EXHIBIT 10.2
DESA HOLDINGS CORPORATION
STOCKHOLDERS AGREEMENT
Dated as of November 26, 1997
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "Agreement") is entered into as of
November 26, 1997, by and among Desa Holdings Corporation, a Delaware
corporation (the "Company"), those persons listed as the JWC Holders on the
signature pages hereof (the "JWC Holders"), those persons listed as the
Management Holders on the signature pages hereof (the "Management Holders") and
those persons listed as the Other Holders on the signature pages hereof (the
"Other Holders").
RECITALS
A. Concurrently with the execution and delivery of this Agreement, the
Company has issued certain shares of Common Stock (as hereinafter defined) and
certain warrants to acquire from the Company shares of Common Stock.
B. All of the Stockholders (as hereinafter defined), including (i)
those acquiring concurrently with the execution and delivery of this Agreement
certain shares of Common Stock and certain warrants to acquire from the Company
shares of Common Stock and (ii) those retaining at the date hereof certain
equity interests in the Company, desire to enter into this Agreement for the
purpose of regulating certain aspects of the Stockholders' relationships with
one another and with the Company.
AGREEMENT
In consideration of the foregoing recitals and the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement, the parties to this Agreement mutually agree as follows:
ARTICLE 1
1.1 Definitions. For the purposes of this Agreement, the following
terms shall be defined as follows:
The "1933 Act" shall mean the Securities Act of 1933, as amended, or
any successor federal statute thereto, and the rules and regulations of the SEC
promulgated thereunder, all as the same shall be in effect from time to time.
The "1934 Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute thereto, and the rules and regulations
of the SEC promulgated thereunder, all as the same shall be in effect from time
to time.
An "Affiliate" of a specified Person (a) shall mean (i) a Person who,
directly or indirectly, through one or more intermediaries, controls or is
controlled by or is under
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common control with such specified Person, (ii) a director or executive officer
of such specified Person, (iii) a general partner of such specified Person if
such specified Person is a partnership, and (iv) a manager of such specified
Person if such specified Person is a limited liability company, and, (b) when
used with respect to the Company or any Subsidiary of the Company, shall include
any holder of capital stock or any officer or director of the Company or any
Subsidiary of the Company.
"Business Day" shall mean any day, other than a Saturday, Sunday or
legal holiday, on which banks in both New York, New York and Boston,
Massachusetts are permitted to be open for business.
"Common Stock" shall mean shares of Voting Common Stock or Nonvoting
Common Stock.
"Common Stock Equivalents" shall mean, as of any date, (a) all shares
of Common Stock outstanding as of such date and (b) all shares of Common Stock
that may be acquired as of such date pursuant to Vested Options.
The "Company" shall mean Desa Holdings Corporation, a Delaware
corporation, and its successors and assigns.
"Company Notice Period" shall have the meaning set forth in Section
2.4.
"Demand Registration" shall have the meaning set forth in Section 3.2.
"Dragalong Group" shall have the meaning set forth in Section 2.3.
"Election Period" shall have the meaning set forth in Section 4.17.
"Equity Partners Agreement" shall have the meaning set forth in Section
4.8.
"First Refusal Offer" shall have the meaning set forth in Section 2.4.
"First Refusal Offer Notice" shall have the meaning set forth in
Section 2.4.
"HMTF Attendee" shall have the meaning set forth in Section 2.5.
"HMTF Holders" shall mean HMTF Inc. and its officers, directors and
Affiliates, together with those persons whose names are set forth on Exhibit A
hereto and any spouse, children, parents or siblings (whether natural, step or
adopted) or trust solely for the benefit of one or more such persons and shall
also include Permitted Transferees of the HMTF Holders unless immediately prior
to such Transfer such transferee was a Management Holder, a JWC Holder or a UBS
Holder.
"HMTF Inc." shall mean Hicks, Muse, Xxxx & Xxxxx Incorporated, a
Delaware corporation.
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"Holder" shall have the meaning set forth in Section 3.1.
"Initiating Stockholder" shall have the meaning set forth in Section
2.2.
"JWC Equity Funding" shall mean JWC Equity Funding, Inc., a Delaware
corporation.
"JWC Equity Partners" shall mean X.X. Childs Equity Partners, L.P., a
Delaware limited partnership.
"JWC Holders" shall have the meaning set forth in the preamble
preceding the recitals to this Agreement and shall also include (a) Permitted
Transferees of the JWC Holders (other than the Warrant Holders) unless
immediately prior to such Transfer such transferee was a Management Holder or an
Other Holder and (b) any Permitted Transferee in a Permitted Transfer permitted
under clause (k) of the definition of "Permitted Transfer" if, immediately prior
to such Transfer, such Permitted Transferee was a JWC Holder.
"JWC/UBS Holders Notice Period" shall have the meaning set forth in
Section 2.4.
"JWC Inc." shall mean X.X. Childs Associates, Inc., a Delaware
corporation.
"JWC L.P." shall mean X.X. Childs Associates, L.P., a Delaware limited
partnership.
"JWC Representative" shall have the meaning set forth in Section 4.8.
"Management Agreement" shall mean that Management Agreement dated as of
the date hereof among the Company, the Operating Company and JWC L.P.
"Management Holders" shall have the meaning set forth in the preamble
preceding the Recitals to this Agreement and shall also include (a) any
director, officer or management employee of the Company or any of its
Subsidiaries (other than JWC Holders or UBS Holders) who, with the written
consent of the Company and the JWC Representative, hereafter becomes a party to
this Agreement, (b) Permitted Transferees of the Management Holders, unless
immediately prior to such Transfer such transferee was a JWC Holder or an Other
Holder, and (c) any Permitted Transferees in a Permitted Transfer permitted
under clause (k) of the definition of "Permitted Transfer" herein if,
immediately prior to any such Transfer, such transferee was a Management Holder.
"Nonvoting Common Stock" shall mean shares of Nonvoting Common Stock,
par value $.01 per share, of the Company.
"Offered Securities" shall have the meaning set forth in Section 2.4.
"Operating Company" shall mean Desa International, Inc., a Delaware
corporation, in its capacity as a Subsidiary of the Company.
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"Other Holders" shall have the meaning set forth in the preamble
preceding the recitals to this Agreement and shall also include Permitted
Transferees of the Other Holders and any Permitted Transferee in a Permitted
Transfer permitted under clause (k) of the definition of "Permitted Transfer"
herein, unless immediately prior to any such Transfer such transferee was a
Management Holder or a JWC Holder.
"Participating Offerees" shall have the meaning set forth in Section
2.2.
"Participation Notice" shall have the meaning set forth in Section 2.2.
"Participation Securities" shall have the meaning set forth in Section
2.2.
"Permitted Transfer" shall mean:
(a) a Transfer of any Subject Securities between any JWC Holder or
UBS Holder or HMTF Holder or Management Holder who is a
natural person and such Stockholder's spouse, children,
parents or siblings (whether natural, step or by adoption) or
to a trust solely for the benefit of one or more of any of
such Persons, provided that with respect to any such Transfer,
the Stockholder retains, as trustee or by some other means,
the sole authority to vote such Subject Securities (including
any Common Stock that may be acquired pursuant to any Vested
Options);
(b) a Transfer of Subject Securities by a JWC Holder to JWC Inc.
or to the officers, employees or consultants of JWC Inc. or to
a corporation or corporations or to a partnership or
partnerships (or other entity for collective investment, such
as a fund) which is (and continues to be) controlled by,
controlling or under common control with JWC Inc.;
(c) a Transfer of Subject Securities (i) between or among the
Management Holders, (ii) between or among the JWC Holders,
(iii) between or among the UBS Holders, (iv) between or among
the HMTF Holders or (v) between or among the Warrant Holders;
(d) a Transfer of Subject Securities between any Stockholder who
is a natural person and such Stockholder's estate, executors,
legal representative, guardian or conservator, or the Transfer
of Subject Securities between the estate of any Stockholder
and such Stockholder's spouse, children, parents or siblings
(whether natural, step or by adoption) or to a trust solely
for the benefit of one or more of any of such Persons;
(e) (i) a bona fide pledge of Subject Securities by a JWC Holder
or a UBS Holder or an HMTF Holder to a bank or financial
institution or (ii) any pledge existing at the date hereof of
Subject Securities by a Management Holder;
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(f) a Transfer of Subject Securities between any Other Holder or
any JWC Holder and any Affiliate of such holder, provided that
such Affiliate (i) shall remain at all times an Affiliate of
such Stockholder and (ii) is an Accredited Investor at the
time of such transfer;
(g) a Transfer of Subject Securities between any Other Holder or
any JWC Holder and any shareholder, member, officer, director
or direct or indirect general or limited partner (or officer
or director of such general or limited partner) of such
holder;
(h) a Transfer of Subject Securities by a HMTF Holder to HMTF Inc.
or to the officers or employees of HMTF Inc. or to a
corporation or corporations or to a partnership or
partnerships (or other entity for collective investment, such
as a fund) which is (and continues to be) controlled by,
controlling or under common control with HMTF Inc.;
(i) a Transfer of Subject Securities by a UBS Holder to UBS
Capital or to the officers, employees or consultants of UBS
Capital or to a corporation or corporations or to a
partnership or partnerships (or other entity for collective
investment, such as a fund) which is (and continues to be)
controlled by, controlling or under common control with UBS
Capital;
(j) a Transfer of Warrants or Warrant Shares (each as defined in
the Tagalong/Dragalong Agreement) pursuant to the terms of
Article II of the Tagalong/Dragalong Agreement; and
(k) a Transfer by a JWC Holder or a UBS Holder of any of those
576,287.8200 shares of Voting Common Stock (with such number
of shares to be adjusted from time to time to reflect any
split or combination of shares of Common Stock) issued by the
Company to JWC Equity Funding on or about the date hereof.
No Permitted Transfer shall be effective unless and until the transferee of the
Subject Securities so transferred executes and delivers to the Company an
executed counterpart of this Agreement in accordance with Section 4.12 hereof.
"Permitted Transferee" shall mean any Person who shall have acquired
and who shall hold any Subject Securities pursuant to a Permitted Transfer.
"Person" means an individual, corporation, partnership, limited
liability company, trust, unincorporated association, government or any agency
or political subdivision thereof, or other entity.
"Preemptive Rights Notice" shall have the meaning set forth in Section
4.17.
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"Preferred Stock" shall mean shares of any class or series of preferred
stock of the Company, whether now authorized and existing or hereafter
authorized and existing.
"Public Float Date" shall mean the date on which shares of Common Stock
shall have been sold pursuant to one or more Public Offerings in which the
aggregate proceeds (before deducting underwriter discounts and commissions) to
the Company and the selling stockholders, if any, of such shares equal or exceed
$50 million.
A "Public Offering" shall mean the completion of a sale of shares of
Common Stock pursuant to a registration statement which has become effective
under the 1933 Act, excluding registration statements on Form S-4 or Form S-8 or
similar limited purpose forms.
"Registrable Securities" shall mean, as of any date, with respect to
any Stockholder, (a) all shares of Common Stock held by such Stockholder as of
such date and (b) all shares of Common Stock that may be acquired as of such
date by such Stockholder upon exercise of Vested Options; provided that, as to
any particular Registrable Securities, such securities shall cease to be
Registrable Securities when (i) a registration statement (other than a
registration statement on Form S-8) with respect to the sale or exchange of such
securities shall have become effective under the 1933 Act and such securities
shall have been disposed of in accordance with such registration statement, (ii)
a registration statement on Form S-8 with respect to such securities shall have
become effective under the 1933 Act, (iii) such securities shall have been sold
or acquired under a Rule 144 Transaction, or (iv) such securities have ceased to
be outstanding.
"Rule 144 Transaction" means a transfer of Common Stock (a) complying
with Rule 144 under the 1933 Act as such rule or a successor thereto 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 (i) and (ii) of
paragraph (g) of Rule 144 as in effect on the date hereof) and (b) occurring at
a time when the Common Stock is registered pursuant to Section 12 of the 1934
Act.
"Sale Request" shall have the meaning set forth in Section 2.3.
"Schedule of Stockholders" shall refer to the Schedule of Stockholders
attached hereto as Exhibit B as from time to time amended pursuant to Section
4.2.
"Stockholder" shall mean any party hereto other than the Company,
including any Person who hereafter becomes a party to this Agreement pursuant to
Section 4.12 hereof.
"Stockholder Group" shall mean any of (a) the Other Holders (including
the HMTF Holders and the UBS Holders) taken as a group, (b) the JWC Holders
taken as a group, (c) the Management Holders taken as a group, (d) the HMTF
Holders taken as a group, and (e) the UBS Holders taken as a group. The Company
shall not in any case be deemed to be a member of any Stockholder Group (whether
or not the Company holds or repurchases any Common Stock Equivalents). Where
provisions of this Agreement contemplate that actions be taken or notices be
given by a Stockholder Group, actions taken or notices given by the holders
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of a majority of the Common Stock Equivalents held in the aggregate by a
Stockholder Group shall be deemed to be actions taken or notices given by such
Stockholder Group, and the other parties hereto are and will be entitled to rely
on any action so taken or any notice so given by such majority holders of a
Stockholder Group.
"Subject Securities" shall mean any Common Stock or Vested Options now
or hereafter held by any Stockholder.
"Subsidiary" with respect to any Person (the "parent") shall mean any
Person of which such parent, at the time in respect of which such term is used,
(a) owns directly or indirectly more than fifty percent (50%) of the equity or
beneficial interest, on a consolidated basis, or (b) owns directly or controls
with power to vote, indirectly through one or more Subsidiaries, shares of
capital stock or beneficial interest having the power to cast at least a
majority of the votes entitled to be cast for the election of directors,
trustees, managers or other officials having powers analogous to those of
directors of a corporation. Unless otherwise specifically indicated, when used
herein the term Subsidiary shall refer to a direct or indirect Subsidiary of the
Company.
"Tagalong/Dragalong Agreement" shall mean the Tagalong/Dragalong
Agreement of even date herewith among JWC Equity Funding, Inc. and the UBS
Holders.
"Third Party" means any Person other than the Company.
"Third Party Offer" shall have the meaning set forth in Section 2.4.
"Third Party Offeror" shall have the meaning set forth in Section 2.4.
"Transfer" shall mean to transfer, sell, assign, pledge, hypothecate,
give, grant or create a security interest in or lien on, place in trust (voting
or otherwise), assign an interest in or in any other way encumber or dispose of,
directly or indirectly and whether or not by operation of law or for value, any
of the Subject Securities.
"UBS Attendee" shall have the meaning set forth in Section 2.5.
"UBS Capital" shall mean UBS Capital LLC, a Delaware limited liability
company.
"UBS Holders" shall mean UBS Capital and shall also include Permitted
Transferees of UBS Capital (other than the Warrant Holders), unless immediately
prior to such Transfer such transferee was a Management Holder, a JWC Holder or
an HMTF Holder.
"Vested Options" shall mean, as of any date, options, warrants,
securities and other rights to acquire from the Company, by exercise,
conversion, exchange or otherwise, shares of Common Stock or securities
convertible into Common Stock, but only to the extent that such options,
warrants, securities and other rights are both, as of such date, (a) vested
under the terms thereof or under any plan, agreement or instrument pursuant to
which such options,
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warrants, securities and other rights were issued, and (b) so exchangeable,
exercisable or convertible.
"Voting Common Stock" shall mean shares of Common Stock, par value $.01
per share, of the Company.
"Warrant Holders" shall mean the Persons, if any, to whom any of the
Warrants or Warrant Shares may be transferred in a Permitted Transfer pursuant
to clause (j) of the definition of "Permitted Transfer" contained herein and
shall also include Permitted Transferees of the Warrant Holders, unless
immediately prior to such Transfer such transferee was a Management Holder, a
JWC Holder, a UBS Holder or an HMTF Holder.
ARTICLE 2
Transferability and Voting
2.1 Restrictions on Transfers
(a) Without the written consent of the holders of a majority
of the Common Stock Equivalents at the time held by the JWC Holders, no
Management Stockholder shall Transfer all or any part of the Subject Securities
at the time held by such Management Stockholder to any Person other than in
accordance with the provisions of Section 2.3 or in accordance with and as a
Participating Offeree (as defined in Section 2.2 hereof) under the provisions of
Section 2.2 hereof. Without the written consent of the holders of a majority of
the Common Stock Equivalents at the time held by the JWC Holders, no Other
Holder shall Transfer all or any part of the Subject Securities at the time held
by such Other Holder to any Person other than in accordance with the provisions
of Section 2.3 or 2.4 hereof or in accordance with and as a Participating
Offeree under the provisions of Section 2.2 hereof. Without the written consent
of the holders of a majority of the Common Stock Equivalents at the time held by
the Other Holders, no JWC Holder shall Transfer all or any part of the Subject
Securities at the time held by such JWC Holder to any Person other than in
accordance with the provisions of Section 2.3 hereof or in accordance with and
as an Initiating Stockholder (as defined in Section 2.2 hereof) or a
Participating Offeree under the provisions of Section 2.2 hereof.
(b) The provisions of this Section 2.1 shall not apply to a
Transfer which is (i) a Permitted Transfer, (ii) pursuant to a Public Offering,
or (iii) after the Public Float Date, pursuant to a Rule 144 Transaction.
2.2 Tagalong. No Stockholder shall Transfer any Subject Securities to a
Third Party without complying with the terms and conditions set forth in this
Section 2.2, as applicable, provided that any Stockholder may be an Initiating
Stockholder (as defined below) under this Section 2.2 only if such Transfer is
permitted under Section 2.1(a).
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(a) Any Stockholder (the "Initiating Stockholder") desiring to
Transfer such Subject Securities shall give not less than 15 days prior written
notice of such intended Transfer to each other Stockholder ("Participating
Offerees") and to the Company. Such notice (the "Participation Notice") shall
set forth terms and conditions of such proposed Transfer, including the name of
the prospective transferee, the number of Common Stock Equivalents proposed to
be transferred (the "Participation Securities") by the Initiating Stockholder,
the purchase price per share proposed to be paid therefor and the payment terms
and type of Transfer to be effectuated. Within 10 days following the delivery of
the Participation Notice by the Initiating Stockholder to each Participating
Offeree and to the Company, each Participating Offeree shall, by notice in
writing to the Initiating Stockholder and to the Company, have the opportunity
and right to sell to the purchasers in such proposed Transfer (upon the same
terms and conditions as the Initiating Stockholder) up to that number of Subject
Securities representing Common Stock Equivalents at the time held by such
Participating Offeree that constitutes the same percentage of the aggregate
number of Common Stock Equivalents owned by such Participating Offeree as of the
date of such proposed Transfer as the number of Subject Securities representing
Common Stock Equivalents to be sold in such proposed Transfer by the Initiating
Stockholder (after giving effect to the provisions of this and the following
sentence) constitutes of the aggregate number of Common Stock Equivalents owned
as of the date of such proposed Transfer by the Initiating Stockholder. As
contemplated by the preceding sentence, the amount of Participation Securities
to be sold by an Initiating Stockholder and the amount of Subject Securities to
be sold by any Participating Offerees shall be adjusted to the extent necessary
to provide for sales by the Initiating Stockholder and Participating Offerees of
an aggregate number of Subject Securities (i) which is not greater than the
number of Participation Securities originally proposed to be transferred by the
Initiating Stockholder and (ii) such that the number of Subject Securities
representing Common Stock Equivalents at the time held by each Participating
Offeree to be sold in such proposed Transfer constitutes the same percentage of
the aggregate number of Common Stock Equivalents owned by such Participating
Offeree as of the date of such proposed Transfer as the number of Subject
Securities representing Common Stock Equivalents to be sold in such proposed
Transfer by the Initiating Stockholder (after giving effect to the provisions of
this Section 2.2) constitutes of the aggregate number of Common Stock
Equivalents owned as of the date of such proposed Transfer by the Initiating
Stockholder.
(b) At the closing of any proposed Transfer in respect of
which a Participation Notice has been delivered, the Initiating Stockholder,
together with all Participating Offerees so electing to sell Subject Securities
pursuant to this Section 2.2 shall deliver to the proposed transferee
certificates and/or other instruments representing the Subject Securities to be
sold, free and clear of all liens and encumbrances, together with stock or other
appropriate powers duly endorsed therefor, and shall receive in exchange
therefor the consideration to be paid or delivered by the proposed transferee in
respect of such Subject Securities as described in the Participation Notice.
(c) The provisions of this Section 2.2 shall not apply to (i)
any Transfer pursuant to a Public Offering or, following the Public Float Date,
pursuant to a Rule 144
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Transaction or (ii) any Permitted Transfer or (iii) any Transfers pursuant to
Section 2.3 or 2.4 hereof.
2.3 Dragalong.
(a) If, at the time a Sale Request (as hereinafter defined) is given,
both (i) the JWC Holders hold more Common Stock Equivalents than the UBS Holders
and (ii) JWC Holders holding at least a majority of Common Stock Equivalents at
the time held by such JWC Holders (the Dragalong Group) determine to sell or
exchange (in a sale or exchange of securities of the Company or in a merger,
consolidation or other business combination or any similar transaction), in one
or a series of bona fide arms-length transactions to an unrelated and
unaffiliated Third Party fifty percent (50%) or more of the Subject Securities
at the time held by them then, upon 30 days' prior written notice from the
Dragalong Group to the other Stockholders, which notice shall include reasonable
details of the proposed sale or exchange including the proposed time and place
of closing and the consideration to be received by the Stockholders (such notice
being referred to as the "Sale Request"), each other Stockholder shall be
obligated to, and shall, (i) sell, transfer and deliver, or cause to be sold,
transferred and delivered, to such Third Party an equivalent percentage of such
Stockholder's Subject Securities in the same transaction at the closing thereof
and shall (A) execute and deliver such agreements for the purchase of such
Subject Securities and other agreements, instruments and certificates as the
members of the Dragalong Group shall execute and deliver in connection with such
proposed transaction (provided that no Holder shall be required to make any
representations or warranties in connection with such sale or transfer other
than representations and warranties as to (x) such Holder's ownership of his or
its Subject Securities to be sold or transferred free and clear of all liens,
claims, and encumbrances, (y) such Holder's power and authority to effect such
transfer and (z) such matters pertaining to compliance with securities laws as
the transferee may reasonably require) and (B) deliver certificates and/or other
instruments representing such percentage of such Stockholder's Subject
Securities, together with stock or other appropriate powers therefor duly
executed, at the closing, free and clear of all claims, liens and encumbrances),
and each Stockholder shall receive upon the closing of such transaction the same
per share consideration (including terms of payment) to be paid or delivered by
the proposed transferee in respect of such Stockholder's Subject Securities as
shall be payable to the members of the Dragalong Group in respect of their
Subject Securities, and (ii) if stockholder approval of the transaction is
required, vote such Stockholder's Common Stock in favor thereof.
(b) The provisions of this Section 2.3 shall not apply to any
Transfer (i) pursuant to a Public Offering or (ii) pursuant to a Permitted
Transfer.
2.4 Right of First Refusal. If at any time prior to the Public Float
Date, any Other Holder shall receive a bona fide written offer (a "Third Party
Offer") from a Third Party (the "Third Party Offeror") to purchase any Subject
Securities and such Other Holder desires to accept such Third Party Offer, such
Other Holder shall, prior to accepting the Third Party Offer, offer (the "First
Refusal Offer") to sell such Subject Securities (the "Offered Securities") in
accordance with the procedures, and upon the terms, set forth below.
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(a) (i) The Other Holder shall send a written notice
of the First Refusal Offer (a "First Refusal
Offer Notice") to the Company, which First
Refusal Offer Notice shall state that such
Other Holder proposes to effect a sale to a
Third Party Offeror, the number and class or
type of Subject Securities subject to the
Third Party Offer and the name and address
of the Third Party Offeror, together with a
copy of all writings between the Third Party
Offeror and such Other Holder necessary to
establish the terms of the Third Party
Offer.
(ii) Subject to Section 2.4(b), the right of
first refusal may be exercised by the
Company by delivery of a written notice to
the Other Holder making the First Refusal
Offer within 20 days after receipt by the
Company of the applicable First Refusal
Offer Notice (the "Company Notice Period"),
which notice shall state the number of
Offered Securities the Company intends to
purchase pursuant to this paragraph (ii). If
the Company fails to respond to the Other
Holder making the First Refusal Offer within
the Company Notice Period, the failure shall
be deemed a rejection of the First Refusal
Offer.
(iii) If the Company has not exercised the right
of first refusal with respect to all of the
Offered Securities pursuant to this Section
2.4, the Other Holder shall send a First
Refusal Offer Notice to the JWC Holders, the
UBS Holders and the Management Holders
(other than the Other Holder making the
First Refusal Offer) with respect to those
Offered Securities as to which the Company
has not exercised its right of first
refusal. Subject to Section 2.4(b), the
right of first refusal may be exercised by
the JWC Holders, such UBS Holders and the
Management Holders, pro rata in accordance
with the respective Common Stock Equivalents
at the time held by the JWC Holders, such
UBS Holders and the Management Holders so
exercising their rights under this Section
2.4, by delivery of a written notice to the
Other Holder making the First Refusal Offer
within 20 days after receipt by the JWC
Holders, such UBS Holders and the Management
Holders of the applicable First Refusal
Offer Notice (the "JWC/UBS Holders Notice
Period"), which notice shall state the
number of Offered Securities each of the JWC
Holders, such UBS Holders and the Management
Holders intend to purchase pursuant to this
paragraph (iii). If the JWC Holders or such
UBS Holders or the Management Holders, as
the case may be, fail to respond to the
Other Holder making the First Refusal Offer
within the JWC/UBS Holders Notice Period,
the failure shall be deemed a rejection of
the First Refusal Offer by the JWC Holders
or such UBS Holders or the Management
Holders, as the case may be.
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(iv) The purchase of the Offered Securities by
the Company and/or the JWC Holders, such UBS
Holders and the Management Holders pursuant
to this Section 2.4 shall be effected at the
offices of JWC Equity Partners within 30
days after the expiration of the Company
Notice Period (or, if the JWC Holders or
such UBS Holders or the Management Holders
are exercising their right of first refusal
with respect to any of the Offered
Securities, within 30 days after the
expiration of the JWC/UBS Holders Notice
Period) on those terms and conditions of the
Third Party Offer. The price per Offered
Security payable by the Company and/or the
JWC Holders, such UBS Holders and the
Management Holders shall be equal to the
price per Offered Security set forth in the
Third Party Offer. The purchase price for
the Offered Securities purchased by the
Company and/or the JWC Holders, such UBS
Holders and the Management Holders shall be
paid by certified checks payable, or wire
transfer, to the Other Holder making the
First Refusal Offer against receipt of a
certificate or certificates representing
all Offered Securities so purchased,
properly endorsed for transfer to the
Company and/or the JWC Holders, such UBS
Holders and the Management Holders, as the
case may be.
(v) Any purchase of the Offered Securities by
the Company and/or the JWC Holders, such UBS
Holders and the Management Holders pursuant
to this Section 2.4 shall be conditioned (by
the Other Holder making the First Refusal
Offer) upon the Company's and/or the JWC
Holders', such UBS Holders' and the
Management Holders' exercising in the
aggregate the right of first refusal with
respect to all the Offered Securities.
(b) Notwithstanding anything to the contrary contained herein,
if the Company and/or the JWC Holders, such UBS Holders and the Management
Holders have not exercised the right of first refusal with respect to all of the
Offered Securities pursuant to this Section 2.4, then such Other Holder may
transfer to the Third Party Offeror on the terms and conditions of the Third
Party Offer all but not less than all of the Offered Securities; provided that
such sale is consummated within 45 days from the expiration of the JWC/UBS
Holders Notice Period; and provided further, that such Third Party Offeror shall
agree in writing in advance with the Company to be bound by and to comply with
all applicable provisions of this Agreement to the same extent as if such Third
Party Offeror were such Other Holder. If such sale is not consummated within
such 45-day period, the restrictions provided for in this Section 2.4 shall
again become effective, and no transfer of such Offered Securities may be made
thereafter without again offering the same to the Company and/or the JWC
Holders, such
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UBS Holders and the Management Holders in accordance with the terms and
conditions of this Agreement.
(c) The provisions of this Section 2.4 shall not apply to (i)
any Transfer pursuant to a Public Offering or, following a Public Offering,
pursuant to a Rule 144 Transaction or (ii) any Permitted Transfer or (iii) any
Transfers pursuant to Section 2.2 or 2.3 hereof.
2.5 Corporate Governance.
(a) The Company and each of the JWC Holders, the Other Holders
and the Management Holders shall take all action (including but not limited to
such Stockholder's voting, or executing proxies or written consents with respect
to, the Common Stock at the time held by such Stockholder as may be from time to
time requested by holders of a majority of the Common Stock Equivalents at the
time held by the JWC Holders) so that the Company's Board of Directors shall
include such number of members as may be from time to time designated by the
holders of a majority of the Common Stock Equivalents at the time held by the
JWC Holders (or the JWC Representative). The holders of a majority of the Common
Stock Equivalents at the time held by the JWC Holders (or the JWC
Representative) shall also be entitled to require that any member of the
Company's Board of Directors so designated pursuant to this Section 2.5 be
removed or replaced by another designee of the holders of a majority of the
Common Stock Equivalents at the time held by the JWC Holders (or the JWC
Representative), in which event the Company and each such Stockholder shall take
all action, including but not limited to such Stockholder's voting, or executing
written consents with respect to, the Common Stock at the time held by such
Stockholder as may be necessary to effect such removal or replacement.
(b) Notwithstanding the provisions of Section 2.5(a), the
Company and each of the JWC Holders, the Other Holders and the Management
Holders shall take all action, including but not limited to such Stockholder's
voting, or executing proxies or written consents with respect to, the Common
Stock at the time held by such Stockholder as may be from time to time requested
by holders of a majority of the Common Stock Equivalents at the time held by the
UBS Holders, so that the Company's Board of Directors shall include one (1)
member designated by the holders of a majority of the Common Stock Equivalents
at the time held by the UBS Holders which one (1) member shall initially be
Xxxxxxx Xxxxxx; provided that the number of members of the Company's Board of
Director's that the UBS Holders shall be entitled to designate pursuant to this
Section 2.5(b) shall be permanently reduced from one (1) member to zero (0)
members at such time as the UBS Holders shall hold less than 770,000 shares of
Voting Common Stock (with such number of shares to be adjusted from time to time
to reflect any split or combination of shares of Common Stock). The holders of a
majority of the Common Stock Equivalents at the time held by the UBS Holders
shall also be entitled to require that any member of the Company's Board of
Directors so designated pursuant to this Section 2.5(b) be removed or replaced
by another designee of the holders of a majority of the Common Stock Equivalents
at the time held by the UBS Holders, in which event the Company and each such
Stockholder shall take all action, including but not limited to such
Stockholder's
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voting, or executing written consents with respect to, the Common Stock at the
time held by such Stockholder as may be necessary to effect such removal or
replacement.
(c) Notwithstanding the provisions of Section 2.5(a) or
2.5(b), the Stockholders shall vote their shares of Common Stock to elect each
of Xxxxxx X. Xxxxx and Xxxxx X. Xxxxxxx to the Company's Board of Directors
until such person is no longer employed by the Company or any of its
Subsidiaries.
(d) The HMTF Holders shall have the right to have an
individual appointed by them (the "HMTF Attendee") in attendance at all regular
and special meetings of the Company's Board of Directors to observe, but not to
vote on any matters before the Board of Directors at, such meetings; provided,
however, that the HMTF Attendee shall recuse himself or herself from any such
meeting during the Board of Directors' discussions, deliberations and voting on
matters with respect to which the Board of Directors determines, in the good
faith exercise of its business judgment, the HMTF Attendee's presence presents a
conflict of interest. The HMTF Attendee shall be provided with all information
prepared and delivered to board members in general, at the same time and by the
same means as such information is provided to members of the board.
2.6 Restrictions on Other Agreements. Except as provided in Section 4.8
and clause (a) of the definition of "Permitted Transfer" herein, no Stockholder
shall grant any proxy or enter into or agree to be bound by any voting trust or
voting agreement with respect to any Subject Securities nor shall any
Stockholder enter into any stockholders agreements or arrangements of any kind
with any Person with respect to any of the Subject Securities on terms which
conflict with the provisions of this Agreement (whether or not such agreements
and arrangements are with other Stockholders or holders of Common Stock
Equivalents that are not parties to this Agreement), including, but not limited
to, agreements or arrangements with respect to the acquisition, disposition or
voting of Subject Securities inconsistent herewith.
2.7 Stockholder Action. Each Stockholder agrees that, in such
Stockholder's capacity as a stockholder of the Company, such Stockholder shall,
subject to delivery of the Sale Request pursuant to Section 2.3 hereof, vote, or
grant proxies relating to the Common Stock at the time held by such Stockholder
to vote, all of such Stockholder's Common Stock in favor of any sale or exchange
of securities of the Company or any merger, consolidation or other business
combination or any similar transaction pursuant to Section 2.3 hereof (other
than a transaction with an Affiliate) if, and to the extent that, approval of
the Company's stockholders is required in order to effect such transaction.
ARTICLE 3
Registration Rights
3.1 General. For purposes of this Article 3: (a) the terms "register",
"registered" and "registration" refer to a registration effected by preparing
and filing a registration
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statement on Form X-0, X-0 or S-3 in compliance with the 1933 Act and the
declaration or ordering of effectiveness of such registration statement; and (b)
the term "Holder" means any Stockholder.
3.2 Demand and Piggyback Registration.
(a) Demand Registration.
(i) Subject to the provisions of this Agreement
(including Section 3.2(b), at any time after
the Public Float Date, upon the written
request of any UBS Holders requesting that
the Company effect the registration under
the 1933 Act of Registrable Securities,
which request shall specify in reasonable
detail the number of Registrable Securities
to be registered and the intended method of
distribution thereof, the Company shall use
its reasonable commercial efforts to
register under the 1933 Act (a "Demand
Registration") the Registrable Securities
which the Company has been requested to
register by such UBS Holders, all to the
extent requisite to permit the disposition
of such Registrable Securities in accordance
with the plan of distribution set forth in
the applicable registration statement. In
the case of such Demand Registration, such
UBS Holders must request registration of
Registrable Securities representing not less
than such number of Registrable Securities
the expected gross proceeds of which, on the
date of the aforementioned written request,
would equal at least $5 million unless such
registration request is for all remaining
Registrable Securities held by such UBS
Holders.
(ii) Registration Statement Form. Any Demand
Registration under this Section shall be on
Form S-3, if and to the extent that the
Company is eligible under the 1933 Act to
use such form at the time of the written
request for such Demand Registration.
(iii) Limitations on Demand Registration. Anything
herein to the contrary notwithstanding, the
Company shall not be required to effect more
than one (1) Demand Registration pursuant to
this Section.
(iv) Effective Registration Statement. Except as
otherwise provided in Section 3.2(a)(vii)
hereof, a Demand Registration requested
pursuant to this Section 3.2(a) shall not be
deemed to have been effected (A) unless a
registration statement with respect thereto
has become effective, (B) if after it has
become effective, such registration is
materially interfered with by any stop
order, injunction or similar order or
requirement of the Commission or other
governmental agency or court for any reason
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not attributable to any UBS Holder and has
not thereafter become effective, or (C) if
the conditions to closing specified in the
underwriting agreement, if any, entered into
in connection with such registration are not
satisfied or waived, other than by reason of
a failure on the part of any UBS Holder.
(v) Selection of Underwriters. In the case of
such Demand Registration, the selection of
any managing and other underwriter(s) shall
be made by the Company, with the consent of
UBS Capital (which consent shall not be
unreasonably withheld).
(vi) Certain Requirements in Connection with
Registration Rights. In the case of such
Demand Registration, if the Holder has
determined to enter into one or more
underwriting agreements in connection
therewith, no Person may participate in such
Demand Registration unless such Person
agrees to sell his or its securities on the
basis provided in the underwriting
arrangements and completes all
questionnaires, powers of attorney,
indemnities, underwriting agreements and
other documents which are reasonable and
customary under the circumstances.
(vii) Certain Other Matters. Should a Demand
Registration not become effective due to the
failure of any of the UBS Holders requesting
such Demand Registration to perform its
obligations under this Agreement or the
inability of such UBS Holders to reach
agreement with the underwriters on price or
other customary terms for such transaction,
or in the event such UBS Holders withdraw or
do not pursue the request for such Demand
Registration (in each of the foregoing
cases, provided that at such time the
Company is in compliance in all material
respects with its obligations under this
Agreement), then such Demand Registration
shall be deemed to have been effected.
(b) Piggyback Registration. If at any time the Company
determines to register any Public Offering of any of the Common Stock
Equivalents for the account of any JWC Holder under the 1933 Act in connection
with the public offering of such securities or pursuant to a request for a
Demand Registration pursuant to Section 3.2(a) hereof, the Company shall, at
each such time, promptly give each Holder written notice of such determination
no later than 30 days before its intended filing with the SEC. Upon the written
request of any Holder received by the Company within 10 days after the giving of
any such notice by the Company, the Company shall use all commercially
reasonable efforts to cause to be registered under the 1933 Act all of the
Registrable Securities of such Holder that such Holder has requested be
registered. If the total amount of Registrable Securities that are to be
included by the Company in such registration exceeds the amount of securities
that the underwriters reasonably believe compatible with the success of the
offering, then the Company will include in such
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registration only the number of securities which in the opinion of such
underwriters can be sold, in the following order:
(i) first, all securities of the Company to be
offered for the account of the Company; and
(ii) second, the Registrable Securities, pro rata
based on the number of Registrable
Securities held by each Holder seeking to
have Registrable Securities included in such
registration (including any UBS Holders
seeking to have Registrable Securities
included in such registration pursuant to a
Demand Registration requested under Section
3.2(a) hereof).
3.3 Obligations of the Company.
(a) Whenever required under Section 3.2 hereof to use all
commercially reasonable efforts to effect the registration of any Public
Offering Registrable Securities, the Company shall:
(i) prepare and file with the SEC a registration
statement with respect to such Registrable
Securities and use all commercially
reasonable efforts to cause such
registration statement to become and remain
effective, including, without limitation,
filing of post-effective amendments and
supplements to any registration statement or
prospectus necessary to keep the
registration statement current;
(ii) as expeditiously as reasonably possible,
prepare and file with the SEC such
amendments and supplements to such
registration statement and the prospectus
used in connection with such registration
statement as may be necessary to comply with
the provisions of the 1933 Act with respect
to the disposition of all securities covered
by such registration statement and to keep
each registration and qualification under
this Agreement effective (and in compliance
with the 1933 Act) by such actions as may be
necessary or appropriate for a period of 90
days after the effective date of such
registration statement (unless all
securities covered by such registration
statement are sooner disposed of), all as
requested by such Holder or Holders;
(iii) as expeditiously as reasonably possible
furnish to the Holders such numbers of
copies of a prospectus, including a
preliminary prospectus, in conformity with
the requirements of the 1933 Act, and such
other documents as they may reasonably
request in order to facilitate the
disposition of Registrable Securities owned
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by them in accordance with the plan of
distribution provided for in such
registration statement;
(iv) as expeditiously as reasonably possible use
all commercially reasonable efforts to
register and qualify the securities covered
by such registration statement under such
securities or "blue sky" laws of such
jurisdictions as shall be reasonably
appropriate for the distribution of the
securities covered by the registration
statement, provided that the Company shall
not be required in connection therewith or
as a condition thereto to qualify to do
business or to file a general consent to
service of process in any such jurisdiction,
and further provided that (anything in this
Agreement to the contrary notwithstanding
with respect to the bearing of expenses) if
any jurisdiction in which the securities
shall be qualified shall require that
expenses incurred in connection with the
qualification of the securities in that
jurisdiction be borne by selling
stockholders, then such expenses shall be
payable by selling stockholders pro rata, to
the extent required by such jurisdiction;
(v) notify each seller of Registrable Securities
covered by such registration statement, at
any time when a prospectus relating thereto
is required to be delivered under the 1933
Act, upon discovery that, or upon the
happening of any event as a result of which,
the prospectus included in such registration
statement, as then in effect, includes an
untrue statement of a material fact or omits
to state any material fact required to be
stated therein or necessary to make the
statements therein not misleading in the
light of the circumstances under which they
were made (each Holder hereby covenanting
that, upon receipt of any such notice, it
shall forthwith cease using any such
prospectus unless and until it shall have
received from the Company a supplement to or
amendment of such prospectus as hereinafter
referred to in this Section 3.3(a)(v)), and
at the request of any such seller or Holder
promptly prepare to furnish to such seller
or Holder a reasonable number of copies of a
supplement to or an amendment of such
prospectus as may be necessary so that, as
thereafter delivered to the purchasers of
such securities, such prospectus shall not
include an untrue statement of a material
fact or omit to state a material fact
required to be stated therein or necessary
to make the statements therein not
misleading in the light of the circumstances
under which they were made;
(vi) otherwise use all commercially reasonable
efforts to comply with all applicable rules
and regulations of the SEC, and make
available to its security holders, as soon
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as reasonably practicable, an earnings
statement covering the period of at least 12
months but not more than 18 months,
beginning with the first full calendar month
after the effective date of such
registration statement, which earnings
statement shall satisfy the provisions of
Section 11(a) of the 1933 Act, and will
furnish to each such seller at least 2
Business Days prior to the filing thereof a
copy of any amendment or supplement to such
registration statement or prospectus and
shall not file any thereof to which any such
seller shall have reasonably objected,
except to the extent required by law, on the
grounds that such amendment or supplement
does not comply in all material respects
with the requirements of the 1933 Act or of
the rules or regulations thereunder;
(vii) provide and cause to be maintained a
transfer agent and registrar for all
Registrable Securities covered by such
registration statement from and after a date
not later than the effective date of such
registration statement; and
(viii) use all commercially reasonable efforts to
list all Registrable Securities covered by
such registration statement on any
securities exchange on which any class of
Registrable Securities is then listed.
(b) The Company will furnish to each Holder on whose behalf
Registrable Securities have been registered pursuant to this Agreement a signed
counterpart, addressed to such Holder, of (i) an opinion of counsel for the
Company dated the effective date of such registration statement, and (ii) a
so-called "cold comfort" letter signed by the independent public accountants who
have certified the Company's financial statements included in such registration
statement, and such opinion of counsel and accountants' letter, with respect to
events subsequent to the date of such financial statements, as are customarily
covered in opinions of issuer's counsel and in accountants' letters delivered to
underwriters in connection with underwritten public offerings of securities.
(c) If the Company at any time proposes to register any of its
securities under the 1933 Act subject to the piggyback registration rights of
the Holders under Section 3.2(b) hereof or pursuant to a Demand Registration
under Section 3.2(a) hereof, and such securities are to be distributed by or
through one or more underwriters, then the Company will make reasonable efforts,
if requested by any Holder of Registrable Securities who requests registration
of Registrable Securities in connection therewith pursuant to Section 3.2
hereof, to arrange for such underwriters to include such Registrable Securities
among the securities to be distributed by or through such underwriters.
(d) In connection with the preparation and filing of each
registration statement registering Registrable Securities under this Agreement,
the Company will give the Holders of Registrable Securities on whose behalf such
Registrable Securities are to be so registered and their underwriters, if any,
and their respective counsel and accountants the opportunity to
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participate in the preparation of such registration statement, each prospectus
included therein or filed with the SEC, and each amendment thereof or supplement
thereto, and will give each of them such access to its books and records and
such opportunities to discuss the business of the Company with its officers, its
counsel and the independent public accountants who have certified its financial
statements, as shall be reasonably necessary, in the opinion of such Holders or
such underwriters or their respective counsel, in order to conduct a reasonable
and diligent investigation within the meaning of the 1933 Act. Without limiting
the foregoing, each registration statement, prospectus, amendment, supplement or
any other document filed with respect to a registration under this Agreement
shall be subject to review and reasonable approval by the Holders registering
Registrable Securities in such registration and by their counsel.
3.4 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Article 3 that
each Holder shall furnish to the Company such information regarding such Holder,
the Registrable Securities held by such Holder, and the intended method of
disposition of such securities as the Company shall reasonably request and as
shall be required in connection with the action to be taken by the Company.
3.5 Expenses of Registration. All expenses incurred in connection with
a registration pursuant to Section 3.2 hereof (excluding underwriters' discounts
and commissions, which shall be borne by the Holders), including without
limitation all registration and qualification fees, printers' and accounting
fees, fees and disbursements of counsel for the Company, and the reasonable fees
and disbursements of one counsel for the selling Holders (which counsel shall be
selected by the holders of a majority of the Registrable Securities to be
included in such registration) shall be borne by the Company.
3.6 Underwriting Requirements. In connection with any registration of
Registrable Securities under this Agreement, the Holders shall, if requested by
the Company or the underwriters for any Registrable Securities included in such
registration, enter into an underwriting agreement with such underwriters for
such offering, such agreement to contain such representations and warranties by
the Company and such other terms and provisions as are customarily contained in
underwriting agreements with respect to secondary distributions, including,
without limitation, provisions relating to indemnification and contribution
provided, that no Holder shall be required to make any representations or
warranties, or provide any indemnity, with respect to any matter other than (x)
such Holder's ownership of his or its Subject Securities to be sold or
transferred free and clear of all liens, claims, and encumbrances and (y)
information regarding such Holder appearing in the registration statement,
preliminary or final prospectus or amendments or supplements thereto that has
been provided in writing by such Holder. The Holders on whose behalf Registrable
Securities are to be distributed by such underwriters shall be parties to any
such underwriting agreement, and the representations and warranties by, and the
other agreements on the part of, the Company to and for the benefit of such
underwriters shall be also made to and for the benefit of such Holders of
Registrable Securities. Such underwriting agreement shall comply with Section
3.7.
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3.7 Indemnification. In the event any Registrable Securities are
included in a registration statement pursuant to this Article 3:
(a) To the fullest extent permitted by law, the Company will
indemnify and hold harmless each Holder joining in a registration, any
underwriter (as defined in the 0000 Xxx) for it, and each Person, if any, who
controls such Holder or such underwriter within the meaning of the 1933 Act,
from and against any losses, claims, damages, expenses (including reasonable
attorneys' fees and expenses and reasonable costs of investigation) or
liabilities, joint or several, to which they or any of them may become subject
under the 1933 Act or otherwise, insofar as such losses, claims, damages,
expenses or liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based on any untrue or
alleged untrue statement of any material fact contained in such registration
statement including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements made therein not
misleading in light of the circumstances under which they were made or arise out
of any violation by the Company of any rule or regulation promulgated under the
1933 Act applicable to the Company and relating to action or inaction required
of the Company in connection with any such registration, provided that the
indemnity agreement contained in this Section 3.7(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable to anyone for any
such loss claim, damage, liability or action to the extent that it arises out of
or is based upon an untrue statement or omission made in connection with such
registration statement, preliminary prospectus, final prospectus or amendments
or supplements thereto in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
such Holder, underwriter or control person. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Holder, underwriter or control person and shall survive the transfer of such
securities by such Holder.
(b) To the fullest extent permitted by law, each Holder
joining in a registration shall indemnify and hold harmless the Company, each of
its directors, each of its officers who has signed the registration statement,
each Person, if any, who controls the Company within the meaning of the 1933
Act, and each agent and any underwriter for the Company and any Person who
controls any such agent or underwriter and each other Holder and any Person who
controls such Holder (within the meaning of the 0000 Xxx) against any losses,
claims, damages or liabilities to which the Company or any such director,
officer, control person, agent, underwriter or other Holder may become subject,
under the 1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon an untrue statement of any
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto, or arise out of or are based upon the omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or omission was made in such registration
statement,
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preliminary or final prospectus, or amendments or supplements thereto, in
reliance upon and in conformity with written information furnished by such
Holder with respect to such Holder expressly for use in connection with such
registration, and such Holder shall reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer, control
person, agent, underwriter or other Holder in connection with investigating or
defending any such loss, claim, damage, liability or action, provided that the
indemnity obligation of each such Holder hereunder shall be limited to and shall
not exceed the proceeds actually received by such Holder upon a sale of
Registrable Securities pursuant to a registration statement hereunder, and
provided, further that the indemnity agreement contained in this Section 3.7(b)
shall not apply to amounts paid in settlements effected without the consent of
such Holder (which consent shall not be unreasonably withheld). Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of the Company or any such director, officer, Holder, underwriter or
control person and shall survive the transfer of such securities by such Holder.
(c) Any Person seeking indemnification under this Section 3.7
will (i) give prompt notice to the indemnifying party of any claim with respect
to which it seeks indemnification, but the failure to give such notice will not
affect the right to indemnification hereunder (except to the extent the
indemnifying party is prejudiced by such failure), and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest may exist between
such indemnified and indemnifying parties with respect to such claim, permit
such indemnifying party, and other indemnifying parties similarly situated,
jointly to assume the defense of such claim with counsel reasonably satisfactory
to the parties. In the event that the indemnifying parties cannot mutually agree
as to the selection of counsel, each indemnifying party may retain separate
counsel to act on its behalf and at its expense. The indemnified party shall in
all events be entitled to participate in such defense at its expense through its
own counsel. If such defense is not assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any settlement made
without its consent (but such consent will not be unreasonably withheld). No
indemnifying party will consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation. An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim, in which event the indemnifying party shall be obligated
to pay the reasonable fees and expenses of such additional counsel.
(d) If for any reason the foregoing indemnification is
unavailable to any party or insufficient to hold it harmless as and to the
extent contemplated by the preceding paragraphs of this Section 3.7, then each
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such loss, claim, damage expense or liability
in such proportion as is appropriate to reflect the relative benefits received
by the Company, on the one hand, and the applicable indemnified party, as the
case may be, on the
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other hand, and also the relative fault of the Company and any applicable
indemnified party, as the case may be, as well as any other relevant equitable
considerations.
3.8 Rule 144. With a view to making available to the Holders and their
transferees the benefits of Rule 144 and Rule 144A under the 1933 Act and any
other rule or regulation of the SEC that may at any time permit a Holder to sell
securities of the Company to the public without registration, the Company agrees
to use all commercially reasonable efforts to take all action that may be
required as a condition to the availability after a public offering of Rule 144,
Rule 144A or such other rules or regulations, including without limitation to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144, at all times subsequent to 90 days after
the effective date of the first registration statement covering an underwritten
public offering filed by the Company;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act
(including, without limitation, under Section 13 or Section 15 of the 0000 Xxx);
and
(c) furnish to any Holder forthwith upon request a written
statement by the Company that it has complied with the reporting requirements of
Rule 144 (at any time after 90 days after the effective date of said first
registration statement filed by the Company), and of the 1933 Act and the 1934
Act (at any time after it has become subject to such reporting requirements), a
copy of the most recent annual or quarterly report of the Company, and such
other reports and documents so filed by the Company as may be reasonably
requested in availing any Holder of any rule or regulation of the SEC permitting
the selling of any such securities without registration.
3.9 Market Stand-Off Agreement. Each Stockholder agrees not to sell or
otherwise transfer or dispose of any Common Stock (or other securities) of the
Company at the time held by such Stockholder (other than securities included in
the applicable registration statement or shares purchased in the public market
after the effective date of registration) or any interest or future interest
therein during such period (not to exceed 180 days) as is mutually acceptable to
a majority in interest of Stockholders and the underwriter following the
effective date of the registration statement of the Company filed under the 1933
Act which includes securities of the Company to be sold to the public in an
underwritten offer.
ARTICLE 4
Certain Miscellaneous Other Provisions
4.1 Remedies. The parties to this Agreement acknowledge and agree that
the covenants of the Company and the Stockholders set forth in this Agreement
may be enforced in equity by a decree requiring specific performance. Without
limiting the foregoing, if any dispute arises concerning the sale or other
disposition of any of the securities of the Company subject to this Agreement or
concerning any other provisions hereof or the obligations of the
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parties hereunder, the parties to this Agreement agree that an injunction may be
issued in connection therewith. Such remedies shall be cumulative and
non-exclusive and shall be in addition to any other rights and remedies the
parties may have under this Agreement or otherwise.
4.2 Entire Agreement; Amendment; Termination.
(a) This Agreement sets forth the entire understanding of the
parties, and supersedes all prior agreements and all other arrangements and
communications, whether oral or written, with respect to the subject matter
hereof.
(b) The Schedule of Stockholders may be amended in writing by
the Company to reflect changes in the composition of the Stockholders and
changes in their addresses or telecopy numbers that may occur from time to time
as a result of Permitted Transfers, Transfers permitted under Article 2 hereof
or issuances contemplated by Section 4.12. Amendments to the Schedule of
Stockholders reflecting Permitted Transfers, Transfers permitted under Article 2
hereof or issuances contemplated by Section 4.12 shall become effective when the
amended Schedule of Stockholders, and a copy of this Agreement as executed by
any new transferee or other new party hereto in accordance with Section 4.12,
are filed with the Company. Upon written request of any Stockholder, the Company
will promptly provide to such Stockholder a copy of the Schedule of Stockholders
as in effect at the date of such request therefor.
(c) Any other amendment to this Agreement shall be in writing
and shall require the written consent of (i) the Company, (ii) either the JWC
Representative or the holders of a majority of Common Stock Equivalents at the
time held by the JWC Holders, (iii) if adverse to the interests of the
Stockholder Group comprised of the Other Holders, Other Holders, both (A) the
holders of a majority of the Common Stock Equivalents at the time held by the
Other Holders and (B) the holders of a majority of the Common Stock Equivalents
at the time held by the UBS Holders, and (iv) if adverse to the interests of a
particular Stockholder or any Stockholder Group (other than the Stockholder
Group comprised of the Other Holders), that Stockholder or the holders of a
majority of the Common Stock Equivalents at the time held by that Stockholder
Group, as the case may be.
(d) Notwithstanding the foregoing provisions of this Section
4.2, this Agreement may be terminated at any time upon the written consent of
(i) the Company and (ii) the holders of a majority of the Common Stock
Equivalents at the time held by the Management Holders, the Other Holders and
the JWC Holders (or the JWC Representative), each voting separately as a group;
provided that the provisions of Sections 3.7 and 4.20 shall survive any
termination of this Agreement.
4.3 Severability. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if the invalid or
unenforceable provision were omitted.
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4.4 Notices. All notices, consents and other communications required,
or contemplated under this Agreement shall be in writing and shall be delivered
in the manner specified herein or, in the absence of such specification, shall
be deemed to have been duly given (i) three (3) Business Days after mailing by
first class certified mail, postage prepaid, (ii) when delivered by hand, (iii)
upon confirmation of receipt by telecopy, or (iv) one day after sending by
overnight delivery service, to the respective addresses of the parties set forth
below:
For notices and communications to the Company:
c/o X.X. Childs Associates, L.P.
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. Childs
Telecopy: 617-753-1101
with a copy to:
Desa International, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: President
Telecopy: 000-000-0000
For notices and communications to the Stockholders, to the
respective addresses set forth in the Schedule of
Stockholders.
With a copy in the case of the JWC Holders to:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxxxxxx Xxxxx, Esq.
Telecopy: 617-338-2880
By notice complying with the foregoing provisions of this Section 4.4, each
party shall have the right to change the mailing address or telecopy number for
future notices and communications to such party.
4.5 Binding Effect; Assignment. This Agreement shall binding upon and
inure to the benefit of the parties hereto and to their respective transferees,
successors, assigns, heirs and administrators, provided that the rights under
this Agreement may not be assigned except as expressly provided herein. No such
assignment shall relieve an assignor of its obligations hereunder.
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4.6 Termination. Without affecting any other provision of this
Agreement requiring termination of any rights in favor of any Stockholder,
Permitted Transferee or any other transferee of Subject Securities, the
provisions of Articles 2 and 3 (other than Section 3.7, which in any event shall
survive any termination of this Agreement or the termination of this Agreement
as to any Stockholder, Permitted Transferee or other transferee when such
Stockholder, Permitted Transferee or other transferee no longer owns any Subject
Securities) and Sections 4.17, 4.18 and 4.19 of this Agreement shall terminate
as to such Stockholder, Permitted Transferee or other transferee, when, pursuant
to and in accordance with this Agreement, such Stockholder, Permitted Transferee
or other transferee, as the case may be, no longer owns any Subject Securities.
4.7 Recapitalizations, Exchanges, etc. The provisions of this Agreement
shall apply, to the full extent set forth herein with respect to Common Stock
Equivalents and to any and all shares of capital stock of the Company or any
successor or assign of the Company (whether by merger, consolidation, sale of
assets or otherwise) which may be issued in respect of, in exchange for, or in
substitution of the Common Stock Equivalents, by reason of a stock dividend,
stock split, stock issuance, reverse stock split, combination, recapitalization,
reclassification, merger, consolidation or otherwise. Upon the occurrence of any
such events, amounts hereunder shall be appropriately adjusted.
4.8 JWC Representative. Each JWC Holder hereby designates and appoints
(and each Permitted Transferee of each such JWC Holder shall be deemed to have
so designated and appointed) Xxxx X. Childs and Xxxx X. Xxxxxx, and each of them
acting singly, with full power of substitution (the "JWC Representative"), the
representative of each such Person to perform all such acts as are required,
authorized or contemplated by this Agreement to be performed by any such Person
and hereby acknowledges that the JWC Representative shall be the only Person
authorized to take any action so required, authorized or contemplated by this
Agreement by each such Person. Each such Person further acknowledges that the
foregoing appointment and designation shall be deemed to be coupled with an
interest and shall survive the death or incapacity of such Person. Each such
Person hereby authorizes (and each Permitted Transferee shall be deemed to have
authorized) the other parties hereto to disregard any notice or other action
taken by such Person pursuant to this Agreement except for the JWC
Representative. The other parties hereto are and will be entitled to rely on any
action so taken or any notice given by the JWC Representative and are and will
be entitled and authorized to give notices only to the JWC Representative for
any notice contemplated by this Agreement to be given to any such Person. A
successor to the JWC Representative may be chosen by the holders of a majority
of the Common Stock Equivalents at the time held by the JWC Holders, provided
that written notice thereof is given by the successor JWC Representative to the
Company, the Other Holders, the Management Holders and the other JWC Holders.
4.9 Action Necessary to Effectuate the Agreement. The parties hereto
agree to take or cause to be taken all such corporate and other action as may be
necessary to effect the intent and purposes of this Agreement.
4.10 Purchase for Investment; Legend on Certificate. Each Stockholder
acknowledges that all of the securities of the Company held by such Stockholder
are being (or have been)
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acquired for investment and not with a view to the distribution thereof and that
no transfer, hypothecation or assignment of any such securities (including the
Common Stock for which such securities may be exercisable or exchangeable or
into which such securities may be convertible) may be made except in compliance
with applicable federal and state securities laws. All the certificates or other
instruments representing any of such securities (including the Common Stock for
which such securities may be exercisable or exchangeable or into which such
securities may be convertible) which are now or hereafter held by any
Stockholder shall be subject to the terms of this Agreement and shall have
endorsed in writing, stamped or printed, thereon either of the following
legends:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS AND CONDITIONS OF A STOCKHOLDERS AGREEMENT DATED AS OF NOVEMBER
__, 1997, AS AMENDED FROM TIME TO TIME, A COPY OF WHICH IS ON FILE WITH
AND AVAILABLE FROM THE SECRETARY OF THE COMPANY."
or
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
PROVISIONS REGARDING THE VOTING OF SUCH SECURITIES AND CERTAIN TRANSFER
RESTRICTIONS SET FORTH IN THE STOCKHOLDERS AGREEMENT DATED AS OF
NOVEMBER __, 1997, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT
ITS PRINCIPAL EXECUTIVE OFFICES."
4.11 Effectiveness of Transfers. Any Subject Securities transferred by
a Stockholder (other than pursuant to an effective registration statement under
the 1933 Act or a Rule 144 Transaction) shall be held by the transferee thereof
pursuant to this Agreement. Such transferee shall, except as otherwise expressly
stated herein, have all the rights and be subject to all of the obligations of a
Stockholder under this Agreement automatically and without requiring any further
act by such transferee or by any parties to this Agreement. Without affecting
the preceding sentence, if such transferee is not a Stockholder on the dates of
such transfer, then such transferee, as a condition to such transfer, shall
confirm such transferee's obligations hereunder in accordance with Section 4.12
hereof. No Subject Securities shall be transferred on the Company's books and
records, and no transfer of thereof shall be otherwise effective, unless any
such transfer is made in accordance with the terms and conditions of this
Agreement, and the Company is hereby authorized by all of the Stockholders to
enter appropriate stop transfer notations on its transfer records to give effect
to this Agreement.
4.12 Additional Stockholders. Any Person acquiring any Subject
Securities (except for any acquisition thereof (a) in an offering registered
under the 1933 Act or (b) in a Rule 144 Transaction) shall on or before the
transfer or issuance to it of such Subject Securities, sign a counterpart
signature page hereto in form reasonably satisfactory to the Company and the JWC
Representative and shall thereby become a party to this Agreement; provided that
a transferee which is a pledgee and within the definition of a Permitted
Transferee shall not be obligated so to agree until foreclosure on its pledge.
The Company shall require each Person acquiring an
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option, warrant or other right to purchase shares of Common Stock under any
option or other equity participation plan to execute a counterpart signature
page hereto.
4.13 No Waiver. No course of dealing and no delay on the part of any
party hereto in exercising any right, power or remedy conferred by this
Agreement shall operate as a waiver thereof or otherwise prejudice such party's
rights, powers and remedies. No single or partial exercise of any rights, powers
or remedies conferred by this Agreement shall preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
4.14 Counterparts. This Agreement may be executed in two or more
counterparts each of which shall be deemed an original but all of which together
shall constitute one and the same instrument, and all signatures need not appear
on any one counterpart.
4.15 Headings, etc. All headings and captions in this Agreement are for
purposes of references only and shall not be construed to limit or affect the
substance of this Agreement. Words used in this Agreement, regardless of the
gender and number used, will be deemed and construed to include any other
gender, masculine, feminine, or neuter, and any other number, singular or
plural, as the context requires. As used in this Agreement, the words
"including", "includes" and "included" are not limiting, and the word "or" is
not exclusive. The words "this Agreement", "hereto", "herein", "hereunder",
"hereof", and words or phrases of similar import refer to this Agreement as a
whole, together with any and all Schedules and Exhibits hereto, and not to any
particular article, section, subsection, paragraph, clause or other portion of
this Agreement.
4.16 Governing Law. This Agreement shall be construed under and
governed by the substantive and procedural laws of the State of Delaware
applicable to a contract executed in and wholly performed within Delaware.
4.17 Preemptive Right Provisions. The Company hereby agrees, so long as
both (i) the Stockholders hold any of Common Stock Equivalents, and (ii) a
Public Offering shall not have occurred, as follows:
(a) Except as otherwise provided in Section 4.17(b) hereof, if
the Company proposes to issue or sell any shares of its capital stock or any
security convertible into, exchangeable or exercisable for or having rights to
purchase any shares of capital stock of the Company (the "Company Securities")
to any person, the Company shall deliver to the Stockholders at the time holding
any Subject Securities at least 20 days' prior written notice (the "Preemptive
Rights Notice") stating its desire to issue or sell such Company Securities. The
Preemptive Rights Notice must specify the class of and the amount of such
Company Securities that the Company desires so to issue or sell and the price,
payment terms and other material terms and conditions at and on which it is
willing to sell such Company Securities and the material terms, provisions and
conditions of such Company Securities. Within 10 days after the Company's
delivery of a Preemptive Rights Notice (the "Election Period"), each Stockholder
at the time holding any Subject Securities shall have the right to elect to
purchase, at the designated offering price and on other terms and conditions
specified in the Preemptive Rights Notice, up to that number of such Company
Securities so that, after giving effect to
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such purchase, such Stockholder shall continue to maintain in the aggregate his,
her or its same proportionate equity ownership of the Company as of the date of
the Preemptive Rights Notice. For purposes of determining the equity ownership
of the Company as of the date of the Preemptive Rights Notice under the
preceding sentence, each holder (including but not limited to each Stockholder)
of Vested Options shall be treated as though he, she or it had fully converted,
exchanged or exercised all Vested Options at the time held by him, her or it at
the then existing conversion, exchange or exercise price or ratio. Each
Stockholder at the time holding any Subject Securities may exercise his, her or
its rights under this Section 4.17(a) by delivering a notice to the Company
during the Election Period. Should such Stockholder elect to purchase any such
Company Securities pursuant to this Section 4.17(a), such Stockholder shall
purchase such Company Securities at the closing and on the closing date set
forth in the Preemptive Rights Notice.
(b) Exclusions. The provisions of Section 4.17(a) hereof shall
not apply to the issuance or sale of (i) Company Securities issued or issuable
to officers, directors or employees of the Company or any subsidiary of the
Company who are not affiliated with X.X. Childs Associates, L.P., (ii) shares of
capital stock of the Company Securities issued or issuable upon the exercise,
exchange or conversion of any Company Security or other securities, options,
warrants and other rights issued by the Company and outstanding as of the date
hereof, after giving effect to the closing of certain transactions that are
closing concurrently with the issuance of the Subject Securities pursuant to
this Agreement, (iii) shares of Common Stock issued or issuable in connection
with any pro rata stock split, stock dividend or recapitalization by or
reorganization of the Company, (iv) Company Securities issued or issuable as a
pro rata dividend on the Common Stock, (v) Company Securities issued or issuable
by the Company in connection with and as consideration for the acquisition of
another business or entity by the Company or any of its subsidiaries, and (vi)
Company Securities issued or issuable to any person or entity who (A) is neither
an Affiliate of JWC Equity Partners nor a financial buyer and (B) is either (I)
directly or indirectly through its subsidiaries a significant actual or
prospective supplier of goods to or customer of the Company or any of its
subsidiaries, to whom such Company Securities are issued or issuable for the
purpose of establishing or enhancing the business relationship between such
supplier or customer and the Company and its subsidiaries or (II) engaged in,
and having a principal business unit engaged in, manufacturing or marketing
tools, specialty tools, decorative, indoor, outdoor or other heating products,
lighting products, security products, home improvement or decorative products or
other accessories or products for the home.
4.18 Transactions with Affiliates. Other than the Management Agreement
and other agreements entered into on or prior to the date hereof and arms-length
agreements entered into in the ordinary course of business after the date hereof
on terms no less favorable to the Company than would be available in agreements
entered into with Persons who are not Affiliates of JWC Equity Partners, the
Company shall not enter into any transaction with any Affiliate of JWC Equity
Partners without the consent of the holders of a majority of the Common Stock
Equivalents at the time held in the aggregate by the Management Holders and the
Other Holders.
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4.19 Certain Covenants of the Company. The Company hereby agrees, for
the benefit of the UBS Holders and the HMTF Holders for so long as the Public
Float Date shall not have occurred, the Company will comply with and will cause
its subsidiaries to comply with the following covenants:
(a) Annual Statements. As soon as available and in any event
within 90 days after the close of each fiscal year of the Company ending after
the date of this Agreement, the Company will deliver to each of UBS Capital and
HMTF Inc. a balance sheet of the Company and its subsidiaries and statements of
income and of cash flows of the Company and its subsidiaries, audited by any
"big six" independent public accounting firm selected by the Company (or other
independent public accounting firm selected by the Company and reasonably
acceptable to the UBS Holders and the HMTF Holders), showing the financial
position of the Company and its subsidiaries as of the close of such fiscal year
and the results of the operations of the Company and its subsidiaries during
such fiscal year, all on a consolidated basis. Each of the financial statements
delivered pursuant to this Section 4.19(a) will be accompanied by a report,
without material qualification, of such accounting firm to the effect that such
financial statements have been prepared, except as may be otherwise noted
therein, in accordance with generally accepted accounting principles
consistently applied.
(b) Monthly Statements. Within 30 days after the end of each
of the first eleven months in each fiscal year of the Company, the Company will
deliver to each of UBS Capital and HMTF Inc. a consolidated unaudited balance
sheet of the Company and its subsidiaries and statements of income and of cash
flows of the Company and its subsidiaries as of the end of each such month, all
on a consolidated basis, with (i) a comparison of such month's results to the
budgeted results for such month and to the corresponding month of the prior
fiscal year and, (ii) a comparison of the results for the period from the
beginning of the then current fiscal year to the end of such month to the
budgeted results for such period and to the corresponding period of the prior
fiscal year, certified by the chief financial officer of the Company to be true
and correct in all material respects and to have been prepared, except as may be
otherwise noted therein, in accordance with generally accepted accounting
principles consistently applied, subject to normal year-end adjustments and the
addition of footnotes.
(c) Other Financial Information. The Company will deliver to
each of UBS Capital and HMTF Inc., within 90 days after the commencement of each
fiscal year, projected monthly balance sheets and statements of income for such
fiscal year prepared by management of the Company.
(d) Notice of Litigation, Defaults, Etc. The Company will
promptly give notice to each of UBS Capital and HMTF Inc. of any litigation or
administrative proceeding to which the Company or any of its subsidiaries may
hereafter become a party which has or, in the good faith business judgment of
senior management of the Company, is reasonably likely to have a material
adverse effect on the business, assets or financial condition of the Company and
its subsidiaries, taken as a whole. Promptly upon any executive officer of the
Company obtaining knowledge of any default with respect to indebtedness for
borrowed money involving in excess of $25,000,000 in principal amount, the
Company will furnish a notice to each of UBS Capital and HMTF Inc. specifying
the nature and period of existence and the action the
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Company or any of its subsidiaries has taken, is taking or proposes to take with
respect thereto. Promptly after the receipt thereof, the Company will provide
each of UBS Capital and HMTF Inc. copies of any reports as to adequacies in
accounting controls submitted by independent accountants with respect to the
Company and its subsidiaries.
(e) Other Information. From time to time upon the written
request of UBS Capital or HMTF Inc., the Company will furnish such information
regarding the business, affairs, prospects and financial condition of the
Company and its subsidiaries as the representatives of any UBS Holder or HMTF
Holder may reasonably request; provided that, upon the request and as a
condition to the delivery of such information, each of the UBS Holders and HMTF
Holders who is to receive such information shall execute and deliver a
confidentiality and nondisclosure agreement in form and substance reasonably
satisfactory to the Company. Each such representative shall have the right
during normal business hours to examine the financial books and records, and the
certificate of incorporation, bylaws, minutes of meetings of stockholders,
boards of directors and committees thereof, stockholders records and similar
corporate records, of the Company and its subsidiaries and to make copies, notes
and abstracts therefrom, all at such reasonable times and intervals as such UBS
Holder or HMTF Holder may reasonably request.
4.20 Confidentiality Covenant.
(a) Each of the UBS Holders and the HMTF Holders agrees to
keep confidential any information or materials provided by or on behalf of the
Company hereunder, except (i) as may be otherwise required by law and (ii) such
information and materials as (A) are or become generally available to the public
other than as a result of a disclosure in violation of this Agreement, (B) was
independently acquired or developed by such Stockholder without violating any of
its obligations under this Agreement, or (C) becomes available to such
Stockholder on a nonconfidential basis from a person who is not and was not to
such Stockholder's knowledge bound by a confidentiality obligation to the
Company, or is not and was not otherwise prohibited from transmitting such
information or materials to such Stockholder. Notwithstanding the foregoing,
each of the UBS Holders and the HMTF Holders shall have the right to disclose
such information or materials to any prospective purchaser of securities of the
Company owned by such Stockholder, provided that such prospective purchaser
shall have executed and delivered a confidentiality and nondisclosure agreement
in form and substance reasonably satisfactory to the Company.
(b) Each of the UBS Holders and HMTF Holders acknowledges that
securities laws prohibit any person who has received material non-public
information regarding the Company or its subsidiaries from purchasing or selling
securities of the Company or from communicating such information to any other
person under circumstances in which it is reasonably foreseeable that such
person is likely to purchase or sell such securities. Each of the UBS Holders
and HMTF Holders agrees that it will not, at any time that it has received
material non-public information regarding the Company or its subsidiaries,
purchase or sell securities of the Company in violation of such securities laws
or communicate such information to any other person under circumstances in which
it is reasonably foreseeable that such person is likely to purchase or sell such
securities in violation of such securities laws.
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[Signatures on Following Pages]
Desa Holdings Corporation
Stockholders Agreement
Counterpart Signature Page
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under SEAL as of the date first set forth above.
THE COMPANY:
DESA HOLDINGS CORPORATION
By: /s/
Name:
Title:
[Stockholders]
[Schedules of stockholders have not been
included and are available upon request]
