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EXHIBIT 10.23
SECURITIES PURCHASE AND STOCKHOLDERS' AGREEMENT, dated as of
August 16, 1999, among XXXXXXX TIRE GROUP, INC., a Delaware corporation (the
"Company"), and Xxxxx X. Xxxxxx (the "Purchaser").
Introduction
The Company desires to issue and sell to the Purchaser, and
the Purchaser desires to purchase from the Company, that number of shares (the
"Purchased Shares") of the Company's Class A Common Stock, par value $.01 per
share (the "Class A Common Stock"), set forth in Exhibit A attached hereto.
In addition to the terms of the issuance, sale and purchase of
the Purchased Shares, the Company and the Purchaser desire to set forth herein
certain matters regarding the ownership of shares of Class A Common Stock by the
Purchaser (the shares of Class A Common Stock now or hereafter acquired by the
Purchaser are referred to herein as the "Shares").
For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
Purchase and Sale
SECTION 1.1. Purchase and Sale of Common Stock. The Company
hereby issues and sells to the Purchaser, and the Purchaser hereby acquires from
the Company, on the date hereof, that number of Purchased Shares set forth on
Exhibit A hereto for a purchase price of $9.00 per Share (the "Purchase Price"),
in cash, payable by wire transfer of immediately available funds to an account
heretofore designated to the Purchaser by the Company, by certified bank check
or money order payable to the Company. The Purchased Shares shall have the
respective rights and preferences of other shares of Class A Common Stock as set
forth in the Company's Certificate of Incorporation in Delaware, a copy of which
is attached to this Agreement as Exhibit B.
SECTION 1.2. Delivery of Certificates. The Company is hereby
issuing and selling to the Purchaser the Purchaser's Purchased Shares by
delivering to the Purchaser a duly executed certificate or certificates
representing the Purchased Shares registered in the name of the Purchaser, with
appropriate issue stamps, if any, affixed at the expense of the Company, free
and clear of all security interests, liens, pledges, charges, options, rights of
first refusal, mortgages, indentures, security agreements or other claims,
encumbrances, agreements, arrangements or commitments of any kind or character,
whether written or oral and whether or not relating in any way to credit or the
borrowing of money ("Claims"), and the Purchaser is hereby purchasing the Shares
for the Purchase Price applicable thereto.
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ARTICLE II
Representations and Warranties of the Company
The Company represents and warrants to the Purchaser as
follows:
SECTION 2.1. Organization Standing and Power. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware.
SECTION 2.2. Authority; Binding Agreements. The Company has
all requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Company and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of the Company. This Agreement has been duly
executed and delivered by the Company and constitutes the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.
SECTION 2.3. Conflicts; Consents. The execution and delivery
by the Company of this Agreement and the consummation of the transactions
contemplated hereby and compliance by the Company with any of the provisions
hereof do not and will not (i) conflict with or result in a breach of the
articles of incorporation, by-laws or other constitutive documents of the
Company, (ii) conflict with or result in a default (or give rise to any right of
termination, cancellation or acceleration) under any of the provisions of any
note, bond, lease, mortgage, indenture, or any license, franchise, permit,
agreement or other instrument or obligation to which the Company is a party, or
by which the Company or any of the Company's properties or assets may be bound
or affected, except for such conflicts, breaches or defaults as to which
requisite waivers or consents have been obtained, (iii) violate any law,
statute, rule or regulation or order, writ, injunction or decree applicable to
the Company or any of the Company's properties or assets or (iv) result in the
creation or imposition of any Claim upon any of the Company's properties or
assets. No consent or approval by, or notification of or filing with, any person
is required in connection with the execution, delivery and performance by the
Company of this Agreement and the consummation of the transactions contemplated
hereby.
ARTICLE III
Representations and Warranties of the Purchaser
The Purchaser represents and warrants to the Company as
follows:
SECTION 3.1. Capacity; Binding Agreements. The Purchaser has
all requisite capacity to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Purchaser, and constitutes the valid
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and binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms.
SECTION 3.2. Conflicts; Consents. The execution and delivery
by the Purchaser of this Agreement, the consummation of the transactions
contemplated hereby and compliance by the Purchaser with any of the provisions
hereof do not and will not (i) conflict with or result in a default (or give
rise to any right of termination, cancellation or acceleration) under any of the
provisions of any note, bond, lease, mortgage, indenture, or any license,
franchise, permit, agreement or other instrument or obligation to which the
Purchaser is a party, or by which the Purchaser or any of the Purchaser's
properties or assets may be bound or affected, except for such conflicts,
breaches or defaults as to which requisite waivers or consents have been
obtained, (ii) violate any law, statute, rule or regulation or order, writ,
injunction or decree applicable to the Purchaser or any of the Purchaser's
properties or assets or (iii) result in the creation or imposition of any Claim
upon any of the Purchaser's properties or assets.
SECTION 3.3. Purchase for Own Account. (a) The Purchased
Shares to be acquired by the Purchaser pursuant to this Agreement are being
acquired for his own account and the Purchaser has no intention of distributing
or reselling such securities or any part thereof in any transaction that would
be in violation of the securities laws of the United States of America, or any
state thereof. If the Purchaser should in the future decide to dispose of any of
the Purchased Shares, the Purchaser understands and agrees that he may do so
only in compliance with this Agreement and with the Securities Act of 1933, as
amended (the "Securities Act"), and applicable state securities laws, as then in
effect, and that stop-transfer instructions to that effect, where applicable,
will be in effect with respect to such securities. If the Purchaser should
decide to dispose of any Shares, the Purchaser, if requested by the Company,
will have the obligation in connection with such disposition, at the Purchaser's
expense, of delivering an opinion of counsel of recognized standing in
securities law in connection with such disposition to the effect that the
proposed disposition of the Shares will not be in violation of the Securities
Act or any applicable state securities laws and, assuming such opinion is
required and is otherwise appropriate in form and substance under the
circumstances, the Company will accept, and will recommend to any applicable
transfer agent or trustee for such securities that it accept, such opinion.
(b) The Purchaser agrees to the imprinting of a legend on
certificates representing all of the Shares to the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED, QUALIFIED, APPROVED OR DISAPPROVED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION
TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS AND NEITHER THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER FEDERAL OR STATE
REGULATORY AUTHORITY HAS PASSED ON OR ENDORSED THE MERITS OF THESE SECURITIES.
THE TRANSFER OF ANY
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SECURITIES REPRESENTED BY THIS CERTIFICATE IS FURTHER LIMITED BY THE PROVISIONS
OF THE SECURITIES PURCHASE AND STOCKHOLDERS' AGREEMENT AMONG XXXXXXX TIRE GROUP,
INC. AND THE MANAGEMENT STOCKHOLDERS IDENTIFIED THEREIN, A COPY OF WHICH IS ON
FILE AT THE EXECUTIVE OFFICE OF THE COMPANY."
SECTION 3.4. Nature of Purchaser. The Purchaser acknowledges
that the offer and sale of the Purchased Shares is intended to be exempt from
registration under the Securities Act. The Purchaser is (i) a director,
president, vice president in charge of a principal business unit, division or
function or other officer of the Company who performs a policy making function
for the Company, (ii) an individual with a net worth, or joint net worth with
the Purchaser's spouse, at the date hereof in excess of $1,000,000, (iii) an
individual with an income in excess of $200,000 in each of the two most recent
years or joint income with the Purchaser's spouse in excess of $300,000 in each
of those years and has a reasonable expectation of reaching the same income
level in the current year or (iv) an individual who has appointed a "purchaser
representative" as described in Section 5.6 to act as the Purchaser's
representative to assist the Purchaser in evaluating the purchase of the
Purchased Shares. The Purchaser has such knowledge and experience in financial
and business matters so that he is capable of evaluating the relative merits and
risks of purchasing the Purchased Shares. The Purchaser has adequate means of
providing for his current economic needs and possible personal contingencies,
has no need for liquidity in his investment in the Company and is able
financially to bear the risks of such investment.
SECTION 3.5. Information. All documents, records and books
pertaining to the investment in the Purchased Shares and requested by the
Purchaser or his purchaser representative, if any, have been made available or
delivered to the Purchaser. The Purchaser has been given full access to all
material information concerning the condition, business, operations, proposed
operations and prospects of Purchaser, including (i) the Annual Report on Form
10-K most recently filed with the SEC by the Company, (ii) all Quarterly Reports
on Form 10-Q filed with the SEC by the Company since the date of such Annual
Report and (iii) all Reports on Form 8-K filed with the SEC by the Company since
the date of such Annual Report (receipt of copies of each of which is hereby
acknowledged by the Purchaser). The Purchaser has had an opportunity to discuss
the Company's business, management and financial affairs with the Company's
management and to ask questions of and receive answers from the Company
concerning such matters. All such questions, if any, have been answered to the
full satisfaction of the Purchaser and his purchaser representative, if any, and
the Purchaser has received all information about the Company which the Purchaser
or his purchaser representative, if any, desires, including information which
the Purchaser or purchaser representative deems necessary to verify the accuracy
of information the Company has furnished to the Purchaser.
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ARTICLE IV
Transferability of Shares
SECTION 4.1. Stock Transfer Restrictions. The Purchaser shall
not sell, assign, pledge, give away or otherwise transfer (a "Transfer") any
Shares except in accordance with the procedures set forth in this Agreement. Any
attempted Transfer of Shares not permitted by this Agreement shall be null and
void, and the Company shall not in any way give effect to any such Transfer. Any
proposed Transfer of Shares shall be null and void, and the Company shall not in
any way give effect to any such Transfer, unless the transferee of such Shares
who is not, immediately prior to such Transfer, the Purchaser shall agree in
writing to be bound by and comply with the provisions of this Agreement
SECTION 4.2. Termination of Employment. (a) Termination by
Company for Cause or by Purchaser without Good Reason. If the Company shall
terminate the Purchaser's employment for "Cause" or the Purchaser shall
terminate his employment with the Company other than for "Good Reason" (as such
terms are defined below), the Company shall have the right, commencing on the
date of such termination and continuing until the first anniversary thereof, to
purchase all of the Purchaser's Shares at the Repurchase Price (as defined
below) applicable thereto; provided that if and to the extent that, prior to
such first anniversary, the Company is prohibited under the terms of any loan
agreement, indenture, note or other agreement from making such repurchase, in
whole or in part, the Company shall have the right to purchase such Shares until
the expiration of 45 days after such first anniversary. In the event the Company
does not exercise its right to purchase such Shares, or is unable to purchase
such Shares, and so long as the Principal Shareholders then own more than 50% of
the Combined Voting Power of the then outstanding shares of capital stock of the
Company, then the Company shall so notify the Principal Shareholders in writing
no later than the first anniversary of the date of the termination triggering
the right to purchase, and for a period of 60 days following the first
anniversary of such termination the Principal Shareholders (through their agent
Charlesbank Capital Partners, LLC) shall have all the rights conferred on the
Company pursuant to this Section 4.2(a). For purposes of this Section 4.2,
"Company" shall include any subsidiary of the Company with respect to the
Purchaser employed directly by such subsidiary.
For purposes of this Agreement,
"Cause", with respect to the Purchaser, has the meaning set
forth in the executive severance or employment agreement, if any, then in effect
between the Company and the Purchaser or, in the absence of such an agreement,
shall mean (i) the Purchaser's conviction of, or plea of guilty or nolo
contendere to a felony, (ii) the Purchaser's gross negligence in the performance
of his employment services to the Company, which is not corrected within 15
business days after written notice, (iii) the Purchaser's knowingly dishonest
act, or knowing bad faith or willful misconduct in the performance of such
services to the material detriment of the Company, which is not corrected within
15 business days after written notice, or (iv) the Purchaser's other material
breach of his obligations as an employee or officer of the Company which is not
corrected within a reasonable period of time (determined in light of the cure
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appropriate to such material breach, but in no event less than 15 business days)
after written notice.
"Combined Voting Power" with respect to capital stock of the
Company means the number of votes such stock is normally entitled (without
regard to the occurrence of any contingency) to vote in an election of the
directors of the Company.
"EBITDA" means earnings before interest, taxes, depreciation,
and amortization as reflected in the Company's financial statements for the four
full fiscal quarters immediately preceding the date on which such termination
shall have occurred. Adjustments for unusual items will be made in the
reasonable discretion of the Board of Directors of the Company, after
consultation with the Chief Executive Officer of the Company.
"Good Reason", with respect to the Purchaser, has the meaning
set forth in the executive severance or employment agreement, if any, then in
effect between the Company and the Purchaser or, in the absence of such an
agreement, shall mean any of the following, unless the basis for such Good
Reason is cured within a reasonable period of time (determined in light of the
cure appropriate to the basis of such Good Reason, but in no event less than 15
business days) after the Company receives written notice specifying the basis of
such Good Reason: (i) the failure of the Company to pay any undisputed amount
due to the Purchaser in connection with his employment by the Company or a
substantial diminution in benefits provided pursuant to such employment other
than a reduction in benefits or salary applicable to all of the Company's bonus
eligible employees, (ii) a substantial diminution in the status, position and
responsibilities of the Purchaser that is not instituted to all employees of the
Company or (iii) the Company requiring the Purchaser to be based at any office
or location that requires a relocation or commute greater than 50 miles from the
office or location to which the Purchaser is currently assigned; provided,
however, that Good Reason shall not be deemed to exist due to the travel
requirements consistent with the performance of the Purchaser's employment
services.
"Principal Shareholders" means (i) Charlesbank Equity Fund IV,
Limited Partnership and the investors in such fund, (ii) Charlesbank Equity Fund
IV G.P. Limited Partnership, (iii) Charlesbank Capital Partners, LLC (and any
other fund managed by Charlesbank Capital Partners, LLC), (iv) any investor
(other than The 1818 Mezzanine Fund, L.P.) whose investment in the Company is
approved by the representative of management on the board of the Company, (v)
any new investors in the Company designated as Principal Shareholders by
Charlesbank Capital Partners, LLC within one year of the initial investment by
Charlesbank Equity Fund IV, Limited Partnership, and (vi) any corporation,
partnership, limited liability company or other entity a majority of the capital
stock or other ownership interests of which are directly or indirectly owned by
any of the foregoing.
"Repurchase Price" means, with respect to each Share owned by
the Purchaser, (a) in the event of any termination, excluding a termination
described in clause (b) below, the greater of (i) the Purchase Price applicable
thereto, and (ii) the quotient obtained by dividing the Net Equity Value by the
total number of shares of Common Stock outstanding on the date of termination of
the Purchaser's employment (on a fully diluted basis, after assuming the
issuance
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of shares of Common Stock pursuant to the exercise of in-the-money options
granted under the Option Plans and in-the-money Warrants), (b) in the event of a
termination (i) by the Company for Cause or (ii) within 24 months of the date
hereof, by the Purchaser other than for Good Reason, the Purchase Price
applicable thereto, and (c) notwithstanding the terms of clauses (a) and (b)
above, in the event of a termination by the Company for a Specified Cause Event
or in the event that following termination for any reason the Purchaser violates
the confidentiality or non-compete provisions of any executive severance,
employment or non-competition agreement with the Company, the lesser of (i) the
Purchase Price applicable thereto and (ii) the quotient obtained by dividing the
Net Equity Value by the total number of shares of Common Stock outstanding on
the date of termination of the Purchaser's employment (on a fully diluted basis,
after assuming the issuance of shares of Common Stock pursuant to the exercise
of in-the-money options granted under the Option Plans and in-the-money
Warrants). "Net Equity Value" means the sum of (x) 6 times the Company's EBITDA
plus (y) the aggregate exercise price of all in-the-money options granted under
the Option Plans and all in-the-money Warrants, less (z) the aggregate amount of
principal of and interest on (in the case of debt) and liquidation value of (in
the case of capital stock) all debt for borrowed money and Preferred Stock (or
any replacements therefor) owed or outstanding as of the date of such
termination.
"Specified Cause Event" means (1) a proven or admitted act of
fraud, misappropriation or embezzlement by the Purchaser that is detrimental to
the Company or (2) the Purchaser's conviction of or plea of guilty or nolo
contendere to a felony that is related to the Company or the performance of the
Purchaser's services for the Company.
(b) Termination by Company other than for Cause or by
Purchaser with Good Reason. If the Company shall terminate the Purchaser's
employment other than for Cause or the Purchaser shall terminate his employment
with the Company for Good Reason, the Purchaser shall have the right, commencing
on the date of such termination and continuing until the first anniversary
thereof, to require the Company to purchase all of the Purchaser's Shares at the
Repurchase Price applicable thereto; provided that if and to the extent that,
prior to such first anniversary, the Company is prohibited under the terms of
any loan agreement, indenture, note or other agreement from purchasing such
Shares to the extent so required by the Purchaser, the Company shall not be
obligated to make such purchase until it is no longer prohibited from doing so,
in which case payment shall be made promptly after the removal of such
prohibition. In the event the option is not exercised, the Company shall have
the right, commencing on the first anniversary and continuing until the second
anniversary thereof, to purchase all of the Purchaser's Shares at the Repurchase
Price applicable thereto. In the event the Company does not exercise its right
to purchase such Shares, or is unable to purchase such Shares, and so long as
the Principal Shareholders then own more than 50% of the Combined Voting Power
of the then outstanding shares of capital stock of the Company, then the Company
shall so notify the Principal Shareholders in writing no later than the second
anniversary of the date of termination triggering the right to purchase, and for
a period of 60 days following the second anniversary of such termination the
Principal Shareholders (through their agent Charlesbank Capital Partners, LLC)
shall have all the rights conferred on the Company pursuant to this Section
4.2(b).
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(c) Termination or Repurchase upon Death. If the Purchaser's
employment with the Company shall terminate due to the Purchaser's death, or, if
within one year after any other termination of employment with the Company, the
Purchaser shall die, the Company shall have the right to purchase, and the
Purchaser's descendants shall have the right to require the Company to purchase,
all of the Purchaser's Shares at the Repurchase Price applicable thereto,
commencing on the date of death of the Purchaser and continuing until the first
anniversary thereof; provided that if and to the extent that, prior to such
first anniversary, the Company is prohibited under the terms of any loan
agreement, indenture, note, or other agreement from purchasing such Shares to
the extent so required by the Purchaser's descendants, the Company shall not be
obligated to make such purchase until it is no longer prohibited from doing so,
in which case payment shall be made promptly after the removal of such
prohibition. In the event the Company does not exercise its right to purchase
such Shares, or is unable to purchase such Shares, and so long as the Principal
Shareholders then own more than 50% of the Combined Voting Power of the then
outstanding shares of capital stock of the Company, then the Company shall so
notify the Principal Shareholders in writing no later than the first anniversary
of the date of the death triggering the right to purchase, and for a period of
60 days following the first anniversary of the date of death the Principal
Shareholders (through their agent Charlesbank Capital Partners, LLC) shall have
all the rights conferred on the Company pursuant to this Section 4.2(c).
(d) Delivery of Payment. The Company or the Principal
Shareholders or the Purchaser, as the case may be, shall notify the other of
such party's exercise of its rights under this Section 4.2 by giving written
notice of such exercise at least 10 and not more than 30 days before the date
established by such electing party for such purchase or sale, as the case may
be. On the date so designated, the Company or the Principal Shareholders shall
deliver the appropriate Repurchase Price to the Purchaser by certified check or
money order and the Purchaser shall deliver the certificates evidencing the
Shares being purchased, duly endorsed for transfer as the Company or the
Principal Shareholders may direct, and free and clear of any Claim. If any
Shares evidenced by a certificate so surrendered are not being purchased
pursuant to the terms hereof, the Company shall promptly issue to the Purchaser
a replacement certificate evidencing the Shares not so purchased.
SECTION 4.3. Transfers Among Management or to Descendants. The
Purchaser may, so long as any right has not been exercised with respect to such
Shares pursuant to Section 4.2, Transfer any Shares to another management
employee of the Company or one of its subsidiaries who has acquired or does
acquire shares of Common Stock pursuant to a purchase agreement containing
transfer and other restrictions substantially similar to, and no less favorable
to the Company than, those contained herein or pursuant to an exercise of any
option under the Option Plans (a "Management Employee"). The Purchaser may
Transfer all or any portion of the Purchaser's Shares to the Purchaser's spouse
or descendants or a trust for the benefit of the Purchaser or his or her spouse
or descendants or to a partnership or corporation controlled by the Purchaser or
his or her spouse or descendants. Such Transfers shall be effective only if the
transferee agrees to be bound by the terms of this Agreement.
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SECTION 4.4. Right of First Offer. With respect to any Shares
that the Purchaser wishes to Transfer, other than pursuant to Section 4.3
hereof, the following provisions shall apply.
(a) If the Purchaser desires to Transfer any such Shares, the
Purchaser shall deliver to the Company, the Principal Shareholders, and the
Management Employees a written notice, which shall be irrevocable for a period
of 60 days after delivery, offering all of such Shares to the Company, and so
long as the Principal Shareholders then own more than 50% of the Combined Voting
Power of the then outstanding shares of capital stock of the Company, the
Principal Shareholders, and the Management Employees at the purchase price and
on the terms specified in the written notice. The Company shall have the first
right and option, for a period of 30 days after delivery of such written notice,
to purchase all (but not part) of such Shares at the purchase price and on the
terms specified in the notice. Such acceptance shall be made by delivering a
written notice to the Purchaser within such 30-day period.
(b) If the Company fails to accept such offer, then upon the
earlier of the expiration of such 30-day period or upon the receipt of a written
rejection of such offer from the Company, the Principal Shareholders shall have
the second right and option, until 15 days after the expiration of the 30-day
period, to purchase all (but not part) of such Shares offered at the purchase
price and on the terms specified in the notice. Such acceptance shall be made by
delivering a written notice to the Purchaser within the 15-day period.
(c) If the Principal Shareholders fail to accept such offer,
then upon the earlier of the expiration of such 15-day period or upon the
receipt of a written rejection of such offer from the Principal Shareholders,
the Management Employees (as a group) shall have the third right and option,
until 15 days after the expiration of the 15-day period, to purchase on a pro
rata basis with all Management Employees so electing all (but not part) of such
Shares offered at the purchase price and on the terms specified in the notice.
Such acceptance shall be made by delivering a written notice to the Purchaser
within the second 15-day period.
(d) If the Company, Principal Shareholders, and the Management
Employees do not elect to purchase the Shares so offered, then the Purchaser may
Transfer all (but not part) of such Shares at a price not less than the price,
and on terms not more favorable to the transferee of such Shares than the terms,
stated in the original written notice of intention to sell, at any time within
15 days after the expiration of the period in which the Management Employees
could elect to purchase such Shares. If such Shares are not sold by the
Purchaser during such 15-day period, the right of the Purchaser to sell such
Shares shall expire and the rights and obligations set forth in this Section 4.4
shall be reinstated with respect to such Shares.
(e) The rights of the Principal Shareholders under this
Section 4.4 shall terminate if at the time of the proposed Transfer the
Principal Shareholders do not own more than 50% of the Combined Voting Power of
the then outstanding shares of capital stock of the Company.
SECTION 4.5. Lock-up Agreements. If the Company proposes to
register under the Securities Act any of its Common Stock for sale to the
public, the Purchaser shall enter into such agreement (a "Lock-up Agreement") as
may be requested by the underwriters of such
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registered offering, pursuant to which Lock-up Agreement the Purchaser shall
refrain from selling any Shares during the period of distribution of Common
Stock by such underwriters and for a period of up to 180 days following the
effective date of such registration.
SECTION 4.6. Take-Along. If Charlesbank Capital Partners, LLC
agrees to transfer all of the shares of Common Stock which it owns and which are
owned by funds that it manages to any person or entity other than an affiliate
of the Principal Shareholders, and so long as the Principal Shareholders then
own more than 50% of the Combined Voting Power of the then outstanding shares of
capital stock of the Company, then Charlesbank Capital Partners, LLC shall have
the right to require the Purchaser to sell his Shares to such person or entity
upon the same terms and subject to the same conditions as the Principal
Shareholders have agreed to sell their shares. The Principal Shareholders shall
provide a written notice of such sale not less than 30 days prior to the closing
of such sale.
ARTICLE V
Miscellaneous
SECTION 5.1. Option Shares; Dividends; Reclassifications. If,
subsequent to the date hereof, any shares of Common Stock are issued to the
Purchaser pursuant to the exercise of any option (including options granted
under the Option Plans), warrant or other security convertible into or
exercisable for shares of Common Stock, or any shares or other securities are
issued with respect to, or in exchange for, any of the Shares by reason of any
reincorporation, stock dividend, stock split, consolidation of shares,
reclassification or consolidation involving the Company, such shares of Common
Stock and such other shares or securities shall be deemed to be Shares for all
purposes of this Agreement.
SECTION 5.2. Survival of Provisions; Termination. (a) All of
the representations, warranties and covenants made herein and each of the
provisions of this Agreement shall, except as otherwise expressly set forth
herein, survive the execution and delivery of this Agreement, any investigation
by or on behalf of the Purchaser, the acceptance of the Purchased Shares and
payment therefor or the termination of this Agreement.
(b) This Agreement shall terminate upon the earliest to occur
of the (i) issuance by the Company or sale by the shareholders of the Company to
the public on a Form S-1 under the Securities Act of shares of Common Stock
representing at least 40% of the Common Stock outstanding after such issuance or
sale, (ii) tenth anniversary of the date of this Agreement and (iii) written
consent of the Purchaser, the Management Employees and the Company. Upon such a
termination, all rights and obligations under this Agreement shall terminate,
except the Purchaser's obligations under Section 4.5 with respect to a Lock-up
Agreement entered into in connection with a public offering referred to in the
foregoing clause (i), if applicable.
SECTION 5.3. Notices. All notices, demands and other
communications provided for or permitted hereunder shall be made in writing and
shall be by registered or certified first-class mail, return receipt requested,
telecopier, courier services or personal delivery
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to the following addresses, or to such other addresses as shall be designated
from time to time by a party in accordance with this Section 5.3:
(a) if to the Company:
Xxxxxxx Tire Group, Inc.
0000 Xxxxx Xxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: J. Xxxxxxx Xxxxxxx
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxx & Xxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telecopier No.: (000) 000-0000
(b) if to the Purchaser:
Xxxxx X. Xxxxxx
0000 xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
(c) if to the Principal Shareholders:
Charlesbank Capital Partners, LLC
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxx and Xxxx X. Xxxxx
Telecopier: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered; one business day after delivery
to a courier, if delivered by
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commercial overnight courier service; five business days after being deposited
in the mail, postage prepaid, if mailed; and when receipt is acknowledged, if
telecopied.
SECTION 5.4. Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the successors and permitted assigns
of the parties hereto. The provisions of Article IV also shall inure to the
benefit of and be enforceable by the Management Employees and the Principal
Shareholders. The Purchaser may assign its rights hereunder only in conjunction
with, and to a transferee of, a Transfer permitted pursuant to the terms of
Article IV, and any such assignee shall be deemed to be the "Purchaser" for
purposes of this Agreement. The Company may not assign any of its rights or
obligations hereunder without the consent of Purchaser; provided that any
successor by merger or consolidation of the Company or similar transaction shall
be bound by and benefit from the terms hereof as if named as the Company
hereunder.
SECTION 5.5. Amendment and Waiver. No failure or delay on the
part of the Company or the Purchaser in exercising any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. No waiver
of or consent to any departure by the Company or the Purchaser from any
provision of this Agreement shall be effective unless signed in writing by the
party entitled to the benefit thereof; provided that notice of any such waiver
shall be given to each party hereto as set forth herein. Except as otherwise
provided herein, no amendment, modification or termination of any provision of
this Agreement shall be effective unless signed in writing by or on behalf of
the Company and the Purchaser and with respect to any amendment, modification or
termination of the rights or obligations of the Principal Shareholders under
Article IV, the Principal Shareholders (through their agent Charlesbank Capital
Partners, LLC); provided that the provisions of Section 5.2(b) and of this
sentence shall not be amended or waived without the written consent of the
Purchaser and the Company.
Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by the Company or the Purchaser from the terms of
any provision of this Agreement, shall be effective only in the specific
instance and for the specific purpose for which made or given. Except where
notice is specifically required by this Agreement, no notice to or demand on the
Company or the Purchaser in any case shall entitle the Company or the Purchaser
to any other or further notice or demand in similar or other circumstances.
SECTION 5.6. Purchaser Representative. If the Purchaser has
been represented by a purchaser representative in connection with his investment
in the Shares, in evaluating the Purchaser's investment in the Shares the
Purchaser has been advised by the Purchaser representative as to the merits and
risks of the investment in general and the suitability of the investment for the
Purchaser in particular, and the purchaser representative has disclosed in
writing any material relationship, actual or contemplated, between the purchaser
representative and any entity connected to the transactions contemplated hereby,
or affiliate of any such entity, and any compensation received or to be received
as a result of such relationship.
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SECTION 5.7. Counterparts. This Agreement may be executed in
any number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
SECTION 5.8. Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
SECTION 5.9. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
SECTION 5.10. Severability. If any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired,
unless the provisions held invalid, illegal or unenforceable shall substantially
impair the benefits of the remaining provisions hereof.
SECTION 5.11. Entire Agreement. This Agreement, together with
the exhibits hereto and the terms of the Common Stock, is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein or therein. This Agreement, together with the exhibits
hereto and the Common Stock, supersede all prior agreements and understandings
among the parties with respect to such subject matter hereof.
SECTION 5.12. Expenses. Each party to this Agreement shall
each bear its or his own costs incurred in connection with the negotiation,
execution and delivery and enforcement of this Agreement, including the fees and
expenses of lawyers, financial advisors and accountants.
SECTION 5.13. Certain Definitions and Rules of Interpretation.
Except as otherwise expressly provided in this Agreement, the following rules of
interpretation apply to this Agreement: (i) the singular includes the plural and
the plural includes the singular; (ii) "or" and "any" are not exclusive and
"include" and "including" are not limiting; (iii) a reference to any agreement
or other contract includes permitted supplements and amendments; (iv) a
reference to a law includes any amendment or modification to such law and any
rules or regulations issued thereunder; (v) a reference to a person includes its
permitted successors and assigns; (vi) a reference to GAAP or generally accepted
accounting principles refers to United States generally accepted accounting
principles; and (vii) a reference in this Agreement to an Article, Section or
Exhibit is to the Article, Section or Exhibit of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Securities Purchase and Stockholders' Agreement to be executed and delivered as
of the date first above written.
XXXXXXX TIRE GROUP, INC.
By:/s/ J. Xxxxxxx Xxxxxxx
--------------------------------------------
J. Xxxxxxx Xxxxxxx
Executive Vice President and General Counsel
/s/ Xxxxx X. Xxxxxx
--------------------------------------------
Xxxxx X. Xxxxxx
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Exhibit A
to Securities Purchase and Stockholders' Agreement
Shareholder Number of Purchased Shares Cash
----------- -------------------------- ----
Xxxxx X. Xxxxxx 25,000 $225,000
