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EXHIBIT 10.1
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
among
MSX INTERNATIONAL, INC.
and
ITS STOCKHOLDERS
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TABLE OF CONTENTS
PAGE
ARTICLE 1 CERTAIN DEFINITIONS.............................................1
1.1 Defined Terms......................................................1
ARTICLE 2 RESTRICTIONS ON TRANSFERS......................................13
2.1 Restrictions Generally; Securities Act............................13
2.2 Legend............................................................14
2.3 Limitations on Repurchases, Dividends, Etc........................14
2.4 Transfer Restrictions.............................................15
2.5 Right of First Refusal............................................16
2.6 Involuntary Transfers.............................................18
2.7 Drag-Along Rights.................................................20
2.8 Institutional Stockholders Accounting Determination...............22
2.9 Institutional Stockholders Regulatory Problem.....................23
ARTICLE 3 RIGHTS OF INCLUSION............................................23
3.1 Rights of Inclusion...............................................23
3.2 Article III Sales.................................................24
ARTICLE 4 REPURCHASE OF SECURITIES.......................................25
4.1 Sale Event........................................................25
4.2 Purchase Price....................................................27
4.3 Closing...........................................................28
4.4 Postponement......................................................28
ARTICLE 5 CORPORATE GOVERNANCE...........................................29
5.1 Board of Directors................................................29
5.2 Removal...........................................................30
5.3 Vacancies.........................................................31
5.4 Special Approval Rights...........................................31
5.5 Committees of the Board; Subsidiary Boards........................31
5.6 Observer's Rights.................................................31
5.7 Action by Written Consent of Stockholders.........................32
5.8 Designation of Proxy..............................................32
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TABLE OF CONTENTS
(CONTINUED)
PAGE
5.9 Designation of Proxy in Favor of Court Square.....................32
ARTICLE 6 CERTAIN COVENANTS OF THE PARTIES...............................33
6.1 Registration......................................................33
6.2 Management Stockholders; Additional Stockholders..................33
6.3 Stockholder List; Certain Notices.................................34
6.4 Regulatory Compliance or Accounting Determination Cooperation.....34
6.5 Purchaser Representatives.........................................35
6.6 Confidentiality...................................................35
6.7 Financial Reporting Covenants.....................................36
ARTICLE 7 MISCELLANEOUS..................................................36
7.1 Governing Law.....................................................36
7.2 Entire Agreement; Amendments......................................36
7.3 Term..............................................................36
7.4 Certain Actions...................................................37
7.5 Inspection........................................................37
7.6 Compliance with Regulations.......................................37
7.7 Waiver............................................................37
7.8 Successors and Assigns............................................37
7.9 Remedies..........................................................38
7.10 Income Tax Withholding; Taxes.....................................38
7.11 Invalid Provisions................................................39
7.12 Headings..........................................................39
7.13 Further Assurances; Subsidiaries..................................39
7.14 Gender............................................................39
7.15 Counterparts......................................................39
7.16 Payment...........................................................39
7.17 Notices...........................................................40
7.18 Service of Process................................................41
7.19 Waiver of Jury Trial..............................................41
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TABLE OF CONTENTS
(CONTINUED)
PAGE
7.20 Waiver of Fiduciary Duties; Corporate Opportunity.................42
7.21 Vesting of Certain Management Stock...............................43
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THIS AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (this
"Agreement") effective as of November 28, 2000 by and among MSX INTERNATIONAL,
INC., a Delaware corporation (the "Company"), Court Square Capital Limited, a
Delaware corporation ("Court Square"), each of the individuals or entities whose
name appears on the signature pages hereto under the heading "Management Group"
(individually, a "Management Group Member" and, collectively, the "Management
Group"), each of the individuals or entities whose name appears on the signature
pages hereto under the heading "CVC Group" (individually, a "CVC Stockholder"
and, collectively, the "CVC Stockholders") and each of the other individuals
whose name appears on the signature pages hereto. Capitalized terms are used as
defined in Article I hereto.
RECITALS
WHEREAS, certain of the Stockholders, certain former
stockholders of the Company and the Company entered into a Stockholders'
Agreement, dated as of January 3, 1997, as amended (the "Original Agreement") to
regulate certain aspects of their relationship and to provide for, among other
things, restrictions on the transfer or other disposition of securities of the
Company and matters relating to the corporate governance of the Company and its
Subsidiaries; and
WHEREAS, in connection with the transfer of shares of Common
Stock and Series A Preferred by MascoTech, Inc., a Delaware corporation, to
Court Square pursuant to a Stock Purchase Agreement, dated as of August 1, 2000,
by and between CVC and MascoTech, as amended, and the transfer of shares of
Common Stock and Series A Preferred by CVC to Court Square pursuant to a Stock
Purchase Agreement, dated as of November 28, 2000, by and between CVC and Court
Square, the Stockholders and the Company desire to amend and restate the
Original Agreement, all in accordance with Section 7.2 of the Original
Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
1.1 DEFINED TERMS.
(a) The following defined terms, when used in this Agreement,
have the respective meanings set forth below (such definitions to be equally
applicable to both singular and plural forms of the terms defined):
"Additional Management Stockholder" means an Additional
Stockholder who is an employee, officer or director of the Company or any of its
Subsidiaries.
"Additional Stockholder" means any Person (other than any
Institutional Stockholder or Management Stockholder), to whom the Company issues
Restricted Securities or Restricted Preferred Securities (or to whom Restricted
Securities or
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Restricted Preferred Securities have been transferred in such transferee's
capacity as a Company Designee under Section 4.1) after the Original Closing
Date other than pursuant to a public offering registered under the Securities
Act, in each case who has executed a Joinder Agreement as an Additional
Stockholder pursuant to Section 6.2, and its direct and indirect Permitted
Transferees, so long as any such Person shall hold Restricted Securities or
Restricted Preferred Securities.
"Affiliate" means, with respect to any Person, any other
Person that controls, is controlled by or is under common control with such
Person. For the purposes of this definition, "control" (including, with its
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of securities, by
contract or otherwise. For purposes of this Agreement, employees, officers and
directors of Court Square and its Affiliates shall be "Affiliates" of Court
Square.
"Associate" means, with respect to any Person, (i) any trust
or other estate in which such Person has a substantial beneficial interest or as
to which such Person serves as trustee or in a similar fiduciary capacity and
(ii) any relative or spouse of such Person, or any relative of such spouse, who
has the same home as such Person.
"Board" means the Board of Directors of the Company.
"Cause" means, with respect to a Management Stockholder or an
Additional Management Stockholder, (i) a material breach by such Management
Stockholder or Additional Management Stockholder of this Agreement or any
employment, non-compete or confidentiality agreement with the Company or any of
its Subsidiaries to which such person is a party (including without limitation
any Management Subscription Agreement) or (ii) the commission by such person of
a felony, a crime involving moral turpitude or any other willful act causing
material harm to the business, financial condition, standing or reputation of
the Company or any of its Subsidiaries.
"Certificate of Incorporation" means the Restated Certificate
of Incorporation of the Company, as amended and restated as of the date hereof
and as the same thereafter may be amended or restated from time to time.
"Citicorp" means Citicorp, a Delaware corporation, and any
successor in interest thereto (whether by merger, consolidation, sale of assets
or otherwise).
"Class A Common" means the Company's Class A Common Stock, par
value $.01 per share, consisting of five series of Class A Common Stock, the
Series A-1 Common Stock, the Series A-2 Common Stock, the Series A-3 Common
Stock, the Series A-4 Common Stock and, the Series I Common Stock, and any
securities into which such Class A Common shall have been changed or any
securities resulting from any reclassification or recapitalization of such Class
A Common.
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"Class B Common" means the Company's Class B Common Stock, par
value $.01 per share, consisting of five series of Class B Common Stock, the
Series B-1 Common Stock, the Series B-2 Common Stock, the Series B-3 Common
Stock, the Series B-4 and the Series II Common Stock, and any securities into
which such Class B Common shall have been changed or any securities resulting
from any reclassification or recapitalization of such Class B Common.
"Commission" means the Securities and Exchange Commission and
any other similar or successor agency of the federal government administering
the Securities Act or the Exchange Act.
"Common Stock" means the Class A Common, the Class B Common,
any securities into which such Class A Common or Class B Common shall have been
changed, and all other securities of any class or classes (however designated)
of the Company, the holders of which have the right, without limitation as to
amount, after payment on any securities entitled to a preference on dividends or
other distributions upon any dissolution, liquidation or winding-up, either to
all or to a share of the balance of payments upon such dissolution, liquidation
or winding-up.
"CVC" means Citicorp Venture Capital, Ltd., a New York
corporation.
"Date of Issuance" means, with respect to each share of Common
Stock or Series A Preferred or any Equity Equivalent, the date on which the
Company initially issues each such share of Common Stock or Series A Preferred
or grants such Equity Equivalent, as the case may be, and, in the case of
shares, regardless of the number of times the transfer of such share is made on
the stock records of the Company and regardless of the number of certificates
which may be issued to evidence such share and, in the case of Equity
Equivalents, regardless of the number of times such Equity Equivalent is
transferred.
"Debentures" means the Company's Junior Subordinated
Debentures issued or issuable in exchange for shares of the Restricted Preferred
Securities or in payment of interest on any such Junior Subordinated Debentures
(including Junior Subordinated Debentures so issued in payment of interest).
"Equity Equivalents" means any option, warrant or other
security exercisable, convertible or exchangeable for or into Common Stock.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations of the Commission
thereunder.
"Fair Market Value" means (i) with respect to each share of
Series A Preferred as of a particular date, the fair market value thereof, as
determined in good faith by the Board of Directors acting by Institutional
Affirmative Board Vote (subject to the same qualification applicable to a
Significant Transaction under Section 5.4), and (ii) with respect to each share
of Common Stock as of a particular date, the average of the closing prices of
such Common Stock (A) on the New York Stock Exchange, Inc. on each of the thirty
(30) trading days next preceding such date or, (B) if such Common
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Stock is not then listed or admitted to trading on such exchange, on the
principal national securities exchange on which such Common Stock is listed or
admitted to trading, or (C) if such Common Stock is not then listed or admitted
to trading on any national securities exchange, on the Nasdaq National Market,
or (D) if such Common Stock is not then listed or admitted to trading on a
national securities exchange or quoted on the Nasdaq National Market, the
average of the closing bid and asked prices in the over-the-counter market as
furnished by any New York Stock Exchange member firm selected by the Board of
Directors or (E) if no such prices are available, the fair market value per
share as determined in good faith by the Board of Directors acting by
Institutional Affirmative Board Vote (subject to the same qualification
applicable to a Significant Transaction under Section 5.4).
"Fully-Diluted Basis" means, with respect to the calculation
of the number of shares of Common Stock, (i) all shares of Common Stock
outstanding at the time of determination and (ii) all shares of Common Stock
issuable upon the exercise, conversion or exchange of Equity Equivalents
outstanding at the time of determination; provided, however, that with respect
to any options, shares of Common Stock underlying stock options shall only be
included in the determination of Diluted Basis to the extent such options are
vested.
"Funded Debt" means, without duplication, with respect to any
Person (i) all indebtedness for borrowed money or for the deferred purchase
price of property, (ii) the face amount of all letters of credit, banker's
acceptances and other credit facilities issued for the account of such Person
and, without duplication, all drafts drawn thereunder, (iii) all indebtedness
secured by any Lien on any property owned by such Person, to the extent
attributable to such Person's interest in such property, even though such Person
has not assumed or become liable for the payment thereof, (iv) lease obligations
of such Person which, in accordance with generally accepted United States
accounting principles, consistently applied ("GAAP"), should be capitalized, (v)
obligations with respect to any conditional sale agreement or title retention
agreement and (vi) guarantees by such Person of the Funded Debt of another
Person; but excluding in each case trade and other accounts payable in the
ordinary course of business.
"Institutional Affirmative Board Vote" means the affirmative
vote of the number of directors as required by the Delaware Act which shall
include, unless the Institutional Stockholders have elected in writing not (or
are no longer entitled) to designate the Institutional Directors, at least one
director who is an officer or director of Court Square.
"Institutional Stockholders" means the CVC Stockholders, Court
Square and each of their respective direct and indirect Permitted Transferees,
so long as any such Person shall hold Restricted Securities or Restricted
Preferred Securities.
"Institutional Stockholder Subscription Agreement" means the
Institutional Stockholder Subscription Agreement dated as of January 3, 1997
between the Company and CVC.
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"Involuntary Transfer" means, with respect to Restricted
Securities or Restricted Preferred Securities of any Management Stockholder or
Additional Stockholder, any involuntary Transfer or Transfer by operation of law
of such Restricted Securities or Restricted Preferred Securities (other than to
a Permitted Transferee of such Stockholder) by or in which such Stockholder
shall be deprived or divested of any right, title or interest in or to such
Restricted Securities or Restricted Preferred Securities, including without
limitation by seizure under levy of attachment or execution, by foreclosure upon
a pledge, in connection with any voluntary or involuntary bankruptcy or other
court proceeding to a debtor in possession, trustee in bankruptcy or receiver or
other officer or agency, pursuant to any statute pertaining to escheat or
abandoned property, pursuant to a divorce or separation agreement or a final
decree of a court in a divorce action, upon or occasioned by the incompetence of
any such Stockholder and the Transfer in such event to a legal representative of
any such Stockholder; provided that "Involuntary Transfer" shall not include any
Transfer effected pursuant to the exercise by Institutional Stockholders of
Drag-Along Rights under Section 2.7 hereof, any Transfer effected pursuant to
Article IV hereof, any Transfer to the Company solely resulting from a
reclassification of the capital stock of the Company or a recapitalization of
the Company and any Transfer effected as a result of a merger of the Company
with or into any other Person.
"Joinder Agreement" means a Joinder Agreement substantially in
the form attached hereto as Exhibit A.
"Lien" means any lien, claim, option, charge, encumbrance,
security interest or other adverse claim of any kind.
"Management Note" means a promissory note (i) issued by the
Company pursuant to Section 4.2 in payment of the purchase price for shares of
Management Securities purchased pursuant to Section 4.1, (ii) bearing interest
at the rate of 12% per annum, compounded annually (subject to reduction as may
be required to preserve the deductibility of interest for tax purposes), (iii)
pursuant to which payments of principal and interest may be made only to the
extent permitted from time to time under any agreement evidencing Funded Debt of
the Company or any of its direct or indirect Subsidiaries, and (iv) subordinated
in right of payment to the Debentures and all other "Senior Indebtedness" as
defined in the Debentures.
"Management Securities" means all shares of Restricted
Securities and Restricted Preferred Securities issued to or acquired by
Management Stockholders and Additional Management Stockholders, unless otherwise
agreed between the Company and any Management Stockholder or Additional
Management Stockholder.
"Management Stockholders" means the Management Group and their
respective direct and indirect Permitted Transferees, so long as any such Person
shall hold Restricted Securities or Restricted Preferred Securities.
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"Management Subscription Agreement" means any Management
Subscription Agreement between the Company or any Subsidiary and either a member
of the Management Group or an Additional Management Stockholder.
"Original Closing Date" means January 3, 1997.
"Original Cost" means, as to each share of Common Stock
purchased or otherwise acquired (i) on the Original Closing Date, $40.00 and
(ii) after the Original Closing Date, the price paid (including the price at
which any Equity Equivalent was exercised) therefor, in each case appropriately
adjusted to reflect all stock splits, stock dividends, reclassification,
recapitalizations or other similar events affecting the Common Stock subsequent
to the date of purchase thereof.
"Original Ownership Level" means, with respect to the
Institutional Stockholders, the number of shares of Common Stock, on a Fully
Diluted Basis, subject to any stock splits, stock dividends or reclassifications
or other similar events, acquired by the Institutional Stockholders, on or prior
to the Original Closing Date.
"Original Ownership Level Ratio" means a fraction the
numerator of which is the number of shares of Common Stock acquired by the
Institutional Stockholders on or prior to the Original Closing Date and the
denominator of which is the number of shares of Common Stock issued and
outstanding as of the Original Closing Date, in each case on a Fully-Diluted
Basis and subject to any stock splits, stock dividends or reclassifications or
other similar events.
"Permitted Transferee" means:
(i) with respect to any Stockholder who is a
natural person, (A) the spouse or any lineal descendant (including by
adoption and stepchildren) of such Stockholder, (B) any trust of which
such Stockholder is the trustee and which is established solely for the
benefit of any of the foregoing individuals and whose terms are not
inconsistent with the terms of this Agreement, (D) the estate of such
Stockholder established by reason of such Stockholder's death, or (E)
any corporation, limited liability company or partnership, all of the
interests of which are (or is) owned by one or more of the Persons
identified in this subparagraph (i);
(ii) with respect to the estate of any Stockholder
or any trust to which such Stockholder has transferred Restricted
Securities or Restricted Preferred Securities that meets the criteria
set forth in clause (B) of subparagraph (i) above with respect to such
Stockholder, any person having the relationship with respect to such
Stockholder described in clause (A) of such subparagraph (i);
(iii) with respect to the Institutional Stockholders,
(A) any Associate or Affiliate of any such Institutional Stockholder
and any officer, director or employee of any Institutional Stockholder
or such Associate or Affiliate, (B) any spouse or lineal descendant
(including by adoption and stepchildren) of the officers, directors and
employees referred to in clause (A) above, and any trust (where a
majority in interest of the beneficiaries thereof are
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any of the persons described in this clause (B) and in clause (A)
above), corporations or partnerships (where a majority in interest of
the stockholders or limited partners, or where the managing general
partner, is one of more of the persons described in clause (A) above),
(C) subject to the provisions of Section 2.8 (Institutional
Stockholders Accounting Determination), and if, after taking
commercially reasonable steps, with the cooperation of the Company,
such Institutional Stockholder is unable to restructure its ownership
of the Company's securities in a manner which avoids an Accounting
Determination and which is not materially adverse to such Institutional
Stockholders, upon the giving of notice to the Company that the
Institutional Stockholders have determined that such Accounting
Determination may not be avoided, then to any third party in an amount
necessary to avoid such Accounting Determination, or (D) subject to the
provisions of Section 2.9 (Institutional Stockholders Regulatory
Problem) and if, after taking commercially reasonable steps, with the
cooperation of the Company, such Institutional Stockholder is unable to
restructure its ownership of the Company's securities in a manner which
avoids a Regulatory Problem and which is not materially adverse to such
Institutional Stockholder, upon the giving of notice to the Company
that the Institutional Stockholders have determined that such
Regulatory Problem may not be avoided then to any third party in an
amount necessary to avoid such Regulatory Problem. For purposes of
determining a "Permitted Transferee" under Article III of this
Agreement, the term "Affiliate" shall include, without limitation, any
limited partnership, limited liability company or other investment
vehicle that is sponsored or managed (whether through the ownership of
securities having a majority of the voting power, as a general partner
or through the management of investments) by Citicorp or its Affiliates
(defined without giving effect to this sentence) or present or former
employees of Citicorp or its Affiliates.
"Person" or "person" means an individual, partnership,
corporation, trust, unincorporated organization, limited liability company or
partnership, joint venture, government (or agency or political subdivision
thereof) or any other entity of any kind.
"Pro Rata" means, with respect to one or more Stockholders (i)
as it relates to the Common Stock or Equity Equivalents, in proportion to the
number of shares of Common Stock on a Fully-Diluted Basis owned by such
Stockholder or Stockholders or which may be acquired by any Stockholder or
Stockholders, and (ii) as it relates to Series A Preferred, in proportion to the
number of shares of Series A Preferred, owned by such Stockholder or
Stockholders; provided, however, that for purposes of calculating an
Institutional Stockholder's holdings in accordance with the foregoing no effect
shall be given to a Transfer of any Common Stock or Series A Preferred to a
Xxxxxx Stockholder other than for purposes of Article III hereof.
"Qualifying Offering" means the consummation by the Company of
an underwritten primary or a secondary public offering (including by spin-off or
other transfer) of Common Stock pursuant to an effective registration statement
under the Securities Act, covering the distribution of the Common Stock (i)
which (taken together with all similar previous public offerings) raises at
least $50,000,000 of aggregate net
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proceeds to the Company (after underwriters' fees, commissions and discounts and
offering expenses) or (ii) as a result of which, at that time, at least 25% of
the Common Stock, on a Fully-Diluted Basis, has been sold (including through
dividend or spin-off) to the public.
"Registration Rights Agreement" means the Amended and Restated
Registration Rights Agreement, dated as of the date hereof, among the parties
thereto, as the same may be amended, modified or supplemented from time to time.
"Restricted Preferred Securities" means the Series A
Preferred.
"Restricted Securities" means the Common Stock, the Equity
Equivalents and any securities issued with respect thereto as a result of any
stock dividend, stock split, reclassification, recapitalization, reorganization,
merger, consolidation or similar event or upon the conversion, exchange or
exercise thereof.
"Rule 144 Transaction" means a transfer of Common Stock (A)
complying with Rule 144 under the Securities Act as such Rule is in effect on
the date of such transfer (but not including a sale other than pursuant to a
"brokers transaction" as defined in clauses (1) and (2) of paragraph (g) of such
Rule as in effect on the date hereof) and (B) occurring at a time when shares of
such Common Stock are registered pursuant to Section 12 of the Exchange Act (or
any successor to such Section).
"Sale of the Company" means the sale of the Company (whether
by merger, consolidation, recapitalization, reorganization, sale of securities,
sale of assets or otherwise) in one transaction or series of related
transactions to a Person or group (within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) of Persons (other than any
Institutional Stockholder, Management Stockholder or Additional Management
Stockholder) pursuant to which such Person or group of Persons (together with
its Affiliates) acquires (i) securities representing at least a majority of the
voting power of the Common Stock of the Company, assuming the conversion,
exchange or exercise of all securities convertible, exchangeable or exercisable
for or into voting securities, or (ii) all or substantially all of the Company's
assets on a consolidated basis.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, and the rules and regulations of the Commission thereunder.
"Series A-1 Common Stock" means the Company's Series A-1
Common Stock, par value $.01 per share, and any securities into which such
Series A-1 Common Stock shall have been changed or any securities resulting from
any reclassification or recapitalization of such Series A-1 Common Stock.
"Series A-2 Common Stock" means the Company's Series A-2
Common Stock, par value $.01 per share, and any securities into which such
Series A-2 Common Stock shall have been changed or any securities resulting from
any reclassification or recapitalization of such Series A-2 Common Stock.
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"Series A-3 Common Stock" means the Company's Series A-3
Common Stock, par value $.01 per share, and any securities into which such
Series A-3 Common Stock shall have been changed or any securities resulting from
any reclassification or recapitalization of such Series A-3 Common Stock.
"Series A-4 Common Stock" means the Company's Series A-4
Common Stock, par value $.01 per share, and any securities into which such
Series A-4 Common Stock shall have been changed or any securities resulting from
any reclassification or recapitalization of such Series A-4 Common Stock.
"Series A Preferred" means the Company's Series A Preferred
Stock, par value $.01 per share, and any securities (other than the Debentures)
into which such Series A Preferred shall have been changed or any securities
resulting from any reclassification or recapitalization of such Series A
Preferred.
"Series A Preferred Original Level Ratio" means a fraction the
numerator of which is the number of shares of Series A Preferred, acquired by
the Institutional Stockholders on or prior to the Original Closing Date and the
denominator of which is the number of shares of Series A Preferred issued and
outstanding as of the Original Closing Date, in each case subject to any stock
splits, stock dividends or reclassifications or other similar events.
"Series I Common Stock" means the Company's Series I Common
Stock, par value $.01 per share, and any securities into which such Series I
Common Stock shall have been changed or any security resulting from any
reclassification or recapitalization of such Series I Common Stock.
"Series II Common Stock" means the Company's Series II Common
Stock, par value $.01 per share, and any securities into which such Series II
Common Stock shall have been changed or any securities resulting from any
reclassification or recapitalization of such Series II Common Stock.
"Significant Subsidiaries" means those Subsidiaries of the
Company which constitute a "Significant Subsidiary" as defined in Regulation S-X
promulgated by the Commission under the Securities Act, as such Regulation is in
effect on the date hereof.
"Significant Transaction" means:
(i) any merger, consolidation or other business
combination of the Company or any of its Significant Subsidiaries with
or into any Person (other than a wholly-owned Subsidiary) or any
formation by the Company or any of its Significant Subsidiaries of any
subsidiary which would, upon such formation, be a Significant
Subsidiary;
(ii) any sale, lease, transfer, exchange or other
disposition by the Company or any of its Subsidiaries of assets having
a book value in excess of
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$2,500,000.00, in a single transaction or a series of related
transactions, to or with any Person, other than sales of inventory in
the ordinary course of business;
(iii) any amendment to or modification or repeal of
any provision of the Certificate of Incorporation or the By-Laws of the
Company or any Subsidiary thereof;
(iv) any acquisition by the Company or any of its
Subsidiaries of securities or assets, in a single transaction or a
series of related transactions for consideration in excess of
$2,500,000.00, other than (A) purchases of inventory in the ordinary
course of business, (B) capital expenditures made in accordance with an
annual budget approved by the Board, or (C) investments described on
Exhibit B hereto;
(v) any increase or reduction of the capital of the
Company or any of its Subsidiaries or the creation of any additional
class of capital stock of the Company or any of its Subsidiaries, or
the issuance by the Company or any of its Subsidiaries of Equity
Equivalents other than (A) the issuance of Common Stock upon the
exercise or conversion of Equity Equivalents where the issuance of such
Equity Equivalents has been approved by the Board in accordance with
the provisions of this Agreement, (B) the issuance of Common Stock upon
the conversion of any outstanding class of Common Stock, and (C) the
issuance of Equity Equivalents and the issuance of Common Stock upon
the exercise or conversion of such Equity Equivalents, each as provided
in and in accordance with the Company's 2000 Stock Option Plan;
(vi) the incurrence or guaranty after the Original
Closing Date by the Company or any of its Subsidiaries of any material
Funded Debt or any modification or amendment to any agreement governing
the extension or guaranty thereof (including the issuance of Debentures
but excluding any incurrence under the terms of the Debentures
following their issuance or any agreement or instrument previously
approved by the Board in accordance with the terms of this Agreement,
including, without limitation, drawdowns on any previously approved
revolving credit facility);
(vii) the dissolution of the Company (or any of its
Significant Subsidiaries), the adoption of a plan of liquidation by the
Company (or any of its Significant Subsidiaries), any action by the
Company (or any of its Significant Subsidiaries) to commence any suit,
case, proceeding or other action (A) under any existing or future law
of any jurisdiction relating to bankruptcy, insolvency, reorganization
or relief of debtors seeking to have an order for relief of debtors
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with
respect to it, or (B) seeking appointment of a receiver, trustee,
custodian or other similar official for it or for all or any
substantial part of its assets, or making a general assignment for the
benefit of its creditors;
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(viii) any increase, decrease or change in the
compensation or benefits of the senior management of the Company or any
of its Subsidiaries, or the issuance of any Management Note; and
(ix) any transaction or dealing between the Company
or any of its Subsidiaries, on the one hand, and one or more of its
Stockholders (or any Affiliate of any Stockholder), on the other hand,
not entered into in the ordinary course of business or on an
arm's-length basis or which is material to the Company or any of its
Subsidiaries, other than transactions undertaken by the Company in
compliance with the provisions of this Agreement and the Registration
Rights Agreement.
"Stockholders" means each of the Institutional Stockholders,
the Management Stockholders and the Additional Stockholders.
"Subscription Agreements" means, collectively, the
Institutional Stockholder Subscription Agreement and the Management Stockholder
Subscription Agreements.
"Subsidiary" means, with respect to any Person, any
corporation, partnership, limited liability company, association or other
business entity of which (i) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof,
or (ii) if a partnership, limited liability company, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
that Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a partnership, limited liability company, association or
other business entity if such Person or Persons shall be allocated a majority of
partnership, limited liability company, association or other business entity
gains or losses or shall be or control the managing director or general partner
of such partnership, limited liability company, association or other business
entity.
"Transfer" means, directly or indirectly, any sale, transfer,
assignment, grant of a participation in, gift, hypothecation, pledge or other
disposition of any securities or any interests therein or, as the context may
require, to sell, transfer, assign, grant a participation in, give as a gift,
hypothecate, pledge or otherwise dispose of any securities or any interests
therein; provided that the exercise, conversion or exchange of any Equity
Equivalent (including without limitation the right of the Company to exchange
shares of Series A Preferred for the Debentures) shall not be deemed a
"Transfer."
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"Unvested Shares" shall mean, only with respect to each
Management Stockholder or Additional Management Stockholder, all Management
Securities other than Vested Shares.
"Vested Shares" means, unless otherwise provided in a separate
agreement between the Company and a Management Stockholder or Additional
Management Stockholder, only with respect to each Management Stockholder or
Additional Management Stockholder, that portion of Management Securities held by
such Person and by such Person's Permitted Transferees who hold such Management
Securities which are attributable to such Person which is the product of: (x)
the number of Management Securities acquired by such Management Stockholder or
Additional Management Stockholder on any Date of Issuance, and (y) the fraction
in which the numerator is the number of anniversaries that have elapsed after
such Date of Issuance and the denominator is five (5) provided, however, that in
the event such fraction is greater than one it shall be deemed to equal one; and
provided, further, that simultaneously with a Sale of the Company, all Unvested
Shares (other than Management Securities which are Equity Equivalents) shall
become Vested Shares.
(b) Unless otherwise provided herein, all accounting
terms used in this Agreement shall be interpreted in accordance with generally
accepted accounting principles as in effect from time to time, applied on a
consistent basis.
(c) The following terms, when used in this Agreement,
shall have the meanings defined for such terms in the Section set forth below
(such definitions to be equally applicable to both singular and plural forms of
the terms defined):
Term Section
---- -------
"Accounting Determination" 2.8(a)
"Acquiror" 2.7(a)
"Agreement" Preamble
"Article III Offer" 3.1(a)
"Buyer" 3.1(a)
"Company" Preamble
"Company Designee" 4.1(c)
"Company Notice" 2.5(c)
"Court Square" Preamble
"CVC Stockholder" Preamble
"CVC Stockholders" Preamble
"Disinterested Director 5.1(a)
"Drag-Along Right" 2.7(a)
"Drag-Along Sale" 2.7(a)
"Employment Agreement" 7.21
"Executive" 7.21
"Inclusion Notice" 3.1(a)
"Inclusion Right" 3.1(b)
"Institutional Director" 5.1(a)
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"Institutional Stockholder Notice" 2.5(b)
"Involuntary Transfer Notice" 2.6(a)
"Involuntary Transfer Purchase Notice" 2.6(b)
"Management Director" 5.1(a)
"Management Group" Preamble
"Management Group Member" Preamble
"Management Representative" 5.8
"MascoTech" Recitals
"Xxxxxx Management Subscription Agreement" 7.21
"Xxxxxx Stockholders" 2.5(b)
"Nominating Committee" 5.1(a)
"Notice of Intention" 2.5(a)
"Observer" 5.7(a)
"Offered Securities" 2.5(a)
"Offerees" 3.1(a)
"Offer Price" 2.5(a)
"Prospective Buyer Notice" 2.5(d)
"Prospective Buyers" 2.5(a)
"Purchase Notice" 4.1(c)
"Regulatory Problem" 6.4(c)
"Sale Event" 4.1(a)
"Sale Event Notice" 4.1(a)
"Sale Event Purchase Notice" 4.1(b)
"Section 2.8 Notice" 2.8(a)
"Section 2.9 Notice" 2.9(a)
"Section 2.8 Securities" 2.8(a)
"Section 2.9 Securities" 2.9(a)
"Sellers" 4.1(c)
"Selling Stockholder" 2.5(a)
"Subject Securities" 2.6(d)
"Third Anniversary" 7.21
"Third Party" 2.5(a)
"Transferor" 3.1(a)
"Transferor Shares" 3.1(a)
ARTICLE 2
RESTRICTIONS ON TRANSFERS
2.1 RESTRICTIONS GENERALLY; SECURITIES ACT.
(a) Each Stockholder agrees that it will not, directly or
indirectly, Transfer any Restricted Securities or Restricted Preferred
Securities except in accordance with the terms of this Agreement. Any attempt to
Transfer or any purported Transfer of any Restricted Securities or Restricted
Preferred Securities not in accordance with the terms of this Agreement shall be
null and void and neither the Company nor any transfer
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agent of such securities shall give any effect to such attempted Transfer in its
stock records.
(b) Each Stockholder agrees that, in addition to the
other requirements set forth herein, the Registration Rights Agreement and in
each Stockholder's respective subscription agreement between such Stockholder
and the Company or a Subsidiary relating to Transfer, it will not Transfer any
Restricted Securities or Restricted Preferred Securities except (i) pursuant to
an effective registration statement under the Securities Act, or (ii) unless
such requirement is waived by the Company, upon receipt by the Company, at the
option of the Company, of either an opinion of counsel to the Stockholder (which
opinion and counsel are reasonably satisfactory to the Company) or of an opinion
of counsel to the Company, in each case to the effect that no registration
statement is required in connection with the Transfer because of the
availability of an exemption from registration under the Securities Act.
2.2 LEGEND.
(a) Each certificate representing Restricted Securities
or Restricted Preferred Securities shall be endorsed with the legends set forth
in Exhibit C hereto and such other legends as may be required by applicable
state securities laws.
(b) Any certificate issued at any time in exchange or
substitution for any certificate bearing such legends (except a new certificate
issued upon the completion of a Transfer pursuant to a registered public
offering under the Securities Act and made in accordance with the Securities
Act) shall also bear such legends, unless, in the opinion of counsel to the
Company (with advice from counsel to the Company, as the Company may deem
appropriate), the Restricted Securities or Restricted Preferred Securities, as
the case may be, represented thereby are either no longer subject to the
provisions of this Agreement or the restrictions imposed under the Securities
Act or state securities laws, in which case the applicable legend (or legends)
may be removed.
2.3 LIMITATIONS ON REPURCHASES, DIVIDENDS, ETC.
Each Stockholder understands that the Company has entered
into, or may from time to time enter into, certain financing agreements which do
or may contain prohibitions, restrictions and limitations, among other things,
on the ability of the Company to purchase any Restricted Securities and/or
Restricted Preferred Securities (whether pursuant to this Agreement or
otherwise), to pay dividends and to waive, modify or discharge any rights or
obligations under this Agreement. Each Stockholder (a) acknowledges that such
prohibitions, restrictions and limitations might prohibit the Company from
complying with repurchase or payment obligations under this Agreement and (b)
agrees that it shall not be entitled to exercise any remedy under Section 7.9 or
otherwise to enforce any such obligation at any time the Company is subject to
any such prohibition, restriction or limitation.
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2.4 TRANSFER RESTRICTIONS.
(a) Each of the Management Stockholders and the
Additional Stockholders severally agrees that it will not Transfer any
Restricted Securities or Restricted Preferred Securities, except (i) to a
Permitted Transferee who shall have executed and delivered to the Company a
Joinder Agreement and thereby becomes a party to this Agreement; (ii) pursuant
to Section 2.6 (Involuntary Transfers); (iii) pursuant to 2.7 (Drag-Along
Rights); (iv) in accordance with Article III (Rights of Inclusion) in the
capacity of an Offeree or Transferor thereunder; (v) pursuant to Article IV
(Repurchase of Securities); (vi) in a registered public offering or in a Rule
144 Transaction; (vii) pursuant to Section 2.5 (Right of First Refusal); or
(viii) to the Company pursuant to a mandatory redemption of Restricted Preferred
Securities as may be provided for under the Certificate of Incorporation;
provided, however, that no Management Stockholder or Additional Management
Stockholder shall Transfer any Restricted Securities or Restricted Preferred
Securities pursuant to Section 2.5 for a period of five years following the
Original Closing Date, and provided, further, that no Management Stockholder or
Additional Management Stockholder shall transfer any Unvested Shares except (y)
to a Permitted Transferee who shall have executed and delivered to the Company a
Joinder Agreement and thereby becomes a party to this Agreement or (z) pursuant
to Section 2.6 (Involuntary Transfers), Section 2.7 (Drag-Along Rights) or
Article IV (Repurchase of Securities).
(b) Each of the Institutional Stockholders severally
agrees that it will not Transfer any Restricted Securities or Restricted
Preferred Securities, except (i) to a Permitted Transferee, who shall have
executed and delivered to the Company a Joinder Agreement and thereby become a
party to this Agreement; (ii) pursuant to Section 2.7 (Drag-Along Rights); (iii)
pursuant to Section 2.8 (Institutional Stockholders Accounting Determination),
(iv) pursuant to Section 2.9 (Institutional Stockholders Regulatory Problem),
(v) in accordance with Article III (Rights of Inclusion) in the capacity of an
Offeree or Transferor thereunder; (vi) in a registered public offering or in a
Rule 144 Transaction; (vii) to the Company pursuant to a mandatory redemption of
Restricted Preferred Securities as may be provided for under the Certificate of
Incorporation; or (viii) in the case of a transfer to any limited partnership,
limited liability company or other investment vehicle that is sponsored or
managed (whether through the ownership of securities having a majority of the
voting power, as a general partner or through the management of investments) by
Citicorp or its Affiliates or present or former employees of Citicorp or its
Affiliates (with "Affiliates" to include for purposes of this clause (viii) the
entities described in this clause (viii)), as a Transferor without compliance
with the terms of Article III (Right of Inclusion) hereof.
(c) Notwithstanding the provisions of Section 2.4(a) and
(b), Section 2.5 and Article III hereof, the Company, acting by Institutional
Affirmative Board Vote, and a Stockholder may agree for the Company or any of
its Subsidiaries to purchase any or all of the Restricted Securities or
Restricted Preferred Securities owned by such Stockholder at the Fair Market
Value thereof. The closing of any such Transfer of Restricted Securities or
Restricted Preferred Securities shall take place on such terms, on such date and
at such place as the Company and such Stockholder mutually agree. At the
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closing of such purchase and sale, such Stockholder shall deliver certificates
evidencing the Restricted Securities or Restricted Preferred Securities being
sold duly endorsed, or accompanied by written instruments of Transfer in form
satisfactory to the Company, duly executed by such Stockholder, free and clear
of any Liens, against delivery of the purchase price therefor.
2.5 RIGHT OF FIRST REFUSAL.
(a) Except for Transfers permitted pursuant to Section
2.4(a), if pursuant to a written bona fide third party (a "Third Party") offer
any Management Stockholder or Additional Stockholder desires to Transfer any
Restricted Securities or Restricted Preferred Securities (such transferring
Management Stockholder or Additional Stockholder, a "Selling Stockholder" and
such securities proposed to be so Transferred, the "Offered Securities"), prior
to any Transfer it shall give written notice of the proposed Transfer (the
"Notice of Intention") to the Company and each of the Institutional Stockholders
(such parties other than the Company to whom notice is given, but excluding the
Selling Stockholder, the "Prospective Buyers"), specifying the type and number
of Offered Securities which such Selling Stockholder wishes to Transfer, the
proposed purchase price (the "Offer Price") therefor and all other material
terms and conditions of the proposed Transfer.
(b) If the Selling Stockholder is Xxxxx X. Xxxxxx or any
of his Permitted Transferees (collectively, the "Xxxxxx Stockholders"), for a
period of thirty (30) days following its receipt of the Notice of Intention,
each of the Institutional Stockholders shall have the right to purchase all or
any portion of the Offered Securities at the Offer Price and on the other terms
specified in the Notice of Intention, up to such amount of Offered Securities so
that, upon such purchase, the Institutional Stockholders' Original Ownership
Level Ratio would be equal to 46.54%, calculated as if such purchase had been in
effect on the Original Closing Date and without giving effect to any Transfer of
Common Stock by the Institutional Stockholders other than to the Xxxxxx
Stockholders, exercisable by delivery of an irrevocable notice (the
"Institutional Stockholder Notice") to the Xxxxxx Stockholders, with a copy to
the Company and the other Prospective Buyers, specifying the number of Offered
Securities with respect to which each Institutional Stockholder is exercising
its option.
(c) (A) For a period of thirty (30) days following its
receipt of the (x) Institutional Stockholder Notice or (y) the Notice of
Intention, if no Institutional Stock Notice of Intention may be given, or (B)
for a period of sixty (60) days following its receipt of the Notice of
Intention, if no Institutional Stockholder Notice is so received, but may be
given, the Company shall have the right to purchase (i) all or any portion of
the Offered Securities, if no Institutional Stockholder Notice is given but may
be, (ii) any portion of the Offered Securities which the Institutional
Stockholder has elected not to purchase, if an Institutional Stockholder Notice
has been given, or (iii) all or any portion of the Offered Securities, if no
Institutional Stockholder Notice may be given, in each case at the Offer Price
and on the other terms specified in the Notice of Intention, exercisable by
delivery of an irrevocable notice (the "Company Notice") to the Selling
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Stockholder, with a copy to each of the Prospective Buyers, specifying the
number of Offered Securities with respect to which the Company is exercising its
option.
(d) For a period of thirty (30) days following its
receipt of the Company Notice or, if no Company Notice is so received, for a
period of thirty (30) days following the last date on which such Company Notice
may have been given, each of the Prospective Buyers shall have the right to
purchase at the Offer Price and on the other terms specified in the Notice of
Intention addressed to it, any or all of the Offered Securities which neither
the Institutional Stockholder nor the Company has elected to purchase pursuant
to Sections 2.5(b) and (c), Pro Rata among the Prospective Buyers; provided,
however, that in the event any Prospective Buyer does not purchase any or all of
its Pro Rata portion of the Offered Securities, the other Prospective Buyers
shall have the right to purchase such portion, Pro Rata, until all of such
Offered Securities are purchased or until such other Prospective Buyers do not
desire to purchase any more Offered Securities. The right of the Prospective
Buyers pursuant to this Section 2.5(d) shall be exercisable by delivery of a
notice (the "Prospective Buyer Notice") setting forth the maximum number of
Offered Securities that such Prospective Buyer wishes to purchase, including any
number which would be allocated in the event any Prospective Buyer does not
purchase all of its Pro Rata share, to the Selling Stockholder, the Company and
the other Prospective Buyers and shall expire if unexercised within such 30-day
period.
(e) Notwithstanding the foregoing provisions of this
Section 2.5, except for purchases pursuant to Section 2.5(b), unless the Selling
Stockholder shall have consented to the purchase of less than all of the Offered
Securities, neither the Company nor any Prospective Buyer may purchase any
Offered Securities unless all of the Offered Securities are to be purchased
(whether by the Company or the Prospective Buyers, or any combination thereof).
(f) If all notices required to be given pursuant to this
Section 2.5 have been duly given, and the Company and the Prospective Buyers
determine not to exercise their respective options to purchase the Offered
Securities at the Offer Price and on the other terms specified in the Notice of
Intention or determine, with the consent of the Selling Stockholder, to exercise
their options to purchase less than all of the Offered Securities, then the
Selling Stockholder shall have the right, for a period of ninety (90) days from
the earlier of (i) the expiration of the last applicable option period pursuant
to this Section 2.5 or (ii) the date on which such Selling Stockholder receives
notice from the Company and the Prospective Buyers that they will not exercise
in whole or in part the options granted pursuant to this Section 2.5, to sell to
a third party the Offered Securities remaining unsold under this Section 2.5 at
a price not less than the Offer Price and on other terms which shall not be
materially more favorable to the Third Party in the aggregate than those terms
set forth in the Notice of Intention; provided that prior to any such Transfer
to a Third Party, such Third Party executes and delivers to the Company a
Joinder Agreement and thereby becomes a party to this Agreement.
(g) The closing of any purchase and sale pursuant to this
Section 2.5 shall take place on such date, not later than fifteen (15) business
days after the later of (A)
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delivery to the Selling Stockholder of (i) the Institutional Stockholders'
Notice, if applicable, (ii) the Company Notice or (iii) the Prospective Buyer
Notice and (B) if any of the foregoing notices are not given, the last date on
which such notice may be given, as the parties to such purchase and sale shall
select. At the closing of such purchase and sale, the Selling Stockholder shall
deliver certificates evidencing the Offered Securities being sold duly endorsed,
or accompanied by written instruments of Transfer in form satisfactory to the
purchasers thereof, duly executed by the Selling Stockholder, free and clear of
any Liens, against delivery of the Offer Price therefor.
2.6 INVOLUNTARY TRANSFERS.
(a) Upon the occurrence of any event which would cause
any Restricted Securities or Restricted Preferred Securities owned by a
Management Stockholder or an Additional Management Stockholder to be Transferred
by Involuntary Transfer, such Stockholder (or his or its legal representative or
successor) shall give the Company and the Institutional Stockholders written
notice thereof (the "Involuntary Transfer Notice") stating the terms of such
Involuntary Transfer, the identity of the transferee or proposed transferee, the
price or other consideration, if readily determinable, for which the Restricted
Securities or Restricted Preferred Securities are proposed to be or have been
Transferred and the number of Restricted Securities or Restricted Preferred
Securities which are the subject of such Transfer, and the Company shall provide
the Institutional Stockholders with copies of such notice.
(b) If such Involuntary Transferee is with respect to a
Xxxxxx Stockholder, after its receipt of the Involuntary Transfer Notice or,
failing such receipt, after the Company otherwise obtains actual knowledge of
such a proposed or completed Involuntary Transfer and notifies the Institutional
Stockholders of the same, each of the Institutional Stockholders shall have the
right and option to purchase all or any portion of such Restricted Securities up
to such amount of such Restricted Securities so that, upon such purchase, the
Institutional Stockholders' Original Ownership Level Ratio would be equal to
46.54%, and (y) such Restricted Preferred Securities up to such amount of such
Restricted Preferred Securities so that, upon such purchase, the Institutional
Stockholders' Series A Preferred Original Ownership Level Ratio would be equal
to 50%, in each case calculated as if such purchase had been in effect on the
Original Closing Date and without giving effect to any Transfer of Restricted
Securities or Restricted Preferred Securities by an Institutional Stockholder
other than to a Xxxxxx Stockholder, which right shall be exercised by written
notice (the "Involuntary Transfer Purchase Notice") given by each of the
Institutional Stockholders to the transferor (or transferee following the
occurrence of any Involuntary Transfer) and to the Company within thirty (30)
days following the Institutional Stockholders' receipt of such notice.
(c) After its receipt of the Involuntary Transfer Notice
or, failing such receipt, after the Company otherwise obtains actual knowledge
of such a proposed or completed Involuntary Transfer, subject to Section 2.6(b),
the Company shall have the right and option to purchase (or to have any designee
purchase) all or any portion of such Restricted Securities or Restricted
Preferred Securities, which right shall be exercised by written notice given by
the Company to the transferor (or transferee following the
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occurrence of any Involuntary Transfer) and to the Institutional Stockholders
within thirty (30) days following the later of (i) the Company's receipt of the
Involuntary Transfer Notice or, failing such receipt, the Company's obtaining
actual knowledge of such proposed or completed Transfer, (ii) the date of such
Involuntary Transfer and (iii) the Company's receipt of the Involuntary Transfer
Purchase Notice, if applicable and given.
(d) In the event that the Institutional Stockholders and
the Company elect not to purchase all of such Restricted Securities or
Restricted Preferred Securities pursuant to Sections 2.6 (b) and (c), then the
Company shall on or prior to the end of such thirty (30) day period, notify the
Institutional Stockholders thereof, such notice to identify the Securities not
purchased by the Institutional Stockholders and the Company pursuant to Sections
2.6(b) and (c) (the "Subject Securities"). For a period of thirty (30) days
after receipt of such notice from the Company, each of the Institutional
Stockholders shall have the irrevocable right to purchase any or all of the
Subject Securities, Pro Rata; provided, however, that in the event any
Institutional Stockholder does not purchase any or all of its Pro Rata portion
of the Subject Securities, the remaining Institutional Stockholders shall have
the right to purchase such portion pro rata as among themselves until all of the
Subject Securities are purchased or until such persons do not desire to purchase
any more Subject Securities. The right of the Institutional Stockholders to
purchase Subject Securities pursuant to this Section 2.6(d) shall be exercisable
by delivery of a notice to the transferor (or transferee following the
occurrence of any Involuntary Transfer) setting forth the maximum number of
Subject Securities that such person wishes to purchase including any number
which would be allocated in the event that any Institutional Stockholder does
not purchase all or any portion of its pro rata portion.
(e) Any purchase pursuant to this Section 2.6 shall be at
the price and on the terms applicable to such Involuntary Transfer; provided,
however, that if the nature of the event giving rise to such Involuntary
Transfer is such that no readily determinable consideration is to be paid for or
assigned to the Transfer of the Restricted Securities or Restricted Preferred
Securities, the price to be paid by the Company or the Institutional
Stockholders, as the case may be, and the applicable terms shall be the purchase
price and terms applicable to a Sale Event pursuant to Section 4.2. The closing
of the purchase and sale of such Restricted Securities or Restricted Preferred
Securities pursuant to this Section 2.6 shall be held at the place and on the
date to be established by the Company and/or the Institutional Stockholders, as
the case may be, which in no event shall be less than ten (10) nor more than
forty-five (45) days from the date on which the Company and/or the Institutional
Stockholders, as the case may be, gives notice of its election to purchase such
Restricted Securities or Restricted Preferred Securities. At such closing, the
Stockholder (or his or its legal representative or successor) shall deliver the
certificates evidencing the Restricted Securities or Restricted Preferred
Securities to be purchased by the Company and/or the Institutional Stockholders,
as the case may be, as applicable, accompanied by stock powers, duly endorsed in
blank, or duly executed instruments of Transfer, and any other documents that
are necessary to Transfer to the Company and/or the Institutional Stockholders,
as the case may be, good title to such Restricted Securities or Restricted
Preferred Securities free and clear of all Liens and,
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concurrently with such delivery, the Company and/or the Institutional
Stockholders, as the case may be, shall deliver to the transferor thereof the
full amount of the purchase price therefor.
(f) Notwithstanding anything to the contrary contained
herein, in the event a purchase (or the payment of the purchase price) by the
Company pursuant to this Section 2.6 would violate or conflict with any statute,
rule, injunction, regulation, order, judgment or decree applicable to the
Company or any of its Subsidiaries or by which any of them or their respective
properties is bound or affected or would result in any breach of, or constitute
a change of control or a default (or an event which with notice or lapse of
time, or both, would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien on any of the property or assets of the Company or any of its
Subsidiaries pursuant to any note, bond, mortgage, indenture, contract,
agreement, lease, license, franchise or other instrument or obligation to which
the Company or any of its Subsidiaries is a party or by which any of their
respective properties is bound or affected, with the prior written consent of
the Institutional Stockholders, the rights of the Company to purchase (or to
have any designee purchase) the Restricted Securities or Restricted Preferred
Securities of any Stockholder shall be suspended until the earlier of (i) the
date which falls thirty (30) days following such time as such prohibition first
lapses or is waived and no such default would be caused or (ii) the date which
is one hundred eighty (180) days after the date of the Involuntary Transfer. For
the purposes of this Section 2.6 (other than Section 2.6 (b) hereof) only, the
date of such lapse or waiver shall be deemed the date of the Involuntary
Transfer for purposes of the purchase and sale of Restricted Securities or
Restricted Preferred Securities pursuant to this Section 2.6. The Company shall
use its reasonable efforts to obtain a waiver of any such prohibition, but shall
not be obligated to incur any additional interest or other costs or charges or
to make any prepayment with respect to any indebtedness in connection with such
efforts.
(g) Notwithstanding anything to the contrary contained in
this Section 2.6, any event giving rise to an Involuntary Transfer which is also
subject to the provisions of Article IV shall be governed by the provisions of
Article IV.
2.7 DRAG-ALONG RIGHTS.
(a) If the Institutional Stockholders (i) propose to
Transfer to a third party (which is not an Affiliate of any of the Institutional
Stockholders) (the "Acquiror") Restricted Securities or Restricted Preferred
Securities that include 51% or more of the shares of Common Stock or Series A
Preferred, as the case may be, owned by them in the aggregate on a Fully-Diluted
Basis, the Institutional Stockholders shall have the right to require the other
Stockholders to Transfer a corresponding percentage of their Restricted
Securities (determined on a class-by-class basis) or Restricted Preferred
Securities to such Acquiror on the same terms, or (ii) propose the Transfer of
50% or more of the assets or business (whether by merger, sale or otherwise) of
the Company to any such third party, the Institutional Stockholders shall in
each case have the right (a "Drag-Along Right") to require (x) the Stockholders
to take all action necessary or appropriate (including replacement of the
directors designated by such Stockholders) in order to
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cause the Company to take all action necessary or appropriate to give effect to
such transaction and (y) the Stockholders to approve such transaction in their
capacity as stockholders of the Company (a transaction described in subparagraph
(i) or (ii), a "Drag-Along Sale"); provided, that upon the consummation of any
transaction resulting in a sale or transfer of all or substantially all of the
assets or business of the Company (whether by merger, sale or otherwise), the
Company will immediately distribute all of the net proceeds of such transaction
to the Stockholders in accordance with their respective rights and privileges.
(b) In order to exercise a Drag-Along Right, the
Institutional Stockholders shall notify each other Stockholder, such notice to
set forth the terms and conditions of such proposed sale. Each such Stockholder
will take all actions reasonably requested by the Institutional Stockholders in
connection with the consummation of such sale, and within ten (10) business days
after the receipt of such notice (or such longer period of time as the
Institutional Stockholders shall designate in such notice), if such transaction
is structured as a sale of assets or a merger, such Stockholders shall approve
the transaction in their capacities as stockholders of the Company, and if such
transaction is a sale of Restricted Securities or Restricted Preferred
Securities, such Stockholders shall cause the applicable percentage of each
class of their respective Restricted Securities or Restricted Preferred
Securities to be sold to the Acquiror on the same terms and conditions and for
the same per share consideration as the Restricted Securities and Restricted
Preferred Securities being sold by the Institutional Stockholders; provided,
however, that if any of such Restricted Securities are Equity Equivalents, the
purchase price of such Equity Equivalents shall equal the aggregate price that
would be paid for the shares of Common Stock issuable upon the exercise,
exchange or conversion thereof minus the aggregate exercise, exchange or
conversion price under such Equity Equivalents for such shares of Common Stock
and if any Stockholders are given a choice as to the type or amount of
consideration to be received in respect of a specific security of the Company,
all Stockholders will be given the same choice. In furtherance of, and not in
limitation of the foregoing, in connection with a Drag-Along Sale, subject to
Section 2.7(c), each Stockholder will (i) raise no objections against the
Drag-Along Sale or the process pursuant to which it was arranged, (ii) waive any
appraisal, dissenter or similar rights under applicable law, and (iii) execute
all documents containing such terms and conditions as those executed by other
Stockholders as reasonably directed by the Institutional Stockholders.
(c) Unless otherwise agreed in writing by any Stockholder
with respect to the obligations of such Stockholder, all contractual
indemnification and contribution payments required to be made by any Stockholder
in connection with any Drag-Along Sale shall be limited to payments made from
the proceeds of such Drag-Along Sale set aside in an escrow account or similar
arrangement, except with respect to indemnification or contribution payments
which arise from a misrepresentation or breach by such Stockholder with respect
to matters of title to such Stockholders' securities and valid authorization by
such Stockholder with respect to the Drag-Along Sale. The amount of proceeds
payable to each Stockholder so set aside in respect of any such indemnification
or contribution payments shall be proportionate to the amount of consideration
received or to be received by such Stockholder in relation to all
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Stockholders. All Stockholders will bear their pro rata share of the costs and
expenses incurred in connection with a Drag-Along Sale to the extent such costs
are incurred for the benefit of all Stockholders and are not otherwise paid by
the Company or the purchaser and so long as such costs and expenses are
reimbursed solely out of the proceeds of such Drag-Along Sale. Costs incurred by
any Stockholder on its own behalf will not be shared by any other Stockholder.
2.8 INSTITUTIONAL STOCKHOLDERS ACCOUNTING DETERMINATION.
(a) If Court Square has made a good faith determination
following consultation with its independent accountants that (i) there is a
reasonable likelihood that it will be required to consolidate into the financial
statements of Citigroup and its consolidated Subsidiaries the balance sheet of
the Company and its consolidated Subsidiaries as a result of its holdings (or
the holdings of any other Institutional Stockholder) of Restricted Securities or
Restricted Preferred Securities and (ii) after taking all commercially
reasonable steps, Court Square, with the cooperation of the Company, is unable
to restructure its ownership (or the ownership of any other Institutional
Stockholder) of such securities in a manner which continues to avoid
consolidation accounting treatment and is not materially adverse to Court Square
(such determination, an "Accounting Determination") and that it needs to
Transfer certain of the Company's securities pursuant to (iii)(C) of the
definition of Permitted Transferee then Court Square may provide a notice to the
Company of such determination, such notice to provide a brief summary setting
forth an explanation of the basis for the determination and to indicate that it
is a notice under this Section 2.8 (a "Section 2.8 Notice") and the quantity of
the securities of the Company as is reasonably deemed necessary by the
Institutional Stockholders to be sold to avoid such accounting problem (the
"Section 2.8 Securities") and the price and the terms upon which such Section
2.8 Securities are proposed to be sold.
(b) For a period of 180 days after the date of such
Section 2.8 Notice, the Institutional Stockholders may sell their holdings of
Section 2.8 Securities to a third party at a price and upon terms substantially
similar to those set forth in the Section 2.8 Notice; provided that if the
Institutional Stockholders provide the Company with notice that (i) a third
party has accepted such offer within such 180-day period, (ii) a definitive
agreement has been entered into providing for the sale of the Section 2.8
Securities to such third party, (iii) the closing of such sale was scheduled to
occur within such 180-day period, (iv) such closing has been delayed as a result
of an assertion by the Federal Trade Commission or United States Department of
Justice or other party that such sale will constitute a violation of antitrust
laws or as a result of the waiting period applicable to such sale under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, having not
expired as of the end of such 180-day period and (v) the sale is reasonably
likely to occur notwithstanding such delay in an additional period of 60-days
from the end of such 180-day period, then such 180-day period shall be extended
(once only) for a period of an additional 60-days to allow for such sale to be
consummated to such third party. Upon the acceptance of any such offer of the
Institutional Stockholders by a third party, the Institutional Stockholders
shall notify the Company thereof, such notice to provide details as to the
identity of the third party and the terms of such sale.
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2.9 INSTITUTIONAL STOCKHOLDERS REGULATORY PROBLEM.
(a) If any Institutional Stockholder determines that it
needs to Transfer certain of the Company's securities pursuant to (iii)(D) of
the definition of Permitted Transferee then such Institutional Stockholder may
provide a notice to the Company of such determination, such notice to indicate
that it is a notice under this Section 2.9 (a "Section 2.9 Notice") and the
quantity of the securities of the Company as is reasonably deemed necessary by
such Institutional Stockholder to be sold to avoid such Regulatory Problem (as
defined herein) (the "Section 2.9 Securities") and the price and the terms upon
which such Section 2.9 Securities are proposed to be sold.
(b) The Institutional Stockholders may, for a period of
180 days after the date of such Section 2.9 Notice, sell their holdings of
Section 2.9 Securities to a third party at a price and upon terms substantially
similar to those set forth in the Section 2.9 Notice; provided that if the
Institutional Stockholders provide the Company with notice that (i) a third
party has accepted such offer within such 180-day period, (ii) a definitive
agreement has been entered into providing for the sale of the Section 2.9
Securities to such third party, (iii) the closing of such sale was scheduled to
occur within such 180-day period, (iv) such closing has been delayed as a result
of an assertion by the Federal Trade Commission or United States Department of
Justice or other party that such sale will constitute a violation of antitrust
laws or as a result of the waiting period applicable to such sale under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, having not
expired as of the end of such 180-day period and (v) the sale is reasonably
likely to occur notwithstanding such delay in an additional period of 60-days
from the end of such 180-day period, then such 180-day period shall be extended
(once only) for a period of an additional 60-days to allow for such sale to be
consummated to such third party. Upon the acceptance of any such offer of the
Institutional Stockholders by a third party, the Institutional Stockholders
shall notify the Company thereof, such notice to provide details as to the
identity of the third party and the terms of such sale.
ARTICLE 3
RIGHTS OF INCLUSION
3.1 RIGHTS OF INCLUSION.
(a) Except for any Transfer of Restricted Securities or
Restricted Preferred Securities pursuant to clauses (i), (ii) or (v) of Section
2.4(a) or clauses (i), (ii), (iii), (iv), (v) (in the capacity of a Transferor
or Offeree thereunder), (vi) or (vii) of Section 2.4(b), if
(i) the Institutional Stockholders propose to
Transfer, in one or more transactions, Restricted Securities
representing more than twenty-five percent (25%) of the Restricted
Securities on a Fully-Diluted Basis; provided, that this clause (I)
shall apply only to the extent such Transfers otherwise subject to the
Inclusion Right in the aggregate exceed such twenty-five percent (25%)
threshold; or
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(ii) the Institutional Stockholders, the Additional
Stockholders or the Management Stockholders propose to Transfer
Restricted Preferred Securities;
in each case to any Person (the "Buyer") (the transferor under clause (I) or
(II), the "Transferor" and the securities proposed to be so transferred, the
"Transferor Shares"), then, as a condition to such Transfer, the Transferor
shall cause the Buyer to include an offer (the "Article III Offer") to each of
the Stockholders holding shares of the same class (and series) as the Transferor
Shares who are not Transferors (collectively, the "Offerees"), to sell to the
Buyer, at the option of each Offeree, that number of shares of the same class
(and series) of Restricted Securities (or Restricted Preferred Securities) as
the Transferor, determined in accordance with Section 3.1(b), on the same terms
and conditions as are applicable to the Transferor Shares. (For purposes of this
Section 3.1, shares of all classes and series of Common Stock together with
Equity Equivalents (on an as-if-converted basis), shall be deemed one and the
same class and series of Common Stock.) The Transferor shall provide a written
notice (the "Inclusion Notice") of the Article III Offer to each Offeree, which
may accept the Article III Offer by providing a written notice of acceptance of
the Article III Offer to the Transferor within thirty (30) days after delivery
of the Inclusion Notice.
(b) Each Offeree shall have the right (an "Inclusion
Right") to sell pursuant to the Article III Offer a Pro Rata number of its
shares of Restricted Securities or Restricted Preferred Securities (as the case
may be) as is sold by the Transferor (to the extent the Transferor's securities
are subject to the Inclusion Right). Any Offeree which owns Equity Equivalents
may sell pursuant to the Article III Offer, in lieu of shares of Common Stock,
Equity Equivalents representing that number of shares of Common Stock which it
could sell pursuant to its Inclusion Right and the purchase price therefor shall
equal the aggregate price that would be paid for the shares of Common Stock
issuable upon the exercise, exchange or conversion thereof minus the aggregate
exercise, exchange or conversion price under such Equity Equivalent for such
shares of Common Stock.
3.2 ARTICLE III SALES.
(a) Upon its exercise of an Inclusion Right, each Offeree
shall, within a reasonable period prior to the closing of such Article III Sale,
deliver to the Transferor a certificate or certificates representing the shares
of Restricted Securities and/or Restricted Preferred Securities to be sold or
otherwise disposed of pursuant to the Article III Offer by such Offeree, free
and clear of all Liens, and a limited power-of-attorney authorizing the
Transferor to sell or otherwise dispose of such shares of Restricted Securities
and/or Restricted Preferred Securities pursuant to the terms of the Article III
Offer, provided, however, that in the event that the purchase and sale of
Restricted Securities or Restricted Preferred Securities contemplated by the
Article III Offer is not completed, such certificate(s) and power-of-attorney
shall be returned to the Offeree in accordance with Section 3.2(c) promptly upon
request by the Offeree.
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(b) The Transferor shall have until one hundred twenty
(120) days commencing on the expiration of the 30 day period following delivery
of the Inclusion Notice, in which to sell or otherwise dispose of, on behalf of
itself and the Offerees, up to the number of shares of Restricted Securities
and/or Restricted Preferred Securities covered by the Article III Offer (and the
number of Transferor Shares) to the Buyer. If all such shares are not sold to
the Buyer, the Transferor, at its option, may elect to sell on behalf of itself
and the Offerees such number of shares as the Buyer will purchase, Pro Rata
among the Transferee and each Offeree, as nearly as practicable. The material
terms of such sale, including, without limitation, price and form of
consideration, shall be as set forth in the Inclusion Notice. If at the end of
such 120-day period the Transferor has not completed the sale or other
disposition of all the Transferor Shares and all the Offerees' Restricted
Securities and/or Restricted Preferred Securities (if any) proposed to be sold
to the Buyer, the Transferor shall return to each of the Offerees its respective
certificates, if any, representing shares of Restricted Securities and/or
Restricted Preferred Securities which the Offerees delivered for sale or other
disposition pursuant to this Article III and which were not sold pursuant
thereto and the provisions of this Article III shall continue to be in effect.
(c) Promptly after the consummation of the sale or other
disposition of the Transferor Shares and Restricted Securities and/or Restricted
Preferred Securities of the Offerees to the Buyer pursuant to the Article III
Offer, the Transferor shall notify the Offerees thereof, and the Buyer shall pay
to the Transferor and each of the Offerees their respective portions of the
sales price of the Restricted Securities and/or Restricted Preferred Securities
sold or otherwise disposed of pursuant thereto, and shall furnish such other
evidence of the completion of such sale or other disposition and the terms
thereof as may be reasonably requested by the Offerees.
(d) Notwithstanding anything to the contrary contained in
this Article III, except for the Transferor's obligation to return to each
Offeree any certificates representing the Offerees' Restricted Securities or
Restricted Preferred Securities, there shall be no liability on the part of the
Transferor to any Stockholder in the event that the proposed sale pursuant to
this Article III is not consummated for whatever reason. Whether a sale of
Restricted Securities or Restricted Preferred Securities is effected pursuant to
this Article III by the Transferor is in the sole and absolute discretion of the
Transferor.
ARTICLE 4
REPURCHASE OF SECURITIES
4.1 SALE EVENT.
(a) In the event that any Management Stockholder or any
Additional Management Stockholder shall cease to be employed by (or in the case
of any non-employee ceases to be a director of) the Company or any of its
Subsidiaries for any reason, including death, permanent disability, termination
for Cause or without Cause, voluntary termination, retirement or otherwise (such
cessation of employment or
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directorship being referred to herein as a "Sale Event"), but in each case
subject to Section 4.4, such Management Stockholder (or his personal
representative) or such Additional Management Stockholder (or his personal
representative) shall promptly notify (the "Sale Event Notice") the Company and
the Institutional Stockholders of the applicable Sale Event.
(b) If such Sale Event is with respect to a Xxxxxx
Stockholder, within ninety (90) days after the Institutional Stockholders'
receipt of the Sale Event Notice, each of the Institutional Stockholders may, at
its option, elect to purchase an amount of Management Securities as follows: (x)
if Restricted Securities, up to such amount so that, upon such purchase, the
Institutional Stockholders' Original Ownership Level Ratio would be equal to
46.54% and (y) if Restricted Preferred Securities, up to such amount so that,
upon such purchase, the Institutional Stockholders Series A Preferred Original
Ownership Level Ratio would be equal to 50%, in each case calculated as if such
purchase had been in effect on the Original Closing Date and without giving
effect to any Transfer of Restricted Securities or Restricted Preferred
Securities by an Institutional Stockholder other than to the Xxxxxx
Stockholders, exercisable by written notice (a "Sale Event Purchase Notice")
delivered to such Management Stockholder (or his personal representative) (with
copies thereof to the Company) and his respective Permitted Transferees who hold
Management Securities which are attributable to the Management Stockholder whose
employment or directorship has ceased (collectively, the "Sellers"). Upon the
giving of a Sale Event Purchase Notice, the Sellers shall be obligated to sell
to the Institutional Stockholders those Management Securities which are
designated in the Sale Event Purchase Notice; provided, however, that in the
event a Sale Event Notice is not given, a Sale Event Purchase Notice may in any
event be given at any time following a Sale Event. The time periods set forth
herein and in Sections 4.1(c) and (d) below shall be tolled for the duration of
any suspension period under Section 4.4 hereof and the remaining balance of any
such time period shall re-commence as of the end of any such suspension period.
(c) Subject to Section 4.1(b), within ninety (90) days
after the later of the Company's receipt of the Sale Event Notice or the Sale
Event Purchase Notice, if applicable and given, the Company or, at the option of
the Company, any present or future employee or director of the Company or any of
its Subsidiaries who shall have been designated by the Board acting by an
Institutional Affirmative Board Vote (subject to the same qualification
applicable to a Significant Transaction under Section 5.4) (a "Company
Designee") may, at its option, elect to purchase the Securities described in the
next sentence of this Section 4.1(c), exercisable by written notice (a "Purchase
Notice") delivered to each of the Sellers (with a copy to the Institutional
Stockholders). Upon the giving of such notice, the Sellers shall be obligated to
sell to the Company or the Company Designee those Management Securities (whether
Vested Shares or Unvested Shares) of the Sellers which are designated in the
Purchase Notice (but in no event in an amount in excess of the total number of
Management Securities less any Management Securities that the Institutional
Stockholders have elected to purchase pursuant to Section 4.1(b)); provided,
however, that in the event a Sale Event Notice is not given, a Purchase Notice
(or notice from the Institutional Stockholders as described in Section 4.1(d))
may in any event be given at any time following a Sale Event.
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(d) To the extent the Company or any Company Designee
fails to deliver a Purchase Notice or otherwise does not purchase all of the
Management Securities then owned by the Sellers, the Institutional Stockholders
may, at their option, exercisable by written notice delivered to the Sellers
within fifteen (15) days after delivery of the Purchase Notice (or (x) one
hundred (100) days after the Sale Event Notice, if no Sale Event Purchase Notice
may be given by the Institutional Stockholders, or (y) one hundred ninety (190)
days after the Sale Event Notice, if a Sale Event Notice may be given, but no
Purchase Notice is given by Company or any Company Designee), on a Pro Rata
basis (and including on such Pro Rata basis with respect to the number of Vested
Shares or Unvested Shares purchasable by each such Person) purchase the
Management Securities not so purchased by the Institutional Stockholders and the
Company pursuant to Sections 4.1(b) and (c) which are designated in such written
notice from the Institutional Stockholders.
4.2 PURCHASE PRICE. The purchase price for each share of
Management Securities to be purchased pursuant to Section 4.1 shall be as set
forth below (and such purchase price may be paid at the election of the Company
in cash or by a Management Note in an aggregate principal amount equal to such
purchase price):
(a) as to each Vested Share (provided that the Sale Event
did not occur as a result of a termination for Cause), the Fair Market Value
thereof as of the date of the Sale Event,
(b) as to each Unvested Share, and each Vested Share (if
the Sale Event occurred as a result of a termination for Cause), the lower of
(x) the Fair Market Value thereof as of the date of the Sale Event or (y) the
Original Cost thereof, and
(c) as to each Restricted Preferred Security, the stated
value thereof together with accrued and unpaid dividends thereon as of the date
of the Sale Event.
Notwithstanding anything to the contrary contained herein, no provision of this
Agreement shall prevent or otherwise restrict the Board acting by an
Institutional Affirmative Board Vote (subject to the same qualification
applicable to a Significant Transaction under Section 5.4) from determining (in
its discretion) (i) that the Company will purchase Management Securities from
Management Stockholders or Additional Management Stockholders pursuant to
Section 4.1 at a price per share in excess of the purchase price specified in
this Section 4.2, (ii) that in connection with a retirement of a Management
Stockholder or Additional Management Stockholder at or after normal retirement
age all or any part of such Stockholder's Unvested Shares may be treated as
Vested Shares by the Company for purposes of this Section 4.2 or (iii) that a
Management Stockholder's or Additional Management Stockholder's Management
Securities may not be repurchased pursuant to this Article IV by the Company or
the Institutional Stockholders.
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4.3 CLOSING.
(a) Subject to Section 4.4, the closing for all purchases
and sales of Management Securities provided for in this Article IV shall be held
at the principal executive offices of the Company at 10:00 a.m., local time, on
the 30th day after the determination of the purchase price in respect thereof
determined in accordance with Section 4.2 or at such other date and time as
shall have been designated by the Board (acting by an Institutional Affirmative
Board Vote (subject to the same qualification applicable to a Significant
Transaction under Section 5.4) and the Seller); provided, however, that if any
Seller who has become obligated to sell Management Securities is deceased on
such 30th day as aforesaid and such deceased person's personal representative
shall not have been appointed and qualified by such date, then unless otherwise
agreed to as provided above, the closing shall be postponed until the earlier of
(i) the 10th day after the appointment and qualification of such personal
representative and (ii) ninety (90) days following the death of such Seller.
(b) All Management Securities to be sold pursuant to this
Article IV shall be delivered to the purchaser at the aforesaid closing free and
clear of all Liens. The purchaser will be entitled to receive customary
representations as to title, authority and capacity to sell and to require a
guaranteed signature of the Seller, as applicable. Each Seller hereby appoints
the Company as attorney-in-fact to transfer such Management Securities on the
books of the Company in the event of a sale pursuant to this Article IV. Such
Sellers shall take all such actions as the Company or any other purchaser shall
request as necessary to vest in the Company or any other purchaser at such
closing good title to such Management Securities, free and clear of all Liens.
4.4 POSTPONEMENT. Notwithstanding anything to the contrary
contained herein, in the event a purchase (or the payment of the purchase price)
by the Company pursuant to this Article IV would:
(a) violate or conflict with any statute, rule,
injunction, regulation, order, judgment or decree applicable to the Company or
any of its Subsidiaries or by which any of them or their respective properties
is bound or affected,
(b) result in a change of control under, any breach of,
or constitute a default (or an event which with notice or lapse of time, or
both, would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien on any of the property or assets of the Company or any of its
Subsidiaries pursuant to any note, bond, mortgage, indenture, contract,
agreement, lease, license, franchise or other instrument or obligation to which
the Company or any of its Subsidiaries is a party or by which any of their
respective properties is bound or affected or
(c) in the judgment of the Board, jeopardize the
financial condition of the Company or otherwise have a material adverse effect
on the business, condition (financial or otherwise), results of operations or
assets or properties of the Company,
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then, upon the delivery by the Company of notice of suspension under this
Section 4.4 to each of the Sellers, the rights of the Company to purchase the
Management Securities of the Sellers with respect to whom the Sale Event has
occurred pursuant to this Article IV shall be suspended until the earlier of, in
the case of clauses (a) or (b) above, the date which falls thirty (30) days
following such time as such prohibition first lapses or is waived and no such
default would be caused, and in the case of clause (c) above, the date which
falls thirty (30) days following such time as the Board determines that such
purchase (or payment of the purchase price) would no longer jeopardize the
financial condition of the Company or otherwise have a material adverse effect
on the business, condition (financial or otherwise), results of operations or
assets or properties of the Company. For the purposes of this Section 4.4 only,
the date determined under the preceding sentence shall be deemed to be the date
of the relevant Sale Event for purposes of the purchase and sale of Management
Securities pursuant to this Article IV.
ARTICLE 5
CORPORATE GOVERNANCE
5.1 BOARD OF DIRECTORS.
(a) From and after the date hereof, each of the
Stockholders shall vote or cause to be voted all of its shares of voting Common
Stock (as described below), at any regular or special meeting of stockholders
called for the purpose of filling positions on the Board, or shall execute a
written consent in lieu of such a meeting of stockholders for the purpose of
filling positions on the Board, and shall take all actions necessary, to ensure
that the Board consists of no less than five (5) and no greater than seven (7)
members as follows:
(i) no less than three (3) and no greater than four
(4) individuals (individually, an "Institutional Director," and
collectively, the "Institutional Directors") to be designated by the
Institutional Stockholders for so long as they own Common Stock;
provided, that, at any time, and from time to time, the Institutional
Stockholders, in their sole discretion, may determine not to designate
any or all of the Institutional Directors;
(ii) one (1) individual (the "Management Director")
to be designated by the Management Stockholders for so long as they own
Management Securities who shall be the Chief Executive Officer of the
Company or Chief Operating Officer of the Company, as the case may be;
and
(iii) two (2) individuals (individually, a
"Disinterested Director" and collectively, the "Disinterested
Directors"), each of whom is not (A) an Affiliate, employee, director
or agent of any Institutional Stockholder, (B) employed by the Company
or any Subsidiary of the Company or (C) a Stockholder or an Affiliate
of any Stockholder; provided, however, that any of the requirements
contained in (A), (B) or (C) above may be waived with the written
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consent of the Institutional Stockholders. Such Disinterested Directors
shall be designated by the Nominating Committee;
provided, however, that (x) effective as of the date hereof, the Board shall
consist of the individuals set forth on Exhibit D hereto in the categories shown
thereon and (y) the Stockholders shall cause the Institutional Directors, the
Disinterested Directors and the Management Director named thereon to be
designated and elected as directors. The Nominating Committee shall consist of
two (2) Institutional Directors and one (1) Disinterested Director
(collectively, the "Nominating Committee"), and upon the Closing the Nominating
Committee shall consist of the individuals set forth on Exhibit C hereto in the
categories shown thereon. The Nominating Committee shall act by majority vote,
provided that, if for any reason there shall be less than three (3) directors on
the Nominating Committee, it shall act by the unanimous vote of the remaining
director(s) on the Nominating Committee. In the event that the Institutional
Stockholders do not designate at least two of the Institutional Directors, the
Nominating Committee will select one (1) additional Disinterested Director who
shall serve on the Nominating Committee which will then consist of two (2)
Disinterested Directors.
(b) If, prior to his election to the Board pursuant to
Section 5.1(a), any person shall be unable or unwilling to serve as a director
of the Company, the group of Stockholders or Nominating Committee who designated
such person shall be entitled to designate a replacement.
(c) If at any time any Person designated as an
Institutional Director or any Disinterested Director is not then serving as a
director of the Company, upon the written request of the Institutional
Stockholders, the Stockholders shall promptly take all action necessary or
appropriate to elect individuals designated by the Institutional Stockholders
(in the case of any Institutional Director) and by the Nominating Committee (in
the case of any Disinterested Director) to serve as directors from and after the
time of such request.
5.2 REMOVAL. If:
(a) the Institutional Stockholders request that an
Institutional Director elected as a director be removed (with or without cause),
by written notice to the other Stockholders;
(b) the Management Stockholders request that the
Management Director elected as a director be removed (with or without cause), by
written notice to the other Stockholders;
(c) the Nominating Committee requests that a
Disinterested Director elected as a director be removed (with or without cause)
by written notice to the other Stockholders, or such director ceases to qualify
as a Disinterested Director; or
(d) a Management Director ceases to qualify as a
Management Director;
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then in each such case, such director shall be removed and each Stockholder
agrees to vote all shares of Common Stock owned by such Stockholder and other
securities over which such Stockholder has voting control to effect such removal
or to consent in writing to effect such removal upon such request
5.3 VACANCIES. In the event that a vacancy is created on the Board
at any time by the death, disability, retirement, resignation or removal (with
or without cause) of a director, each Stockholder agrees to vote all shares of
Common Stock owned by such Stockholder and other securities over which such
Stockholder has voting control for the individual designated to fill such
vacancy by whichever of the Stockholders or Nominating Committee designated
and/or approved (pursuant to Section 5.1 hereof) the director whose death,
disability, retirement, resignation or removal (with or without cause) resulted
in such vacancy on the Board in the manner set forth in Section 5.1 hereof;
provided, however, that such other individual so designated may not previously
have been a director of the Company who was removed for cause from the Board.
5.4 SPECIAL APPROVAL RIGHTS. In addition to any other action
requiring an Institutional Affirmative Board Vote, so long as the Institutional
Stockholders have the right to designate directors under Section 5.1(a), an
Institutional Affirmative Board Vote shall be required prior to the Company or
any of its Subsidiaries entering into a Significant Transaction.
5.5 COMMITTEES OF THE BOARD; SUBSIDIARY BOARDS. For so long as the
Board shall be comprised of the individuals contemplated by Section 5.1, unless
otherwise agreed to in writing by the Institutional Stockholders, the
Stockholders shall take all action necessary or appropriate to cause the Company
to have a compensation and an audit committee of the Board.
5.6 OBSERVER'S RIGHTS.
(a) In the event the Institutional Stockholders elect not
to exercise, or are prohibited by applicable law from exercising, their rights
to designate the Institutional Directors, or once appointed, the Institutional
Stockholders desire to remove all of the Institutional Directors, the
Institutional Stockholders shall have the right to have one (1) individual
(each, an "Observer") attend any meeting of the Board or any committee thereof.
In addition, the Institutional Stockholders shall have the right to appoint an
Observer to the board of directors of any Subsidiary in lieu of designating a
director thereto as provided by Section 5.5.
(b) An Observer shall not have the right to vote on any
matter presented to the Board of Directors or the board of directors of any
Subsidiary or any committee thereof. The Company shall give each Observer
written notice of each meeting thereof at the same time and in the same manner
as the members of the relevant Board or board of directors of any Subsidiary or
such committee thereof receive notice of such meetings, and the Company shall
permit each Observer to attend as an observer at all meetings thereof; provided,
however, that in the case of telephonic meetings, such
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Observer need receive only actual notice thereof at the same time and in the
same manner as notice is given to the directors.
(c) Each Observer shall be entitled to receive all
written materials and other information given to the directors in connection
with such meetings at the same time such materials and information are given to
the directors, and each Observer shall keep such materials and information
confidential. If the Company (or any Significant Subsidiary) proposes to take
any action by written consent in lieu of a meeting of its board of directors,
the Company (or such Significant Subsidiary) shall give written notice thereof
to each Observer prior to the effective date of such consent describing the
nature and substance of such action.
5.7 ACTION BY WRITTEN CONSENT OF STOCKHOLDERS. The parties hereto
agree that whenever any action is proposed to be taken by Stockholders without a
meeting, the Stockholders proposing to act by such consent shall, or shall cause
the Company to, give the Institutional Stockholders at least seven (7) days'
prior written notice (or such shorter notice period as is agreed to in writing)
of such proposed action specifying the action to be taken and the purpose
thereof (such notice requirement shall be deemed satisfied by execution of such
consent by Institutional Stockholders which hold in the aggregate more than
fifty percent (50%) of the shares of Common Stock on a Fully-Diluted Basis held
by all Institutional Stockholders).
5.8 DESIGNATION OF PROXY. In order to secure the performance of
the agreements set forth in the provisions of this Article V and in addition to
and not in lieu of Sections 5.1 through 5.3 hereof, each of the Management
Stockholders and Additional Management Stockholders hereby (i) grants to each of
the Chief Executive Officer of the Company and the Chief Financial Officer of
the Company, as the case may be, or any successor Chief Executive Officer of the
Company or Chief Financial Officer of the Company, as the case may be (the
"Management Representative"), an irrevocable proxy (which proxy is coupled with
an interest) to vote at any annual or special meeting of stockholders, or to
take action by written consent in lieu of such meeting with respect to, all of
the shares of Common Stock owned or held of record by such Management
Stockholder or Additional Management Stockholder solely for (a) the election of
directors designated in accordance with Section 5.1, (b) the removal of
directors in accordance with Section 5.2 and (c) the election of a director to
fill any vacancy on the Board in accordance with Section 5.3 and (ii) agrees to
enter into any agreement in the future necessary to effectuate the granting of
such proxy. Such proxy shall be in effect with respect to each share of Common
Stock owned or held of record by a Management Stockholder or Additional
Management Stockholder until such time as such Management Stockholder or
Additional Management Stockholder no longer owns or is the record holder of such
share.
5.9 DESIGNATION OF PROXY IN FAVOR OF COURT SQUARE. Each of the
Institutional Stockholders hereby (i) grants to Court Square an irrevocable
proxy (which proxy is acknowledged by such Stockholder to be coupled with an
interest) to vote at any annual or special meeting of stockholders, or to take
action by written consent in lieu of such meeting with respect to, all of the
shares of Common Stock owned or held of record
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by such Institutional Stockholder solely for (a) the election of directors
designated in accordance with Section 5.1, (b) the removal of directors in
accordance with Section 5.2 and (c) the election of a director to fill any
vacancy on the Board in accordance with Section 5.3 and (ii) agrees to enter
into any agreement in the future necessary to effectuate the granting of such
proxy. Such proxy shall be in effect with respect to each share of Common Stock
owned or held of record by an Institutional Stockholder until such time as such
Institutional Stockholder no longer owns or is the record holder of such share.
ARTICLE 6
CERTAIN COVENANTS OF THE PARTIES
6.1 REGISTRATION. In the event of a registration by the Company of
Common Stock under the Securities Act, each Stockholder shall, if requested by
the Institutional Stockholders, at a meeting convened for the purpose of
amending the Certificate of Incorporation and the By-laws of the Company, vote
(in each case as recommended by the Board by Institutional Affirmative Board
Vote):
(i) to increase the authorized shares of any or all
classes of the Company's Common Stock and if necessary or desirable,
change the par value of any class or series of Common Stock or change
the number of issued and outstanding shares of any class or series of
Common Stock whether by stock split, stock dividend, reclassification,
combination or the like; and
(ii) to amend, modify or repeal provisions of the
Certificate of Incorporation or By-laws of the Company (subject to the
rights and privileges set forth in the terms of the Series A Preferred)
to the extent such amendments, modifications or repeals are customary
and reasonably necessary in order to facilitate such registration.
6.2 MANAGEMENT STOCKHOLDERS; ADDITIONAL STOCKHOLDERS. The parties
hereto agree that as a condition precedent to the issuance by the Company of
shares of Common Stock, Series A Preferred or of Equity Equivalents (a) to any
employee or director of the Company or its Subsidiaries or (ii) to any Person
other than any such employee or director, any Institutional Stockholder, any
Management Stockholder or any Additional Management Stockholder, the Company
shall require such employee or director or other Person to execute and deliver
to the Company a Joinder Agreement and thereby enter into and become a party to
this Agreement. From and after such time, the term "Additional Management
Stockholder" shall be deemed to include such employees and directors and the
term "Additional Stockholder" shall be deemed to include such other Person.
Nothing contained herein nor the ownership of any Restricted Securities or
Restricted Preferred Securities shall confer upon any Management Stockholder or
Additional Management Stockholder the right to employment or to remain in the
employ of the Company or any of its Subsidiaries. Notwithstanding the foregoing,
to the extent approved by an Institutional Affirmative Board Vote and specified
in any Joinder Agreement (or amendment thereto) pursuant to which any employee
or director who is
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deemed to be an Additional Management Stockholder may become a party hereto or
in any other writing between such Person and the Company, the provisions of this
Agreement may be varied to be more or less restrictive with respect to any
Additional Management Stockholder.
6.3 STOCKHOLDER LIST; CERTAIN NOTICES. Upon the request of any
Institutional Stockholder, the Company shall deliver promptly to such
Institutional Stockholder a list setting forth the names of all Stockholders and
the number of shares of Common Stock and Equity Equivalents owned by each
Stockholder. In addition, the Company shall give each of the Institutional
Stockholders written notice of (a) the conversion of any shares of any class of
Common Stock or Equity Equivalents and (b) any record transfer of Restricted
Securities or Restricted Preferred Securities, setting forth the name of the
transferee and the number and type of Restricted Securities or Restricted
Preferred Securities being so transferred.
6.4 REGULATORY COMPLIANCE OR ACCOUNTING DETERMINATION COOPERATION.
(a) Before the Company redeems, purchases or otherwise
acquires, directly or indirectly, or converts or takes any action with respect
to the voting rights of, any shares of any class of its capital stock or any
securities convertible, exchangeable or exercisable for or into any shares of
any class of its capital stock, the Company will give written notice of such
pending action to the Institutional Stockholders. Upon the written request of
any Institutional Stockholder made within seven (7) days after its receipt of
any such notice, stating that after giving effect to such action such
Institutional Stockholder would have a Regulatory Problem (as defined below) or
an Accounting Determination, the Company will defer taking such action for such
period (not to extend beyond forty-five (45) days after such Institutional
Stockholder's receipt of the Company's original notice) as such Institutional
Stockholder requests to permit it and its Affiliates to reduce the quantity of
securities owned by them in order to avoid the Regulatory Problem or Accounting
Determination, as applicable. In the event the Company or any Institutional
Stockholder is precluded from taking any action under this Agreement within any
allotted period of time as a consequence of this Section, such period of time
shall be extended by the number of days during which the Company or such
Institutional Stockholder is precluded from acting.
(b) In the event that any Institutional Stockholder
determines in its good faith reasonable judgment that it has a Regulatory
Problem (as defined below) or an Accounting Determination, as applicable, the
Company agrees to take all such actions as are reasonably requested by such
Institutional Stockholder in order to effectuate and facilitate any Transfer by
such Institutional Stockholder of any securities of the Company then held by
such Institutional Stockholder to any Person designated by such Institutional
Stockholder, it being understood that Transfers pursuant to this subsection
shall only be for that quantity of the securities of the Company as is
reasonably deemed necessary by such Institutional Stockholder to remedy such
Regulatory Problem or an Accounting Determination, as applicable, and that such
Transfer is to be at the expense of such Institutional Stockholder and be
subject to all other provisions of the Stockholders' Agreement.
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(c) For purposes of this Agreement, "Regulatory Problem"
means (i) the Institutional Stockholder's investment in the Common Stock exceeds
any limitation to which it is subject, or is otherwise not permitted, under any
law, rule or regulation of any governmental authority (including any position to
that effect taken by such governmental authority), or (ii) restrictions are
imposed on the Institutional Stockholder as a result of any law, regulation,
rule or directive (whether or not having the force of law) of any governmental
or regulatory authority which, in the reasonable judgment of the Institutional
Stockholder, make it illegal or unduly burdensome for the Institutional
Stockholder to continue to hold such Common Stock.
6.5 PURCHASER REPRESENTATIVES. If the Company enters into any
negotiation or transaction involving the issuance of securities of another
Person to the Stockholders for which Rule 506 (or any similar rule then in
effect) promulgated under the Securities Act by the Commission may be available
with respect to such negotiation or transaction (including a merger,
consolidation or other reorganization) each Management Stockholder and
Additional Stockholder (if an individual) will, at the request of the Company,
appoint a purchaser representative (as such term is defined in Rule 501 under
the Securities Act) reasonably acceptable to the Company. If any such Management
Stockholder or Additional Stockholder appoints the purchaser representative
designated by the Company, the Company will pay the fees of such purchaser
representative, but if any such Management Stockholder or Additional Stockholder
declines to appoint the purchaser representative designated by the Company, such
Management Stockholder or Additional Stockholder will appoint, at his own
expense, another purchaser representative reasonably acceptable to the Company.
6.6 CONFIDENTIALITY. Each Stockholder agrees to use only in a
manner consistent with its status as a Stockholder and not in furtherance of any
other unrelated business purpose, any information which it may receive from, or
at the direction of, the Company with respect to the financial condition,
business or operations of the Company or any Subsidiary, and to hold such
information in confidence, except for disclosures (a) to its lenders and to its
legal counsel, accountants, and other professional advisors, (b) as required by
law, regulation or legal process or the rules of any stock exchange, (c) in
accordance with the prior written consent of the Company, (d) to its Affiliates
and their directors, officers, employees and professional advisors and (e) to
any prospective purchaser of Restricted Securities, Preferred Restricted
Securities or Debentures which agrees to keep such information confidential. The
information subject to the restrictions set forth in this Section 6.7 shall not
include information which (i) becomes generally available to the public other
than as a result of a disclosure by any Stockholder, or any Affiliate thereof
(other than the Company or its Subsidiaries) or representatives, (ii) was
available to a Stockholder on a non-confidential basis prior to its disclosure
by the Company, a Subsidiary or their representatives or (iii) becomes available
to a Stockholder on a non-confidential basis from a source other than the
Company, a Subsidiary or their representatives provided, that such source is not
bound by a confidentiality agreement with the Company, a Subsidiary or their
representatives.
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6.7 FINANCIAL REPORTING COVENANTS. The Company agrees to comply
with the financial reporting requirements of the Company required by the
Subscription Agreements.
ARTICLE 7
MISCELLANEOUS
7.1 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule that would
cause the application of the laws of any jurisdiction other than the State of
New York, except to the extent that the General Corporation Law of the State of
Delaware applies as a result of the Company being incorporated in the State of
Delaware, in which case such General Corporation Law shall apply.
7.2 ENTIRE AGREEMENT; AMENDMENTS. This Agreement (when read in
conjunction with the applicable Stockholder's subscription agreement)
constitutes the entire agreement of the parties with respect to the subject
matter hereof and this Agreement may be amended, modified or supplemented only
by a written instrument duly executed by the Company and the Institutional
Stockholders, except that (a) any amendment, modification or supplement that
materially, adversely and disproportionately affects the Management Stockholders
or the Additional Stockholders, as the case may be, as a group shall require the
consent of the Management Stockholders or the Additional Stockholders,
respectively, and (b) any amendment, modification or supplement that
disproportionately affects less than all of the Management Stockholders or the
Additional Stockholders, as the case may be, shall require the consent of the
Management Stockholders or the Additional Stockholders so affected. In the event
of an amendment, modification or supplement of this Agreement in accordance with
its terms, the Stockholders shall take all action necessary or appropriate,
within thirty (30) calendar days following such amendment, modification or
supplement, or as soon thereafter as is practicable, to cause the adoption of
any amendment to the Certificate of Incorporation and By-Laws of the Company
that may be required as a result of such amendment, modification or supplement
to this Agreement. The Stockholders hereby agree to vote their shares of
Restricted Securities and Restricted Preferred Securities to approve such
amendments to the Certificate of Incorporation and By-Laws of the Company.
7.3 TERM. Except as provided below in this Section 7.3, this
Agreement shall automatically and without further action terminate upon the
earliest to occur of (i) a Qualifying Offering and (ii) a Sale of the Company;
provided that upon the occurrence of a Qualifying Offering and prior to the
occurrence of a Sale of the Company, the provisions of Article IV and Article
VII and the prohibition on transfer by any Management Stockholder or Additional
Management Stockholder of any Unvested Shares set forth in the second proviso to
Section 2.4(a) shall continue in full force and effect (together with related
definitions).
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7.4 CERTAIN ACTIONS. Unless otherwise expressly provided herein,
whenever any action is required under this Agreement by:
(a) the Institutional Stockholders (as a group, as
opposed to the exercise by an Institutional Stockholder of its individual rights
hereunder), it shall be by the affirmative vote of the holders of Common Stock
representing more than fifty percent (50%) of the Common Stock on a
Fully-Diluted Basis then held by the Institutional Stockholders as a group or as
otherwise agreed in writing by the Institutional Stockholders as a group;
(b) the Management Stockholders (and Additional
Management Stockholders), it shall be by the Management Representative; or
(c) the Additional Stockholders (as a group, as opposed
to the exercise by an Additional Stockholder of its individual rights
hereunder), it shall be by the affirmative vote of the holders of Common Stock
representing more than fifty percent (50%) of the Common Stock on a
Fully-Diluted Basis then held by the Additional Stockholders as a group.
7.5 INSPECTION. For so long as this Agreement shall remain in
effect, this Agreement shall be made available for inspection by any Stockholder
at the principal executive offices of the Company, except that the Company may
elect to maintain confidentiality over any portion of any exhibits, schedules or
annexes which show the stock ownership of any Management Stockholder or
Additional Management Stockholder.
7.6 COMPLIANCE WITH REGULATIONS. Whenever a Stockholder is
entitled to purchase Restricted Securities or Restricted Preferred Securities
pursuant to the provisions of this Agreement, any closing time period specified
in such provision shall be tolled until any necessary governmental approval is
received, including without limitation approval under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended and the rules and regulations
promulgated thereunder; provided, that such tolling period shall not exceed
sixty (60) days.
7.7 WAIVER. No waiver by any party of any term or condition of
this Agreement, in one or more instances, shall be valid unless in writing, and
no such waiver shall be deemed to be construed as a waiver of any subsequent
breach or default of the same or similar nature.
7.8 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, personal representatives, successors
and permitted assigns (including without limitation transferees of Restricted
Securities and Restricted Preferred Securities); provided, however, that:
(a) nothing contained herein shall be construed as
granting any Stockholder the right to Transfer any of its Restricted Securities
or Restricted Preferred Securities except in accordance with this Agreement,
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(b) any Third Party which acquires Restricted Securities
or Restricted Preferred Securities in accordance with Section 2.5 or Article III
shall be bound by the provisions of this Agreement as an Additional Stockholder
with respect to such Restricted Securities or Restricted Preferred Securities
whether or not such Third Party acquired such Restricted Securities or
Restricted Preferred Securities from an Institutional Stockholder, Management
Stockholder, Additional Management Stockholder or Additional Stockholder, except
that the provisions of Article IV shall not apply to the Restricted Securities
or Restricted Preferred Securities of such Third Party (unless such Third Party
is also an employee or director of the Company or any of its Subsidiaries),
(c) none of the provisions of this Agreement shall apply
to any Transfer of Restricted Securities or Restricted Preferred Securities
subsequent to a Transfer pursuant to a registered public offering under the
Securities Act made in accordance with the Securities Act or in a Rule 144
Transaction, and
(d) notwithstanding any Transfer of Restricted Securities
or Restricted Preferred Securities by an Institutional Stockholder, Management
Stockholder, Additional Management Stockholder or Additional Stockholder to
another Stockholder, only the provisions of this Agreement which are expressly
applicable to such transferee Stockholder of such Restricted Securities or
Restricted Preferred Securities shall be applicable to such Stockholder and to
the Restricted Securities or Restricted Preferred Securities in the hands of
such transferee Stockholder.
7.9 REMEDIES. In the event of a breach by any party to this
Agreement of its obligations under this Agreement, any party injured by such
breach, in addition to being entitled to exercise all rights granted by law,
including recovery of damages and costs (including reasonable attorneys' fees),
will be entitled to specific performance of its rights under this Agreement. The
parties agree that the provisions of this Agreement shall be specifically
enforceable, it being agreed by the parties that the remedy at law, including
monetary damages, for breach of any such provision will be inadequate
compensation for any loss and that any defense in any action for specific
performance that a remedy at law would be adequate is waived. Such equitable
remedies and all other remedies are cumulative and not exclusive and shall be in
addition to any remedies which any party may have under this Agreement or
otherwise.
7.10 INCOME TAX WITHHOLDING; TAXES.
(a) Each Management Stockholder and Additional Management
Stockholder authorizes the Company to make any required withholding from such
Management Stockholder's or Additional Management Stockholder's compensation for
the payment of any and all income taxes and other sums that may be due any
governmental authority as a result of the receipt by the Management Stockholders
or the Additional Management Stockholders of compensation income under Section
83 of the Internal Revenue Code of 1986, as amended, or similar provisions of
state or local law, if required by applicable law, and agrees, if requested by
the Company, and in lieu of all or a portion of such withholding, to pay the
Company in a lump sum such amounts as the
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Company may be required to remit to any governmental authority on behalf of the
Management Stockholder or the Additional Management Stockholder in respect of
any such taxes and other sums.
(b) All transfer taxes due and owing on account of a
Transfer of Restricted Securities or Restricted Preferred Securities hereunder
shall be paid by the seller of such shares.
7.11 INVALID PROVISIONS. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future law, and if
the rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.
7.12 HEADINGS. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
7.13 FURTHER ASSURANCES; SUBSIDIARIES. Each party hereto shall
cooperate and shall take such further action and shall execute and deliver such
further documents as may be reasonably requested by any other party in order to
carry out the provisions and purposes of this Agreement. Any provision herein
that by its terms requires a Subsidiary of the Company to take any action or
refrain from taking any action shall be interpreted to require the Company to
cause such Subsidiary to take such action or to refrain from taking such action,
respectively, to the fullest extent permitted by law.
7.14 GENDER. Whenever the pronouns "he" or "his" are used herein
they shall also be deemed to mean "she" or "hers" or "it" or "its" whenever
applicable. Words in the singular shall be read and construed as though in the
plural and words in the plural shall be construed as though in the singular in
all cases where they would so apply.
7.15 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
7.16 PAYMENT. All payments hereunder shall be made in cash (or by
Management Note, as provided by Section 4.2 hereof), or by wire transfer of
immediately available funds, except that payments of amounts of less than
$500,000 may be by an official bank check.
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7.17 NOTICES.
(a) All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally against written receipt or by facsimile transmission or
mailed (by registered or certified mail, postage prepaid, return receipt
requested) or delivered by reputable overnight courier, fee prepaid to the
parties at the following addresses or facsimile numbers:
(i) If to any Institutional Stockholder, to:
Court Square Capital Limited
000 Xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: 000-000-0000
Attn: Xxxxxxx X. Xxxxxxx
with a copy to:
Xxxxxx, Xxxxx & Bockius LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: 000-000-0000
Attn: Xxxxxx X. Xxxxxx
(ii) If to any Management Stockholder, to:
MSX International, Inc.
000 Xxx Xxxxxxxxx
Xxxxxx Xxxxx, XX 00000
Attn: Chief Executive Officer
with a copy to:
MSX International, Inc.
000 Xxx Xxxxxxxxx
Xxxxxx Xxxxx, XX 00000
Attn: Chief Financial Officer
and
MSX International, Inc.
000 Xxx Xxxxxxxxx
Xxxxxx Xxxxx, XX 00000
Attn: Vice President and General Counsel
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(iii) If to the Company, to:
MSX International, Inc.
000 Xxx Xxxxxxxxx
Xxxxxx Xxxxx, XX 00000
Attn: Chief Executive Officer
with copies to:
Court Square Capital Limited
000 Xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: 000-000-0000
Attn: Xxxxxxx X. Xxxxxxx
and
Xxxxxx, Xxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: 000-000-0000
Attn: Xxxxxx X. Xxxxxx
(iv) If to any Additional Stockholder, to the
address of such Person set forth in the stock records of the Company.
(b) All such notices, requests and other communications
will be deemed delivered upon receipt. Any party from time to time may change
its address, facsimile number or other information for the purpose of notices to
that party by giving notice specifying such change to the other parties hereto
(subject to Section 7.4).
7.18 SERVICE OF PROCESS. EACH OF THE PARTIES HERETO IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS IN ANY ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE PARTY AT
THE ADDRESS SPECIFIED IN THIS AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE
FIFTEEN (15) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED
TO LIMIT THE ABILITY OF ANY PARTY HERETO TO SERVE ANY SUCH LEGAL PROCESS,
SUMMONS, NOTICES AND DOCUMENTS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW
OR TO OBTAIN JURISDICTION OVER OR TO BRING ACTIONS, SUITS OR PROCEEDINGS AGAINST
ANY OF THE OTHER PARTIES HERETO IN SUCH OTHER JURISDICTIONS, AND IN SUCH MANNER,
AS MAY BE PERMITTED BY ANY APPLICABLE LAW.
7.19 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES
ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF THIS AGREEMENT.
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EACH OF THE PARTIES HERETO ALSO WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH
BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF SUCH PARTY. THE SCOPE OF
THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY
BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT,
INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH OF THE PARTIES
HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS
LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
7.20 WAIVER OF FIDUCIARY DUTIES; CORPORATE OPPORTUNITY.
(a) INSTITUTIONAL STOCKHOLDERS AND THEIR RESPECTIVE
AFFILIATES SHALL HAVE NO DUTIES, COMMITMENTS, OBLIGATIONS OR COVENANTS,
EXPRESSED OR IMPLIED, OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT,
THE REGISTRATION RIGHTS AGREEMENT OR THE SUBSCRIPTION AGREEMENTS. EXCEPT AS SO
SET FORTH HEREIN AND THEREIN, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
THE INSTITUTIONAL STOCKHOLDERS SHALL NOT HAVE ANY FIDUCIARY OR SIMILAR DUTY, OR
ANY LIABILITY RELATING THERETO, TO THE COMPANY OR TO ANY OTHER STOCKHOLDERS (OR
ANY AFFILIATE OF THE COMPANY OR SUCH OTHER STOCKHOLDER) IN CONNECTION WITH THE
COMPANY OR THE COMPANY'S BUSINESS OR AFFAIRS, AND THE COMPANY, EACH STOCKHOLDER
AND EACH AFFILIATE OF SUCH STOCKHOLDER HEREBY WAIVES ANY CLAIM FOR BREACH OF
FIDUCIARY DUTY AGAINST ANY INSTITUTIONAL STOCKHOLDER OR ANY AFFILIATE OF ANY
INSTITUTIONAL STOCKHOLDER, AS THE CASE MAY BE, AND EACH STOCKHOLDER AGREES THAT
IT SHALL NOT TAKE ANY ACTION TO CAUSE THE COMPANY TO BRING ANY CLAIM FOR BREACH
OF FIDUCIARY DUTY AGAINST ANY INSTITUTIONAL STOCKHOLDER OR ANY AFFILIATE OF ANY
INSTITUTIONAL STOCKHOLDER, IN EACH CASE WITH RESPECT TO THE COMPANY OR THE
COMPANY'S BUSINESS OR AFFAIRS.
(b) WITHOUT LIMITING THE GENERALITY OF 7.20(a) ABOVE, TO
THE FULLEST EXTENT PERMITTED BY ANY APPLICABLE LAW, THE DOCTRINE OF CORPORATE
OPPORTUNITY, OR ANY OTHER ANALOGOUS DOCTRINE, SHALL NOT APPLY WITH RESPECT TO
THE INSTITUTIONAL STOCKHOLDERS OR ANY OF THEIR RESPECTIVE AFFILIATES OR TO THE
COMPANY. IN PARTICULAR, (I) EACH INSTITUTIONAL STOCKHOLDER
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SHALL HAVE THE RIGHT TO ENGAGE IN BUSINESS ACTIVITIES, WHETHER OR NOT IN
COMPETITION WITH THE COMPANY OR THE COMPANY'S BUSINESS ACTIVITIES, WITHOUT
CONSULTING ANY OTHER STOCKHOLDER AND (II) NO INSTITUTIONAL STOCKHOLDER OR ANY OF
ITS AFFILIATES SHALL HAVE ANY OBLIGATION TO ANY OTHER STOCKHOLDER WITH RESPECT
TO ANY OPPORTUNITY TO ACQUIRE PROPERTY OR MAKE INVESTMENTS AT ANY TIME.
7.21 VESTING OF CERTAIN MANAGEMENT STOCK. Notwithstanding
any other provision of this Agreement or the Management Subscription Agreement
between Xxxxx X. Xxxxxx (the "Executive") and the Company dated as of January 3,
1997 (the "Xxxxxx Management Subscription Agreement") which conditions vesting
of the Management Stock owned by Xxxxx X. Xxxxxx (the "Executive") upon the
continued employment of the Executive, should the Executive's Employment Period
(as defined in the Employment Agreement between the Executive and the Company,
dated as of November 12, 1996, as amended (the "Employment Agreement"))
terminate prior to the third anniversary of the Xxxxxx Management Subscription
Agreement (the "Third Anniversary") (unless terminated by the Company for
"cause" or by the Executive for "Good Reason", as such terms are defined in the
Employment Agreement), any unvested portion of the Management Stock issued to
the Executive on January 3, 1997 (being 3,000 shares of Class A Common Stock of
the Company, as adjusted to reflect all stock splits, stock dividends,
recapitalization or similar events affecting such shares subsequent to such
date) which would have vested during the period from the effective date of
termination through the Third Anniversary shall be deemed vested on the
effective date of termination of the Executive's employment. After the Third
Anniversary, vesting of such shares shall continue only if the Executive remains
employed by the Company or is otherwise eligible for vesting as stated in and
subject to the terms and conditions of this Agreement and Xxxxxx Management
Subscription Agreement.
43
48
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
MSX INTERNATIONAL, INC.
By:
-----------------------------------------
Name: Xxxxxxxxx X. Xxxxxxx
Title: Vice President
COURT SQUARE CAPITAL LIMITED
By:
-----------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
MANAGEMENT STOCKHOLDERS
Billig Family Limited Partnership
By:
-----------------------------------------
Name:
Title:
--------------------------------------------
Xxxxxxxxx X. Xxxxxxx
--------------------------------------------
Xxxxxx Xxxxxxxxx
--------------------------------------------
Xxxx X. Risk
49
Xxxxx Xx Xxx and Xxxxx X. Xxxxxx, Trustees
under Trust Agreement, dated October 16,
1989, between Xxxxx Xx Xxx, Settlor, and
Xxxxx Xx Xxx, Trustee
By:
-----------------------------------------
Name:
Title:
CVC GROUP
--------------------------------------------
Xxxxxxx X. Xxxxxx
Xxxxxxx Partnership
By:
-----------------------------------------
Name:
Title:
63BR Partnership
By:
-----------------------------------------
Name:
Title:
--------------------------------------------
Xxxxxx Xxxxxx
--------------------------------------------
Xxxxxxx X. Xxxxxxx
50
Alchemy, L.P.
By:
-----------------------------------------
Name:
Title:
--------------------------------------------
M. Xxxxxx Xxxxxxxx
--------------------------------------------
Xxxxxx Xxxxxxxxx
--------------------------------------------
Xxxxx X. Xxxxxx
--------------------------------------------
Xxxxx X. Xxxx
ADDITIONAL MANAGEMENT STOCKHOLDERS
--------------------------------------------
Xxxxx Xxxxxxxx
--------------------------------------------
Xxxxxxx Xxxxxx
51
EXHIBIT A
Form of Joinder Agreement
MSX INTERNATIONAL, INC.
000 Xxx Xxxxxxxxx
Xxxxxx Xxxxx, XX 00000
Attention: Chief Executive Officer
Ladies & Gentlemen:
In consideration of the [transfer][issuance] to the
undersigned of [Describe security being transferred/issued] of MSX
INTERNATIONAL, INC., a Delaware corporation (the "Company"), the undersigned
[represents that it is a Permitted Transferee of [Insert name of transferor]
and]* agrees that, as of the date written below, [he] [she] [it] shall become a
party to[, and a Permitted Transferee as defined in,]* that certain Amended and
Restated Stockholders' Agreement effective as of November 28, 2000, as such
agreement may have been amended, supplemented or modified from time to time (the
"Agreement"), among the Company and the persons named therein, and [as a
Permitted Transferee shall be fully bound by, and subject to, all of the
covenants, terms and conditions of the Agreement that were applicable to the
undersigned's transferor,]* [shall be fully bound by, and subject to, the
covenants, terms and conditions of the Agreement as provided under Section 7.8
of the Agreement]** [shall be fully bound by, and subject to, all of the
covenants, terms and conditions of the Agreement,]*** as though an original
party thereto and shall be deemed a [Management Stockholder] [Additional
Stockholder] [Institutional Stockholder]**** for [all]* [solely for]** [all]***
purposes thereof.
Executed as of the day of , .
SIGNATORY:_______________________
Address:
ACKNOWLEDGED AND ACCEPTED:
MSX INTERNATIONAL, INC.
By:______________________________
Name:
Title:
* Include if signatory is a Permitted Transferee
** Include if signatory is a Third Party
*** Include if signatory is an Additional Stockholder
**** Include if signatory is receiving securities from a Management Stockholder,
an Additional Stockholder or an Institutional Stockholder; if signatory is an
Additional Stockholder receiving securities issued by the Company insert
[Additional Stockholder]
52
EXHIBIT B
(1) Direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;
(2) Investments in commercial paper maturing within 270 days from
the date of acquisition thereof and having, at such date of acquisition, the
highest credit rating obtainable from S&P or from Xxxxx'x;
(3) Investments in (i) certificates of deposit, banker's
acceptances and time deposits maturing within one year from the date of
acquisition thereof issued or guaranteed by or placed with, and money market
deposit accounts issued or offered by, any domestic office of any commercial
bank organized under the laws of the United States of America or any state
thereof that has a combined capital and surplus profits of not less than
$250,000,000 or (ii) Eurocurrency time deposits maturing within 360 days from
the date of acquisition thereof with any branch or office of any commercial bank
organized under the laws of a country that is a member of the Organization for
Economic Cooperation and Development, and comparable in credit quality to the
investments permitted under the preceding clause (i).
(4) Repurchase obligations with a term of not more than 30 days
for, and secured by, underlying securities of the types described in clause (1)
above entered into with a bank meeting the qualifications described in clause
(3) above;
(5) Investments in securities with maturities of six months or
less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least "A" by S&P or "A-1"
by Xxxxx'x;
(6) Investments in money market funds complying with the risk
limiting conditions of Rule 2a-7 (or any successor rule) of the Securities and
Exchange Commission under the Investment Company Act of 1940, as amended;
(7) In the case of any Foreign Subsidiary, investments comparable
in credit quality and tenor to those referred to above and customarily used by
corporations for cash management purposes in any jurisdiction outside the United
States of America.
For purposes hereof,
"Foreign Subsidiary" means any Subsidiary not incorporated or organized
under the laws of the United States of America, any state thereof or the
District of Columbia.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity (a) of which securities or
other ownership interests representing more than 50% of the equity or more than
50% of the ordinary voting power or more than 50% of the general partnership
interests are, at the time any determination is being made, owned, controlled or
held, or (b) that is, at the time any determination is made, otherwise
Controlled, by a Person or one or more subsidiaries of a Person or by a Person
and one or more subsidiaries of a Person, provided that the term "subsidiary,"
when used in respect of the Company or any of its Subsidiaries, shall not
include any foreign joint venture in which the Company or any such Subsidiary
owns less than or equal to 50% of the equity interest in such joint venture.
53
EXHIBIT C
Legends
Shares of Restricted Securities and shares of Restricted
Preferred Securities shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT EFFECTIVE AS OF NOVEMBER 28,
2000 AMONG MSX INTERNATIONAL, INC. (THE "COMPANY") AND ITS STOCKHOLDERS AS MAY
BE AMENDED FROM TIME TO TIME, AND MAY NOT BE TRANSFERRED, SOLD, ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF (A "TRANSFER") EXCEPT IN
ACCORDANCE WITH THE PROVISIONS THEREOF AND ANY TRANSFEREE OF THESE SECURITIES
SHALL BE SUBJECT TO THE TERMS OF SUCH AGREEMENT. COPIES OF THE STOCKHOLDERS'
AGREEMENT, AS AMENDED, ARE MAINTAINED WITH THE CORPORATE RECORDS OF THE COMPANY
AND ARE AVAILABLE FOR INSPECTION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
COMPANY.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR STATE
SECURITIES LAWS, AND NO TRANSFER OF THESE SECURITIES MAY BE MADE EXCEPT (A)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (B) PURSUANT TO
AN EXEMPTION THEREFROM WITH RESPECT TO WHICH THE COMPANY MAY REQUIRE AN OPINION
OF COUNSEL FOR THE HOLDER THAT SUCH TRANSFER IS EXEMPT FROM THE REQUIREMENTS OF
THE ACT, AS PROVIDED BY THE TERMS OF THE STOCKHOLDERS' AGREEMENT DESCRIBED
ABOVE.
THE POWERS, DESIGNATIONS, PREFERENCES, AND RELATIVE PARTICIPATING, OPTIONAL OR
OTHER SPECIAL RIGHTS, AND THE QUALIFICATIONS, LIMITATIONS, OR RESTRICTIONS OF
SUCH PREFERENCES AND/OR RIGHTS OF EACH CLASS OR SERIES OF CAPITAL STOCK OF THE
COMPANY ARE SET FORTH IN THE CERTIFICATE OF INCORPORATION. THE CORPORATION WILL
FURNISH A COPY OF THE CERTIFICATE OF INCORPORATION TO THE HOLDER OF THIS
CERTIFICATE WITHOUT CHARGE UPON REQUEST.
54
EXHIBIT D
Board of Directors
Institutional Directors
Xxxxxxx X. Xxxxxx, Xx.
Xxxxxxx X. Xxxxxxx
Xxx Xxxxxxx
Xxxxxxx X. Xxxxxxxxx
Management Director
Xxxxxx Xxxxxxxxx
Disinterested Directors
X.X. Xxxxxx
Xxxxx Xxxx
