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EXHIBIT 3
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (this "Agreement"), dated March 4, 1998, is
made and entered into by and among XXXXXXX FINANCIAL SERVICES CORPORATION, a
Michigan corporation (the "Company") and the persons listed on Schedule 1
attached hereto (each of whom is referred to herein individually as a
"Shareholder" and collectively as the "Shareholders"). This Agreement shall be
effective as of the Effective Time, as defined below.
RECITALS
A. All of the members of Bloomfield Acceptance Company, L.L.C., a
Michigan limited liability company ("BAC") and Bloomfield Servicing Company,
L.L.C., a Michigan limited liability company ("BSC"), respectively, as listed on
Schedule 1 hereto (each a "Member" and collectively, the "Members"), have
entered into that certain Agreement and Plan of Merger (the "Merger Agreement"),
dated of even date herewith, by and among the Company, BAC, BSC, BAC Acquiring
Corp., a Michigan corporation and a wholly owned subsidiary of the Company, BSC
Acquiring Corp., a Michigan corporation and a wholly owned subsidiary of the
Company, and each of the Members.
B. Pursuant to the Merger Agreement, BAC Acquiring Corp. shall merge
with and into BAC, and BSC Acquiring Corp. shall merge with and into BSC, with
the Members becoming shareholders of the Company, with respective shareholdings
as set forth on Schedule 1 hereto, all as of the effective time of the mergers
(the "Effective Time").
C. The Company's authorized capital stock consists of 10,000,000 shares
of common stock and 10,000,000 shares of preferred stock, of which there were
1,295,000 shares of common stock, without par value, issued and outstanding as
of January 31, 1998 (the "Common Stock"). The shares of the Common Stock have
all of the rights, preferences and limitations of shares of common stock stated
in the Michigan Business Corporation Act, as amended (the "Act").
D. The number of authorized and outstanding shares of Common Stock, as
set forth in paragraph C above, will not change prior to the Effective Time.
E. At the Effective Time, BAC Acquiring Corp. and BSC Acquiring Corp.
shall cease to exist separately, and shall be merged with and into BAC and BSC
(together the "Subsidiaries"), respectively, in accordance with the provisions
of the Merger Agreement and in accordance with the provisions of and with the
effect provided in the Act and in the Michigan Limited Liability Company Act.
F. At the Effective Time, the member interests of each Member shall be
converted into shares of the Company in the respective amounts set forth on
Schedule 1 hereto and each Member shall thereby become a shareholder of the
Company. In addition to the Members, current directors of the Company (the
"Directors") have executed and joined this
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Agreement as Shareholders and own shares of Common Stock in the amounts set
forth on Schedule 1 hereto.
NOW THEREFORE, for and in consideration of the foregoing Recitals, the
mutual covenants and agreements contained in this Agreement and other good and
valuable consideration, the receipt and adequacy of which is acknowledged, the
Company and each of the Shareholders agree as follows:
SECTION 1. DIRECTORS, OFFICERS AND VOTING.
1.1 Appointment and Nomination of Xxxxx and Xxxxx. Each of the
Directors agrees that, no later than the first meeting of the Board of Directors
of the Company (the "Board") following the date of this Agreement, the Directors
shall expand the number of directors of the Company by two in accordance with
the Company Bylaws and shall cause Xxxxxx X. Xxxxx ("Xxxxx") and Xxxxxxxxx X.
Xxxxx ("Xxxxx") to be appointed to the Board. Each of the Directors further
agrees that so long as he remains a Director of the Company and until this
Agreement is terminated or expires, he will: (a) vote to nominate Xxxxx for
election or reelection as a director of the Company and vote to appoint Xxxxx to
the Executive Committee of the Company's board; (b) neither propose, nor vote,
to expand the size of the Executive Committee of the Board beyond three (3) in
number without Xxxxx'x consent; (c) until the later of the expiration of his
term at the annual meeting of the Company's stockholders to be held in 1999, or
his successor is duly elected and qualified, vote to retain Xxxxx as a director
of the Company; and (d) take all action necessary from time to time (including,
without limitation, the execution of written consents, the calling of special
meetings, the filling of vacancies, and the waiving of notice and attendance at
meetings) to accomplish the nominations of Xxxxx and Xxxxx in accordance with
and to the extent of this Section 1.
1.2 Voting Agreement. Each of the Shareholders agrees that he or she
shall take all action necessary from time to time (including, without
limitation, the voting of securities of the Company, the execution of written
consents, the calling of special meetings, the removal of directors, the filling
of vacancies on the Board of Directors, the waiving of notice and attendance at
meetings) to accomplish the elections of Xxxxx and Xxxxx in accordance with and
to the extent of this Section 1, and to accomplish the elections to the Board of
Xxxxxx X. Xxxxx and other director-nominees endorsed by the Board.
1.3 Appointment of Vice Presidents. Each of the Directors agrees that,
no later than the first meeting of the Board following the date of this
Agreement, the Directors shall nominate and elect each of Xxxxx and Xxxxx to be
a Vice President of the Company, in accordance with the Bylaws of the Company,
until his successor is duly elected. Each of the Directors further agrees that
he or she shall take all action necessary, including the casting of votes as
directors and the execution of written consents, to accomplish the election of
each of Xxxxx and Xxxxx as a Vice President of the Company in accordance with
and to the extent of this Section 1.3.
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SECTION 2. TAG-ALONG RIGHTS.
2.1 Proposed Transfer. If one or more of the Shareholders proposes (the
person or group making such proposal being the "Selling Group" and the remaining
Shareholders being the "Tag-Along Group") a Transfer (as defined below) of five
percent (5%) or more of the then-issued and outstanding common stock of the
Company, and provided that the Transfer is not an Exempt Transfer (as defined
below), then each of the Shareholders comprising the Tag-Along Group (each a
"Tag-Along Shareholder") shall have the right ("Tag-Along Right") to require the
proposed purchaser(s) to purchase from such Tag-Along Shareholder up to the
number of whole shares of Common Stock not to exceed the number derived by
multiplying the total number of shares of Common Stock to be purchased by the
proposed purchaser(s) by a fraction, the numerator of which is the total number
of shares of Common Stock owned by such Tag-Along Shareholder, and the
denominator of which is the total number of shares of Common Stock owned by the
Shareholders. Any shares purchased from Tag-Along Shareholders pursuant to this
Section shall be paid for at the same price per Share and upon the same terms of
payment and conditions, including price per share and the total number of shares
proposed to be transferred, as such proposed Transfer by the Selling Group (the
"Transfer Terms").
2.2 Tag-Along Notice. The Selling Group shall promptly notify the
Company and the Tag-Along Group in the event they propose to make a Transfer
giving rise to Tag-Along Rights, and shall furnish the Tag-Along Group with the
Transfer Terms and a copy of any written offer or agreement pertaining thereto.
The Tag-Along Right may be exercised by any Tag-Along Shareholder by delivery of
a written notice to the Selling Group (the "Tag-Along Notice") within twenty
(20) days following such Tag-Along Shareholder's receipt of such notice from the
Selling Group. The Tag-Along Notice shall state the number of shares of Common
Stock that such Tag-Along Shareholder proposes to include in the Transfer to the
proposed purchaser (not to exceed the number determined in accordance with
Section 2.1 above). In the event that the proposed purchaser does not purchase
the specified number of shares from the Tag-Along Shareholders on the Transfer
Terms, then the Selling Group shall only be permitted to sell any other number
of shares of Common Stock to the proposed purchaser (an "Alternate Transfer")
if: (a) the number of shares to be sold in the Alternate Transfer is less than
five percent (5%) of the then-issued and outstanding common stock of the
Company; or (b) the Tag-Along Shareholders are given five (5) days written
notice of the proposed Alternate Transfer and the right to participate pro rata
in the Alternate Transfer (calculated using the formula set forth in Section
2.1) under the same terms and conditions as the Selling Group.
2.3 Closing. At the closing of any Transfer pursuant to this Section 2,
the proposed purchaser shall remit to each selling Shareholder the consideration
for the total sales price of the Common Stock of such Shareholder sold pursuant
hereto, upon delivery by such Shareholder of certificate(s) for such shares duly
endorsed in blank for transfer or accompanied by stock power(s) duly executed in
blank and such other transfer documentation, including but not limited to
representations and warranties of title, as shall be reasonably required by the
purchaser or its counsel.
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2.4 Transfer. A "Transfer" of stock under this Section 2 shall mean a
sale to be consummated in a single transfer or a series of related transfers, to
a single purchaser or a group of purchasers, as part of a single transaction or
group of related transactions. For purposes of this Section 2, the following
shall be deemed to be a single purchaser: (a) relatives of a person or the
person's spouse living in the same household, (b) trusts or estates in which any
one person has a 10 percent or greater interest or of which he or she is
trustee, executor or administrator, and (c) any number of corporations,
partnerships, limited liability companies or other entities in which any one
person holds a 10 percent or greater beneficial interest. For purposes of this
Section 2, transactions which occur or are proposed to occur more than six (6)
months apart shall not be considered to be a group of related transactions, so
long as those transactions are not part of an expressly related group of
transactions.
2.5 Exempt Transfer. The following transactions shall constitute
"Exempt Transfers" as that term is used in this Section 2: (a) a Transfer to the
Company; (b) a Transfer entirely between or among any of the Shareholders
executing this Agreement; (c) a Transfer by will or intestate succession to a
Shareholder's executors, administrators, testamentary trustees, legatees or
beneficiaries; (d) a Transfer to a Shareholder's immediate family members or to
a Michigan revocable inter-vivos trust, of which a Shareholder is the grantor,
or another entity controlled by such Shareholder formed primarily for estate
planning purposes for the benefit of said Shareholder (and/or his spouse,
children, grandchildren, parents and/or siblings) (the parties identified in (c)
and (d), or any one of them are hereinafter collectively referred to as
"Permitted Transferees"); or (e) a Transfer in a public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(the "Act"), or pursuant to Rule 144 promulgated thereunder.
SECTION 3. REGISTRATION RIGHTS.
The Company covenants and agrees as follows:
3.l Definitions. For purposes of this Section 3:
(a) The terms "register", "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document pursuant to the Act, and the declaration
or ordering of effectiveness of such registration statement or
document;
(b) The term "Registrable Securities" means Common Stock of
the Company and any Common Stock issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in
exchange for or in replacement of any capital stock of the Company,
held by the Holders (as defined below); provided, however, that Common
Stock or other securities shall only be treated as Registrable
Securities if and so long as (1) they have not been sold to or through
a broker or dealer or underwriter in a public distribution or a public
securities transaction, and (2) they have not been sold in a
transaction exempt from the registration and prospectus delivery
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requirements of the Act under Section 4(1) thereof so that all transfer
restrictions and restrictive legends with respect thereto are removed
upon the consummation of such sale;
(c) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common
Stock outstanding which are, and the number of shares of Common Stock
issuable pursuant to then exercisable or convertible securities which
are, Registrable Securities;
(d) The term "Holder" means any person who was a Member of BAC
and/or BSC and is the record owner of Registrable Securities, or any
assignee thereof in accordance with Section 3.12 hereof; and
(e) The term "SEC" means the Securities and Exchange
Commission or any other federal agency at the time administering the
Act.
3.2 Company Registration. If at any time more than two years after the
date of this Agreement, the Company (without any obligation to do so) proposes
to register any of its stock or other securities under the Act in connection
with the public offering of such securities solely for cash (other than a
registration relating solely to the sale of securities to participants in a
Company stock plan, or a registration on any form which does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities or a SEC
Rule 145 transaction), the Company shall, at such time, promptly give each
Holder written notice of such registration. Upon the written request of each
Holder given within thirty (30) days after mailing of such notice by the Company
in accordance with Section 5.6, the Company shall, subject to the provisions of
Sections 3.6, 3.7, 3.8 and 3.9, cause to be registered under the Act all of the
Registrable Securities that each such Holder has requested to be registered.
Notwithstanding the foregoing, the Company will not be required to give notice
to the Holders of Registrable Securities if the underwriters managing the
proposed offering have advised the Company in writing that in their judgment
market conditions will not allow the inclusion of any secondary shares in such
offering. In the event the managing underwriters and the Company subsequently
determine to add any secondary shares in the offering, such notice shall be
provided, and each Holder shall have the registration rights provided in this
Section 3.
3.3 Demand Registration. Subject to the terms of this Agreement, in the
event that the Company shall, not sooner than two years after the date of this
Agreement, receive from the Holders representing at least thirty percent (30%)
of the Registrable Securities then outstanding, a written notice that it or they
intend to offer or cause to be offered for public sale at least twenty-five
percent (25%) of the Registrable Securities then outstanding (or any lesser
percentage if the Registrable Securities to be included in the registration
statement have an aggregate offering price to the public greater than
$3,000,000), the Company will so notify all Holders. Upon written request of any
Holder given within fifteen (15) days after the receipt by such Holder from the
Company of such notification, the Company will use its best efforts to cause
such of the Registrable Securities as may be requested by any Holder (including
the
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Holder giving the initial notice of intent to offer) to be registered under
the Securities Act as expeditiously as possible (a "Demand Registration"). The
Company shall not be required to effect more than one (1) Demand Registration.
If (i) in the good faith judgment of the Board of Directors of the Company, a
Demand Registration would be materially detrimental to the Company and the Board
of Directors of the Company concludes, as a result, that it is essential to
defer the filing of such registration statement at such time, and (ii) the
Company shall furnish to each Holder a certificate signed by the President of
the Company stating that, in the good faith judgment of the Board of Directors
of the Company, it would be materially detrimental to the Company for such
registration statement to be filed in the near future, then the Company shall
have the right to defer such filing for the period during which such Demand
Registration would be materially detrimental, provided that the Company may not
defer the filing for a period of more than ninety (90) days after receipt of the
request for a Demand Registration, and more than once in any 12-month period.
3.4 Form S-3 Registration. In case, at any time after two years from
date of this Agreement, the Company shall receive from Xxxxx and Xxxxx a written
request or requests that the Company effect a registration on Form S-3 for a
public offering of Registrable Securities the aggregate offering price of which
would exceed $500,000.00, the Company will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and
(b) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion
of such Holder's or Holders' Registrable Securities as are specified in
such request, together with all or such portion of the Registrable
Securities of any other Holder or Holders joining in such request as
are specified in a written request given within fifteen (15) days after
receipt of such written notice from the Company, and the Company shall
continue to keep such Form S-3 current and effective for a period of
one (1) year following its initial filing or until all securities
registered under such Form S-3 have been sold, whichever sooner occurs,
provided, however, that the Company shall not be obligated to effect
any such registration, qualification or compliance, pursuant to this
Section 3.4: (i) if Form S-3 is not available for such offering by the
Holders; (ii) if the Company shall furnish to the Holders a certificate
signed by the President of the Company stating that in the good faith
judgment of the Board of Directors of the Company it would be
detrimental to the Company and its stockholders for such Form S-3
Registration to be effected at such time, in which event the Company
shall have the right to defer the filing of the Form S-3 registration
statement for a period of not more than ninety (90) days after receipt
of the request of the Holder or Holders under this Section 3.4; (iii)
if the Company has, within the twelve (12) month period preceding the
date of such request, already effected two registrations for the
Holders pursuant to Section 3.2, 3.3 or this Section 3.4; or (iv) in
any particular jurisdiction in which the Company would be
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required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or
compliance.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable after
receipt of the request or requests of the Holders.
3.5 Expenses of Registration. The Company shall bear and pay all
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to a total of three registrations,
whether pursuant to Section 3.2, 3.3 or 3.4 or a combination thereof, including
(without limitation) all registration and filing fees, fees and expenses of
compliance with securities or blue sky laws, printing expenses, messenger and
delivery expenses and fees and reimbursements the counsel, independent certified
public accountants, underwriters and other persons retained by the Company, the
expense of reporting or disclosing this Agreement or its attendant rights and
obligations (including filings required under Section 13(d) of the Securities
Exchange Act of 1934, as amended), the expense of any annual audit, the expense
of any liability insurance and the expense and fees for listing the securities,
but excluding underwriting discounts and commissions and stock transfer taxes
relating to Registrable Securities.
3.6 Obligations of the Company. Whenever required under Section 3.2,
3.3 or 3.4 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts
and take all steps necessary to cause such registration statement to
become effective, and, upon the request of the Holders of a majority of
the Registrable Securities registered thereunder, keep such
registration statement effective for up to 90 days (or longer if
otherwise provided in this Section 3) or until all of the securities
registered thereunder are sold, whichever occurs sooner.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to
comply with the provisions of the Act with respect to the disposition
of all securities covered by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may
reasonably request in order to facilitate the disposition of
Registrable Securities owned by them.
(d) Furnish to the counsel of any Holder, a copy of the
registration statement five (5) days prior to the filing of such
registration statement.
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(e) Use its best efforts to register and qualify the
securities covered by such registration statement for listing on a
national securities exchange, the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") or such other similar
exchange.
(f) Use its best efforts to register and qualify the
securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be
reasonably requested by the Holders, provided that the Company shall
not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of
process in any such states or jurisdictions.
(g) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter of such
offering. Each Holder participating in such underwriting shall also
enter into and perform its obligations under such an agreement.
(h) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Act of the happening of
any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.
3.7 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 3 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities.
3.8 Underwriting Requirements. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 3.2 or 3.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by the persons
entitled to select the underwriters, and then only in such quantity as the
underwriters determine in their sole discretion will not jeopardize the success
of the offering by the Company. If the total amount of securities, including
Registrable Securities, requested by Holders to be included in such offering
exceeds the amount of securities sold other than by the Company that the
underwriters determine in their sole discretion is compatible with the success
of the offering, then the Company shall be required to include in the offering
only that number of such securities, including Registrable Securities, which the
underwriters determine in their sole discretion will not jeopardize the success
of the offering (the securities so included to be apportioned pro rata among all
selling stockholders
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according to the total amount of securities owned by each selling stockholder or
in such other proportions as shall mutually be agreed to by such selling
stockholders). For purposes of the preceding parenthetical concerning
apportionment, for any selling stockholder which is a holder of Registrable
Securities and which is a partnership or corporation, the partners, retired
partners and stockholders of such holder, or the estates and family members of
any such partners and retired partners and any trusts for the benefit of any of
the foregoing persons shall be deemed to be a single "selling stockholder" and
any pro-rata reduction with respect to such "selling stockholder" shall be based
upon the aggregate amount of shares owned by all entities and individuals
included in such "selling stockholder," as defined in this sentence.
3.9 Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 3.
3.10 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 3:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, any underwriter (as defined in the Act)
for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Act or the Securities Exchange
Act of 1934, as amended (the "1934 Act"), against any losses, claims,
damages, or liabilities (joint or several) to which they may become
subject under the Act, or the 1934 Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i)
any untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or
alleged violation by the Company of the Act, the 1934 Act, any state
securities law or any rule or regulation promulgated under the Act, or
the 1934 Act or any state securities law; and the Company will pay to
each such Holder, underwriter or controlling person, as incurred, any
legal or other expenses reasonably incurred by one law firm retained by
them (or such additional law firms retained by a Holder or Holders if
such Holder or Holders reasonably believe there exists a conflict of
interest among them) in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that
the indemnity agreement contained in this subsection 3.10(a) shall not
apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld), nor
shall the Company be liable in any such case for any loss, claim,
damage, liability or action to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity
with written information furnished expressly for use in
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connection with such registration by any such Holder, underwriter or
controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of
its officers who has signed the registration statement, each person, if
any, who controls the Company within the meaning of the Act, any
underwriter, any other Holder selling securities in such registration
statement and any controlling person of any such underwriter or other
Holder, against any losses, claims, damages or liabilities (joint or
several) to which any of the foregoing persons may become subject,
under the Act, or the 1934 Act or other federal or state law, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by
such Holder expressly for use in connection with such registration; and
each such Holder will pay, as incurred, any legal or other expenses
reasonably incurred by any person intended to be indemnified pursuant
to this subsection 3.10(b), in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this subsection
3.10(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be
unreasonably withheld; provided, that, the obligation to indemnify will
be in several, not joint and several, among such sellers of Registrable
Securities, and in no event shall any indemnity under this subsection
3.10(b) exceed the net proceeds from the offering received by such
Holder.
(c) Promptly after receipt by an indemnified party under this
Section 3.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying xxxxx under this
Section 3.10, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party (together with all other
indemnified parties which may be represented without conflict by one
counsel) shall have the right to retain one separate counsel, with the
fees and expenses to be paid by the indemnifying xxxxx, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of
the commencement of any such action, if prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this Section 3.8, but the
failure to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 3.10.
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(d) The obligations of the Company and Holders under this
Section 3.10 shall survive the completion of any offering of
Registrable Securities in a registration statement under this Section
3, and otherwise.
3.11 Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Act and any other rule or regulation of the SEC that may at any time permit a
Holder to sell securities of the Company to the public without registration, the
Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement
by the Company that it has complied with the reporting requirements of
SEC Rule 144, the Act and the 1934 Act, (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as
may be reasonably requested in availing any Holder of any rule or
regulation of the SEC which permits the selling of any such securities
without registration or pursuant to such form.
3.12 Assignment of Registration Rights. The rights to cause the Company
to register Registrable Securities pursuant to this Section 3 may only be
assigned to a Permitted Transferee of the underlying Registrable Securities who
has executed and delivered to the Company a counterpart of this Agreement,
binding such Permitted Transferee to all of the restrictions and obligations
contained herein.
3.13 "Market Stand-Off" Agreement. Each Holder hereby agrees that for a
period of 180 days following the effective date of any registration effected
pursuant to Sections 3.2, 3.3 or 3.4 (provided the Holders are given written
notice of the offering at least fifteen (15) days prior to the Company's filing
with the SEC of a registration statement relating thereto), it shall not, unless
otherwise agreed by the Company and the managing underwriters, if any, directly
or indirectly sell, offer to sell, contract to sell (including, without
limitation, any short sale), grant any option to purchase or otherwise transfer
or dispose of (other than to donees who agree to be similarly bound) any
securities of the Company held by it at any time during such period except
Common Stock included in such registration. In order to enforce the foregoing
covenant, the Company may impose stop-transfer instructions with respect to the
Registrable Securities of each Holder (and the shares or securities of every
other person subject to the foregoing restriction) until the end of such period.
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3.14 Termination. The rights provided in this Section 3 shall terminate
upon the termination of this Agreement.
SECTION 4. TRANSFER RESTRICTION AND STOCK CERTIFICATE LEGEND.
4.1 Restriction on Transfer. No Shareholder who was a Member may sell,
convey, hypothecate or otherwise transfer ownership of any of the shares of
Common Stock held by such Shareholder: (i) for a period of two (2) years
following the date of this Agreement; and (ii) after the two years from the date
of this Agreement, unless such shares are registered pursuant to an effective
registration statement under, or in accordance with an exemption from, federal
and state securities laws. Notwithstanding anything contained herein to the
contrary, any Shareholder may transfer all or part of his stock of the Company
to a Michigan revocable inter-vivos trust, of which such Shareholder is the
grantor, or to another entity controlled by such Shareholder formed primarily
for estate planning purposes, for the benefit of said Shareholder (and/or his
spouse, children, grandchildren, parents and/or siblings); provided, however,
that in such event (i) all stock so transferred shall remain subject to the
terms and conditions of this Agreement; (ii) the Permitted Transferee shall make
no transfers of such stock except in accordance with the terms of this
Agreement; (iii) the Company shall have received at least ten (10) days prior
written notice of such transfer together with such organizational and transfer
documentation pertaining to the proposed transfer as the Company shall request;
and (iv) the Company shall have received the agreement, in writing, of such
Permitted Transferee to be bound in all respects by this Agreement. Upon the
occurrence of any event requiring or permitting the purchase of stock under this
Agreement, such Shareholder's Permitted Transferee or any subsequent transferee
shall be required to sell or transfer his stock as provided in this Agreement,
in the same manner and to the same extent as the original Shareholder would have
been required to sell or transfer such stock. All references in this Agreement
to stock of the Company shall be deemed to include stock owned by any transferee
or Permitted Transferee, except that payment for such stock shall be made to the
record owner thereof.
4.2 Required Legend. Simultaneously with the execution of this
Agreement, each Shareholder shall surrender all certificates of stock, except
those certificates representing shares which are or were acquired through
ordinary brokerage transactions and not pursuant to this Agreement or as part of
the Company's initial public offering, to the Company for endorsement with the
following legend, which shall be conspicuously placed on such certificates:
"The sale, transfer, assignment, pledge, hypothecation or
other disposition of the shares represented by this certificate is
restricted by the provisions of the Shareholders Agreement, dated as of
March 4, 1998 (as it may be amended from time to time), to which the
Company and the holder of this certificate, among others, are parties,
a copy of which may be inspected at the principal office of the
Company. The provisions of such agreement are incorporated herein by
reference."
All certificates of stock issued to or acquired by any such Shareholder
after the date of this Agreement, except certificates representing shares which
are or were acquired through
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ordinary brokerage transactions and not pursuant to this Agreement or as part of
the Company's initial public offering, shall also bear the foregoing legend;
provided, however, that the Company shall remove the required legend from any
shares transferred to a third party (i.e., a party other than a Shareholder or
Permitted Transferee) as permitted in this Agreement, so that such transferee
shall not be subject to the requirements contained in this Agreement.
4.3 Effect of Missing Legend. Section 4.2 above notwithstanding, the
fact that such legend has not been placed on a given certificate of Stock held
by any Shareholder who was a Member hereunder shall not affect the rights of the
parties to this Agreement in any way, and all certificates of stock on which
such legend has not been placed, except those certificates representing shares
which are or were acquired through ordinary brokerage transactions and not
pursuant to this Agreement or as part of the Company's initial public offering,
shall be deemed to have had that legend placed on them for the purposes of this
Agreement.
4.4 Availability of Agreement. The Company shall maintain a copy of
this Agreement at its principal place of business and shall make such copies
available for review to any person who shall inquire about the Agreement.
SECTION 5. MISCELLANEOUS.
5.1 Waivers and Amendments. With the written consent of all of the
Shareholders, the obligations of the Company and the rights of the holders of
Common Stock under this Agreement may be waived (either generally or in a
particular instance, either retroactively or prospectively and either for a
specified period of time or indefinitely), and with the same consent the
Company, when authorized by resolution of its board of directors, may enter into
a supplementary agreement for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement;
provided, however, that no such waiver or supplemental agreement shall reduce
the aforesaid unanimity which is required to consent to any waiver or
supplemental agreement, without the unanimous consent of the record or
beneficial holders of all of the then outstanding Common Stock, on a fully
converted basis. Upon the effectuation of each such waiver, consent, agreement
of amendment or modification, the Company promptly shall give written notice
thereof to the record holders of the then outstanding Common Stock. This
Agreement or any provision hereof may not be changed, waived, discharged or
terminated orally, but only by a statement in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, except to the extent provided in this Section 5.1.
5.2 Termination. All of the rights and obligations in this Agreement
shall terminate ten (10) years from the date of this Agreement, or upon the
consummation of a sale which has been subject to, and has complied with, the
tag-along rights as set forth in Section 2 above (to the extent of the shares of
Common Stock included in such sale), or upon the dissolution or liquidation of
the Company, whichever occurs sooner. If not sooner terminated, all tag-along
rights (under Section 2) and registration rights (under Section 3) shall be
permanently terminated when the Shareholders, as a group, hold less than ten
percent (10%) of the issued and outstanding Common Stock of the Company.
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5.3 Governing Law. This Agreement shall be governed in all respects by
the laws of the State of Michigan as such laws are applied to agreements between
Michigan residents entered into and to be performed entirely within Michigan.
5.4 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
5.5 Entire Agreement. This Agreement and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof.
5.6 Notices, Etc. Ad notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
upon personal delivery or upon the seventh day following mailing by registered
air mail, postage prepaid, addressed (a) if to the Shareholders, as indicated on
Schedule 1 attached hereto, or at such other address as it shall have furnished
to the Company, (b) if to the Company, to Xxxxxxx Financial Services
Corporation, 00000 Xxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000,
and addressed to the attention of the corporate secretary, or at such other
address as the Company shall have furnished to the Shareholders, or (c) if to
any other holder of Common Stock at such address as such holder shall have
furnished to the Company in writing, or, until such holder so furnishes an
address to the Company, then to and at the address of the last holder of such
Common Stock, who so furnished an address to the Company.
5.7 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any holder of any securities issued or sold or to be
issued or sold hereunder, upon any breach or default of the Company under this
Agreement shall impair any such right, power or remedy of such holder nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or in any similar breach or default thereafter occurring, nor shall any
waiver of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any holder of any breach or
default under this Agreement, or any waiver on the part of any holder of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
holder, shall be cumulative and not alternative.
5.8 Severability. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, it shall be modified in such manner as to be
valid, legal, and enforceable but so as to most nearly retain the intent of the
parties, and the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
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5.9 Titles and Subtitles. The titles and subtitles of this Agreement
are intended for reference and shall not by themselves determine the
construction or interpretation of this Agreement.
5.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5.11 Expenses. The Company and each Shareholder shall pay its own costs
and expenses in connection with the negotiation, execution, delivery and
performance of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Shareholders Agreement
to be executed by themselves or by their respective representatives thereunto
duly authorized as of the day and year first above written. The undersigned
Shareholders execute this Agreement with respect to all shares of capital stock
of the Company currently owned and hereafter acquired, to the extent provided
herein.
"The Company"
XXXXXXX FINANCIAL SERVICES CORPORATION,
a Michigan corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxxx
Its: President, Chief Executive
Officer and Chief Financial
Officer
[signatures continue on following page]
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Shareholders Agreement
Xxxxxxx Financial Services Corporation
signatures, continued
"Shareholders"
/s/ Xxxxxxx X. Xxxxxxxx /s/ Xxxxxx X. Xxxxx
--------------------------- ----------------------------------
XXXXXXX X. XXXXXXXX XXXXXX X. XXXXX
/s/ Xxxx X. Xxxxxxxx /s/ Xxxxxxxxx X. Xxxxx
--------------------------- ----------------------------------
XXXX X. XXXXXXXX XXXXXXXXX X. XXXXX
/s/ Xxxxxx X. Xxxxxxxx /s/ Xxxxxx Xxxxxxxxxx
--------------------------- ----------------------------------
XXXXXX X. XXXXXXXX XXXXXX XXXXXXXXXX
/s/ Xxxxxx X. Xxxxx /s/ Xxxxx Xxxxxxx
--------------------------- ----------------------------------
XXXXXX X. XXXXX XXXXX XXXXXXX
/s/ Xxxxx X. Xxxxxxxx /s/ Xxxxxxxx Xxxxxxxxx
--------------------------- ----------------------------------
XXXXX X. XXXXXXXX XXXXXXXX XXXXXXXXX
/s/ Xxxxxxx Xxxxxxx
----------------------------------
XXXXXXX XXXXXXX
/s/ Xxxxx Xxxxxxxx
----------------------------------
XXXXX XXXXXXXX
/s/ Xxxxx X. Xxxxxxx
----------------------------------
XXXXX X. XXXXXXX
/s/ Xxxxxxxxx X. Xxxxxxxx
----------------------------------
XXXXXXXXX X. XXXXXXXX
/s/ Xxxxxxx X. Xxxxx
----------------------------------
XXXXXXX X. XXXXX
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SCHEDULE 1 TO SHAREHOLDERS AGREEMENT
XXXXXXX FINANCIAL SERVICES CORPORATION
Shareholder Number of Shares
----------- ----------------
"Directors"
Xxxxxxx X. Xxxxxxxx 10,500
Xxxx X. Xxxxxxxx 25,000
Xxxxxx X. Xxxxxxxx 72,500
Xxxxxx X. Xxxxx 10,000
Xxxxx X. Xxxxxxxx 30,000
"Members"
Xxxxxx X. Xxxxx 96,730
Xxxxxxxxx X. Xxxxx 96,730
Xxxxxx Xxxxxxxxxx 25,695
Xxxxx Xxxxxxx 17,130
Xxxxxxxx Xxxxxxxxx 5,136
Xxxxxxx Xxxxxxx 13,689
Xxxxx Xxxxxxxx 1,708
Xxxxx X. Xxxxxxx 15,000
Xxxxxxxxx X. Xxxxxxxx 7,500
Xxxxxxx X. Xxxxx 2,500
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