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EXHIBIT 2
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT, dated as of April 10, 1997, is made and
entered into by Xxxxxxxx Corporation, a Delaware corporation ("Parent"), HC
Acquisition Corp., a Delaware corporation and a direct wholly-owned subsidiary
of Parent ("Sub"), and Golder, Thoma, Xxxxxxx Fund III Limited Partnership (the
"Stockholder").
W I T N E S S E T H:
WHEREAS, concurrently herewith, Parent, Sub and ERO, Inc., a Delaware
corporation (the "Company"), are entering into an Agreement and Plan of Merger
(as such agreement may hereafter be amended from time to time, the "Merger
Agreement"; capitalized terms used and not defined herein have the respective
meanings ascribed to them in the Merger Agreement), pursuant to which Sub will
be merged with and into the Company (the "Merger");
WHEREAS, in furtherance of the Merger, Parent and the Company desire that,
as soon as practicable (and not later than five business days) after the
execution and delivery of the Merger Agreement, Sub commence a cash tender
offer to purchase any and all outstanding shares of Company Common Stock (as
defined in Section 1), including all of the Shares (as defined in Section 2)
owned beneficially by the Stockholder; and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Stockholder agree, and the Stockholder
has agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein, the parties hereto,
intending to be legally bound, hereby agree as follows:
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1. Definitions. For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of
the same securities by the same holder, securities Beneficially Owned by a
Person shall include securities Beneficially Owned by all other Persons with
whom such Person would constitute a "group" as within the meanings of Section
13(d)(3) of the Exchange Act.
(b) "Company Common Stock" shall mean at any time the common stock, $.01
par value, of the Company.
(c) "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
2. Tender of Shares.
(a) The Stockholder hereby agrees to validly tender (and not to withdraw)
pursuant to and in accordance with the terms of the Offer, not later than the
fifth business day after commencement of the Offer pursuant to Section 1.1 of
the Merger Agreement and Rule 14d-2 under the Exchange Act, the number of
shares of Company Common Stock set forth opposite the Stockholder's name on
Schedule I hereto (the "Existing Shares", and together with any shares of
Company Common Stock acquired by the Stockholder after the date hereof and
prior to the termination of this Agreement whether upon the exercise of
options, warrants or rights, the conversion or exchange of convertible or
exchangeable securities, or by means of purchase, dividend, distribution or
otherwise, the "Shares"), Beneficially Owned by him or it. The Stockholder
shall satisfy its obligations hereunder to the extent that it tenders or causes
to be tendered Shares which it Beneficially Owns and over which it has the
legal and unconditional right to dispose of. The
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Stockholder hereby acknowledges and agrees that Sub's obligation to accept for
payment and pay for Shares in the Offer, including the Shares Beneficially
Owned by the Stockholder, is subject to the terms and conditions of the Offer.
(b) The Stockholder hereby agrees to permit Parent and Sub to publish and
disclose in the Offer Documents and, if Company Stockholder Approval is
required under applicable law, the Proxy Statement (including all documents and
schedules filed with the SEC) his or its identity and ownership of Company
Common Stock and the nature of his or its commitments, arrangements and
understandings under this Agreement.
3. Provisions Concerning Company Common Stock.
(a) The Stockholder hereby agrees that during the period commencing on the
date hereof and continuing until the first to occur of the Effective Time, the
termination of this Agreement or termination of the Merger Agreement in
accordance with its terms, at any meeting of the holders of Company Common
Stock, however called, the Stockholder shall vote (or cause to be voted) the
Shares held of record or Beneficially Owned by the Stockholder, whether issued,
heretofore owned or hereafter acquired, (i) in favor of the Merger, the
execution and delivery by the Company of the Merger Agreement and the approval
of the terms thereof and each of the other actions contemplated by the Merger
Agreement and this Agreement and any actions required in furtherance thereof
and hereof; (ii) against any action or agreement that would result in a breach
in any respect of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement or this
Agreement; and (iii) except as otherwise agreed to in writing in advance by
Parent, against the following actions (other than the Merger and the
transactions contemplated by the Merger Agreement): (A) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Company or its Subsidiaries; (B) a sale, lease or
transfer of a material amount of assets of the Company or its Subsidiaries, or
a reorganization, recapitalization, dissolution or liquidation of the Company
or its Subsidiaries; (C) (1) any change in a
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majority of the persons who constitute the board of directors of the Company;
(2) any change in the present capitalization of the Company or any amendment of
the Company's Certificate of Incorporation or Bylaws; (3) any other material
change in the Company's corporate structure or business; or (4) any other
action which, in the case of each of the matters referred to in clauses C (1),
(2), (3) or (4), is intended, or could reasonably be expected, to impede,
interfere with, delay, postpone, or materially adversely affect the Merger and
the transactions contemplated by this Agreement and the Merger Agreement, and
during such period the Stockholder shall not enter into any agreement or
understanding with any person or entity the effect of which would be
inconsistent or violative of the provisions and agreements contained in this
Section 3.
(b) The Stockholder hereby grants to Parent a proxy to vote the Shares of
the Stockholder as indicated in Section 3(a). The Stockholder intends such
proxy to be irrevocable and coupled with an interest and will take such further
action or execute such other instruments as may be necessary to effectuate the
intent of this proxy and hereby revokes any proxy previously granted by the
Stockholder with respect to such Shares.
4. Other Covenants, Representations and Warranties. (A) The Stockholder
hereby represents and warrants to Parent as follows:
(a) Ownership of Shares. The Stockholder is either (i) the record and
Beneficial Owner of, or (ii) the Beneficial Owner but not the record holder of,
the number of Shares set forth opposite the Stockholder's name on Schedule I
hereto. On the date hereof, except for such Shares that may be deemed to be
Beneficially Owned by the Stockholder as a result of that certain Voting
Agreement, dated as of July 15, 1988, by and among the Company, the Stockholder
and the other parties thereto, as amended, the Existing Shares set forth
opposite the Stockholder's name on Schedule I hereto constitute all of the
Shares owned of record or Beneficially Owned by the Stockholder. The
Stockholder has sole voting power and sole power to issue instructions with
respect to the matters set forth in Sections 2 and 3 hereof, sole
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power of disposition, sole power of conversion, sole power to demand appraisal
rights and sole power to agree to all of the matters set forth in this
Agreement, in each case with respect to all of the Existing Shares set forth
opposite the Stockholder's name on Schedule I hereto, with no material
limitations, qualifications or restrictions on such rights, subject to
applicable securities laws and the terms of this Agreement.
(b) Power; Binding Agreement. The Stockholder has the legal capacity,
power and authority to enter into and perform all of the Stockholder's
obligations under this Agreement. The execution, delivery and performance of
this Agreement by the Stockholder will not violate any other agreement to which
the Stockholder is a party including, without limitation, any voting agreement,
stockholders agreement or voting trust. This Agreement has been duly and
validly executed and delivered by the Stockholder and constitutes a valid and
binding agreement of the Stockholder, enforceable against the Stockholder in
accordance with its terms. There is no beneficiary or holder of a voting trust
certificate or other interest of any trust of which the Stockholder is trustee
whose consent is required for the execution and delivery of this Agreement or
the consummation by the Stockholder of the transactions contemplated hereby.
(c) No Conflicts. Except for filings under the HSR Act, if applicable,
and the filings required under the Merger Areement (A) no filing with, and no
permit, authorization, consent or approval of, any state or federal public body
or authority is necessary for the execution of this Agreement by the
Stockholder and the consummation by the Stockholder of the transactions
contemplated hereby, except where the failure to obtain such consent, permit,
authorization, approval or filing would not interfere with the Stockholder's
ability to perform its obligations hereunder, and (B) none of the execution and
delivery of this Agreement by the Stockholder, the consummation by the
Stockholder of the transactions contemplated hereby or compliance by the
Stockholder with any of the provisions hereof shall (1) conflict with or result
in any breach of any applicable organizational documents applicable to the
Stockholder, (2) result in a violation or breach of, or constitute (with or
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without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification or
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, contract, commitment, arrangement,
understanding, agreement or other instrument or obligation of any kind to which
the Stockholder is a party or by which such Stockholder or any of the
Stockholder's properties or assets may be bound, or (3) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to the Stockholder or any of the Stockholder's properties or assets,
in each such case except to the extent that any conflict, breach, default or
violation would not interfere with the ability of the Stockholder to perform
its obligations hereunder.
(d) No Encumbrances. Except as required by Section 2 and for the proxy
granted under Section 3(b), the Stockholder's Shares and the certificates
representing such Shares are now, and at all times during the term hereof will
be, held by the Stockholder, or by a nominee or custodian for the benefit of
the Stockholder, free and clear of all liens, claims, security interests,
proxies, voting trusts or agreements, understandings or arrangements or any
other encumbrances whatsoever.
(e) No Solicitation. The Stockholder shall, in its capacity as such,
comply with the terms of Section 5.1(e) of the Merger Agreement.
(f) Restriction on Transfer, Proxies and Non-Interference. Except as
required by Section 2 or Section 3(b), at any time during the period beginning
on the date hereof and ending upon the earlier to occur of the Effective Time
or the termination of this Agreement, the Stockholder shall not, directly or
indirectly: (i) offer for sale, sell, transfer, tender, pledge, encumber,
assign or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to or consent to the offer for sale,
sale, transfer, tender, pledge, encumbrance, assignment or other disposition
of, any or all of the Stockholder's Shares or any interest therein; (ii) grant
any proxies or powers of attorney,
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deposit any Shares into a voting trust or enter into a voting agreement with
respect to any Shares; or (iii) take any action that could reasonably be
expected to have the effect of preventing or disabling the Stockholder from
performing the Stockholder's obligations under this Agreement.
(g) Waiver of Appraisal Rights. The Stockholder hereby waives any rights
of appraisal or rights to dissent from the Merger that the Stockholder may
have.
(h) Reliance by Parent. The Stockholder understands and acknowledges that
Parent is entering into, and causing Sub to enter into, the Merger Agreement in
reliance upon the Stockholder's execution and delivery of this Agreement.
(i) Further Assurances. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further action as may be necessary
or desirable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
(B) Parent and Sub hereby represent and warrant to Stockholder as follows:
(a) Power; Binding Agreement. Each of Parent and Sub has the legal
capacity, power and authority to enter into and perform all of its obligations
under this Agreement and the Merger Agreement. The execution, delivery and
performance of this Agreement and the Merger Agreement by Parent and Sub will
not violate any other agreement to which Parent or Sub is a party. This
Agreement and the Merger Agreement has been duly and validly executed and
delivered by each of Parent and Sub and constitutes a valid and binding
agreement of Parent and Sub enforceable against each of them in accordance with
its terms.
(b) No Conflicts. Except for filings under the HSR Act, if applicable,
and the filings required under the Merger Areement (A) no filing with, and no
permit, authorization, consent or approval of, any state or federal public body
or
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authority is necessary for the execution of this Agreement and the Merger
Agreement by Parent or Sub and the consummation by Parent or Sub of the
transactions contemplated hereby, except where the failure to obtain such
consent, permit, authorization, approval or filing would not interfere with
Parent or Sub's ability to perform its obligations hereunder, and (B) none of
the execution and delivery of this Agreement and the Merger Agreement by Parent
or Sub, the consummation by Parent or Sub of the transactions contemplated
hereby or compliance by Parent or Sub with any of the provisions hereof shall
(1) conflict with or result in any breach of any applicable organizational
documents applicable to Parent or Sub, (2) result in a violation or breach of,
or constitute (with or without notice or lapse of time or both) a default (or
give rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agreement or other instrument or obligation of any
kind to which Parent or Sub is a party or by which Parent or Sub or any of
Parent's or Sub's properties or assets may be bound, or (3) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to Parent or Sub or any of its properties or assets, in each such
case except to the extent that any conflict, breach, default or violation would
not interfere with the ability of Parent or Sub to perform its obligations
hereunder.
(c) Financing. Parent and Sub have delivered to the Company a true and
complete copy of (i) a letter of commitment obtained by Parent from Credit
Suisse First Boston to provide debt financing for the transactions contemplated
hereby pursuant to a senior credit facility; (ii) a letter of commitment
obtained by Parent from Credit Suisse First Boston with respect to senior
subordinated debt financing for the transactions contemplated hereby pursuant
to the sale by Parent of senior subordinated notes; (iii) a letter of
commitment obtained by Xxxxxxxx Holdings, Inc., the sole stockholder of Parent
("Holdings"), from Credit Suisse First Boston with respect to senior debt
financing for the transactions contemplated hereby pursuant to the sale by
Holdings of senior notes; and (iv) from Xxxxx Muse Equity Fund
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II, L.P. to provide certain equity financing pursuant to the sale by Holdings
of shares of its common stock (collectively, the "Financing Commitments").
Assuming that the financing contemplated by the Financing Commitments is
consummated in accordance with the terms thereof, the funds to be borrowed
and/or provided thereunder by Parent and Holdings will provide sufficient funds
to pay the Offer Consideration, the Merger Consideration and all related fees
and expenses. As of the date of this Agreement, Parent is not aware of any
facts or circumstances that create a reasonable basis for Parent to believe
that Parent and Holdings will not be able to obtain financing in accordance
with the terms of the Financing Commitments.
5. Stop Transfer. The Stockholder agrees with, and covenants to, Parent
that, except with respect to the tender of the Stockholder's Shares into the
Offer, the Stockholder shall not request that the Company register the transfer
(book-entry or otherwise) of any certificate or uncertificated interest
representing any of the Stockholder's Shares, unless such transfer is made in
compliance with this Agreement (including the provisions of Section 2 hereof).
In the event of a stock dividend or distribution, or any change in the Company
Common Stock by reason of any stock dividend, split-up, recapitalization,
combination, exchange of shares or the like, the term "Shares" shall be deemed
to refer to and include the Shares as well as all such stock dividends and
distributions and any shares into which or for which any or all of the Shares
may be changed or exchanged.
6. Termination. Except as otherwise provided herein, the covenants and
agreements contained herein with respect to the Shares shall terminate upon the
termination of the Merger Agreement in accordance with its terms by Parent or
the Company. Notwithstanding anything contained herein to the contrary, the
Stockholder shall have the absolute right, exercisable in its sole discretion,
to terminate this Agreement if the Merger Agreement is amended in any respect
in a manner that is adverse to the Stockholder or if the Offer is terminated,
withdrawn,
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abandoned, expires or is modified in any manner that is adverse to the
Stockholder.
7. Stockholder Capacity. No person executing this Agreement who is or
becomes during the term hereof a director of the Company makes any agreement or
understanding herein in his or her capacity as such director. The Stockholder
signs solely in his or her capacity as the record and beneficial owner of, or
the trustee of a trust whose beneficiaries are the beneficial owners of, the
Stockholder's Shares.
8. Confidentiality. The Stockholder recognizes that successful
consummation of the transactions contemplated by this Agreement may be
dependent upon confidentiality with respect to the matters referred to herein.
In this connection, pending public disclosure thereof, the Stockholder hereby
agrees not to disclose or discuss such matters with anyone not a party to this
Agreement (other than the Stockholder's counsel and advisors, if any) without
the prior written consent of Parent, except for filings required pursuant to
the Exchange Act and the rules and regulations thereunder or disclosures the
Stockholder's counsel advises are necessary in order to fulfill the
Stockholder's obligations imposed by law, in which event the Stockholder shall
give notice of such disclosure to Parent as promptly as practicable so as to
enable Parent to seek a protective order from a court of competent jurisdiction
with respect thereto.
9. Miscellaneous.
(a) Entire Agreement. This Agreement and the Merger Agreement constitute
the entire agreement between the parties with respect to the subject matter
hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter
hereof.
(b) Certain Events. The Stockholder agrees that this Agreement and the
obligations hereunder shall attach to the Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of
such Shares shall pass, whether by operation of law or otherwise, including,
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without limitation, the Stockholder's heirs, guardians, administrators or
successors. Notwithstanding any transfer of Shares, the transferor shall
remain liable for the performance of all obligations under this Agreement of
the transferor.
(c) Assignment. This Agreement shall not be assigned by operation of law
or otherwise without the prior written consent of the other party, provided
that Parent may assign, in its sole discretion, its rights and obligations
hereunder to any direct or indirect wholly owned subsidiary of Parent, but no
such assignment shall relieve Parent of its obligations hereunder if such
assignee does not perform such obligations.
(d) Amendments, Waivers, Etc. This Agreement may not be amended, changed,
supplemented, waived or otherwise modified or terminated, except upon the
execution and delivery of a written agreement executed by the parties hereto;
provided that Schedule I hereto may be supplemented by Parent by adding the
name and other relevant information concerning any stockholder of the Company
who agrees to be bound by the terms of this Agreement without the agreement of
any other party hereto, and thereafter such added stockholder shall be treated
as a "Stockholder" for all purposes of this Agreement.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram,
telex or telecopy, or by mail (registered or certified mail, postage prepaid,
return receipt requested) or by any courier service, such as Federal Express,
providing proof of delivery. All communications hereunder shall be delivered
to the respective parties at the following addresses:
If to Stockholder: At the addresses set forth on Schedule I hereto
If to Parent: Xxxxxxxx Corporation
000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
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Telecopy: (000) 000-0000
Attn: Xxxxx Xxxxxxx
copies to: Hicks, Muse, Xxxx & Xxxxx Incorporated
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxx, Xx.
Hicks, Muse, Xxxx & Xxxxx Incorporated
1325 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attn: Xxxx X. Xxxxxx
Weil, Gotshal & Xxxxxx
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxx
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
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(g) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by
such party of its right to exercise any such or other right, power or remedy or
to demand such compliance.
(j) No Third Party Beneficiaries. This Agreement is not intended to be
for the benefit of, and shall not be enforceable by, any person or entity who
or which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
(l) Jurisdiction. Each party hereby irrevocably submits to the exclusive
jurisdiction of the Court of Chancery in the State of Delaware in any action,
suit or proceeding arising
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in connection with this Agreement, and agrees that any such action, suit or
proceeding shall be brought only in such court (and waives any objection
based on forum non conveniens or any other objection to venue therein);
provided, however, that such consent to jurisdiction is solely for the purpose
referred to in this paragraph (l) and shall not be deemed to be a general
submission to the jurisdiction of said Court or in the State of Delaware other
than for such purposes. Each party hereto hereby waives any right to a trial
by jury in connection with any such action, suit or proceeding.
(m) Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of
or to affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which, taken together,
shall constitute one and the same Agreement.
(o) Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement shall survive the acceptance
for payment of, and the payment for the Shares by Sub in the Offer or the
expiration of the Offer.
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IN WITNESS WHEREOF, Parent and the Stockholder have caused this Agreement
to be duly executed as of the day and year first above written.
XXXXXXXX CORPORATION
By:_______________________________
HC ACQUISITION CORP.
BY:_______________________________
STOCKHOLDER:
GOLDER, THOMA, XXXXXXX FUND III
LIMITED PARTNERSHIP
By: GOLDER, THOMA, XXXXXXX &
XXXXXX, X.X., its General
Partner
By: _______________________
Name:
Title: General Partner
AGREED TO AND ACKNOWLEDGED
(with respect to Section 5):
ERO, INC.
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By: __________________________
Name:
Title:
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SCHEDULE 1 TO
STOCKHOLDERS AGREEMENT
Name and Address of Stockholder Number of Shares
Owned
1. Golder, Thoma, Xxxxxxx 3,940,000
Fund III Limited Partnership
c/o Golder, Thoma, Cressey, Rauner, Inc.
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
with a copy to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: H. Xxxx xxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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