offering of the Common Stock to be sold in such offering; and
make all required filings of such Prospectus supplement or
post-effective amendment as soon as notified of the matters to
be incorporated in such Prospectus supplement or post-
effective amendment;
(vi) furnish to such Registering Stockholder and each managing
underwriter at least one signed copy of the Registration
Statement and any post-effective amendment thereto, including
financial statements and schedules, all documents incorporated
therein by reference and all exhibits (including those
incorporated by reference);
(vii) deliver to such Registering Stockholders and the underwriters,
if any, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement
thereto as such persons or entities may reasonably request;
(viii) prior to any public offering of Common Stock, register or
qualify or cooperate with the Registering Stockholders, the
underwriters, if any, and their respective counsel in
connection with the registration or qualification of such
Common Stock for offer and sale under the securities or blue
sky laws or such jurisdictions within the United States as any
Registering Stockholder or underwriter reasonably requests in
writing and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of
the Common Stock covered by the applicable Registration
Statement; provided that the Company will not be required to
qualify generally to do business in any jurisdiction where it
is not then so qualified or to take any action which would
subject it to general service of process or taxation in any
such jurisdiction where it is not then so subject;
(ix) cooperate with the Registering Stockholders and the managing
underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing shares of Common Stock
to be sold pursuant to
13
such Registration Statement and not bearing any restrictive
legends, and enable such shares of Common Stock to be in such
denominations and registered in such names as the managing
underwriters may request at least two business days prior to
any sale of Common Stock to the underwriters;
(x) if any fact contemplated by paragraph (iii)(E) above shall
exist, prepare a supplement or post-effective amendment to the
applicable Registration Statement or the related Prospectus or
any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to
the purchasers of the Common Stock being sold thereunder, such
Prospectus will not contain an untrue statement of a material
fact or omit to state any material fact necessary to make the
statements therein not misleading;
(xi) cause all Common Stock covered by the Registration Statement
to be listed on each securities exchange on which similar
securities issued by the Company are then listed;
(xii) provide a CUSIP number for all shares of Common Stock included
in such Registration Statement, not later than the effective
date of the applicable Registration Statement;
(xiii) enter into such agreements (including an underwriting
agreement in form reasonably satisfactory to the Company) and
take all such other reasonable actions in connection therewith
in order to expedite or facilitate the disposition of such
Common Stock;
(xiv) make available for inspection by a representative of the
Registering Stockholders, any underwriter participating in any
disposition pursuant to a Registration Statement, and any
attorney or accountant retained by such Registering
Stockholders or underwriter, all financial and other records,
any pertinent corporate documents and properties of the
Company reasonably requested by such representative,
underwriter, attorney or accountant in connection with such
Registration Statement; provided, that any records,
information or documents that are designated by the Company in
writing as confidential shall be kept confidential by such
persons or entities unless disclosure of such records,
information or documents is required by court or
administrative order; and
(xv) otherwise use his or its reasonable best efforts to comply
with all applicable rules and regulations of the SEC and
relevant state blue sky commissions, and make generally
available to the Registering Stockholders earning statements
satisfying the provisions of Section 11(a) of the Securities
Act no later than forty-five (45) days after the end of any
12-month period (or ninety (90) days, if such period is a
fiscal year) commencing at the end of any fiscal quarter in
which Common Stock of
14
such Registering Stockholder is sold to underwriters in an
underwritten offering, or, if not sold to underwriters in such
an offering, beginning with the first month of the Company's
first fiscal quarter commencing after the effective date of a
Registration Statement, which statements shall cover said 12-
month periods.
(e) Conditions to Stockholder Rights: Indemnification by
----------------------------------------------------
Stockholder. It shall be a condition of each Registering Stockholder's
-----------
rights hereunder to have Common Stock owned by it registered that:
(i) such Registering Stockholder shall cooperate with the Company
in all reasonable respects by supplying information and
executing documents relating to such Registering Stockholder
or the securities of the Company owned by such Registering
Stockholder in connection with such registration;
(ii) such Registering Stockholder shall enter into such
undertakings and take such other action relating to the
conduct of the proposed offering which the Company or the
underwriters may reasonably request as being necessary to
ensure compliance with federal and state securities laws and
the rules or other requirements of the NASD or otherwise to
effectuate the offering; and
(iii) such Registering Stockholder shall execute and deliver an
agreement to indemnify and hold harmless the Company and each
underwriter (as defined in the Securities Act), and each
person or entity, if any, who controls such underwriter within
the meaning of the Securities Act, against such losses,
claims, damages or liabilities (including reimbursement for
legal and other expenses) to which such underwriter or
controlling person or entity may become subject under the
Securities Act or otherwise, in such manner as is customary
for registrations of the type then proposed and, in any event,
at least equivalent in scope to indemnities given by the
Company in connection with such registration, but only with
respect to information furnished in writing by such
Registering Stockholder specifically for use in the
Registration Statement or Prospectus in connection with such
registration and with respect to such Registering
Stockholder's failure to deliver Prospectuses as required
under the Securities Act (so long as the Company has delivered
copies of the Prospectus to such Registering Stockholder).
(f) Indemnification by Company. In the event of any
--------------------------
registration under the Securities Act of any Common Stock of
Registering Stockholders pursuant to this Section 56, the Company
shall execute and deliver an agreement to indemnify and hold harmless
each Registering Stockholder disposing of such Common Stock and any
underwriter in connection with such disposition against such losses,
claims, damages or liabilities (including reimbursement for legal and
other expenses) to which such Registering Stockholder may become
subject under
15
the Securities Act or otherwise, in such manner as is customary in
underwriting agreements for registrations of the type then proposed.
(g) Rule 144. The Company covenants that it will file the
--------
reports required to be filed by it under the Securities Act and the
Securities Exchange Act of 1934, as amended, and the rules and
regulations adopted by the SEC thereunder so that the conditions of
Rule 144(c) are satisfied. Upon the request of any Registering
Stockholder, the Company will deliver to such Registering
Stockholder a written statement as to whether it has complied with
such requirements.
(h) Priority. Without the consent of the holders of at least a
--------
majority of the Stockholder Shares, the Company shall not grant PAC
or any PAC Affiliate registration rights with respect to any Common
Stock held by PAC or such PAC Affiliate as of the date hereof or
hereafter acquired by any of them that are prior in right to the
registration rights granted to the Stockholders hereunder. Subject
to the foregoing and notwithstanding any other provision of this
Section 5, the Company may without the consent of the Parties, grant
registration rights senior to the rights of the Parties pursuant to
this Section 5.
SECTION 6. PREEMPTIVE RIGHTS.
(a) The Company hereby grants to each Holder the option and
right to purchase (a "Preemptive Right"), pursuant to the terms and
conditions of this Section 6, such Holder's pro rata share of any
Common Stock, or options, warrants, subscriptions, rights or other
securities convertible into or exchangeable for shares of Common
Stock ("Common Stock Equivalent Securities"), which the Company may
from time to time propose to sell for cash to a PAC Affiliate prior
to the Company's initial public offering; provided, however, that
notwithstanding the foregoing, no Holder shall have any Preemptive
Right to purchase such Holder's pro rata share of (i) Common Stock
issued upon the exercise of stock options granted to and held by the
employees, directors or consultants of the Company, or (ii) Common
Stock issued to leasing entities or financial institutions in
connection commercial leasing or borrowing transactions.
(b) In the event that the Company proposes to undertake an
issuance of Common Stock or Common Stock Equivalent Securities to a
PAC Affiliate prior to its initial public offering, the Company
shall give the Stockholders written notice (the "Preemptive Right
Notice") of the Company's intention to sell Common Stock or Common
Stock Equivalent Securities for cash, the proposed price therefor,
the identity of the proposed purchaser thereof, and the principal
terms and conditions upon which the Company proposes to issue and
sell such Common Stock or Common Stock Equivalent Securities. Each
Stockholder shall have thirty (30) calendar days from the delivery
date of any such Preemptive Right Notice to agree to purchase an
amount of Common Stock or Common Stock Equivalent Securities (as the
case may be) up to such Stockholder's Preemptive Right pro rata
share (calculated prior to the proposed issuance) for the
16
purchase price, and upon the terms and conditions specified in, the
Preemptive Right Notice, by delivery of written notice thereof to
the Company, which notice shall state therein the amount of Common
Stock or Common Stock Equivalent Securities to be so purchased in
connection therewith.
(c) In the event that any Stockholder shall fail to purchase
all of such Stockholder's Preemptive Right pro rata share of any
Common Stock or Common Stock Equivalent Securities proposed to be
sold by the Company pursuant to the Preemptive Right provided for in
this Section 6, the Company shall have 180 calendar days after the
last date on which such Stockholder's Preemptive Right lapsed to
sell the Common Stock or Common Stock Equivalent Securities in
respect of which such Stockholder's Preemptive Right was not
exercised, at or above the purchase price, and upon terms not more
favorable to the purchasers of such Common Stock or Common Stock
Equivalent Securities, than the terms specified in the initial
Preemptive Right Notice delivered in connection with such sale. In
the event that the Company shall not have sold the Common Stock or
Common Stock Equivalent Securities proposed to be sold as described
in a Preemptive Right Notice within such 180-day period, the Company
shall not thereafter issue or sell any Common Stock or Common Stock
Equivalent Securities to a PAC Party without first offering such
Common Stock or Common Stock Equivalent Securities (as the case may
be) to the Stockholders pursuant to the Preemptive Right provided in
this Section 6.
SECTION 7. MISCELLANEOUS.
(a) Financial Information. If the Company or any direct or
---------------------
indirect Parent of the Company is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act (the
"reporting requirements"), the Company shall deliver to Genstar and
StarGen, on the date that it is required to file such documents with
the Securities and Exchange Commission (the "Commission"), annual
and quarterly reports as filed with the Commission, which reports
include the consolidated financial information of the Company and
its subsidiaries. If neither the Company nor any direct or indirect
Parent of the Company is subject to the reporting requirements, the
Company shall deliver to Genstar and StarGen, on the date that it
would have been (if it were subject to such reporting requirements)
required to file such documents with the Commission annual and
quarterly financial statements and a management's discussion and
analysis ("MD&A") substantially equivalent to the annual and
quarterly financial statements and MD&A with respect to the Company
and its subsidiaries that would have been included in reports filed
with the Commission if the Company (or any direct or indirect Parent
of the Company) were subject to the reporting requirements.
17
(b) Legends. Each certificate representing the Restricted
-------
Shares shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), OR
THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR TRANSFERRED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
AND SAID LAWS OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
THEREOF."
"THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER AND CERTAIN OTHER AGREEMENTS SET FORTH IN A
STOCKHOLDERS AGREEMENT BETWEEN THE ISSUER AND THE INITIAL HOLDER
HEREOF DATED AS OF NOVEMBER 24,1999. A COPY OF SUCH AGREEMENT SHALL
BE FURNISHED WITHOUT CHARGE BY THE ISSUER TO THE HOLDER HEREOF UPON
WRITTEN REQUEST."
(c) Successors, Assigns and Transferees. This Agreement
-----------------------------------
shall be binding upon and inure to the benefit of the Parties hereto
and their respective legal representatives, heirs, legatees,
successors, and assigns and any other transferee of the Restricted
Shares and shall also apply to any Restricted Shares acquired by
Stockholders, Stockholder Affiliates or a PAC Affiliate after the
date hereof. In the event that PAC transfers all or any portion of
its shares to any PAC Affiliate, such PAC Affiliate shall execute a
signature page to this Agreement as provided in Section 7(k) hereof
and agree to be bound by the terms hereof and shall become a "Party"
for all purposes hereunder.
(d) Specific Performance, Etc. The Company, each PAC
-------------------------
Affiliate and each Stockholder, in addition to being entitled to
exercise all rights provided herein or granted by law, including
recovery of damages, shall be entitled to specific performance of
each other Parties' obligations under this Agreement. The Company,
PAC and each Stockholder agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by
any of them of the provisions of this Agreement and each hereby
agrees to waive the defense in any action for specific performance
that a remedy at law would be adequate.
(e) Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of New York.
(f) Interpretation. The headings of the Sections contained
--------------
in this Agreement are solely for the purpose of reference, are not
part of the agreement of the Parties and shall not affect the
meaning or interpretation of this Agreement.
18
(g) Notices. All notices and other communications provided
-------
for or permitted hereunder shall be in writing and shall be deemed
to have been duly given and received when delivered by overnight
courier or hand delivery, when sent by telecopy, or five days after
mailing if sent by registered or certified mail (return receipt
requested) postage prepaid, to the Parties at the following
addresses (or at such other address for any Party as shall be
specified by like notices, provided that notices of a change of
address shall be effective only upon receipt thereof).
If to the Company, at:
Panolam Industries Holdings, Inc.
00 Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Xx.
Facsimile: (000) 000-0000
with copies to:
PAC, at the address given below and
Xxxxxx & Xxxxxxx
000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
If to PAC, at:
Panolam Acquisition Company, L.L.C.
c/o The Carlyle Group, L.L.C.
0000 Xxxxxxxxxxxx Xxxxxx, XX
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx Xxxxxx
Facsimile: (000) 000-0000
with copies to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
0000 Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
If to Genstar or Stargen at:.
19
Genstar Capital Partners II, L.P.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxx-Xxxxxx Xxxxx
Facsimile: (000) 000-0000
With copies to:
Xxxxxx & Xxxxxxx
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
(h) Recapitalization, Exchange, Etc. Affecting the Company's
--------------------------------------------------------
Stock. The provisions of this Agreement shall apply, to the full
-----
extent set forth herein, with respect to any and all shares of
capital stock of the Company or any successor or assign of the
Company (whether by merger, consolidation, sale of assets, or
otherwise) that may be issued in respect of, in exchange for, or in
substitution of, the Restricted Shares and shall be appropriately
adjusted for any stock dividends, splits, reverse splits,
combinations, recapitalizations, and the like occurring after the
date hereof. This Agreement shall also apply to any shares of Common
Stock acquired by the Stockholders at any time hereafter, whether as
a result of exercising Vested Options or otherwise without any
further action by such Stockholder.
(i) Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be deemed to be an original
and all of which together shall be deemed to constitute one and the
same agreement.
(j) Severability. In the event that any one or more of the
------------
provisions contained herein or the application thereof in any
circumstances, 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 contained herein shall not be in any way impaired thereby
to the extent consistent with the intent of the parties as reflected
by this Agreement.
(k) Amendment. This Agreement may be amended only by written
---------
agreement executed by Holders of a majority of the PAC Shares and
holders of at least a majority of the Stockholder Shares (a
"Stockholder Majority"). At any time hereafter, Permitted
Transferees may be made parties hereto by executing a signature page
in the form attached as Exhibit A hereto, which signature page shall
be countersigned by the Company and shall be attached to this
Agreement and become a part hereof without any further action of any
other party hereto.
20
(l) Effectiveness. This Agreement shall be effective from
-------------
and after the Closing (as defined in the Stock Purchase Agreement).
In the event that the Stock Purchase Agreement is terminated prior
to the consummation of the transactions contemplated thereby, this
Agreement shall immediately terminate and be of no further force and
effect.
(m) Determination of Fair Market Value. The "fair market
---------------- -----------------
value" of any securities for any purpose hereunder shall be
determined by the Company and the Stockholder as follows:
(i) if such security is listed on one or more national
securities exchanges (within the meaning of the Securities
Exchange Act of 1934, as amended), the fair market value
shall be the average closing price of such security for the
most recent twenty (20) trading days on the principal
exchange on which such security is then trading;
(ii) if such security is not traded on a national securities
exchange but is quoted on NASDAQ or a successor quotation
system, the fair market value shall be the average last
sales price for the most recent twenty (20) trading days as
reported by NASDAQ or such successor quotation system; or
(iii) if such security is not publicly traded on a national
securities exchange and is not quoted on NASDAQ or a
successor quotation system, the fair market value shall be
agreed upon by the Stockholder and the Company; provided
that if the Stockholder and the Company cannot agree on the
fair market value within twenty (20) business days of the
date for which fair market value is to be determined, the
Stockholder and the Company shall jointly retain an
independent appraiser or other consultant with experience
valuing securities of issuers in the Company's industry, who
shall determine the fair market value of such securities
(without any minority discount being attributed to the
securities to be purchased) (the "Independent Appraiser").
In the event that the Stockholder and the Company cannot
agree on an Independent Appraiser within thirty (30)
business days of the date for which fair market value is to
be determined, the Company and the Stockholder shall each
retain an independent accounting firm of national
reputation, which shall jointly designate and retain the
Independent Appraiser. The Stockholder and the Company agree
to use their reasonable best efforts to cooperate with the
Independent Appraiser, and provide such information (subject
to customary confidentiality protections, if requested)
reasonably required for the Independent Appraiser to
determine the fair market value of such securities. Each of
the Company and the Stockholder shall bear one-half of the
cost of the Independent Appraiser (including the costs of
appointment).
21
(n) Entire Agreement. This writing constitutes the entire
----------------
agreement of the Parties with respect to the subject matter hereof.
22
IN WITNESS WHEREOF, the Parties have executed this Agreement on the
date first written above.
PANOLAM ACQUISITION COMPANY, L.L.C.
By:___________________________________
Xxxxxx Xxxxxx
Chairman
PANOLAM INDUSTRIES HOLDINGS, INC.
By:___________________________________
Xxxxxx X. Xxxxxx
President
GENSTAR CAPITAL PARTNERS II, L.P.
By:______________________________________
STARGEN II LLC
By:______________________________________
23
EXHIBIT A
PERMITTED TRANSFEREE SIGNATURE PAGE
IN WITNESS WHEREOF, the undersigned Permitted Transferee hereby
accepts the terms and conditions of this Agreement and agrees to be bound
thereby as a Party thereto, effective as of ____________________.
_____________________________________
as Permitted Transferee
By:___________________________________
Name:
Title:
PANOLAM INDUSTRIES HOLDINGS, INC.
By:___________________________________
Name:
Title:
