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EXHIBIT 4.6
SHAREHOLDERS AGREEMENT
dated as of
October 6, 1995
among
FIBERITE HOLDINGS, INC.
- and -
THE SHAREHOLDERS LISTED ON THE SIGNATURE PAGES HEREOF,
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TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS
1.1 Definitions................................................. 2
ARTICLE 2
CORPORATE GOVERNANCE
2.1 Composition of the Board................................... 11
2.2 Removal.................................................... 11
2.3 Vacancies.................................................. 12
2.4 Meetings.................................................... 12
2.5 Action by the Board......................................... 13
2.6 Conflicting Charter or Bylaw Provisions..................... 13
ARTICLE 3
RESTRICTIONS ON TRANSFER;
RIGHTS TO COMPEL A SALE;
RIGHTS TO PARTICIPATE IN A SALE
3.1 General..................................................... 13
3.2 Legends..................................................... 14
3.3 Permitted Transferees....................................... 15
3.4 Transfers by Institutional Shareholders..................... 15
3.5 Transfers by Management Stockholders........................ 16
3.6 Public Offering............................................. 17
3.7 Right to Participate in a Transfer.......................... 17
3.8 Right to Compel Participation in Certain
Transfers.................................................. 20
3.9 Right of First Offer....................................... 22
ARTICLE 4
CERTAIN REPURCHASES OF COMMON STOCK
4.1 Surrender of Shares......................................... 26
4.2 Method of Repurchase........................................ 27
4.3 Payment Limitations......................................... 28
4.4 Determination of Fair Market Value.......................... 29
4.5 Right of Company to Designate Third Parties................. 30
4.6 Employment; No Implied Right to Employment.................. 30
4.7 Termination of Article 4..................................... 30
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Page
ARTICLE 5
REGISTRATION RIGHTS
5.1 Demand Registration......................................... 30
5.2 Incidental Registration..................................... 33
5.3 Holdback Agreements......................................... 34
5.4 Registration Procedures..................................... 35
5.5 Indemnification by the Company.............................. 38
5.6 Indemnification by Participating Shareholders............... 39
5.7 Conduct of Indemnification Proceedings...................... 40
5.8 Contribution................................................ 41
5.9 Participation in Public Offering............................ 42
5.10 Other Indemnification....................................... 42
ARTICLE 6
COVENANTS OF THE SHAREHOLDERS
6.1 Confidentiality............................................. 43
6.2 Cooperation in Refinancings................................. 44
ARTICLE 7
MISCELLANEOUS
7.1 Entire Agreement............................................ 44
7.2 Additional Parties.......................................... 44
7.3 Binding Effect; Benefit..................................... 45
7.4 Exclusive Financial Advisor and Investment
Banking Advisor; Management Advisory Fees.................. 45
7.5 Assignability............................................... 45
7.6 Amendment; Waiver; Termination.............................. 46
7.7 Notices..................................................... 46
7.8 Headings.................................................... 48
7.9 Counterparts................................................ 48
7.10 Applicable Law.............................................. 48
7.11 Specific Enforcement........................................ 48
7.12 Consent to Jurisdiction..................................... 49
EXHIBIT A - Initial Ownership of Common Stock of Fiberite Holdings, Inc.
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SHAREHOLDERS AGREEMENT
AGREEMENT (the "Agreement") dated as of October 6, 1995 by and among:
(1) Fiberite Holdings, Inc., a Delaware corporation (the "Company");
(2) DLJ Merchant Banking Partners, L.P., DLJ International Partners, C.V.,
DLJ Offshore Partners, C.V. and DLJ Merchant Banking Funding, Inc. (each a
"DLJ Entity", and collectively, the "DLJ Entities");
(3) Carlisle-Fiberite Investors L.P.;
(4) Steeple International, Inc. ("Steeple"); and
(5) Each other person who executes a signature page hereto on or after the
Effective Date (as defined below) pursuant to Sections 3.1 and 7.2
hereof).
This Agreement shall become effective on the date (the "Effective
Date") of, and simultaneously with, the closing of the transactions contemplated
by the Securities Purchase Agreement (as defined below).
WITNESSETH:
WHEREAS, upon consummation of the transactions contemplated hereby, the
authorized capital stock of the Company will consist of 15,000,000 shares of
Common Stock, par value $.01 per share;
WHEREAS, certain of the parties hereto have entered into a Securities
Purchase Agreement (the "Securities Purchase Agreement") dated as of the date
hereof pursuant to which the Company has sold (i) shares of its Common Stock to
the shareholders listed on Exhibit A hereto at a price of $.50 per share and
(ii) $63,705,500 aggregate principal amount of its 11.30% Subordinated Notes due
2002 at a price of $47.2644 per $100 principal amount;
WHEREAS, the parties hereto wish to record their arrangements with
respect to the Shares (as defined below) and certain other matters;
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WHEREAS, the Company, Fiberite, Inc. and ICI American Holdings Inc.
have entered into a Purchase Agreement (the "Stock Purchase Agreement") dated
the date hereof, pursuant to which Fiberite, Inc. will acquire all of the
outstanding capital stock of ICI Composites Inc. and Xxxxx Verwaltungsgell-
schaft mbH, a subsidiary of Fiberite, Inc., Fiberite Europe GmbH and Deutsche
ICI GmbH have entered into a Business Purchase Agreement and a Real Property
Transfer Agreement (together with the Stock Purchase Agreement, the "Purchase
Agreement"), each dated the date hereof, pursuant to which Xxxxx
Verwaltungsgellschaft mbH will acquire substantially all of the assets and
liabilities of Fiberite Europe GmbH (collectively, the "Acquisition");
WHEREAS, the parties hereto understand that in order to provide a
source of funds for the Acquisition, including the payment of certain fees and
expenses in connection therewith, the Company will contribute $35,000,000 to the
capital of Fiberite, Inc. which, together with other funds, will be used to
consummate the Acquisition; and
WHEREAS, the Company owns 100% of the issued and outstanding common
stock, par value $.01 per share, of Fiberite, Inc.; and
WHEREAS, the parties hereto desire to restrict the sale, assignment,
transfer, encumbrance or other disposition of the Shares, including both issued
and outstanding Shares and Shares which may be issued or otherwise acquired
hereafter, and to provide for certain rights and obligations in respect thereto
as hereinafter provided.
NOW, THEREFORE, in consideration of the foregoing covenants and
agreements herein contained, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. (a) The following terms, as used herein, have the
following meanings:
"Adverse Person" means any Person considered by the Board to be a
competitor or potential competitor of the Company or a Person whose interests
are otherwise adverse to the Company or any of the Shareholders.
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"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person; provided that no shareholder of the Company shall be deemed to be
an Affiliate of any other shareholder solely by reason of any investment in the
Company. For the purpose of this definition, the term "control" (including with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.
"Affiliated Employee Benefit Trust" means any trust that is a successor
to the assets held by a trust established under an employee benefit plan subject
to ERISA or any other trust established directly or indirectly under such plan
or any other such plan having the same sponsor.
"Agreement" has the meaning assigned to such term in the introduction
hereto.
"Board" means the board of directors of the Company.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York City are authorized by law to close.
"Bylaws" means the bylaws of the Company, as amended from time to time.
"Carlisle" means Carlisle-Fiberite Investors L.P. together with
Carlisle Group, L.P., if and when Carlisle Group, L.P. becomes a party to this
Agreement in accordance herewith.
"Closing Date" means the date of the closing of the transactions
contemplated by the Purchase Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the Common Stock, $.01 par value per share, of the
Company.
"Company" has the meaning assigned to such term in the introduction to
this Agreement.
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"Disability" with respect to any Management Shareholder, means that, as
a result of incapacity due to physical or mental illness, such Management
Shareholder is, or is reasonably likely to become, unable to perform his or her
duties for more than six consecutive months or six months in aggregate in any
twelve month period.
"DLJ Entity" and "DLJ Entities" have the meaning assigned to such terms
in the introduction to this Agreement.
"DLJ Ownership Period" means the period commencing on the Effective
Date and ending on the date that is the earlier to occur of (i) the tenth
anniversary of the Effective Date and (ii) the date upon which the aggregate
ownership by the DLJ Entities and their Permitted Transferees of shares of
Common Stock is less than 10% of the aggregate Initial Ownership of the DLJ
Entities.
"Duly Endorsed" means duly endorsed in blank by the Person or Persons
in whose name a stock certificate is registered or accompanied by a duly
executed stock assignment separate from the certificate with the signature(s)
thereon guaranteed by a commercial bank or trust company or a member of a
national securities exchange or of the NASD.
"Effective Date" has the meaning assigned to such term in the
introduction to this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fully Diluted" means, with respect to Shares and without duplication,
all outstanding shares, shares issuable in respect of securities convertible
into or exchangeable for Shares, stock appreciation rights or options, warrants
and other rights to purchase or subscribe for Shares or securities convertible
into or exchangeable for Shares, in each case, whether or not vested.
"Initial Management Ownership" means, with respect to any Management
Shareholder, the maximum number of Shares held by and/or subject to the right to
acquire (whether or not vested) by such Management Shareholder during the period
commencing on the Effective Date and ending on (and including) the
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date such Initial Management Ownership amount is calculated hereunder.
"Initial Ownership" means, with respect to any Shareholder, the total
number of Shares purchased by such Shareholder under the Securities Purchase
Agreement; provided that such number shall be adjusted to reflect any subsequent
subdivision, combination or reclassification of the Shares or any subsequent
dividend or other distribution on the Shares paid in shares.
"Initial Public Offering" means the first Public Offering of Shares
after the Effective Date, other than in connection with sales to employees of
the Company or any Subsidiary of the Company or where the primary purpose of
such Public Offering of Shares relates to a debt financing by the Company or any
Subsidiary of the Company.
"Initial Restriction Period" means the period commencing on the
Effective Date and ending on the date that is the later to occur of (a) the
third anniversary of the Initial Public Offering and (b) the fifth anniversary
of the Effective Date.
"Institutional Shareholders" means any DLJ Entity and its Permitted
Transferees, Carlisle and its Permitted Transferees, Steeple and its Permitted
Transferees and (with respect to Shares obtained upon exercise of a Warrant)
each party who becomes a Shareholder upon exercise of Warrants and its Permitted
Transferees.
"Management Shareholders" means employees of the Company or any of its
Subsidiaries who have become party to and agreed to be bound by this Agreement.
"NASD" means the National Association of Securities Dealers, Inc.
"Options" means options to purchase shares of Common Stock, granted
pursuant to the Plan.
"Other Shareholders" means all Shareholders and their Permitted
Transferees, other than the DLJ Entities and their Permitted Transferees.
"Payment Date" means, in connection with any Payment Note, the Business
Day immediately preceding the later of the last day of the Company's fiscal year
in which such Payment
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Note was issued and the date that is six months from such date of issuance.
"Permitted Transferee" means:
(i) in the case of any DLJ Entity, (A) any other DLJ Entity, (B) any
general or limited partner of any DLJ Entity (a "DLJ Partner"), and any
corporation, partnership, Affiliated Employee Benefit Trust or other
entity that is an Affiliate of any DLJ Partner (collectively, the "DLJ
Affiliates"), (C) any managing director, general partner, director,
limited partner, officer or employee of any DLJ Entity or of any DLJ
Affiliate, or the heirs, executors, administrators, testamentary trustees,
legatees or beneficiaries of any of the foregoing persons referred to in
this clause (C) (collectively "DLJ Associates"); (D) a trust, the
beneficiaries of which, or a corporation, limited liability company or
partnership, the stockholders, members or general or limited partners of
which, include only XXX Xxxxxxxx, XXX Xxxxxxxxxx, XXX Associates, their
spouses or their lineal descendants or (E) a voting trustee for one or
more DLJ Entities, DLJ Affiliates or DLJ Associates under the terms of a
voting trust designed to conform with the requirements of the Insurance
Law of the State of New York;
(ii) in the case of Institutional Shareholders other than the DLJ
Entities and their Permitted Transferees, (A) any Affiliate of such
Institutional Shareholder, as the case may be, (B) if such Institutional
Shareholder is a partnership, to the partners of such partnership in
proportion to their interests therein, (C) if such Institutional
Shareholder is a natural Person, Persons described in clauses (iii)(A)(1)
and (2) of this definition or (D) with the consent of DLJ Merchant
Banking, Inc. on behalf of the DLJ Entities, the Company or any Other
Shareholder; and
(iii) in the case of any Management Shareholder, (A) a Person to whom
Shares are transferred from such Shareholder (1) by will or the laws of
descent and distribution or (2) by gift without consideration of any kind;
provided that such transferee is the issue, adopted issue, stepchild,
parent or spouse of such Shareholder, (B) a trust that is for the
exclusive benefit of, or a partnership the partners of which are
exclusively, such Shareholder or his or her Permitted Transferees under
(A) above, or (C) with
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the consent of DLJ Merchant Banking, Inc. on behalf of the DLJ Entities,
the Company or any Other Shareholder;
in each case, who becomes a party hereto and agrees to be bound hereby pursuant
to Sections 3.1 and 7.2 hereof.
"Person" means an individual, corporation, partnership, association,
trust or other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Plan" means the Company's 1995 Long Term Incentive and Share Award
Plan, as amended from time to time pursuant to its terms.
"Public Offering" means an underwritten public offering of Registrable
Stock of the Company pursuant to an effective registration statement under the
Securities Act.
"Purchase Agreement" has the meaning assigned to such term in the
preamble to this Agreement.
"Registrable Stock" means any Shares originally acquired under the
Securities Purchase Agreement and any other Shares that constitute Restricted
Securities until (i) a registration statement covering such Shares has been
declared effective by the SEC and such Shares have been disposed of pursuant to
such effective registration statement, (ii) such Shares are sold under
circumstances in which all of the applicable conditions of Rule 144 (other than
Rule 144A under the Securities Act) are met or under which it may be sold
pursuant to Rule 144(k) or (iii) such Shares are otherwise transferred, the
Company has delivered a new certificate or other evidence of ownership for such
Shares not bearing the legend required pursuant to this Agreement and such
Shares may be resold without subsequent registration under the Securities Act.
"Registration Expenses" means (i) all registration and filing fees,
(ii) fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Shares), (iii) printing expenses, (iv) internal expenses
of the Company (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), (v) reasonable
fees and disbursements of counsel for the Company and customary fees and
expenses for independent certified public accountants retained by the Company
(including the expenses of any comfort letters
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or costs associated with the delivery by independent certified public
accountants of a comfort letter or comfort letters requested pursuant to Article
5 hereof), (vi) the reasonable fees and expenses of any special experts retained
by the Company in connection with such registration, (vii) reasonable fees and
expenses of one counsel for the Shareholders participating in the offering
selected by the DLJ Entities, in the case of an offering in which any of the DLJ
Entities participate, or by Other Shareholders holding the majority of Shares to
be sold for the account of all Other Shareholders in the offering in the case of
an offering in which no DLJ Entity participates, (viii) fees and expenses in
connection with any review of underwriting arrangements by the NASD, including
fees and expenses of any "qualified independent underwriter" and (ix) fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities; but shall not include any underwriting fees, discounts or
commissions attributable to the sale of Registrable Stock, or any out-of-pocket
expenses (except as set forth in clauses (ii) or (vii) above) of the
Shareholders (or the agents who manage their accounts) or any fees and expenses
of underwriter's counsel.
"Restricted Securities" means Shares that are "restricted securities"
within the meaning of Rule 144.
"Rule 144" means Rule 144 and Rule 144A (or any successor provisions)
under the Securities Act.
"SEC" means the Securities and Exchange Commission or any successor
agency.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Purchase Agreement" has the meaning assigned to such term
in the preamble to this Agreement.
"Shareholder" means each Person (other than the Company) who shall be a
party to this Agreement, whether in connection with the execution and delivery
hereof as of the date hereof or otherwise, when, and so long as, such Person
shall have the power to vote or otherwise beneficially own any Shares.
"Shares" means all shares of Common Stock held by the Shareholders in
such capacity and, except with respect to provisions regarding voting, shall
include Vested Options and Vested Warrants.
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"Subsidiary" means, with respect to any Person, any corporation or
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by
such Person.
"Third Party" means a prospective purchaser of Shares in an
arm's-length transaction from a Shareholder where such purchaser is not a
Permitted Transferee of such Shareholder.
"transfer" has the meaning set forth in Section 3.1(a).
"Vested Options" means Options which, pursuant to their terms, are
exercisable by the holder thereof on the date of determination.
"Vested Warrants" means Warrants which, pursuant to their terms, are
exercisable by the holder thereof on the date of determination.
"Warrants" means warrants to purchase Common Stock issued by the
Company pursuant to each of the Stock Purchase Warrants dated the date hereof
granted by the Company to each of Carlisle Group, L.P. and Xxxxx Xxxxxx.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
Business Plan 2.5(b)
Cause 2.2
Claim Costs 7.4
Confidential Information 6.1(b)
Carlisle Nominee 2.1(a)
DLJ Nominees 2.1(a)
DLJSC 7.4
Demand Registration 5.1(a)
Electing Shareholders 3.7(a)
Fair Market Value 4.4
Holders 5.1(a)
Incidental Registration 5.2(a)
Indemnified Party 5.7
Indemnifying Party 5.7
Inspectors 5.4(g)
Joinder Agreement 7.2
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Maximum Obligation 4.3
Nominee 2.3(a)
Non-Selling Shareholder 3.9(a)
Number of Shares 3.7(a)
Participating Shares 3.7(a)
Payment Note 4.2(a)
Records 5.4(g)
Representatives 6.1(b)
Repurchase Price 4.1(a)
Section 3.5 Pro Rata Portion 3.5
Section 3.7 Notice 3.7(a)
Section 3.7 Notice Period 3.7(a)
Section 3.7 Pro Rata Portion 3.7(a)
Section 3.7 Sale 3.7(a)
Section 3.7 Sale Price 3.7(a)
Section 3.7 Seller 3.7(a)
Section 3.8 Notice 3.8(a)
Section 3.8 Notice Period 3.8(a)
Section 3.8 Pro Rata Portion 3.8(a)
Section 3.8 Sale 3.8(a)
Section 3.8 Sale Price 3.8(a)
Section 3.9 Offer 3.9(b)
Section 3.9 Offer Notice 3.9(a)
Section 3.9 Offer Period 3.9(b)
Section 3.9 Sale Price 3.9(a)
Section 3.9 Seller 3.9(a)
Seller 4.2(a)
Selling Shareholder 5.1(a)
Surrendered Shares 4.2(a)
Termination Date 4.2(a)
Underwriters' Limitations 5.1(d)
Vested Parties 3.7(a)
(c) The term "DLJ Entities", to the extent that any such entity shall
have transferred any of its Shares to "Permitted Transferees", shall mean the
DLJ Entities and the Permitted Transferees of the DLJ Entities, as the case may
be, and any right or action that may be taken at the election of the DLJ
Entities may be taken at the election of the DLJ Entities and the Permitted
Transferees of the DLJ Entities, as the case may be.
(d) The term "Other Shareholders", to the extent such shareholders
shall have transferred any of their Shares to "Permitted Transferees", shall
mean the Other Shareholders and the respective Permitted Transferees of the
Other Shareholders, as the case may be, and any right or action that may be
taken at the election of the Other Shareholders may be taken at the
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election of the Other Shareholders and the Permitted Transferees of the Other
Shareholders, as the case may be.
(e) The term "Management Shareholders", to the extent such shareholders
shall have transferred any of their Shares to "Permitted Transferees", shall
mean the Management Shareholders and the respective Permitted Transferees of the
Management Shareholders, as the case may be, and any right or action that may be
taken at the election of the Management Shareholders may be taken at the
election of the Management Shareholders and the Permitted Transferees of the
Management Shareholders, as the case may be.
ARTICLE 2
CORPORATE GOVERNANCE
2.1 Composition of the Board. (a) The Board shall consist of four
directors (or such smaller or larger number as may be agreed among the DLJ
Entities and Carlisle), one of whom shall be designated from time to time by
Carlisle (the "Carlisle Nominee"), and the remaining number of whom shall be
designated from time to time by the DLJ Entities (the "DLJ Nominees"). Upon
execution of this Agreement, the parties shall take all necessary action so that
the Board shall initially consist of Xxxxxxxx Xxxx, Chairman of the Board, Xxxxx
Xxxxxxxx, Xxxx Xxxxxx and Xxxx Xxxx and each such director shall serve until
resignation, removal or replacement in accordance with the terms of this
Agreement. It is acknowledged that of the initial members of the Board, Xx.
Xxxxxxxx has been designated by Carlisle and the other members of the Board have
been designated by the DLJ Entities.
(b) Each Shareholder entitled to vote for the election of directors to
the Board agrees that it will vote its Shares or execute consents, as the case
may be, and take all other necessary action (including in order to satisfy any
quorum requirement) in order to ensure that the composition of the Board is as
set forth in this Section 2.1.
(c) Except as set forth in any special security arrangement with the
United States Department of Defense entered into by a Subsidiary of the Company
with the consent of the Board, the DLJ Entities shall be entitled to designate a
majority of the directors of each Subsidiary of the Company.
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2.2 Removal. Each Shareholder agrees that if, at any time, it is then
entitled to vote for the removal of directors of the Company, it will not vote
any of its Shares in favor of the removal of any director who shall have been
designated or nominated pursuant to Section 2.1 unless such removal shall be for
Cause or the Persons entitled to designate or nominate such director shall have
consented to such removal in writing. Each Shareholder agrees that if the
Persons entitled to designate or nominate any director pursuant to Section 2.1
shall request the removal, with or without Cause, of such director in writing,
such Shareholder shall vote its Shares in favor of such removal. Removal for
"Cause" shall mean removal of a director or employee because of such director's
or employee's (a) willful and continued failure to substantially perform his or
her duties with the Company in his or her established position, (b) willful
conduct that is foreseeably and significantly injurious to the Company or any of
its Subsidiaries, monetarily or otherwise, (c) conviction for, or plea of guilty
or no contest to, a felony or a crime involving moral turpitude, (d) abuse of
illegal drugs or other controlled substances or habitual intoxication, (e)
willful breach of this Agreement or, in the case of an employee of the Company,
termination of such employee's employment agreement with the Company for
"Cause", as defined therein, or (f) in the case of any employee that has a
severance agreement with the Company, breach by such employee of such severance
agreement.
2.3 Vacancies. If, as a result of death, disability, retirement,
resignation, removal (with or without Cause) or otherwise, there shall exist or
occur any vacancy of the Board:
(a) the Person or Persons entitled under Section 2.1 to designate or
nominate such director whose death, disability, retirement, resignation or
removal resulted in such vacancy may designate another individual (the
"Nominee") to fill such capacity and serve as a director of the Company; and
(b) each Shareholder then entitled to vote for the election of the
Nominee as a director of the Company agrees that it will vote its Shares, or
execute a written consent, as the case may be, in order to ensure that the
Nominee is elected to the Board; provided that (i) in the case of the Carlisle
Nominee, Carlisle then holds at least 80% of its Initial Ownership (including,
for this purpose, Warrants to be issued to Carlisle on or about the Closing
Date) or 2% of the Fully Diluted Common Stock, and (ii) in the case of a DLJ
Nominee,
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the DLJ Entities then hold at least 5% of the Fully Diluted Common Stock.
2.4 Meetings. The Board shall hold a regularly scheduled meeting at
least once every calendar quarter.
2.5 Action by the Board. (a) A quorum of the Board shall consist of
three directors, of whom at least two must be DLJ Nominees; provided that the
number of Directors constituting a quorum shall be changed upon request of the
DLJ Entities. All actions of the Board shall require the affirmative vote of at
least a majority of the directors at a duly convened meeting of the Board at
which a quorum is present or the unanimous written consent of the Board;
provided that, in the event there is a vacancy on the Board and an individual
has been nominated to fill such vacancy, the first order of business shall be to
fill such vacancy.
(b) The executive officers of the Company shall submit to the Board,
and obtain their approval of, prior to the start of each calendar year of the
Company, a business plan (the "Business Plan") setting forth the annual budget
and operating plan of the Company and its Subsidiaries for such calendar year.
The Board shall receive monthly, quarterly and annual financial statements and
other appropriate reports concerning operations of the Company and its
Subsidiaries and other matters as the Board shall request.
(c) The Board may create executive, compensation and audit committees,
as well as such other committees as it may determine. The Carlisle Nominee shall
be entitled to serve, and the DLJ Nominees shall be entitled to majority
representation, on any committee created by the Board.
2.6 Conflicting Charter or Bylaw Provisions. Each Shareholder shall
vote its Shares, and shall take all other actions necessary, to ensure that the
Company's Certificate of Incorporation and Bylaws facilitate and do not at any
time conflict with any provision of this Agreement.
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ARTICLE 3
RESTRICTIONS ON TRANSFER;
RIGHTS TO COMPEL A SALE;
RIGHTS TO PARTICIPATE IN A SALE
3.1 General. (a) Each Shareholder understands and agrees that the
Shares purchased pursuant to the Securities Purchase Agreement have not been
registered under the Securities Act and are Restricted Securities. Each
Shareholder agrees that it will not, directly or indirectly, sell, assign,
transfer, grant a participation in, pledge or otherwise dispose of ("transfer")
any Shares (or solicit any offers to buy or otherwise acquire, or take a pledge
of any Shares) except in compliance with the Securities Act, applicable state
and foreign securities laws and the terms and conditions of this Agreement. The
transfer of any Warrant also is subject to the terms and provisions set forth in
such Warrant. The transfer of any Option also is subject to the terms and
provisions set forth in such Option or in the Plan.
(b) Notwithstanding anything else to the contrary contained in this
Agreement, the Board shall have the absolute right in its discretion to refuse
to permit or acknowledge any transfer (and any such transfer or purported
transfer shall be prohibited) (i) to any Adverse Person or (ii) if such transfer
could have adverse consequences for the Company or its Shareholders (it being
understood that for purposes of this Section 3.1(b) any transfer that
individually or together with any other transfer or proposed transfer could
cause the Company to be required to register its Common Stock under the Exchange
Act prior to the Initial Public Offering would have adverse consequences for the
Company and its Shareholders).
(c) Any attempt to transfer any Shares not in compliance with this
Agreement, the Securities Act and applicable state and foreign securities laws
shall be null and void and neither the Company nor any transfer agent shall give
any effect in the Company's stock records to such attempted transfer.
(d) No transfer of Shares by any party to this Agreement including,
without limitation, transfers to one or more Permitted Transferees, shall be
effective unless (x) the certificates representing such Shares issued to the
Transferee shall bear the legends provided in Section 3.2, if required by such
Section , and (y) if the Shares are required to bear the legend set forth in
Section 3.2(b), the transferee (if not
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already a party hereto) shall have executed and delivered to each other party
hereto, as a condition precedent to such transfer, an instrument or instruments
reasonably satisfactory to such parties confirming that the transferee agrees to
be bound by the terms of this Agreement in the same manner as such transferee's
transferor, except as otherwise specifically provided in this Agreement.
3.2 Legends. (a) In addition to any other legend that may be required,
each certificate for Restricted Securities shall bear a legend in substantially
the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR
SOLD EXCEPT IN COMPLIANCE THEREWITH."
(b) In addition to any other legend that may be required, each
certificate for Shares that is issued to any Shareholder shall bear a legend in
substantially the following form:
"THIS SECURITY IS SUBJECT TO RESTRICTIONS ON TRANSFER AND ADDITIONAL
OBLIGATIONS AS SET FORTH IN THE SHAREHOLDERS AGREEMENT DATED AS OF OCTOBER
[ ], 1995, COPIES OF WHICH MAY BE OBTAINED UPON REQUEST FROM FIBERITE
HOLDINGS, INC. AND ANY SUCCESSOR THERETO. NO TRANSFER OF THIS SECURITY
WILL BE MADE ON THE BOOKS OF THE COMPANY UNLESS ACCOMPANIED BY EVIDENCE OF
COMPLIANCE WITH THE TERMS OF SUCH AGREEMENT AND THAT ANY TRANSFEREE AGREES
TO BE BOUND BY THE RESTRICTIONS SET FORTH IN SUCH SHAREHOLDERS AGREEMENT."
(c) If any Restricted Securities shall cease to be Registrable Stock,
the Company shall, upon the written request of the holder thereof, issue to such
holder a new certificate evidencing such shares without the legend required by
Section 3.2(a) endorsed thereon. If any shares of Common Stock cease to be
subject to any restrictions on transfer set forth in this Agreement, the Company
shall, upon the written request of the holder thereof, issue to such holder a
new certificate evidencing such shares without the legend required by Section
3.2(b) endorsed thereon.
3.3 Permitted Transferees. Any Shareholder may at any time transfer any
or all of its Shares to one or more of its Permitted Transferees without the
consent of the Board or
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any other Shareholder or group of Shareholders and without compliance with
Sections 3.7, 3.8 or 3.9, provided that (i) such Permitted Transferee shall have
agreed in writing to be bound by the terms of this Agreement and (ii) the
transfer to such Permitted Transferee is not in violation of applicable federal
or state or foreign securities laws (and, if requested by the Company, such
Shareholder shall have provided to the Company an opinion of counsel reasonably
satisfactory to the Company to such effect).
3.4 Transfers by Institutional Shareholders. Any Institutional
Shareholder may transfer Shares or unvested Warrants to any Third Party who is
not an Adverse Person in compliance with the Securities Act (pursuant to Rule
144 or any other similar exemption under the Securities Act or otherwise) and
subject to Sections 3.7 and 3.9 and Article V hereof; provided that:
(i) no such transfer by any Other Shareholder shall be permitted until
the fifth anniversary of the Effective Date unless such transfer is
pursuant to Sections 3.6, 3.7 or 3.8 hereof; and
(ii) at any time, if requested by the Company (other than in connection
with any Public Offering), any such Third Party transferee shall have
agreed in writing to be bound by the terms of this Agreement.
3.5 Transfers by Management Stockholders. Any Management Shareholder
may transfer Shares only as follows:
(i) pursuant to Section 3.7 or 3.8;
(ii) in a Public Offering (after having exercised any Vested Options to
be sold), provided that (a) no Management Shareholder may sell any Shares
in the Initial Public Offering; (b) in the first Public Offering following
the Initial Public Offering no Management Shareholder may sell more than
the lesser of (x) 50% of such Management Shareholder's Section 3.5 Pro
Rata Portion and (y) 20% of such Management Shareholder's holdings
immediately prior to such offering; and (c) in each Public Offering
thereafter, each Management Shareholder may sell no more than the lesser
of such Management Shareholder's Section 3.5 Pro Rata Portion and (y) 50%
of such Management Shareholder's holdings immediately prior to such
offering;
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(iii) after the first anniversary of the Initial Public Offering (after
having exercised any Vested Options to be sold), pursuant to the exemption
from registration provided under Rule 144 under the Securities Act,
provided that during the Initial Restriction Period, such sales shall not
reduce the Management Shareholder's ownership to (or occur at a time when
such Management Shareholder's ownership is otherwise) below the greater of
(a) 50% of such Management Shareholder's Initial Management Ownership (as
calculated on the date of each such proposed sale), and (b) the number of
shares equal to such Management Shareholder's Initial Management Ownership
(as calculated on the date of each such proposed sale) multiplied by a
fraction, the numerator of which is the number of shares currently owned
by the Institutional Shareholders and the denominator of which is the
Initial Ownership of the Institutional Shareholders;
(iv) after the Initial Restriction Period (after having exercised any
Vested Options to be sold), pursuant to a sale to a Third Party for cash,
provided that (x) the amount sold in any 12-month period may not exceed
20% of such Management Shareholder's holdings at the beginning of such
12-month period and (y) in no event will a Management Shareholder sell
shares to an Adverse Person or any Person deemed inappropriate by the
Board of Directors; and
(v) to a Permitted Transferee of such Management Shareholder.
"Section 3.5 Pro Rata Portion" means with respect to each Management
Shareholder at the time of such Public Offering, the number of Shares the
Management Shareholder holds multiplied by a fraction the numerator of which is
the number of Shares to be sold by the Institutional Shareholders and their
Permitted Transferees in the transaction in question and the denominator of
which is the total number of Shares held by the Institutional Shareholders and
their Permitted Transferees.
The above transfer restrictions will terminate upon the earlier to
occur of (i) ten years after the Effective Date and (ii) the date upon which the
aggregate number of Shares held by the Institutional Shareholders and their
Permitted Transferees falls below 10% of the Initial Ownership of the
Institutional Shareholders.
3.6 Public Offering. At any time in connection with a Public Offering
pursuant to Article V hereof, each
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Shareholder shall have the right to transfer Shares (after having exercised any
Vested Options and Vested Warrants to be sold) in the Public Offering as
provided in Article V.
3.7 Right to Participate in a Transfer. (a) Subject to Section 3.9, if
prior to the Initial Public Offering, any Institutional Shareholder (the
"Section 3.7 Seller") proposes to transfer, in any transaction or series of
transactions, related or unrelated any of its Shares to a Third Party, other
than in a Public Offering or as a result of a pledge of shares as security for a
loan, where (i) the Shares being so transferred constitute more than 25% of the
then outstanding Shares of the Company and (ii) prior to or as a result of the
proposed transfer, the Section 3.7 Seller and its Permitted Transferees hold or
would hold less than 50% of its Initial Ownership (a "Section 3.7 Sale"), the
Section 3.7 Seller shall provide written notice of such proposed Section 3.7
Sale ("Section 3.7 Notice") to all other Shareholders (the "Electing
Shareholders") and to the Company. The Company shall provide information with
respect to Shareholders who are holders of Vested Options or Vested Warrants
(the "Vested Parties"). The Section 3.7 Notice shall identify the number of
Shares subject to the Section 3.7 Sale (the "Number of Shares"), the per Share
consideration for which a sale is proposed to be made (the "Section 3.7 Sale
Price") and all other material terms and conditions of the proposed Section 3.7
Sale. Each Electing Shareholder shall, as to Shares held by it or which it can
obtain at or prior to the Section 3.7 Sale, have the right and option,
exercisable as set forth below, to participate in the Section 3.7 Sale for up to
the number of Shares (the "Participating Shares") as constitute its Section 3.7
Pro Rata Portion, and the Number of Shares and the amount of Shares to be sold
by the Section 3.7 Seller in the Section 3.7 Sale shall be reduced to the extent
any Electing Shareholders elect to participate. Any share to be sold in the
Section 3.7 Sale that is a Vested Option or Vested Warrant shall be exercised
prior to or upon the closing of the Section 3.7 Sale.
"Section 3.7 Pro Rata Portion" means, with respect to each Electing
Shareholder at the time of the Section 3.7 Sale, the number of Shares then owned
by such Electing Shareholder multiplied by a fraction, the numerator of which is
the number of Shares being transferred by the Section 3.7 Seller at the time
that the Section 3.7 Seller proposes to transfer Shares in the Section 3.7 Sale
and the denominator of which is the total number of Shares then owned by the
Section 3.7 Seller.
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Each Electing Shareholder that desires to exercise such option shall
provide the Section 3.7 Seller with written irrevocable notice within 10
Business Days after the date the Section 3.7 Notice is given (the "Section 3.7
Notice Period"), and shall simultaneously provide a copy of such notice to the
Company. Each accepting Electing Shareholder shall deliver to the Section 3.7
Seller the certificate or certificates representing the Participating Shares of
such Electing Shareholder or in the case of an Electing Shareholder that is a
Vested Party, an irrevocable notice of exercise of the Warrants or Options
relating to the Participating Shares addressed to the Company requesting
exercise of such Warrants or Options immediately prior to and conditioned upon
the consummation of the Section 3.7 Sale together with funds sufficient to pay
for such exercise and any other documents required for such exercise, in each
case together with a limited power-of-attorney authorizing the Section 3.7
Seller to transfer such Shares pursuant to the terms of the Section 3.7 Sale.
Delivery of such certificate or certificates representing the Participating
Shares to be transferred and the limited power-of-attorney authorizing the
Section 3.7 Seller to transfer such Shares shall constitute an irrevocable
acceptance of the Section 3.7 Sale by the Electing Shareholder.
(b) The Section 3.7 Seller shall notify each Electing Shareholder of
any change in the Section 3.7 Sale Price or any amendment or modification of any
other material term of the Section 3.7 Sale. Any decrease in the Section 3.7
Sale Price, any change in the form of consideration or any amendment which could
materially increase the potential liability of the participating Electing
Shareholder shall not be binding upon the Electing Shareholder unless the
electing Electing Shareholder consents to such amendment or modification, or
fails to reject such modification or amendment within five Business Days after
written receipt of notice thereof (and any rejection shall be deemed to be a
revocation of such Electing Shareholder's right to participate in such Section
3.7 Sale).
(c) The per Share consideration to be paid to the Section 3.7 Seller
and each Electing Shareholder participating in the Section 3.7 Sale shall be the
Section 3.7 Sale Price net of a pro rata share of total expenses and other costs
associated with the Section 3.7 Sale.
(d) Promptly after the consummation of the transfer of the
Participating Shares of the Section 3.7 Seller and the Electing Shareholders
pursuant to the Section 3.7 Sale, the Section 3.7 Seller shall notify such
Electing Shareholders
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thereof, shall remit to each of such Electing Shareholders the total
consideration for the Participating Shares of such Electing Shareholder
transferred pursuant thereto, and shall furnish such other evidence of the
completion and time of completion of such transfer and the terms thereof as may
be reasonably requested by such Electing Shareholders.
(e) If at the termination of the Section 3.7 Notice Period any Electing
Shareholder shall not have elected to participate in the Section 3.7 Sale, such
Electing Shareholder will be deemed to have waived any of and all of its rights
under this Section 3.7 with respect to the transfer of its Shares pursuant to
such Section 3.7 Sale. The Section 3.7 Seller shall have 120 days following such
termination of the Section 3.7 Notice Period in which to transfer the applicable
Shares at a price no more than 10% higher than that contained in the Section 3.7
Notice and on terms not materially more favorable to the Section 3.7 Seller than
were contained in the Section 3.7 Notice. Promptly after any transfer pursuant
to this Section 3.7, the Section 3.7 Seller shall notify the Company of the
consummation thereof and shall furnish such evidence of the completion thereof
(including time of completion) of such transfer and of the terms thereof as the
Company may request. If, at the end of such 120-day period, the Section 3.7
Seller has not completed the transfer of all the Shares, the Section 3.7 Seller
shall return to the Electing Shareholders the limited power-of-attorney (and all
copies thereof) together with all certificates representing the Shares which
such Electing Shareholders and to the Vested Parties the notice of exercise,
limited power-of-attorney, other documents and funds provided by the Vested
Party, in each case delivered for transfer pursuant to this Section 3.7, and all
the restrictions on transfer contained in this Agreement with respect to Shares
owned by the Electing Shareholders shall again be in effect.
(f) In the event that any Institutional Shareholder shall consummate a
Section 3.7 Sale in violation of this Section 3.7, each Institutional
Shareholder, in addition to such other remedies as may be available at law, in
equity or hereunder, shall have the right to sell to the Section 3.7 Seller its
Section 3.7 Pro Rata Portion at the same price and upon the same terms as in the
prohibited transfer within 90 days of such Institutional Shareholder becoming
aware of such violation.
(g) Notwithstanding anything contained in this Section 3.7, there shall
be no liability on the part of any Institutional Shareholder to any Electing
Shareholder if the
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transfer of Shares pursuant to this Section 3.7 is not consummated for whatever
reason. Any decision as to whether to transfer Shares shall be at the Section
3.7 Seller's sole and absolute discretion.
3.8 Right to Compel Participation in Certain Transfers. (a) If any DLJ
Entities should propose to transfer Shares to any Third Party or such Third
Party's Affiliates (other than pursuant to a pledge as security for a loan) (i)
representing at least 30% of the Initial Ownership of the DLJ Entities or (ii)
representing, together with Shares proposed by the DLJ Entities to be included
in such transfer by the Other Shareholders, at least 50% of the outstanding
Shares of the Company at the time of such proposed transfer (a "Section 3.8
Sale"), the DLJ Entities may, at their option, require each Other Shareholder to
participate in such transfer. If the DLJ Entities shall require any Other
Shareholder to so participate, each Other Shareholder shall be required to so
participate on the same material terms and conditions on a pro-rata basis, so
that each Other Shareholder transfers in such Section 3.8 Sale its Section 3.8
Pro Rata Portion and at the same price per Share. Any Share to be sold in the
Section 3.8 Sale that is a Vested Option or Vested Warrant shall be exercised
prior to the Section 3.8 Sale.
"Section 3.8 Pro Rata Portion" means, with respect to each Other
Shareholder at the time of the Section 3.8 Sale, the number of Shares then owned
by such Other Shareholder multiplied by a fraction, the numerator of which is
the number of Shares being transferred by the DLJ Entities at the time that the
DLJ Entities propose to transfer Shares in the Section 3.8 Sale and the
denominator of which is the total number of Shares then owned by the DLJ
Entities.
The DLJ Entities shall provide written notice of such Section 3.8 Sale
to the Other Shareholders ("Section 3.8 Notice"). The Section 3.8 Notice shall
identify, to the extent known, the transferee, the number of Shares proposed to
be transferred in the Section 3.8 Sale, the per Share consideration for which a
transfer is proposed to be made (the "Section 3.8 Sale Price") and all other
material terms and conditions of the Section 3.8 Sale. Each Other Shareholder
shall be required to participate in the Section 3.8 Sale on the terms and
conditions set forth in the Section 3.8 Notice and to tender its Section 3.8 Pro
Rata Portion, as set forth below. Within 10 Business Days following the date of
the Section 3.8 Notice (the "Section 3.8 Notice Period"), each of the Other
Shareholders shall deliver to a representative of the DLJ Entities
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designated in the Section 3.8 Notice certificates representing its Section 3.8
Pro Rata Portion, Duly Endorsed, together with all other documents required to
be executed in connection with such Section 3.8 Sale or, if such delivery is not
permitted by applicable law, an unconditional agreement to deliver such Shares
pursuant to this Section 3.8(a) at the closing for such Section 3.8 Sale against
delivery to such Other Shareholder of the consideration therefor. In the event
that an Other Shareholder should fail to deliver such certificates to the DLJ
Entities, the Company shall cause the books and records of the Company to show
that such Shares are bound by the provisions of this Section 3.8(a) and that
such Shares shall be transferred to the Third Party or such Third Party's
Affiliates immediately upon surrender for transfer by the Other Shareholders
thereof. In any such sale, if the Shareholders are obligated to make any
representation or warranty to any Third Person, the DLJ Entities shall use their
reasonable efforts to make such representations and warranties several and not
joint obligations as between the Other Shareholders, on the one hand, and the
DLJ Entities on the other hand.
(b) Notwithstanding Section 3.8(a) to the contrary, if the Section 3.8
Agreement would impose potential liability on the DLJ Entities or Carlisle in
excess of the purchase price to be received by either the DLJ Entities or
Carlisle, as applicable for the Shares to be sold by it, the DLJ Entities and
Carlisle shall agree that, as between themselves, any liability imposed on
either or both such parties shall be in proportion to their relative ownership
percentages existing at the date of such sale (excluding unvested Warrants).
(c) If, within 180 days after the DLJ Entities give the Section 3.8
Notice, they have not completed the transfer of all the Shares subject to the
Section 3.8 Sale, the DLJ Entities shall return to each of the Other
Shareholders all certificates representing Shares that such Other Shareholder
delivered for transfer pursuant hereto, together with any documents in the
possession of the DLJ Entities executed by the Other Shareholders in connection
with such proposed transfer, and all the restrictions on transfer contained in
this Agreement or otherwise applicable at such time with respect to Shares owned
by the Other Shareholders shall again be in effect.
(d) Promptly after the consummation of the transfer of Shares of the
DLJ Entities and the Other Shareholders pursuant to this Section 3.8, the DLJ
Entities shall give notice thereof to the Other Shareholders, shall remit to
each of the Other Shareholders who have surrendered their certificates the
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total consideration (net of a pro rata share of total expenses and other costs
directly associated with the Section 3.8 Sale) for the Shares of such Other
Shareholders transferred pursuant thereto and shall furnish such other evidence
of the completion and time of completion of such transfer and the terms thereof
as may be reasonably requested by such Other Shareholders.
3.9 Right of First Offer. (a) If on or after the fifth anniversary of
the Effective Date any Institutional Shareholder other than any of the DLJ
Entities or their Permitted Transferees proposes to transfer any Shares pursuant
to Section 3.4 hereof to any Person other than its Permitted Transferees, and
such transfer is permitted subject to compliance with this Section 3.9, such
Shareholder (the "Section 3.9 Seller") shall give written notice (a "Section 3.9
Offer Notice") to the DLJ Entities (each of the DLJ Entities receiving the
Section 3.9 Offer Notice is herein referred to as a "Non-Selling Shareholder")
and the Company (A) stating that such Section 3.9 Seller desires to effect such
a transfer and (B) setting forth the number of Shares proposed to be transferred
and the cash price per Share that such Section 3.9 Seller proposes to be paid
for such Shares (the "Section 3.9 Sale Price") and the other terms (in
reasonable detail) of such proposed transfer.
(b) The receipt by the Company and each Non-Selling Shareholder of a
Section 3.9 Offer Notice from a Section 3.9 Seller shall constitute an offer
(the "Section 3.9 Offer") by such Section 3.9 Seller to sell first to each
Non-Selling Shareholder and then to the Company, for cash and on the terms set
forth in the Section 3.9 Offer Notice the Shares subject to the Section 3.9
Offer at the Section 3.9 Sale Price. Such offer shall be irrevocable for 60 days
after receipt of such Section 3.9 Offer Notice by each Non-Selling Shareholder
and the Company (the "Section 3.9 Offer Period"). During the Section 3.9 Offer
Period, each Non-Selling Shareholder and, to the extent each Non-Selling
Shareholder does not accept such offer as to all Shares subject to the Section
3.9 Offer, the Company shall have the right to accept such offer as to all or a
portion of the Shares (provided that the aggregate number of Shares accepted by
the Non-Selling Shareholders and the Company together equals the total number of
Shares subject to the Section 3.9 Offer) by giving written notice of acceptance
to the Section 3.9 Seller prior to the expiration of such period. If such
Section 3.9 Offer is either rejected by each Non- Selling Shareholder and the
Company or expires at the end of such Section 3.9 Offer Period without the
Non-Selling Shareholders and the Company having accepted all of the Shares
subject to such
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Section 3.9 Offer, the Section 3.9 Seller shall notify each Non-Selling
Shareholder of such rejection or expiration in writing as soon as practicable.
(c) The receipt by each Non-Selling Shareholder and the Company of a
Section 3.9 Offer Notice from any Section 3.9 Seller shall constitute a Section
3.9 Offer by such Section 3.9 Seller to sell (i) first, to each Non-Selling
Shareholder a number of Shares equal to the product of (A) the number of Shares
specified by the Section 3.9 Seller in the Section 3.9 Offer Notice, multiplied
by (B) a fraction, the numerator of which shall equal the number of Shares owned
by such Non- Selling Shareholder on the date of the related Section 3.9 Offer
Notice and the denominator of which shall equal the aggregate number of Shares
owned by all Non-Selling Shareholders on such date, (ii) second, to each
Non-Selling Shareholder, any Shares subject to the Section 3.9 Offer not
acquired pursuant to clause (i) above, where such Shares being sold pursuant to
this Section 3.9(c)(ii) shall be allocated for sale among the Non-Selling
Shareholders who acquired all the Shares allocated to them pursuant to clause
(i) above, ratably on the basis of their respective holdings of Shares and in a
manner similar to the formula set forth in clause (i) above (taking into account
the Shares acquired pursuant to clause (i) above) and (iii) third, to the
Company any Shares subject to the Section 3.9 Offer not purchased by the
Non-Selling Shareholders pursuant to clauses (i) and (ii) above, in each case
for cash at the Section 3.9 Sale Price and on the other terms and conditions set
forth in the Section 3.9 Offer Notice. During the Section 3.9 Offer Period, the
Non-Selling Shareholders and, to the extent the Non-Selling Shareholders do not
accept such offer as to all Shares subject to the Section 3.9 Offer, the Company
shall have the right to accept such offer as to all or a portion of the Shares
(provided that the aggregate number of Shares accepted by the Non-Selling
Shareholders and the Company together equals the total number of Shares subject
to the Section 3.9 Offer) by giving a written notice of acceptance to such
Section 3.9 Seller prior to the expiration of such period. Any such notice
delivered on behalf of a Non-Selling Shareholder shall indicate whether such
Person wishes to acquire only the number of Shares computed in accordance with
the provisions of clause (i) above (or a portion thereof) or, if such Person
also wishes to acquire any Shares to be sold pursuant to such Section 3.9 Offer
and not acquired by the other Persons entitled to accept such Section 3.9 Offer,
the maximum number of shares such Non-Selling Shareholder wishes to acquire.
28
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(d) Each Non-Selling Shareholder and the Company, as the case may be,
shall purchase and pay for all Shares accepted by such Person within a 60-day
period of its (or their) acceptance of any Section 3.9 Offer; provided, however,
that if the purchase and sale of such Shares is subject to any prior regulatory
approval, the time period during which such purchase and sale may be consummated
shall be extended (subject to the 120-day period referred to in Section 3.9(e)
hereof) until the expiration of ten Business Days after all such approvals shall
have been received.
(e) If the aggregate number of Shares accepted by the Non-Selling
Shareholders and the Company pursuant to a Section 3.9 Offer is less than all
the Shares subject to such Section 3.9 Offer or if any required consent or
regulatory approval for the purchase of the Shares subject thereto is not
obtained within 120 days of the acceptance of the Section 3.9 Offer, there shall
commence a 60-day period during which the Section 3.9 Seller that gave the
Section 3.9 Offer Notice shall have the right, subject to any obligations it may
have under Section 3.7 hereof, to effect a transfer of any or all of the Shares
subject to the Section 3.9 Offer on substantially the same terms and conditions
as were set forth in the Section 3.9 Offer Notice and at a price in cash (or,
subject to Section 3.9(f) hereof, for non-cash consideration) not less than the
Section 3.9 Sale Price; provided, however, the provisions of Section 3.7 hereto
are complied with and no Shares are transferred to any Person unless such Person
shall have agreed in writing to be bound by the terms of this Agreement or to an
Adverse Person; provided, further, that if, during such 60-day period, such
Section 3.9 Seller receives an offer for Shares at a price less than the Section
3.9 Sale Price or otherwise on substantially different terms and conditions than
those that were set forth in the Section 3.9 Offer Notice, such Section 3.9
Seller may not accept such offer without repeating the procedures set forth in
this Section 3.9. If such Section 3.9 Seller does not consummate the sale of the
Shares subject to the Section 3.9 Offer in accordance with the foregoing time
limitations, such Section 3.9 Seller must repeat the procedures set forth in
this Section 3.9 with respect to any transfer of Shares permitted by Section 3.4
hereof subject to compliance with this Section 3.9.
(f) A Section 3.9 Seller may transfer Shares in accordance with Section
3.9(e) hereof for consideration other than cash only if the aggregate fair
market value (as defined below) of the non-cash consideration that the Section
3.9 Seller proposes to accept as consideration for such Shares,
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together with any cash consideration, is at least equal to the Section 3.9 Sale
Price. For the purposes of this Section 3.9 (f) only, the aggregate "fair market
value" of any non-cash consideration shall be equal to (i) if such non-cash
consideration consists of (a) equity securities, the aggregate value of such
equity securities based on the last reported sales prices of all such equity
securities as reported by the Nasdaq National Market or, if such equity
securities are listed on a national securities exchange, as reported on such
exchange or, if such equity securities are neither so reported nor listed, the
aggregate value of such equity securities based on the last reported bid prices
of such equity securities or, if no reported bid price is available, an amount
determined in accordance with clause (ii) below or (b) any other securities, the
last reported quote for such securities in the over-the-counter or inter-dealer
market for such securities or, if no reported quote is available, an amount
determined in accordance with clause (ii) below and (ii) in the case of any
other non-cash consideration, the value determined by an investment banking firm
or other appraiser of national standing selected by such Section 3.9 Seller
(which such firm or appraiser shall be reasonably acceptable to the Non-Selling
Shareholders) and set forth in an opinion of such firm or appraiser which
opinion shall be delivered to the Non-Selling Shareholders and the Company by
such Section 3.9 Seller.
ARTICLE 4
CERTAIN REPURCHASES OF COMMON STOCK
4.1 Surrender of Shares. (a) The Company shall have the absolute right,
upon the termination of any Management Shareholder's employment with the Company
(including its Subsidiaries) to repurchase all Shares (other than Vested
Warrants) owned by such Management Shareholder and such Management Shareholder's
Permitted Transferees in accordance with this Article 4. Such right shall
terminate on the first anniversary of the Initial Public Offering of the
Company, except in the case of any termination by the Company of such
Shareholders's employment with the Company (or a Subsidiary of the Company) for
Cause. Upon the termination of any Management Shareholder's employment with the
Company (or any of its Subsidiaries), all Options held by such Management
Shareholder and its Permitted Transferees other than Vested Options shall be
automatically cancelled. The price (the "Repurchase Price") at which each Share
may be purchased by the Company pursuant to this Section 4.1(a) shall be equal
to:
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(i) in the case of any termination by the Company (or a Subsidiary of
the Company) of such Management Shareholder's employment with the Company
(or a Subsidiary of the Company) for Cause or the voluntary termination
within four years of the Effective Date, by such Management Shareholder of
such Management Shareholder's employment with the Company (or a Subsidiary
of the Company), the lesser of (x) the Fair Market Value at the time of
such termination and (y) the purchase price of such Shares;
(ii) in the case of any termination by the Company of such Management
Shareholder's employment with the Company (or a Subsidiary of the Company)
for a reason which does not constitute Cause, the greater of (x) the Fair
Market Value at the time of such termination and (y) the purchase price of
such Shares; and
(iii) in any other case, the Fair Market Value.
Notwithstanding the foregoing, the Repurchase Price of Vested Options purchased
by the Company pursuant to this Section 4.1(a) shall be equal to the Repurchase
Price of each Share underlying a Vested Option (as determined above) less the
exercise price per Share under such Vested Options.
(b) If the Company elects to exercise its right to require any
Management Shareholder and such Management Shareholder's Permitted Transferees
to sell Shares pursuant to Section 4.1(a), the Company shall deliver written
notice to such Management Shareholder and such Management Shareholder's
Permitted Transferees to such effect prior to 180 days after the termination of
such Management Shareholder's employment with the Company (or its Subsidiaries).
In the event that the Company does not exercise its right to repurchase Shares
pursuant to this Section 4.1 within 180 days after such termination, such
Management Shareholder may transfer such Shares, subject to the terms of the
Plan, to any Other Shareholder; provided that such transfer complies with the
Securities Act.
4.2 Method of Repurchase. (a) Upon the receipt of any notice pursuant
to Section 4.1(b), the Shares subject to repurchase pursuant to Section 4.1(a)
(collectively, "Surrendered Shares") shall be repurchased within 30 Business
Days of the date (the "Termination Date") of receipt of such notice; provided
that if the Surrendered Shares become subject to repurchase pursuant to Section
4.1(a) as the result of the death of any Management Shareholder, such
Surrendered Shares may be repurchased within 90 days of the date the will of
such
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Management Shareholder is admitted to probate or, in the event of intestacy,
within 90 days of such death. On the repurchase date, the Management Shareholder
and such Management Shareholder's Permitted Transferees selling such Surrendered
Shares (the "Seller") shall deliver to the Company the certificate or
certificates representing the Shares owned by such Seller on such date against
delivery by the Company to such Seller of a promissory note issued by the
Company (a "Payment Note"). All certificates for Surrendered Shares shall be
Duly Endorsed in favor of the Company by the Seller. If any Seller shall fail to
deliver such Duly Endorsed certificate or certificates to the Company within the
time required, the Company shall cause its books and records to show that the
Surrendered Shares are bound by the provisions of this Section 4.2 and that the
Surrendered Shares, until transferred to the Company, shall not be entitled to
any proxy, dividend or other rights from the date by which such certificate or
certificates should have been delivered to the Company.
(b) Each Payment Note shall (i) be payable to the order of the Seller,
(ii) be issued and dated the date of transfer of the Surrendered Shares by such
Seller to the Company, (iii) be in a principal amount equal to the Repurchase
Price of such Surrendered Shares and (iv) subject to Section 4.3, mature on the
Payment Date immediately following such date of transfer. Each Payment Note
shall bear interest in respect of the unpaid principal amount of such Payment
Note from the Termination Date to the date of payment thereof at a rate per
annum equal to the then-current yield to maturity on United States treasury
bills of comparable maturity, as determined in good faith by the Company.
If any Payment Note is not repaid in full (together with accrued
interest, if any) on the maturity date of such Payment Note as a result of the
limitations set forth in Section 4.3, the Company shall promptly issue to the
holder of such Payment Note a new Payment Note, which shall (i) be payable to
the order of such holder, (ii) be dated the date of issuance of such new Payment
Note, (iii) be in a principal amount equal to the outstanding principal amount
and accrued and unpaid interest, if any, under the Payment Note in respect of
which such new Payment Note is being issued and (iv) subject to Section 4.3,
mature on the Payment Date immediately following the date of issuance of such
new Payment Note. Each such new Payment Note shall bear interest at a rate per
annum equal to the then-current yield to maturity on one year United States
treasury bills. Upon the issuance of such new Payment Note, the holder thereof
shall deliver the Payment Note in respect of
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which such new Payment Note was issued to the Company for cancellation.
(c) The Company shall have the right to resell to any Person any
Surrendered Shares received from a Seller pursuant to this Article 4, whether or
not the applicable Repurchase Price has been paid to such Seller; provided that
any such sale or other disposition by the Company of Surrendered Shares shall
not relieve the Company of its obligation to pay the applicable Repurchase Price
for such Surrendered Shares.
4.3 Payment Limitations. If the aggregate amount of principal of, and
accrued and unpaid interest (if any) on, all Payment Notes to be paid on any
Payment Date, would be greater than the Maximum Obligation (as hereinafter
defined) determined as of such Payment Date, the Company shall apply the cash
available for payment of the Payment Notes up to the amount of such Maximum
Obligation, in the following order:
(i) first, to the payment of Payment Notes issued in connection with
the repurchase of Surrendered Shares as a result of the death or
Disability of any Management Shareholder in chronological order of their
respective Termination Dates; and
(ii) second, to the payment of Payment Notes issued in connection with
the repurchase of Surrendered Shares as a result of any other event
specified in Section 4.1(a), in chronological order of their respective
Termination Dates.
To the extent cash available for payment in respect of any Payment Note shall be
insufficient to pay the principal amount of, plus accrued interest (if any), on
such Payment Note, such cash shall be applied (x) first, to the payment of such
accrued interest and (y) second, to the payment of such principal amount.
For purposes of this Section 4.3, the term "Maximum Obligation" means,
at any time, the maximum amount of cash available to the Company under debt or
lease instruments to which the Company is a party to pay for the repurchase or
redemption of Shares at such time.
4.4 Determination of Fair Market Value. Upon the occurrence of any
event specified in Section 4.1(a) that requires a determination of Fair Market
Value, "Fair Market Value" shall be equal to (i) where the Shares are quoted for
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trading on any national securities exchange (not including any over-the-counter
inter-dealer market), the average of the closing sales or last reported sales
prices for the ten trading days immediately preceding the date of determination
and (ii) in any other case, the fair market value per share as determined in
good faith by the Board, in its sole discretion. In the case of clause (ii)
above, the Board shall give consideration to, among other things, the value of
the Fully Diluted Shares of the Company as a whole and the proportion of the
Fully Diluted Shares of the Company represented by the Surrendered Shares,
including giving effect to any discount for the lack of liquidity of the Shares.
4.5 Right of Company to Designate Third Parties. Notwithstanding
anything contained herein to the contrary, the Company shall have the right (but
not any obligation) to designate third parties to purchase Surrendered Shares in
lieu of purchases by the Company under this Article 4; provided that no such
designation shall relieve the Company of its obligations hereunder and no
Payment Note shall be issued by any party other than the Company without the
consent of the relevant Seller.
4.6 Employment; No Implied Right to Employment. For purposes of this
Agreement, any Management Shareholder's employment with the Company or any
direct or indirect Subsidiary of the Company shall be deemed to be terminated at
such time as the Management Shareholder ceases to be an officer or salaried
employee of the Company or any Subsidiary of the Company. Neither this Agreement
nor any provision hereof nor any action taken or omitted to be taken hereunder
shall be deemed to create or confer on any Management Shareholder any right to
be retained in the employ of the Company or any Affiliate thereof, or to
interfere with or limit in any way the right of the Company or any Affiliate
thereof to terminate the employment of any Management Shareholder at any time.
4.7 Termination of Article 4. Notwithstanding anything else contained
herein, following the expiration of the DLJ Ownership Period, the provisions of
this Article 4 shall terminate with respect to any Shares that have not become
Surrendered Shares prior to the end of the DLJ Ownership Period.
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ARTICLE 5
REGISTRATION RIGHTS
5.1 Demand Registration. (a) Upon the written request of one or more of
the DLJ Entities or, with the consent of DLJ Merchant Banking, Inc., their
Permitted Transferees (each such DLJ Entity and Permitted Transferee, a "Selling
Shareholder" and collectively, the "Selling Shareholders") requesting that the
Company effect the registration under the Securities Act of such Selling
Shareholder's Registrable Stock, and specifying the intended method of
disposition thereof, the Company will promptly give written notice of such
requested registration (a "Demand Registration") to all Shareholders, and
thereupon will use its best efforts to effect, as expeditiously as possible, the
registration under the Securities Act of:
(i) the Registrable Stock that the Company has been so requested to
register by the Selling Shareholders, then held by the Selling
Shareholders; and
(ii) all other Registrable Stock that any other Institutional
Shareholder or any of their Permitted Transferees and, subject to Sections
3.5 and 5.2, any Management Shareholder (all such Shareholders, together
with the Selling Shareholder, the "Holders") has requested the Company to
register by written request received by the Company within 15 days after
the receipt by such Holders of such written notice given by the Company,
all to the extent necessary to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Stock so to be
registered; provided that subject to Section 5.1(e) hereof, the Company shall
not be obligated to effect more than five Demand Registrations by DLJ Entities
pursuant to this Section 5.1 and provided further that any Registrable Stock
that is a Vested Warrant or a Vested Option shall have been exercised prior to
its sale pursuant to any such registration.
Promptly after the expiration of the 15-day period referred to in
Section 5.1(a)(ii) hereof, the Company will notify all the Holders to be
included in the Demand Registration of the other Holders and the number of
shares of Registrable Stock requested to be included therein. The Selling
Shareholder requesting a registration under this Section 5.1(a) may, at any time
prior to the effective date of the registration statement relating to such
registration, revoke such request,
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without liability to any of the other Holders, by providing a written notice to
the Company revoking such request, in which case such request, so revoked, shall
not be considered a Demand Registration.
(b) The Company will pay all Registration Expenses in connection with
any Demand Registration.
(c) A registration requested pursuant to this Section 5.1 shall not be
deemed to have been effected unless the registration statement relating thereto
(i) has become effective under the Securities Act and (ii) has remained
effective for a period of at least 180 consecutive days (or such shorter period
in which all Registrable Stock of the Holders included in such registration has
actually been sold thereunder); provided that if after any registration
statement requested pursuant to this Section 5.1 becomes effective (i) such
registration statement is interfered with by any stop order, injunction or other
order or requirement of the SEC or other governmental agency or court due to the
actions or omissions to act of the Company and (ii) less than 75% of the
Registrable Stock included in such registration has been sold thereunder, such
registration statement shall be at the sole expense of the Company and shall not
be considered a Demand Registration.
(d) If a Demand Registration involves a Public Offering and the
managing underwriter shall advise the Company and the Selling Shareholder that,
in its view, (i) the number of shares of Common Stock requested to be included
in such registration (including Common Stock which the Company proposes to be
included which is not Registrable Stock) exceeds the largest number of Shares
which can be sold without having an adverse effect on such offering, including
the price at which such Shares can be sold or (ii) the inclusion of some or all
of the Shares owned by the Other Shareholders (including any particular category
of Other Shareholders such as the Management Shareholders), would have an
adverse effect on such offering, including the price at which such Shares can be
sold (the "Underwriters' Limitations"), the Company will include in such
registration, in the priority listed below, subject to the Underwriters'
Limitations:
(A) first, all Registrable Stock requested to be included in such
registration by all Institutional Shareholders and any other Holder
(allocated, if necessary, so as to comply with the Underwriters'
Limitations, pro rata among such Institutional Shareholders and such other
Holders on the basis of the relative number of shares of
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Registrable Stock requested to be included in such registration); and
(B) second, any Common Stock proposed to be registered by the Company.
(e) If Registrable Stock representing at least 50% of the number of
Shares requested to be registered by a Selling Shareholder is not included in
any Demand Registration, then such Shareholders may request that the Company
effect an additional registration under the Securities Act of all or part of
such Shareholders' Registrable Stock in accordance with the provisions of this
Section 5.1, and (x) the Company shall pay the Registration Expenses in
connection with such additional registration and (y) such additional
registration shall not be considered a Demand Registration.
5.2 Incidental Registration. (a) If the Company proposes to register
any of its Common Stock under the Securities Act (other than a registration (A)
in connection with an Initial Public Offering, (B) on Form S-8 or S-4 or any
successor or similar forms, (C) relating to Common Stock issuable upon exercise
of employee stock options or in connection with any employee benefit or similar
plan of the Company, (D) in connection with a direct or indirect acquisition by
the Company of another company or business, (E) in connection with sales of
Common Stock or options to employees of the Company or any Subsidiary or (F)
where the primary purpose of such registration relates to a debt financing by
the Company or any Subsidiary), whether or not for sale for its own account, it
will, subject to the provisions of Section 5.2(b) hereof, give prompt written
notice at least 20 days prior to the anticipated filing date of the registration
statement relating to such registration to each Shareholder, which notice shall
set forth such Shareholders' rights under this Section 5.2 and shall offer (i)
all Shareholders, if the proposed registration involves a Public Offering, or
(ii) any Shareholder owning at least 5% of the Shares at the time outstanding,
in any other case, the opportunity to include in such registration statement
such number of shares of Registrable Stock as each such Shareholder may request
(an "Incidental Registration"); provided that any Registrable Stock that is a
Vested Warrant or a Vested Option shall have been exercised prior to its sale
pursuant to any such registration. Upon the written request of any such
Shareholder made within ten days after the receipt of notice from the Company
(which request shall specify the number of shares of Registrable Stock intended
to be disposed of by such Shareholder), the Company will use its best efforts to
effect the
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registration under the Securities Act of all Registrable Stock which
the Company has been so requested to register by such Shareholders, to
the extent requisite to permit the disposition of the Registrable Stock
so to be registered; provided that (I) if such registration involves a
Public Offering, all such Shareholders requesting to be included in the
Company's registration must sell their Registrable Stock to the
underwriters selected as provided in Section 5.4(f) on the same terms
and conditions as apply to the Company, (II) if, at any time after
giving written notice of its intention to register any stock pursuant
to this Section 5.2(a) and prior to the effective date of the
registration statement filed in connection with such registration, the
Company shall determine for any reason not to register such stock, the
Company shall give written notice to all such Shareholders and,
thereupon, shall be relieved of its obligation to register any
Registrable Stock in connection with such registration (without
prejudice, however, to rights of any Institutional Shareholder under
Section 5.1 hereof) and (III) transfers by Management Stockholders and
their Permitted Transferees shall be subject to Section 3.5. No
registration effected under this Section 5.2 shall relieve the Company
of its obligations to effect a Demand Registration to the extent
required by Section 5.1 hereof. The Company will pay all Registration
Expenses in connection with each registration of Registrable Stock
requested pursuant to this Section 5.2.
(b) If a registration pursuant to this Section 5.2 involves a Public
Offering (other than in the case of a Public Offering requested by any DLJ
Entity in a Demand Registration, in which case the provisions with respect to
priority of inclusion in such offering set forth in Section 5.1(d) shall apply)
and the managing underwriter advises the Company of any Underwriters'
Limitations, the Company will include in such registration, in the following
priority, subject to the Underwriters' Limitations:
(i) first, so much of the Common Stock proposed to be registered by the
Company as would not cause the offering to exceed the Underwriters
Limitations; and
(ii) second, all Registrable Stock requested to be included in such
registration by any Shareholder pursuant to this Section 5.2 (allocated,
if necessary in order to comply with any Underwriters' Limitations, pro
rata among such Shareholders on the basis of the relative number of shares
of Registrable Stock so requested to be included in such registration).
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5.3 Holdback Agreements. If any registration of Registrable Stock shall
be in connection with a Public Offering, each Shareholder agrees not to effect
any sale, transfer or distribution, including any sale pursuant to Rule 144, or
any successor provision, under the Securities Act, of any Registrable Stock, and
not to effect any such sale, transfer or distribution of any other Common Stock
of the Company or of any stock convertible into or exchangeable or exercisable
for any Common Stock of the Company (in each case, other than as part of such
Public Offering) during the 14 days (or such shorter period of which such
Shareholder has notice) prior to the effective date of such registration
statement (except as part of such registration) or during the period after such
effective date that shall be required by such managing underwriter (but not to
exceed 180 days). Other than those granted to Shareholders pursuant to this
Agreement, the Company shall not grant any Person any right to include any
securities in a registration statement filed by or on behalf of the Company.
5.4 Registration Procedures. Whenever Shareholders request that any
Registrable Stock be registered pursuant to Section 5.1 or 5.2 hereof, the
Company will, subject to the provisions of such Sections , use its best efforts
to effect the registration and the sale of such Registrable Stock in accordance
with the intended method of disposition thereof as quickly as practicable, and
in connection with any such request:
(a) The Company will as expeditiously as possible prepare and file with
the SEC a registration statement on any form for which the Company then
qualifies or which counsel for the Company shall deem appropriate and which form
shall be available for the sale of the Registrable Stock to be registered
thereunder in accordance with the intended method of distribution thereof, and
use its best efforts to cause such filed registration statement to become and
remain effective for a period of not less than 270 days.
(b) The Company will, if requested, prior to filing a registration
statement or prospectus or any amendment or supplement thereto, furnish to each
Shareholder and each underwriter, if any, of the Registrable Stock covered by
such registration statement copies of such registration statement as proposed to
be filed, and thereafter the Company will furnish to such Shareholder and
underwriter, if any, such number of copies of such registration statement, each
amendment and supplement thereto (in each case including all exhibits thereto
and documents incorporated by reference therein), the prospectus
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included in such registration statement (including each preliminary prospectus)
and such other documents as such Shareholder or underwriter may reasonably
request in order to facilitate the disposition of the Registrable Stock owned by
such Shareholder.
(c) After the filing of the registration statement, the Company will
promptly notify each Shareholder holding Registrable Stock covered by such
registration statement of any stop order, order or injunction enjoining or
suspending the use or effectiveness of such registration statement issued or
threatened by the SEC, any state securities commission, any other governmental
agency or any court and take all reasonable actions required to prevent the
entry of, or to remove it if entered, such stop order, order or injunction
enjoining or suspending the use or effectiveness of such registration statement.
(d) The Company will use its best efforts to (i) register or qualify
the Registrable Stock covered by such registration statement under such other
securities or blue sky laws of such jurisdictions in the United States as any
Shareholder holding such Registrable Stock reasonably (in light of such
Shareholder's intended plan of distribution) requests and (ii) cause such
Registrable Stock to be registered with or approved by such other governmental
agencies or authorities as may be necessary by virtue of the business and
operations of the Company and do any and all other acts and things that may be
reasonably necessary or advisable to enable such Shareholder to consummate the
disposition of the Registrable Stock owned by such Shareholder; provided that
the Company will not be required to (A) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph (d), (B) subject itself to taxation in any such jurisdiction or (C)
consent to general service of process in any such jurisdiction.
(e) The Company will immediately notify each Shareholder holding such
Registrable Stock, at any time when a prospectus relating thereto is required to
be delivered under the Securities Act, of the occurrence of an event requiring
the preparation of a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Stock, such
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading and promptly prepare and make
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available to each such Shareholder any such supplement or amendment.
(f) The DLJ Entities will have the right, in their sole discretion, to
select an underwriter or underwriters in connection with any Public Offering,
which may include any Affiliate of any DLJ Entity. The Company will enter into
customary agreements (including an underwriting agreement in customary form) and
take such other actions as are reasonably required in order to expedite or
facilitate the disposition of Registrable Stock in any such Public Offering,
including the engagement of a "qualified independent underwriter" in connection
with the qualification of the underwriting arrangements with the NASD.
(g) Upon the execution of confidentiality agreements in form and
substance satisfactory to the Company, the Company will make available for
inspection by any Shareholder and any underwriter participating in any
disposition pursuant to a registration statement being filed by the Company
pursuant to this Section 5.4 and any attorney, accountant or other professional
retained by any such Shareholder or underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate documents
and properties of the Company, excluding any information that the Company or its
Subsidiaries are prohibited from disclosing pursuant to special security
agreements with the United States Department of Defense (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise their due
diligence responsibility, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any Inspectors in
connection with such registration statement. Records that the Company
determines, in good faith, to be confidential and that it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless (i)
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in such registration statement or (ii) the release of such Records
is ordered pursuant to a subpoena or other order from a court of competent
jurisdiction. Each Shareholder agrees that information obtained by it as a
result of such inspections shall be deemed confidential and shall not be used by
it as the basis for any market transactions in the securities of the Company or
its Affiliates unless and until such is made generally available to the public.
Each Shareholder further agrees that it will, upon learning that disclosure of
such Records is sought in a court of competent jurisdiction, give notice to the
Company and allow the Company, at its expense, to undertake
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appropriate action to prevent disclosure of the Records deemed confidential.
(h) The Company will furnish to each such Shareholder and to each such
underwriter, if any, a signed counterpart, addressed to such underwriter, of (i)
an opinion or opinions of counsel to the Company and (ii) a comfort letter or
comfort letters from the Company's independent public accountants, each in
customary form and covering such matters of the type customarily covered by
opinions or comfort letters, as the case may be, as a majority of such
Shareholders or the managing underwriter therefor reasonably requests.
(i) The Company will otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
securityholders, as soon as reasonably practicable, an earnings statement
covering a period of 12 months, beginning within three months after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act.
(j) The Company will cooperate with each such Shareholder and each such
underwriter, if any, participating in the disposition of such Registrable Stock
and their respective counsel in connection with any filings required to be made
with the NASD.
The Company may require each such Shareholder to promptly furnish in
writing to the Company such information regarding the distribution of the
Registrable Securities as the Company may from time to time reasonably request
and such other information as may be legally required in connection with such
registration.
Each such Shareholder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 5.4(e)
hereof, such Shareholder will forthwith discontinue disposition of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until such Shareholder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 5.4(e) hereof, and, if so directed by
the Company, such Shareholder will deliver to the Company all copies, other than
any permanent file copies then in such Shareholder's possession, of the most
recent prospectus covering such Registrable Stock at the time of receipt of such
notice. In the event that the Company shall give such notice, the Company shall
extend the period during which such registration
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statement shall be maintained effective (including the period referred to in
Section 5.4(a) hereof) by the number of days during the period from and
including the date of the giving of notice pursuant to Section 5.4(e) hereof to
the date when the Company shall make available to such Shareholder a prospectus
supplemented or amended to conform with the requirements of Section 5.4(e)
hereof.
5.5 Indemnification by the Company. The Company agrees to indemnify and
hold harmless each Shareholder holding Registrable Stock covered by a
registration statement, its officers, directors and agents, and each Person, if
any, who controls such Shareholder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages, expenses and liabilities (including any and all
investigative, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement (to the extent set forth in Section 5.7) of,
any action, suit or proceeding or any claim asserted) arising out of or based on
any untrue statement or alleged untrue statement of a material fact contained in
any registration statement or prospectus relating to the Registrable Stock (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or arising out of or based
on any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, expenses or liabilities are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information furnished in writing to the Company by such
Shareholder or on such Shareholder's behalf expressly for use therein. The
Company also agrees to indemnify any underwriters of the Registrable Stock,
their officers and directors and each person who controls such underwriters on
substantially the same basis as that of the indemnification of the Shareholders
provided in this Section 5.5. This indemnity agreement will be in addition to
any liability the Company might otherwise have.
5.6 Indemnification by Participating Shareholders. Each Shareholder
holding Registrable Stock included in any registration statement agrees,
severally but not jointly, to indemnify and hold harmless the Company, its
officers, directors and agents and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from the Company
to such Shareholder, but only with respect to information furnished in writing
by such
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Shareholder or on such Shareholder's behalf expressly for use in any
registration statement or prospectus relating to the Registrable Stock, or any
amendment or supplement thereto, or any preliminary prospectus. Each such
Shareholder also agrees, severally but not jointly, to indemnify and hold
harmless any underwriters of the Registrable Stock, their officers and directors
and each person who controls such underwriters on substantially the same basis
as that of the indemnification of the Company provided in this Section 5.6. As a
condition to including Registrable Stock in any registration statement filed in
accordance with Article 5 hereof, each Shareholder may require that it shall
have received an undertaking reasonably satisfactory to Shareholders holding a
majority of the Registrable Stock included in the registration statement from
any underwriter to indemnify and hold it harmless to the extent customarily
provided by underwriters with respect to similar securities.
5.7 Conduct of Indemnification Proceedings. In case any proceeding
(including any governmental investigation) shall be instituted involving any
person in respect of which indemnity may be sought pursuant to this Article 5,
such person (an "Indemnified Party") shall promptly notify the person against
whom such indemnity may be sought (the "Indemnifying Party") in writing and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Indemnified Party, and shall assume the
payment of all fees and expenses; provided that the failure of any Indemnified
Party so to notify the Indemnifying Party shall not relieve the Indemnifying
Party of its obligations hereunder except to the extent that the Indemnifying
Party is materially prejudiced by such failure to notify. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) in the
reasonable judgment of such Indemnified Party representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the Indemnifying Party shall not,
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
Indemnified Parties, such firm shall be designated in writing by the DLJ
Entities
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or, if none of the DLJ Entities are Indemnified Parties, the other Indemnified
Parties. The Indemnifying Party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent, or if there be a final judgment for the plaintiff, the Indemnifying
Party shall indemnify and hold harmless such Indemnified Parties from and
against any loss or liability (to the extent stated above) by reason of such
settlement or judgment. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Party is or could have
been a party and indemnity could have been sought hereunder by such Indemnified
Party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability arising out of such proceeding.
5.8 Contribution. If the indemnification provided for in this Article 5
is unavailable to the Indemnified Parties in respect of any losses, claims,
damages or liabilities referred to herein, then each such Indemnifying Party, in
lieu of indemnifying such Indemnified Party, shall contribute to the amount paid
or payable by such Indemnified Party as a result of such losses, claims, damages
or liabilities (i) as between the Company and the Shareholders holding
Registrable Stock covered by a registration statement on the one hand and the
underwriters on the other, in such proportion as is appropriate to reflect the
relative benefits received by the Company and such Shareholders on the one hand
and the underwriters on the other, from the offering of the Registrable
Securities, or if such allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits but also
the relative fault of the Company and such Shareholders on the one hand and of
such underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations and (ii) as between the Company on the
one hand and each such Shareholder on the other, in such proportion as is
appropriate to reflect the relative fault of the Company and of each such
Shareholder in connection with such statements or omissions, as well as any
other relevant equitable considerations. The relative benefits received by the
Company and such Shareholders on the one hand and such underwriters on the other
shall be deemed to be in the same proportion as the total proceeds from the
offering (net of underwriting discounts and commissions but before deducting
expenses) received by the Company and such Shareholders bear to the total
underwriting discounts and commissions received by such underwriters, in each
case as set forth in the table on
45
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the cover page of the prospectus. The relative fault of the Company and such
Shareholders on the one hand and of such underwriters on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company and such
Shareholders or by such underwriters. The relative fault of the Company on the
one hand and of each such Shareholder on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Shareholders agree that it would not be just and
equitable if contribution pursuant to this Section 5.8 were determined by pro
rata allocation (even if the underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 5.8, no underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and no Shareholder
shall be required to contribute any amount in excess of the amount by which the
total price at which the Registrable Securities of such Shareholder were offered
to the public exceeds the amount of any damages which such Shareholder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Each such Shareholder's obligation to contribute
pursuant to this Section 5.8 is several in the proportion that the proceeds of
the offering received by
46
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such Shareholder bears to the total proceeds of the offering received by all
such Shareholders and not joint.
5.9 Participation in Public Offering. No Person may participate in any
Public Offering hereunder unless such Person (a) agrees to sell such Person's
securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements and the provisions of this Agreement in respect of
registration rights.
5.10 Other Indemnification. Indemnification similar to that specified
herein (with appropriate modifications) shall be given by the Company and each
Shareholder participating therein with respect to any required registration or
other qualification of securities under any federal or state law or regulation
or governmental authority other than the Securities Act.
ARTICLE 6
COVENANTS OF THE SHAREHOLDERS
6.1 Confidentiality. (a) Each Shareholder hereby agrees that
Confidential Information (as defined below) was furnished to it and will be
furnished to it in connection with such Shareholder's investment in the Company.
Each Shareholder agrees that he, she or it will not use the Confidential
Information in any way to the competitive disadvantage of the Company or its
Subsidiaries. Each Shareholder further acknowledges and agrees that he, she or
it will not disclose any Confidential Information to any Person; provided that
Confidential Information may be disclosed (i) to such Shareholder's
Representatives (as defined below) in the normal course of the performance of
their duties, (ii) to the extent required by applicable law, rule or regulation
(including complying with any oral or written questions, interrogatories,
requests for information or documents, subpoena, civil investigative demand or
similar process to which a Shareholder is subject), (iii) to any Person to whom
such Shareholder is contemplating a transfer of his, her or its Shares, provided
that such transfer would not be in violation of the provisions of this Agreement
and as long as such Person is advised of the confidential nature of such
information and agrees to be bound by a confidentiality
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agreement in form and substance satisfactory to the Company or (iv) if the prior
written consent of the Board shall have been obtained. Nothing contained herein
shall prevent the use of Confidential Information in connection with the
assertion or defense of any claim by or against the Company or any Shareholder.
(b) "Confidential Information" means all information or material
relating to the Company or its subsidiaries not generally known by non-Company
personnel which (i) is marked "Confidential Information", "Proprietary
Information" or other similar marking, (ii) is known by such Shareholder to be
considered confidential and proprietary by the Company or its subsidiaries or
(iii) derives value by virtue of the fact that it is not generally known;
provided that the term "Confidential Information" does not include information
that (i) was or becomes generally available publicly other than through
disclosure by a Shareholder or his, her or its employees, officers, agents,
partners, advisors or representatives (all such Persons being collectively
referred to as "Representatives") in violation of the Securities Purchase
Agreement, this Agreement or any confidentiality agreement executed in
accordance with Section 5.4(g) or Section 6.1(a), (ii) was available to such
Shareholder on a non-confidential basis prior to disclosure hereunder, excepting
any such information provided to a Shareholder by the Company in connection with
the execution of this Agreement, or (iii) becomes available to a Shareholder
from a source not known to such Shareholder to have a duty of confidentiality
with regard to such information.
6.2 Cooperation in Refinancings. Each Shareholder agrees to use
reasonable best efforts to cooperate with the Company and take such steps as the
Board reasonably deems appropriate in any refinancing of debt of the Company and
any of its Subsidiaries in connection with the financing of the transactions
contemplated in the Securities Purchase Agreement, including by voting its
Shares in favor of any proposed recapitalization of the Company, executing such
documents as the Board reasonably determines should be filed with any
governmental agency and conducting presentations to potential investors and
rating agencies.
48
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ARTICLE 7
MISCELLANEOUS
7.1 Entire Agreement. This Agreement, the Securities Purchase Agreement
and the documents delivered at the closing of the transactions contemplated
thereby constitute the entire agreement among the parties hereto and supersede
all prior agreements and understandings, oral and written, among the parties
hereto with respect to the subject matter hereof.
7.2 Additional Parties. Only Persons (other than the initial
signatories hereto) that execute and deliver to the Company a signature page
hereto and an agreement (a "joinder agreement") to be bound by this Agreement
shall be deemed to be Shareholders. Except to the extent limited in any joinder
agreement, each Person that so becomes a Shareholder after the date hereof shall
be entitled to all rights and privileges of a Shareholder and subject to all the
obligations hereunder as if he, she or it had been an original signatory to this
Agreement. Each holder of Options shall execute a signature page to (such
execution a condition of the grant of each Option under the Plan), and agree to
be bound by, this Agreement.
7.3 Binding Effect; Benefit. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs,
successors, legal representatives and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer on any Person other than
the parties hereto, and their respective heirs, successors, legal
representatives and permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
7.4 Exclusive Financial Advisor and Investment Banking Advisor;
Management Advisory Fees. During the ten-year period beginning on the Effective
Date, Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation ("DLJSC"), or any
Affiliate of DLJSC that the DLJ Entities may choose in their sole discretion,
shall be engaged as the exclusive financial and investment banking advisor for
the Company on DLJSC's customary terms for similar services. Until the earlier
of (i) the last day of the DLJ Ownership Period and (ii) the consummation of the
Initial Public Offering, each of DLJ Merchant Banking, Inc. and Carlisle Group,
L.P. shall be paid management advisory fees of $250,000 per year, payable in
advance in equal installments at the beginning of each fiscal quarter of the
Company, and with respect to the period from the Effective Date to the end of
the
49
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fiscal quarter during which the Effective Date falls, a pro rata amount, payable
on the last day of such fiscal quarter. The Company hereby agrees to indemnify
and hold harmless each of DLJSC, DLJ Merchant Banking, Inc. and Carlisle Group,
L.P., and their respective partners, Affiliates, officers, directors and
employees, against any and all loss, liability, expenses, claims, costs, damages
and expenses (including reasonable attorneys' fees) ("Claim Costs") relating to
or arising from its performance of services pursuant to this Section 7.4
(including any acts or omissions associated therewith); provided that no such
Person shall be indemnified to the extent Claim Costs arise as a result of the
gross negligence or misconduct of such Person.
7.5 Assignability. This Agreement shall not be assignable by any party
hereto, except that any Person acquiring Shares who is required by the terms of
this Agreement to become a party hereto shall execute and deliver to the Company
an agreement to be bound by this Agreement and shall thenceforth be a
"Shareholder", and any Shareholder who ceases to beneficially own any Shares
shall cease to be bound by the terms hereof (other than Article 6 and the
provisions of Sections 4.7, 5.5, 5.6, 5.7, 5.8, and 5.10 applicable to such
Shareholder with respect to any offering of Registrable Stock completed before
the date such Shareholder ceased to own any Shares).
7.6 Amendment; Waiver; Termination. (a) No provision of this Agreement
may be amended, waived, terminated or otherwise modified except by an instrument
in writing executed by the Company and the holders of a majority of the Shares
outstanding on the date of such amendment, waiver, termination or modification;
provided that if so amended, waived, terminated or otherwise modified, then such
amendment, waiver, termination or modification shall be binding upon the Company
and all Shareholders.
(b) Notwithstanding Section 7.6(a), except for amendments or
modifications that affect all Shareholders alike, (i) no provision of this
Agreement that is specifically applicable to and adversely affects the interests
of any DLJ Entity may be amended, waived, terminated or otherwise modified
except with the consent of such DLJ Entity, as the case may be, (ii) no
provision of this Agreement that is specifically applicable to and adversely
affects any Management Shareholder may be amended, waived, terminated or
otherwise modified except with the consent of such the Management Shareholder,
and (iii) no provision of this Agreement that is specifically
50
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applicable to and adversely affects the interests of the Institutional
Shareholders other than the DLJ Entities may be amended, waived, terminated or
otherwise modified except with the consent of the relevant Institutional
Shareholder.
(c) This Agreement shall expire on the tenth anniversary of the date
hereof, unless earlier terminated in accordance with this Section 7.6.
7.7 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including facsimile transmissions) and
shall be given,
if to the Company, to:
Fiberite Holdings, Inc.
x/x XXX Merchant Banking, Inc.
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxxx Xxxx
Fax: (000) 000-0000
and a copy to the DLJ Entities at their addresses listed below.
if to the DLJ Entities, to:
DLJ Merchant Banking Funding, Inc.
DLJ Merchant Banking Partners, L.P.
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxxx Xxxx
Fax: (000) 000-0000
and to:
DLJ International Partners, X.X.
XXX Xxxxxxxx Xxxxxxxx, X.X.
x/x XXX Offshore Management N.V.
Xxxx X. Xxxxxxxxxx 0
Xxxxxxxxxx, Xxxxxxx
Xxxxxxxxxxx Antilles
Attention: Xxxxxxxx Xxxxxx
MeesPierson Trust (Curacao) N.V.
if to Carlisle, to:
Carlisle Enterprises, L.P.
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0000 Xxx Xxxxxx, Xxxxx 000
Xx Xxxxx, XX 00000
Attention: Xxx Xxxxxxxx
Fax: (000) 000-0000
if to Steeple, to:
Steeple International, Inc.
c/o Valufinder Group, Inc.
Leveraged Finance Group
00 Xxxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxx, XX 00000
Attention: Xxx X. Xxxxxxxx
Fax: (000) 000-0000
if to any Management Shareholder, to:
Fiberite, Inc.
0000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxx, XX 00000
Attention: Chief Executive Officer
Fax: (000) 000-0000
All notices, requests and other communications shall be deemed received
on the date of receipt by the recipient thereof if received prior to 5 p.m. in
the place of receipt and such day is a Business Day in the place of receipt.
Otherwise, any such notice, request or communication shall be deemed not to have
been received until the next succeeding Business Day in the place of receipt.
Any notice, request or other written communication sent by facsimile
transmission shall be confirmed by mail, sent within two Business Days, or by
personal delivery, whether courier or otherwise, made within two Business Days
after the date of such facsimile transmission.
Any Person who becomes a Shareholder shall provide its address and fax
number to the Company, which shall promptly provide such information to DLJ
Merchant Banking, Inc.
7.8 Headings. The headings contained in this Agreement are for
convenience only and shall not affect the meaning or interpretation of this
Agreement.
7.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
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7.10 Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICTS OF LAW RULES OF SUCH STATE.
7.11 Specific Enforcement. Each party hereto acknowledges that the
remedies at law of the other parties for a breach or threatened breach of this
Agreement would be inadequate and, in recognition of this fact, any party to
this Agreement, without posting any bond, and in addition to all other remedies
which may be available, shall be entitled to obtain equitable relief in the form
of specific performance, a temporary restraining order, a temporary or permanent
injunction or any other equitable remedy which may then be available.
7.12 Consent to Jurisdiction. Each party hereto irrevocably submits to
the non-exclusive jurisdiction of any Federal court sitting in New York over any
suit, action or proceeding arising out of or relating to this Agreement and
waives, to the fullest extent permitted by law, any objection it may now or
hereafter have to the laying of venue of any such suit, action or proceeding
brought in any such court and any claim that any such suit, action or proceeding
brought in such a court has been brought in an inconvenient forum.
53
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
FIBERITE HOLDINGS, INC.
By: /s/ Xxxxxxxx Xxxx
----------------------------
Name: Xxxxxxxx Xxxx
Title: Director
CARLISLE-FIBERITE INVESTORS, L.P.
By: Carlisle Group, L.P.
its General Partner
By: Carlisle Enterprises, L.P.
its General Partner
By: /s/ Xxxxxx X. Xxxx
----------------------------
Name: Xxxxxx X. Xxxx
Title: General Partner
DLJ MERCHANT BANKING PARTNERS, L.P.
By: DLJ MERCHANT BANKING, INC.
Managing General Partner
By: /s/ Xxxxxxxx Xxxx
----------------------------
Name: Xxxxxxxx Xxxx
Title: Director
DLJ INTERNATIONAL PARTNERS, C.V.
By: DLJ MERCHANT BANKING, INC.
Advisory General Partner
By: /s/ Xxxxxxxx Xxxx
----------------------------
Name: Xxxxxxxx Xxxx
Title: Director
54
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DLJ OFFSHORE PARTNERS, C.V.
By: DLJ MERCHANT BANKING, INC.
Advisory General Partner
By: /s/ Xxxxxxxx Xxxx
----------------------------
Name: Xxxxxxxx Xxxx
Title: Director
DLJ MERCHANT BANKING FUNDING, INC.
By: /s/ Xxxx X. Xxxxxx
----------------------------
Name: Xxxx X. Xxxxxx
Title:
STEEPLE INTERNATIONAL, INC.
By: /s/ Xxx X. Adikoff
----------------------------
Name: Xxx X. Adikoff
Title: President
55
Exhibit A
Initial Ownership of Common Stock of Fiberite Holdings, Inc.
Number of Percentage of
Shares of Total Shares
Shareholder Common Stock of Common Stock
----------- ------------ ---------------
DLJ MERCHANT BANKING PARTNERS, L.P. 4,226,157 42.26%
DLJ INTERNATIONAL PARTNERS, C.V. 1,889,701 18.90
DLJ OFFSHORE PARTNERS, C.V. 109,566 1.10
DLJ MERCHANT BANKING FUNDING, INC. 2,746,398 27.46
CARLISLE-FIBERITE INVESTORS, L.P. 928,530 9.28
STEEPLE INTERNATIONAL, INC. 99,648 1.00
56
AMENDMENT OF SHAREHOLDERS AGREEMENT
THIS AMENDMENT OF SHAREHOLDERS AGREEMENT (the "Amendment") is made as
of December 1, 1996 by and among Fiberite Holdings, Inc. (the "Company") and the
shareholder parties to the Shareholders Agreement dated October 6, 1995.
RECITALS
WHEREAS, on October 6, 1995, the Company entered into a Shareholders
Agreement regarding certain rights of shareholders of the Company, (the
"Agreement"), which Agreement was among the Company and the shareholders listed
on the signature page thereto (the "Shareholders");
WHEREAS, on July 1, 1996, the Company entered into a Securities
Purchase Agreement (the "Purchase Agreement") among the Company and the
purchasers listed on the signature page thereto (the "Purchasers"), which
Purchase Agreement contained certain provisions regarding repurchase rights in
favor of the Company for the securities being acquired by the Purchasers
pursuant thereto;
WHEREAS, on July 1, 1996 the Company entered into a number of Option
Agreements between the Company and the optionees listed on the signature pages
thereto (the "Optionees"), pursuant to which the Company granted to each
Optionee an option to purchase the number of shares of Common Stock of the
Company provided in each Optionee's Option Agreement.
WHEREAS, on July 1, 1996 each of the Purchasers and each of the
Optionees executed a Joinder Agreement, pursuant to which each Purchaser and
each Optionee became a party to the Agreement;
WHEREAS, the Company, the Shareholders, the Purchasers and the
Optionees desire that the repurchase rights contained in the Agreement be
superseded by the repurchase rights contained in the Purchase Agreement or other
repurchase rights substantially similar thereto.
AGREEMENT
NOW, THEREFORE, in consideration the foregoing and the promises and
covenants contained herein, the sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. Amendment. The provisions of Article 4 of the Agreement
entitled "Certain Repurchases of Common Stock" shall not apply to the Management
Shareholders listed on the Schedule of Purchasers attached hereto as Exhibit A,
and
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57
the provisions of Article VII of the Purchase Agreement entitled "Vesting and
Company's Repurchase Right" shall apply to all shares of Common Stock acquired
by the Management Shareholders pursuant to the Purchase Agreement or upon
exercise of any of the Option Agreements.
2. Additions to Schedule of Purchasers. The undersigned hereby
agree and empower the Board of Directors of the Company (the "Board") to add the
names of additional Management Shareholders to the Schedule of Purchasers
attached hereto as Exhibit A upon resolution by the Board.
3. Capitalized Terms. All capitalized terms in this Amendment not
otherwise defined shall have the meaning ascribed them in the Agreement.
4. Entire Agreement. The Agreement, as amended by this Amendment
constitutes the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof.
5. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be an original, and all of which shall
together constitute one instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment of
Shareholders Agreement as of the date first written above.
"COMPANY"
Fiberite Holdings, Inc.
By: /s/ Xxxxx Xxxxxx
------------------------------------
Its: Vice-President
------------------------------------
"SHAREHOLDERS"
CARLISLE-FIBERITE INVESTORS, L.P.
By: Carlisle Group, L.P.
its General Partner
By: Carlisle Enterprises, L.P.
its General Partner
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title:
-2-
58
DLJ MERCHANT BANKING PARTNERS, L.P.
By: DLJ Merchant Banking, Inc.
Managing General Partner
By: /s/ Xxxxxxxx Xxxx
------------------------------------
Name: Xxxxxxxx Xxxx
Title:
DLJ INTERNATIONAL PARTNERS, C.V.
By: DLJ Merchant Banking, Inc.
Advisory General Partner
By: /s/ Xxxxxxxx Xxxx
------------------------------------
Name: Xxxxxxxx Xxxx
Title:
DLJ OFFSHORE PARTNERS, C.V.
By: DLJ Merchant Banking, Inc.
Advisory General Partner
By: /s/ Xxxxxxxx Xxxx
------------------------------------
Name: Xxxxxxxx Xxxx
Title:
DLJ MERCHANT BANKING FUNDING, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Secretary
STEEPLE INTERNATIONAL, INC.
By:
------------------------------------
Name:
Title:
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