EXHIBIT 10.5
CHART INDUSTRIES, INC.
INVESTOR RIGHTS AGREEMENT
Dated as of September 15, 2003
TABLE OF CONTENTS
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SECTION 1. COVENANTS, REPRESENTATIONS AND WARRANTIES.........................2
SECTION 2. RESTRICTIONS ON TRANSFER OF STOCKHOLDER SHARES....................2
2A. Restrictions on Transfer..........................................2
2B. First Offer Rights................................................2
2C. Participation Rights..............................................4
2D. Exempt Transfers..................................................6
2E. Termination.......................................................7
SECTION 3. SALE OF THE COMPANY...............................................7
3A. Approved Sale.....................................................7
3B. Required Actions..................................................7
3C. Conditions to Stockholders' Obligations...........................8
3D. Rule 506 Transaction..............................................8
3E. Expenses of Approved Sale.........................................9
SECTION 4. LIMITED PREEMPTIVE RIGHTS.........................................9
4A. Offering..........................................................9
4B. Expiration of Offering Period....................................10
4C. New Securities...................................................10
4D. Termination......................................................11
SECTION 5. LEGEND...........................................................11
SECTION 6. TRANSFER.........................................................11
SECTION 7. BOARD OF DIRECTORS; VOTING.......................................11
7A. Composition of the Board.........................................11
7B. Board Meeting Expenses...........................................15
7C. Irrevocable Proxy................................................15
7D. Termination......................................................16
SECTION 8. DEMAND REGISTRATIONS.............................................16
8A. Requests for Registration........................................16
8B. Long-Form Registrations..........................................16
8C. Short-Form Registrations.........................................17
8D. Priority on Demand Registrations.................................17
8E. Restrictions on Demand ▇▇▇▇▇▇▇▇▇▇▇▇▇.............................▇▇
▇▇. Selection of Underwriters........................................18
8G. Other Registration Rights........................................18
8H. Demand Registration Expenses.....................................18
SECTION 9. PIGGYBACK REGISTRATIONS..........................................18
9A. Right to Piggyback...............................................18
9B. Piggyback Expenses...............................................18
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9C. Priority on Primary Registrations................................18
9D. Other Registrations..............................................19
9E. Postponement or Withdrawal.......................................19
SECTION 10. HOLDBACK AGREEMENTS..............................................19
10A. Agreement of Holders of Registrable Securities...................19
10B. Company Agreement................................................20
SECTION 11. REGISTRATION PROCEDURES..........................................20
SECTION 12. REGISTRATION EXPENSES............................................23
12A. Company Expenses.................................................23
12B. Reimbursement....................................................23
SECTION 13. INDEMNIFICATION..................................................23
13A. Indemnification Obligation of the Company........................23
13B. Indemnification of the Company...................................24
13C. Indemnification Procedures.......................................24
13D. Other Indemnification Provisions.................................24
SECTION 14. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS......................25
SECTION 15. COVENANTS........................................................25
15A. Restrictive Covenants............................................25
15B. Financial Statements and Other Information.......................28
15C. Expenses.........................................................30
SECTION 16. DEFINITIONS......................................................30
SECTION 17. MISCELLANEOUS....................................................35
17A. Amendment and Waiver.............................................35
17B. Severability.....................................................36
17C. Entire Agreement.................................................36
17D. No Inconsistent Agreements.......................................36
17E. Adjustments Affecting Registrable Securities.....................36
17F. Successors and Assigns...........................................36
17G. Counterparts.....................................................36
17H. Remedies.........................................................36
17I. Notices..........................................................36
17J. Governing Law....................................................38
17K. Mutual Waiver of Jury Trial......................................38
17L. Termination of Certain Provisions. .............................38
17M. Descriptive Headings.............................................38
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EXECUTION COPY
INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT (this "Agreement") is entered into as
of September 15, 2003, by and among (i) Chart Industries, Inc. (the "Company"),
a Delaware corporation reorganized pursuant to the Amended Joint Prepackaged
Reorganization Plan (the "Plan of Reorganization") of Chart Industries, Inc. and
certain of its subsidiaries dated September 3, 2003, (ii) OCM Principal
Opportunities Fund II, L.P., a Delaware limited partnership ("Oaktree"), (iii)
Audax Chart LLC, a Delaware limited liability company ("Audax" and, together
with Oaktree, the "Controlling Stockholders" and each a "Controlling
Stockholder"), (iv) each Person (other than the Company or a Controlling
Stockholder) to whom shares of "Class 2 New Common Stock" (as defined in the
Plan of Reorganization) of the Company are issued pursuant to the Plan of
Reorganization and who is a party to this Agreement and listed on the attached
Schedule of Other New Stockholders as of September 15, 2003 (each an "Other New
Stockholder" and, collectively, the "Other New Stockholders"), (v) each Person
to whom shares of "Class 7 New Common Stock" (as defined in the Plan of
Reorganization) of the Company are issued pursuant to the Plan of Reorganization
and who is a party to this Agreement and listed on the attached Schedule of
Existing Stockholders as of September 15, 2003 (each Person referenced in this
clause (v), an "Existing Stockholder" and, collectively, the "Existing
Stockholders"), and (vi) each Person (other than the Company, a Controlling
Stockholder, an Other New Stockholder or an Existing Stockholder) who at any
time after September 15, 2003 acquires any capital stock or other equity
securities of the Company from a Controlling Stockholder, an Other New
Stockholder or an Existing Stockholder in accordance with the terms of this
Agreement (or, with the prior written consent of the Required Controlling
Holders, from the Company) and agrees to become a party to and bound by this
Agreement as a holder of Stockholder Shares by signing and delivering to the
Company and the Controlling Stockholders a Transfer Notice and Joinder Agreement
in the form attached hereto as Exhibit A (a "Joinder Agreement") (each an
"Additional Stockholder" and, collectively, the "Additional Stockholders"). The
Other New Stockholders, the Existing Stockholders and the Additional
Stockholders are referred to herein collectively as the "Other Stockholders" and
individually as an "Other Stockholder." The Controlling Stockholders and the
Other Stockholders are referred to herein collectively as the "Stockholders" and
individually as a "Stockholder." Each capitalized term used but not otherwise
defined herein has the meaning ascribed to such term in Section 16 hereof.
Pursuant to the Company's Plan of Reorganization, the Company issued
shares of its Common Stock to the Stockholders who are a party to this Agreement
as of the date hereof. The Company and such Stockholders desire to enter into
this Agreement for purposes, among others, of (i) establishing the composition
of the Company's board of directors (the "Board"), (ii) restricting the sale,
assignment, transfer, encumbrance and other disposition of Stockholder Shares,
(iii) establishing certain registration rights and (iv) providing for certain
other rights and obligations relating to the Stockholder Shares.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
SECTION 1. COVENANTS, REPRESENTATIONS AND WARRANTIES
Each Stockholder covenants, represents and warrants as of the date
such Stockholder becomes a party to this Agreement that: (i) this Agreement has
been duly authorized, executed and delivered by such Stockholder and constitutes
the valid and binding obligation of such Stockholder, enforceable in accordance
with its terms; (ii) such Stockholder is the record and beneficial owner of all
shares of Common Stock issued to such Stockholder pursuant to the Plan of
Reorganization or, in the case of any Stockholder who becomes a party to this
Agreement after the date first set forth above, the number of shares of Common
Stock set forth opposite such Stockholder's name on the Joinder Agreement
executed by such Stockholder, free and clear of all liens, charges and other
encumbrances (other than encumbrances imposed or created by virtue of this
Agreement); and (iii) except as contained herein, such Stockholder has not
granted any proxy and is not a party to any voting trust or voting agreement in
respect of any Stockholder Shares and is not party to any agreement which is
inconsistent with, conflicts with or violates any provision of this Agreement.
SECTION 2. RESTRICTIONS ON TRANSFER OF STOCKHOLDER SHARES
2A. Restrictions on Transfer. No holder of Stockholder Shares may
sell, transfer, assign, pledge or otherwise directly or indirectly dispose of
(whether with or without consideration and whether voluntarily or involuntarily
or by operation of law) (a "Transfer") any Stockholder Shares or interest
therein, except (i) any Transfer by a Transferring Stockholder pursuant to and
in accordance with Section 2B, (ii) any Transfer by a Participating Stockholder
pursuant to and in accordance with ▇▇▇▇▇▇▇ ▇▇ ▇▇ (▇▇▇) any Exempt Transfer by a
holder of Stockholder Shares pursuant to and in accordance with Section 2D.
2B. First Offer Rights.
(i) Prior to any Transfer of any Stockholder Shares by a holder
thereof (other than (a) any Transfer by a Participating Stockholder pursuant to
and in accordance with Section 2C or (b) any Exempt Transfer by a holder of
Stockholder Shares pursuant to and in accordance with Section 2D) (a
"Transferring Stockholder"), such Transferring Stockholder shall deliver a
written notice (an "Offer Notice") to each holder of Controlling Stockholder
Shares (other than the Transferring Stockholder if it is itself a holder of
Controlling Stockholder Shares) (each an "Eligible Purchaser" and, collectively,
the "Eligible Purchaser(s)") and to the Company. The Offer Notice shall disclose
in reasonable detail the proposed aggregate number of each class of Stockholder
Shares to be transferred (the "Transfer Shares"), the proposed material terms
and conditions of the Transfer, including the proposed price per share for each
class of Transfer Shares (which shall be payable in cash upon consummation of
such Transfer or in installments of cash over time), and, to the extent known,
the identity of the prospective transferee(s) (and, if any such transferee is an
entity, the beneficial owners thereof). Such Transfer shall not be consummated
prior to the date on which the parties to such Transfer have been finally
determined in accordance with this Section 2B and Section 2C below.
(ii) Each Eligible Purchaser may elect to purchase all or any portion
of the Transfer Shares (provided that, if more than one class or series of
Stockholder Shares is included in the Transfer Shares, then an Eligible
Purchaser may only elect to purchase shares of each class
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and series included in the Transfer Shares and in the same relative proportions
as those in which such classes and series of Transfer Shares are so offered) at
the same price per share and on the same terms specified in the Offer Notice by
delivering, as soon as practicable but in any event within five (5) business
days after delivery of the Offer Notice to the Eligible Purchaser(s) (the "ROFO
Election Period"), a written notice of such election to the Company, the
Transferring Stockholder and the other Eligible Purchaser(s), if any, stating
the number of Stockholder Shares held by such Eligible Purchaser of each class
included in the Transfer Shares and the percentage of Transfer Shares which such
Eligible Purchaser proposes to purchase (each such Eligible Purchaser who so
elects to purchase any Transfer Shares is referred to herein as an "Electing
Purchaser"). If more than one Eligible Purchaser elects to purchase Transfer
Shares and the Eligible Purchaser(s) elect to purchase collectively more than
the aggregate number of Transfer Shares, then each class of Transfer Shares
shall first be allocated to each Electing Purchaser in an amount equal to the
lesser of (a) the maximum amount of Transfer Shares of such class specified by
each such Electing Purchaser in its written notice to the Company and (b) each
such Electing Purchaser's pro rata share of such class of Transfer Shares based
on the number of Controlling Stockholder Shares of such class owned on a Fully
Diluted Basis by each Electing Purchaser (provided that if the Transfer Shares
include any shares of Common Stock or other securities convertible into or
exercisable or exchangeable for shares of Common Stock, then each class of such
Transfer Shares shall be allocated to the Electing Purchasers pro rata based on
the number of shares of Common Stock which are Controlling Stockholder Shares
and owned by each such Electing Purchaser on a Fully Diluted Basis). If after
such allocation any Transfer Shares remain unallocated, then such allocation
procedure shall be repeated for such remaining Transfer Shares (but only with
respect to each Electing Purchaser who has not previously been allocated the
maximum amount of Transfer Shares of such class specified in such Electing
Purchaser's written notice to the Company) until either all Transfer Shares of
such class elected to be purchased by the Electing Purchaser(s) have been so
allocated or no Transfer Shares remain available for purchase by the Electing
Purchaser(s).
(iii) If the Electing Purchaser(s) have collectively elected to
purchase pursuant to this Section 2B all (but not less than all) of the Transfer
Shares, then such Transfer(s) to the Electing Purchaser(s) shall be consummated
as soon as practical, but in any event within ten (10) days, after expiration of
the ROFO Election Period. Except to the extent the Required Controlling
Holder(s) direct otherwise by prior written notice to the Company, an Electing
Purchaser may designate one or more Affiliates of such Electing Purchaser to
purchase from the Transferring Stockholder all or any portion of the Transfer
Shares that such Electing Purchaser elected to purchase; provided that, if such
Affiliate is not already a party to this Agreement, then as a condition to such
purchase, such Affiliate shall agree, by signing a Joinder Agreement, to become
a party to and bound by this Agreement as an Additional Stockholder hereunder.
All amounts payable by an Electing Purchaser (or designee thereof) pursuant to
this Section 2B shall be paid in cash at the closing of such purchase or, to the
extent provided in the Offer Notice, in installments of cash over time.
(iv) If the Electing Purchaser(s) do not collectively elect to
purchase all of the Transfer Shares, the Transferring Stockholder may, subject
to the Transferring Stockholder's compliance with Section 2C if the Transferring
Stockholder is a holder of Controlling Stockholder Shares, Transfer all (but not
less than all) of the Transfer Shares to one or more third parties for a per
share cash purchase price no less than the price specified in, and on other
terms
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no more favorable to such third parties than those set forth in, such Offer
Notice; provided that, if the Transferring Stockholder is a holder of
Controlling Stockholder Shares, then, with respect to each class of Transfer
Shares, the number of Stockholder Shares eligible to be sold in such Transfer by
the Transferring Stockholder shall be reduced by the aggregate number of
Stockholder Shares sold to such third parties in connection with such Transfer
by Participating Stockholder(s) pursuant to Section 2C; provided, further, such
Transfer(s) by the Transferring Stockholder may be made only within the 90-day
period immediately following the expiration of the ROFO Election Period or, if
the Transferring Stockholder is a holder of Controlling Stockholder Shares,
within the 90-day period immediately following the date on which the parties to
such Transfer(s) have been finally determined in accordance with Section 2C. In
the event the Transfer Shares are not Transferred in accordance with the
immediately preceding sentence, the Transfer Shares shall be subject to the
provisions of this Section 2B in connection with any subsequent Transfer or
proposed Transfer of such Transfer Shares by a Transferring Stockholder.
2C. Participation Rights.
(i) In the event a Transferring Stockholder who is also a holder of
Controlling Stockholder Shares delivers an Offer Notice in accordance with
Section 2B and the Eligible Purchaser(s) do not elect to purchase all of the
Transfer Shares specified in such Offer Notice, such Transferring Stockholder
shall, prior to any Transfer by such Transferring Stockholder of Transfer Shares
pursuant to Section 2B(iv), deliver a written notice (a "Tag-Along Sale Notice")
to each other holder of Stockholder Shares (each an "Eligible Stockholder" and,
collectively, the "Eligible Stockholders") and to the Company; provided that a
Tag-Along Sale Notice must be delivered only if the number of Transfer Shares,
when combined with the aggregate number of Stockholder Shares being concurrently
sold by any Affiliate of the Transferring Stockholder or sold previously by such
Transferring Stockholder or any Affiliate thereof pursuant to Section 2B(iv),
exceeds ten percent (10%) of the aggregate number of shares of Common Stock (as
such number shall be proportionately adjusted for all stock splits, stock
dividends, share combinations and similar recapitalization transactions) issued
to such Transferring Stockholder and its Affiliates pursuant to the Plan of
Reorganization (any such excess Transfer Shares are referred to herein as the
"Tag-Along Shares"). The Tag-Along Sale Notice shall disclose in reasonable
detail the number of each class of Tag-Along Shares that such Transferring
Stockholder proposes to Transfer pursuant to Section 2B(iv), the proposed
material terms and conditions of the Transfer, including the proposed price per
share for each class of Tag-Along Shares (which shall be payable in cash upon
consummation of such Transfer or in installments of cash over time), the
identity of the prospective transferee(s), and the expenses which such
Transferring Stockholder anticipates incurring in connection with such Transfer.
(ii) In the event a Transferring Stockholder is obligated to deliver a
Tag-Along Sale Notice pursuant to clause (i) above, each Eligible Stockholder
may elect to participate in the contemplated Transfer at the same price and on
the same economic terms specified in such Tag-Along Sale Notice by delivering,
as soon as practicable but in any event within ten (10) days after delivery of
the Tag-Along Sale Notice to the Eligible Stockholders, a written notice of such
election to the Company, such Transferring Stockholder and the Controlling
Stockholders stating the number of shares held by such Eligible Stockholder of
each class of Stockholder Shares included in the Tag-Along Shares and the number
of Transfer Shares
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which such Eligible Stockholder proposes to sell of each class of Tag-Along
Shares (provided that, if more than one class or series of Stockholder Shares is
included in the Tag-Along Shares, then an Eligible Stockholder may only elect to
sell shares of each class and series included in the Tag-Along Shares and in the
same relative proportions as those in which such classes and series of Tag-Along
Shares are so offered). Subject to Section 2C(iii), each Eligible Stockholder
who elects to participate in such Transfer (each a "Participating Stockholder"
and, collectively, the "Participating Stockholders") shall be entitled to sell
in such Transfer, at the price per share and on the terms described in the
Tag-Along Sale Notice, up to a number of shares of each class of Tag-Along
Shares equal to the product of (a) the quotient determined by dividing the
percentage of Stockholder Shares of such class owned by such Participating
Stockholder on a Fully Diluted Basis by the aggregate percentage of Stockholder
Shares of such class owned by such Transferring Stockholder and all
Participating Stockholders on a Fully Diluted Basis, multiplied by (b) the
proposed number of Tag-Along Shares of such class to be sold in such Transfer;
provided that if the Tag-Along Shares include any shares of Common Stock or
other securities convertible into or exercisable or exchangeable for shares of
Common Stock, then the Participating Stockholders shall be entitled to sell
shares of each class of such Tag-Along Shares in proportion to the number of
shares of Common Stock which are Stockholder Shares and owned by each such
Participating Stockholder on a Fully Diluted Basis.
(iii) Such Transferring Stockholder shall use commercially reasonable
efforts to obtain the agreement of the prospective transferee(s) to the
participation of the Participating Stockholder(s) in such Transfer. If, however,
the prospective transferee(s) refuse to allow the participation of any
Participating Stockholder(s), such Transferring Stockholder shall, at the same
time as such Transfer and as a condition thereto, purchase from such
Participating Stockholder(s), at the same price per share and on the same terms
described above, the number of Stockholder Shares of each class that such
Participating Stockholder(s) would otherwise be entitled to sell to the
prospective transferee(s) hereunder.
(iv) Each Participating Stockholder shall (x) pay the expenses
incurred by such Participating Stockholder in connection with the Transfer as
well as its Allocable Share of the expenses reasonably incurred by such
Transferring Stockholder in connection with such Transfer, and (y) be obligated
to join in any indemnification or other obligations that such Transferring
Stockholder agrees to provide in connection with such Transfer (except that,
while each Participating Stockholder shall be obligated to make representations
and warranties as to such Participating Stockholder's title to and ownership of
Stockholder Shares, authorization, execution and delivery of relevant documents
by such Participating Stockholder, enforceability of relevant agreements against
such Participating Stockholder and other customary matters relating to such
Participating Stockholder, to enter into covenants with respect to the Transfer
and the delivery at the Closing of the Stockholder Shares of such Participating
Stockholder and to enter into indemnification obligations with respect to the
foregoing, in each case to the extent that such Transferring Stockholder is
similarly obligated in connection with its proposed Transfer of Stockholder
Shares, no Participating Stockholder shall be obligated to enter into
indemnification obligations with respect to any of the foregoing to the extent
relating to any representation or warranty by such Transferring Stockholder or
any other Participating Stockholder in respect of such Person or such other
Person's Stockholder Shares). For purposes of the foregoing, a Participating
Stockholder's "Allocable Share" of expenses means that portion of such expenses
which would be borne by such Participating Stockholder if the total amount of
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such expenses were allocated to the Transferring Stockholder and the
Participating Stockholder(s) in proportion to the value of the total
consideration paid and/or payable to each such Stockholder for the shares
Transferred by such Stockholder in such Transfer.
2D. Exempt Transfers. The restrictions set forth in this Section 2
shall not apply to any of the following Transfers:
(i) subject to the final paragraph of this Section 2D, in the case of
Stockholder Shares held by a Stockholder which is not an individual, any
Transfer of such Stockholder Shares to any Affiliate of such Stockholder or to
any Controlling Stockholder or Other New Stockholder (or any Affiliate of any
Controlling Stockholder or Other New Stockholder);
(ii) in the case of Stockholder Shares held by a Stockholder which is
not an individual and which was not formed for the purpose of holding or
acquiring shares of the Company's capital stock or other securities (including
any debt instruments or participations therein), any Transfer of such
Stockholder Shares which constitutes an in-kind distribution by such Stockholder
to such Stockholder's partners or members (an "In-Kind Distribution");
(iii) subject to the final paragraph of this Section 2D, in the case
of Stockholder Shares held by a Stockholder who is an individual, (A) a Transfer
of such Stockholder Shares pursuant to the applicable laws of descent and
distribution or (B) a Transfer of such Stockholder Shares among such
Stockholder's Family Group;
(iv) any Transfer of Stockholder Shares in connection with an Approved
Sale;
(v) any Public Sale of Stockholder Shares;
(vi) subject to the final paragraph of this Section 2D, any Transfer
of Stockholder Shares by a Controlling Stockholder or any Affiliate thereof to
the other Controlling Stockholder or any Affiliate thereof; and
(vii) subject to the final paragraph of this Section 2D, in the case
of Stockholder Shares held by a Stockholder who is not an individual, any
Transfer of such Stockholder Shares to a successor corporation or other
successor entity as a result of a merger or consolidation with, or a sale of all
or substantially all of the assets of, such Stockholder or, if a general or
limited partnership, in connection with the liquidation and dissolution of such
Stockholder.
A transferee of Stockholder Shares pursuant to a Transfer described in
clause (i), (iii), (vi) or (vii) above is sometimes referred to herein as a
"Permitted Transferee." Not less than five (5) business days prior to any
Transfer of Stockholder Shares pursuant to the foregoing clauses (i), (ii),
(iii)(B) or (vii), the proposed transferor shall deliver a written notice to the
Company, which notice shall disclose in reasonable detail the nature of the
proposed Transfer
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and the identity of the proposed transferee(s) (and, if any such transferee is
any entity, the beneficial owners thereof). Notwithstanding the foregoing, the
restrictions contained in this Agreement shall continue to be applicable to the
Stockholder Shares following any Transfer to a Permitted Transferee, and no
Transfer to a Permitted Transferee may be consummated unless prior thereto the
transferor thereof shall have complied with Section 6 below. In addition, and
notwithstanding the foregoing, no holder of Stockholder Shares may avoid the
provisions of this Agreement by making one or more transfers to one or more
Permitted Transferees and then disposing of all or any portion of such Person's
interest in any such Permitted Transferee, and any Transfer or attempted
Transfer in violation of this covenant shall be void and otherwise subject to
Section 6 below. Any Transfer permitted pursuant to this Section 2D is referred
to in this Agreement as an "Exempt Transfer."
2E. Termination.
The restrictions on the Transfer of Stockholder Shares set forth in
this Section 2 shall continue with respect to each Stockholder Share until the
earliest to occur of (i) the date on which such Stockholder Share has been
transferred in a Public Sale, (ii) the consummation of an Approved Sale or (iii)
the consummation of a Qualified Public Offering.
SECTION 3. SALE OF THE COMPANY
3A. Approved Sale. If (i) the Required Controlling Holder(s) consent
in writing to a Sale of the Company (an "Approved Sale") and (ii) at the time of
such consent, the Controlling Stockholder Shares represent at least 40% of the
voting power of the then outstanding shares of voting capital stock of the
Company, then each holder of Stockholder Shares shall vote for, consent to, and
not object or otherwise impede the consummation of, the Approved Sale.
3B. Required Actions. If the Approved Sale is structured as (i) a
merger or consolidation, each holder of Stockholder Shares shall vote its
Stockholder Shares to approve such merger or consolidation, whether by written
consent or at a stockholders meeting (as requested by the Required Controlling
Holder(s)), and waive all dissenter's rights, appraisal rights and similar
rights in connection with such merger or consolidation, (ii) a sale of stock,
each holder of Stockholder Shares shall agree to sell, and shall sell, all of
its Stockholder Shares and rights to acquire Stockholder Shares on the terms and
conditions so approved by the Required Controlling Holder(s), or (iii) a sale of
assets, each holder of Stockholder Shares shall vote its Stockholder Shares to
approve such sale and any subsequent liquidation of the Company or other
distribution of the proceeds therefrom, whether by written consent or at a
stockholders meeting (as requested by the Required Controlling Holder(s)). In
furtherance of the foregoing, (a) each holder of Stockholder Shares shall take
all actions reasonably requested by the Required Controlling Holder(s) in
connection with the consummation of the Approved Sale and (b) each holder of
Stockholder Shares shall make such representations and warranties, provide such
indemnities and enter into such other obligations (in each case subject to
Sections 3B(1), (2), (3) and (4) below) as the Required Controlling Holder(s)
may specify (but only to the extent the Required Controlling Holder(s) are
similarly obligated) in connection with such Approved Sale (including, without
limitation, voting to approve such transaction and executing the applicable
purchase agreement and other agreements). In any Approved Sale, (1) each holder
of
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Stockholder Shares shall be obligated to make representations and warranties as
to such Stockholder's title to and ownership of Stockholder Shares,
authorization, execution and delivery of relevant documents by such Stockholder,
enforceability of relevant agreements against such Stockholder and other matters
relating to such Stockholder, enter into covenants with respect to the Transfer
and the delivery at the Closing of such Stockholder's Stockholder Shares in
connection with such Approved Sale and enter into indemnification obligations
with respect to the foregoing, in each case to the extent that the Required
Controlling Holder(s) request that each other Stockholder be similarly obligated
(provided that no Stockholder shall be obligated to enter into indemnification
obligations with respect to any of the foregoing to the extent relating to any
other Stockholder or such other Stockholder's Stockholder Shares), (2) in no
event shall any Stockholder be liable in respect of any indemnity obligations
pursuant to any Approved Sale in an aggregate amount in excess of the value of
the total consideration paid and/or payable to such Stockholder in connection
with such Approved Sale, (3) appropriate contribution and indemnity arrangements
among the Stockholders shall be executed in connection with any joint indemnity
obligation of the Stockholders, so that such Stockholder is entitled to collect
from the other Stockholders the excess of such Stockholder's indemnity
obligations arising in connection with such Approved Sale over such
Stockholder's pro rata portion of such indemnity obligations, and (4) in no
event shall any Stockholder be obligated to enter into any post-closing
non-compete covenant in connection with such Approved Sale, in each case without
such Stockholder's prior written consent.
3C. Conditions to Stockholders' Obligations. The obligations of the
holders of Stockholder Shares with respect to an Approved Sale are subject to
the satisfaction of the following conditions: (i) upon the consummation of the
Approved Sale, each holder of Stockholder Shares will receive in respect of its
Stockholder Shares the same form of consideration and the same portion of the
aggregate consideration that such holders of Stockholder Shares would have
received if such aggregate consideration had been distributed by the Company in
complete liquidation pursuant to the rights and preferences set forth in the
Certificate of Incorporation as in effect immediately prior to such Approved
Sale; (ii) if any holders of a class of Stockholder Shares are given an option
as to the form and amount of consideration to be received in respect of such
class of Stockholder Shares, each holder of such class of Stockholder Shares
will be given the same option; and (iii) each holder of then currently
exercisable rights to acquire shares of a class of Stockholder Shares will be
given an opportunity to exercise such rights prior to the consummation of the
Approved Sale and participate in such sale as holders of such class of
Stockholder Shares.
3D. Rule 506 Transaction. If the Company or the Required Controlling
Holder(s) enter into any negotiation or transaction for which Rule 506 (or any
similar rule then in effect) promulgated by the Securities Exchange Commission
may be available with respect to such negotiation or transaction (including a
merger, consolidation or other reorganization), each holder of Stockholder
Shares who is not an "accredited investor" (as such term is defined in Rule 501)
will, at the reasonable request of the Company or the Required Controlling
Holder(s), appoint a "purchaser representative" (as such term is defined in Rule
501) reasonably acceptable to the Company and the Required Controlling
Holder(s). If any holder of Stockholder Shares appoints a purchaser
representative designated by the Company or the Required Controlling Holder(s),
the Company will pay the fees of such purchaser representative, but if any
holder of Stockholder Shares declines to appoint such purchaser representative
designated by the
8
Company or the Required Controlling Holder(s), then such holder shall appoint
another purchaser representative, and such holder shall be responsible for the
fees of the purchaser representative so appointed.
3E. Expenses of Approved Sale. Holders of Stockholder Shares will bear
their pro rata share (as if such costs and expenses reduced the aggregate
proceeds available for distribution as contemplated by Section 3C(i) above) of
the costs and expenses of an Approved Sale to the extent reasonably incurred by
the Required Controlling Holder(s) for the benefit of all holders of Stockholder
Shares and not otherwise paid by the Company or the acquiring party. Costs and
expenses incurred by any holder of Stockholder Shares in connection with the
Transfer of its own shares or otherwise on its own behalf will not be considered
costs and expenses of the transaction hereunder and will be the responsibility
of such holder.
SECTION 4. LIMITED PREEMPTIVE RIGHTS
4A. Offering.
(i) If after the date hereof the Company issues or sells or authorizes
the issuance or sale of any New Securities (as defined in Section 4C below) to
any holder of Stockholder Shares or any Affiliate thereof (other than to any
such holder or Affiliate thereof to the extent such New Securities are issued or
sold to such Person in such Person's capacity as an underwriter or placement
agent for the Company, provided that the sale of New Securities by such
underwriter or placement agent to any other holder of Stockholder Shares or any
Affiliate thereof shall be subject to this Section 4), the Company shall offer
each holder of Stockholder Shares a percentage of such New Securities equal to
the percentage result of the quotient determined by dividing (a) the number of
shares of Common Stock that are Stockholder Shares held by such holder on a
Fully Diluted Basis, by (b) the aggregate number of shares of Common Stock that
are Stockholder Shares on a Fully Diluted Basis. Each such holder of Stockholder
Shares shall be entitled to purchase such New Securities at the most favorable
price and on the most favorable other economic terms as such New Securities are
to be sold or issued; provided that, if a Person participating in such purchase
of New Securities is or was required in connection therewith also to purchase
other securities of the Company (including any debt instruments or
participations therein), the holders of Stockholder Shares exercising their
rights pursuant to this Section 4A shall also be required to purchase such other
securities on the same economic terms and conditions as those on which the
offeree of the New Securities is required to purchase such other securities
(e.g., such holder shall be required to purchase the same types and classes of
other securities, in the same proportions relative to their purchases of New
Securities and at the same unit prices). For example, if the Company offers to
sell shares of Common Stock constituting New Securities under the circumstances
described in the first sentence of this paragraph and requires, as part of such
purchase, the offeree of such Common Stock to also purchase a junior
subordinated promissory note, each holder of Stockholder Shares exercising
rights to purchase shares of Common Stock pursuant to this Section 4A would be
obligated also to purchase, at the same price per $1000 of principal, a junior
subordinated promissory note in a proportionate principal amount (i.e., so that
the ratio of the purchase price paid for the shares of Common Stock purchased by
each holder to the principal amount of the junior subordinated promissory note
purchased by such holder shall be the same for each such purchaser). Each holder
of Stockholder Shares participating in such purchase shall also be obligated to
execute
9
agreements in the form presented to such holder by the Company, so long as such
agreements are substantially similar to those proposed by the Company to be
executed by other purchasers of New Securities (without taking into
consideration any rights which do not entitle any purchaser to a higher economic
return on the New Securities than the economic return to which the other
Stockholders participating in such transaction will be entitled with respect to
such New Securities. The purchase price for all New Securities offered to each
holder of Stockholder Shares shall be payable in cash by wire transfer of
immediately available funds to an account designated by the Company.
Notwithstanding anything to the contrary contained herein, the Company shall not
have any obligation to issue, or to offer to issue, any equity securities under
this Section 4 to any holder of Stockholder Shares who is not an "accredited
investor" as such term is defined in Regulation D under the Securities Act.
(ii) In order to exercise its purchase rights hereunder, each holder
of Stockholder Shares must deliver a written notice (an "Election Notice") to
the Company describing its election hereunder. Such Election Notice must be
delivered to the Company during the 15-day period (the "Offering Period")
following such holder's receipt of written notice from the Company describing in
reasonable detail the type, class and number of New Securities being offered,
the purchase price thereof, the payment terms and such holder's percentage
allotment. Any holder of Stockholder Shares may designate one or more Affiliates
of such Stockholder to exercise its purchase rights under this Section 4A.
4B. Expiration of Offering Period . Until expiration of the 180-day
period immediately following the date on which the Offering Period expires, the
Company shall be entitled to sell any New Securities which no holder of
Stockholder Shares is or may be entitled to purchase pursuant to this Section 4,
on terms and conditions no more favorable to the offeree of such New Securities
than those offered to holders of Stockholder Shares pursuant to Section 4A. Any
New Securities offered or sold by the Company after such 180-day period must be
reoffered to each holder of Stockholder Shares pursuant to the terms of this
Section 4.
4C. New Securities. For purposes hereof, "New Securities" means any
equity securities of the Company or any other securities containing options or
rights to acquire equity securities of the Company, other than (i) securities
issued pursuant to the Plan of Reorganization, (ii) Common Stock or other
securities issued directly or indirectly upon the conversion, exchange or
exercise of any securities issued pursuant to the Plan of Reorganization, (iii)
Common Stock or other securities issued directly or indirectly upon the
conversion, exchange or exercise of any securities previously issued in
compliance with this Section 4, (iv) Common Stock or other securities issued as
consideration for the acquisition of or investment in another company or
business (whether through a purchase of securities, a merger, consolidation,
purchase of assets or otherwise) and any Common Stock or other securities issued
directly or indirectly upon the conversion, exchange or exercise of any such
securities, (v) Common Stock or other securities issued in connection with any
stock split, dividend, combination or similar transaction, and (vi) any equity
securities, or options or other rights to acquire equity securities, of the
Company that are issued or granted to any employees, officers or directors of
the Company or any of its subsidiaries pursuant to arrangements approved by the
Board.
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4D. Termination. The rights and obligations under this Section 4 shall
terminate upon (and shall not apply to) the earlier to occur of (i) the
consummation of a Qualified Public Offering and (ii) the consummation of an
Approved Sale.
SECTION 5. LEGEND
Each certificate evidencing Stockholder Shares and each certificate
issued in exchange for or upon the transfer of any Stockholder Shares (if such
shares remain Stockholder Shares as defined herein after such Transfer) shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
TRANSFER RESTRICTIONS PURSUANT TO AN INVESTOR RIGHTS AGREEMENT DATED
AS OF SEPTEMBER 15, 2003, AMONG THE ISSUER OF SUCH SECURITIES (THE
"COMPANY") AND CERTAIN OF THE COMPANY'S STOCKHOLDERS. A COPY OF SUCH
INVESTOR RIGHTS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE
COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST TO THE COMPANY'S
CHIEF FINANCIAL OFFICER."
The Company shall imprint such legend on all certificates evidencing
Stockholder Shares outstanding prior to the date hereof, if any. The legend set
forth above shall be promptly removed from the certificates evidencing any
Stockholder Shares for which the restrictions contained in Section 2 have
terminated in accordance with Section 2E hereof.
SECTION 6. TRANSFER
Prior to consummating, or committing to consummate, any Transfer of
any Stockholder Shares (other than pursuant to an In-Kind Distribution, a Public
Sale or an Approved Sale) to any Person (including any Permitted Transferee),
the transferor of such Stockholder Shares shall cause each prospective
transferee thereof to execute and deliver to the Company and to the Required
Controlling Holder(s) a Joinder Agreement. Any Transfer or attempted Transfer of
any Stockholder Shares in violation of the foregoing or any other provision of
this Agreement shall be void, and the Company shall not record such Transfer on
its books or treat any purported transferee of such Stockholder Shares as the
owner of such shares for any purpose.
SECTION 7. BOARD OF DIRECTORS; VOTING
7A. Composition of the Board. From and after the effectiveness of this
Agreement and until the provisions of this Section 7 cease to be effective, each
Stockholder shall vote all of his, her or its Stockholder Shares and any other
voting securities of the Company over which such Stockholder has voting control
(whether at a stockholders' meeting which has been duly called, or if so
requested by the Required Controlling Holder(s), by written consent) and shall
take all other necessary or desirable actions within his, her or its control
(including, without limitation, attendance at meetings in person or by proxy for
purposes of obtaining a quorum and
11
execution of written consents in lieu of meetings), and the Company shall take
all necessary and desirable actions within its control (including, without
limitation, calling special board and stockholder meetings), so that:
(i) the authorized number of directors on the Company's Board shall be
established at seven directors or such greater number of directors as the Board
may specify from time to time by written notice to the Company;
(ii) the following persons shall be elected to the Board:
(a) the Company's chief executive officer (the "Executive
Director") or, at any time when no person is then serving as the Company's
chief executive officer, a person designated by a majority of the members
of the Board (an "Interim Executive Director"); provided that an Interim
Executive Director shall serve on the Board only for so long as no person
is serving as the Company's chief executive officer and shall be removed at
such time thereafter as the Board elects a person to serve as the Company's
chief executive officer and such person has commenced to serve the Company
in such capacity;
(b) four persons designated by the Required Controlling Holder(s)
so long as the Controlling Stockholder Shares represent at least 40% of the
voting power of the then outstanding shares of voting capital stock of the
Company; three persons designated by the Required Controlling Holders so
long as the Controlling Stockholder Shares represent at least 27% but less
than 40% of the voting power of the then outstanding shares of voting
capital stock of the Company; two persons designated by the Required
Controlling Holders so long as the Controlling Stockholder Shares represent
at least 14% but less than 27% of the voting power of the then outstanding
shares of voting capital stock of the Company; and one person designated by
the Required Controlling Holders so long as the Controlling Stockholder
Shares represent at least 1% but less than 14% of the voting power of the
then outstanding shares of voting capital stock of the Company; the
individuals designated pursuant to this clause (b) are referred to herein,
collectively, as the "Controlling Stockholders Directors" and each,
individually, as a "Controlling Stockholders Director", and such designees
shall initially be ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇;
(c) one person designated by the Majority New Non-Controlling
Holder(s) so long as the New Non-Controlling Stockholder Shares represent
at least 1% of the voting power of the then outstanding shares of voting
capital stock of the Company, and, after such Stockholder Shares cease to
represent at least 1% of such voting power, one person designated by a
majority of the members of the Board (the "New Non-Controlling Stockholders
Director"), who initially shall be ▇▇▇▇▇▇▇ ▇. ▇▇▇▇; provided that the
rights of the Majority New Non-Controlling Holder(s) under this Section
7A(ii)(c) shall terminate upon consummation of a Sale of the Company;
provided, further, the New Non-Controlling Stockholders Director shall not
be a principal, director, officer or other employee of (x) any Other New
Stockholder, (y) any other Stockholder who, together with its Affiliates,
owns 10% or more of the voting
12
power of the then outstanding shares of voting capital stock of the
Company, or (z) any Affiliate of any Stockholder described in clause (x) or
(y); and
(d) one person designated in accordance with Article V.D of the
Plan of Reorganization (the "Initial Board Designee"), who initially shall
be ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇; provided that the Initial Board Designee shall serve
for a term beginning on the Consummation Date (as defined in the Plan of
Reorganization) and ending upon the first to occur of (i) the first annual
or special meeting held for the election of directors of the Company or
(ii) the first written consent of Stockholders taken for the election of
directors of the Company, in each case held or taken on or after the second
anniversary of the Consummation Date, after which time such directorship
shall be filled by a person designated by a majority of the members of the
Board (excluding the Initial Board Designee); and
(e) if and so long as the authorized number of directors on the
Board is greater than seven directors, then the Additional Controlling
Number of directorships shall be filled by person(s) designated by the
Required Controlling Holder(s) (each an "Additional Controlling Director"
and, collectively, the "Additional Controlling Directors"); provided that
the rights of the Required Controlling Holder(s) under this Section
7A(ii)(e) shall terminate at such time as the Controlling Stockholder
Shares represent less than 40% of the voting power of the then outstanding
shares of voting capital stock of the Company;
(iii) a person designated by a majority of the members of the Board
shall at all times serve as the chairman of the Board;
(iv) upon the request of the Required Controlling Holder(s), the
composition of the board of directors (or equivalent governing body) of any or
all of the Company's subsidiaries (each a "Sub Board") shall, to the fullest
extent permitted by applicable law, be the same as that of the Board, but in any
case shall (x) upon the request of the Required Controlling Holder(s), include a
number of Controlling Stockholders Directors who, together with the Additional
Controlling Directors, represent a number of members of such Sub Board
proportionate to the ratio that the sum of Controlling Stockholders Directors
and Additional Controlling Directors represents to the total number of directors
then on the Board, and (y) upon the request of the Majority New Non-Controlling
Holder(s), include the Non-Controlling Stockholders Director;
(v) the composition of any committee of the Board or any committee of
any Sub Board shall, to the fullest extent permitted by applicable law or stock
exchange regulation, (x) upon the request of the Required Controlling Holder(s),
include a number of Controlling Stockholders Directors who, together with the
Additional Controlling Directors, represent a number of members of such
committee proportionate to the ratio that the sum of Controlling Stockholders
Directors and Additional Controlling Directors represents to the total number of
directors then on the Board (not to exceed a majority of the members of such
committee solely as a result of this Section 7A(v)) and (y) except with respect
to the Audit and Compensation Committees, upon the request of the Majority New
Non-Controlling Holder(s), include the New Non-Controlling Stockholders
Director;
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(vi) if the person serving as Executive Director ceases to be the
chief executive officer of the Company, such person is removed immediately as a
director of the Company and each of its Subsidiaries;
(vii) a Controlling Stockholders Director is removed without cause
from the Board, any Sub Board or any committee thereof (and shall be so removed)
only upon the written request of the Required Controlling Holder(s);
(viii) the New Non-Controlling Stockholders Director is removed
without cause from the Board, any Sub Board or any committee thereof (and shall
be so removed) only upon the written request of the Majority New Non-Controlling
Holder(s);
(ix) the Initial Board Designee is removed from the Board or any Sub
Board, or any committee thereof, during such director's term of office, and
shall be so removed, only in accordance with Article V.D of the Plan of
Reorganization;
(x) an Additional Controlling Director is removed without cause from
the Board or any Sub Board, or any committee thereof, and shall be so removed,
only upon the written request of the Required Controlling Holder(s);
(xi) in the event that any person designated as a director pursuant to
any subparagraph of Section 7A(ii) for any reason ceases to serve as a member of
the Board or a Sub Board, or any committee thereof, during such person's term of
office (other than on account of the termination of the rights of the Person or
Persons to designate such director pursuant to such subparagraph), the resulting
vacancy shall be filled by a person designated by the Person or Persons then
entitled to designate such director pursuant to such subparagraph of Section
7A(ii) or, in the case of the Initial Board Designee, in accordance with Article
V.D of the Plan of Reorganization;
(xii) so long as Audax or any of its Affiliates owns any Stockholder
Shares, any employee, agent or legal representative of Audax designated in
writing to the Company shall be entitled to (x) attend meetings, and participate
in discussions, of the Board, any Sub Board and/or any of their respective
committees, but will not be allowed to vote on any matter submitted for a vote
to the Board, any Sub Board or any of their respective committees (provided that
nothing in this subparagraph (xii) shall in any manner limit the rights of the
Required Controlling Holder(s) under Section 7A(ii)), and (y) discuss the
business operations, properties and financial and other conditions of the
Company with any authorized officer, employee, agent, representative, director
or independent accountant of the Company and, upon reasonable notice to the
Company, any authorized officer, agent, representative, director or independent
accountant of any subsidiary of the Company;
(xiii) so long as Oaktree or any of its Affiliates owns any
Stockholder Shares, any employee, agent or legal representative of Oaktree
designated in writing to the Company shall be entitled to (x) attend meetings,
and participate in discussions, of the Board, any Sub Board and/or any of their
respective committees, but will not be allowed to vote on any matter submitted
for a vote to the Board, any Sub Board or any of their respective committees
(provided that nothing in this subparagraph (xiii) shall in any manner limit the
rights of the Required
14
Controlling Holder(s) under Section 7A(ii)), and (y) discuss the business
operations, properties and financial and other conditions of the Company with
any authorized officer, employee, agent, representative, director or independent
accountant of the Company and, upon reasonable notice to the Company, any
authorized officer, agent, representative, director or independent accountant of
any subsidiary of the Company;
(xiv) directors' fees shall not be paid to any of the Controlling
Stockholders Directors unless such fees are approved by a majority of the other
directors then serving on the Board; and
(xv) except as otherwise contemplated by the Plan of Reorganization or
this Agreement, neither the Company nor any subsidiary of the Company shall
enter into any agreement or other transaction after the date hereof with any
Stockholder or any Affiliate of any Stockholder without the approval of a
majority of the disinterested directors or the consent of the holders of a
majority of the Stockholder Shares held by all Stockholders other than such
Stockholder and its Affiliates.
7B. Board Meeting Expenses. The Company shall pay all reasonable
out-of-pocket expenses incurred by each director in connection with attending
regular and special meetings of the Board and any Sub Board, and any committee
thereof.
7C. Irrevocable Proxy. In order to secure the obligations of each
Stockholder who now or hereafter holds any voting securities of the Company to
vote such voting securities in accordance with the provisions of Section 3 and
this Section 7, each Stockholder other than Oaktree hereby irrevocably appoints
Oaktree (and each of its managing directors), and Oaktree hereby irrevocably
appoints Audax Management Company, LLC (and each of its managing directors), as
such Persons' true and lawful proxy and attorney-in-fact, with full power of
substitution, to vote all of his, her or its Stockholder Shares (and, in the
case of Oaktree, all Stockholder Shares which it is entitled to vote pursuant to
this Section 7C) (i) for an Approved Sale and all such other matters as
expressly provided for in Section 3A and Section 3B, (ii) for the election
and/or removal of directors and all such other matters as expressly provided for
in Section 7A and (iii) as otherwise determined by the Required Controlling
Holder(s) to be necessary to enforce the obligations of any Stockholder
hereunder; provided, however, that no such action shall (a) be inconsistent with
the terms of this Agreement or (b) have a material adverse effect on any
Stockholder's rights or interests in respect of any class of Stockholder Shares
that would be borne disproportionately by such Stockholder relative to the
effect on the rights or interests of other Stockholders in respect of holdings
of Stockholder Shares of the same class, unless approved by holders of a
majority of the Stockholder Shares so adversely affected. Oaktree may exercise
the irrevocable proxy granted to it hereunder by any Stockholder only at such
time(s) as such Stockholder fails to comply with the provisions of this
Agreement, and Audax Management Company, LLC may exercise the irrevocable proxy
granted to it hereunder by Oaktree only at such time(s) as Oaktree fails to
comply with the provisions of this Agreement or a Stockholder (other than
Oaktree) fails to comply with the provisions of this Agreement and Oaktree does
not exercise the irrevocable proxy granted to it hereunder by such Stockholder
to cause such Stockholder to comply with the provisions of this Agreement. The
proxies and powers granted by each Stockholder pursuant to this Section 7C are
coupled with an interest and are given to secure the performance of each such
Person's obligations under this Agreement.
15
Such proxies and powers shall be irrevocable until the earlier of (x)
termination of this Section 7 and (y) an Approved Sale, and shall survive the
death, incompetency, disability, bankruptcy or dissolution of any Person
appointing Audax Management Company, LLC or Oaktree as such Person's true and
lawful proxy and attorney-in-fact. No Stockholder shall grant any proxy or
become party to any voting trust or other agreement which is inconsistent with,
conflicts with or violates any provision of this Agreement.
7D. Termination. Except as otherwise set forth in this Section 7, the
rights and obligations under this Section 7 shall terminate at such time as the
Required Controlling Holder(s) and the Majority New Non-Controlling Holder(s) no
longer have the right to designate any directors pursuant to Section 7A(ii)(b)
or 7A(ii)(c), respectively.
SECTION 8. DEMAND REGISTRATIONS
8A. Requests for Registration. Subject to Sections 8B and 8C, at any
time and from time to time the Required Controlling Holder(s) may request
registration under the Securities Act (a "Demand Registration") of all or any
portion of such holders' Registrable Securities on Form S-1 or any similar
long-form registration (a "Long-Form Registration") or, if available, on Form
S-2 or S-3 or any similar short-form registration (a "Short-Form Registration").
In addition, subject to Section 8C, at any time subsequent to consummation of a
Qualified Public Offering after the date hereof, or at any time prior thereto
with the prior written consent of the Required Controlling Holder(s),
Stockholders who then collectively hold at least 35% of the Other Registrable
Securities may request a Demand Registration of all or any portion of such
holders' Registrable Securities. Each request for a Demand Registration shall
specify the approximate number of Registrable Securities requested to be
registered and the anticipated per share price range for such offering. Within
ten (10) days after receipt of any such request, the Company will give written
notice of such requested registration to all other holders of Registrable
Securities and, subject to Section 8D below, will include in such registration
all Registrable Securities with respect to which the Company has received
written requests for inclusion therein within fifteen (15) days after the
receipt of the Company's notice.
8B. Long-Form Registrations. The Required Controlling Holder(s) will
be entitled to request three (3) Long-Form Registrations, and Stockholders who
then collectively hold at least 35% of the Other Registrable Securities will be
entitled to request one (1) Long-Form Registration, in each case for which the
Company shall pay all Registration Expenses, but only if a Short-Form
Registration is not then available and the aggregate offering value of the
Registrable Securities initially requested by such Stockholder(s) to be
registered in such Long-Form Registration is at least $25,000,000; provided
that, in the event the holders of the Registrable Securities initially requested
to be included in such Demand Registration (the "Initiating Holders") are unable
to sell at least 80% of the Registrable Securities initially requested (and not
withdrawn) by such holder(s) to be included in such registration, then such
request and any related registration shall not count as any of the Company-paid
Long-Form Registrations to which such holders are entitled to request pursuant
to this Section 8B, and in any event the Company shall pay all Registration
Expenses incurred in connection with any such registration whether or not such
registration has counted as any of such Company-paid Long-Form Registrations.
16
8C. Short-Form Registrations. The Required Controlling Holder(s) will
also be entitled to request unlimited Short-Form Registrations, and the
Stockholders who then collectively hold at least 35% of the Other Registrable
Securities will be entitled to request one (1) Short-Form Registration (but only
if such holders have not previously requested a Long-Form Registration), for
which the Company shall pay all Registration Expenses; provided that, in the
event the Initiating Holder(s) of Other Registrable Securities are unable to
sell at least 80% of the Registrable Securities initially requested (and not
withdrawn) by such holder(s) to be included in such registration, then such
request and any related registration shall not count as the one (1) Company-paid
Short-Form Registration to which the holders of at least 35% of Other
Registrable Securities are entitled to request pursuant to this Section 8C;
provided, further, in each case the Company shall pay all Registration Expenses
incurred in connection with any such registration whether or not such
registration has counted as a Company-paid Short-Form Registration. Demand
Registrations will be Short-Form Registrations whenever the Company is permitted
to use any applicable short form. The Company will use its reasonable best
efforts to make Short-Form Registrations available for the sale of Registrable
Securities.
8D. Priority on Demand Registrations. The Company will not include in
any Demand Registration any securities which are not Registrable Securities
without the prior written consent of Initiating Holders who hold a majority of
the Registrable Securities initially requested to be included in such Demand
Registration by the Initiating Holders. If a Demand Registration is an
underwritten offering and the managing underwriters advise the Company in
writing that in their opinion the number of Registrable Securities and, if
permitted hereunder, other securities requested to be included in such offering
exceeds the number of Registrable Securities and other securities, if any, which
can be sold in an orderly manner in such offering within a price range
acceptable to the Initiating Holders who hold a majority of the Registrable
Securities initially requested to be included in such Demand Registration by the
Initiating Holders (the "Optimal Number"), the Company shall include in such
registration, if any, (i) first, the Registrable Securities requested to be
included in such registration up to the Optimal Number, pro rata among the
holders of such Registrable Securities on the basis of the number of Registrable
Securities owned by each such holder, and (ii) second, if all Registrable
Securities requested to be included in such registration by the holders thereof
have been so included, such other securities requested to be included in such
registration up to a number of such securities that, when combined with the
Registrable Securities included in such registration, causes the total number of
securities (including all Registrable Securities) included in such registration
to be less than or equal to the Optimal Number.
8E. Restrictions on Demand Registrations. The Company will not be
obligated to effect any Demand Registration within six (6) months after the
effective date of a previous Demand Registration. The Company may postpone for
up to six (6) months the filing or the effectiveness of a registration statement
for a Demand Registration if the Board determines that such Demand Registration
would reasonably be expected to have an adverse effect on any proposal or plan
by the Company or any of its Subsidiaries to engage in any acquisition of assets
(other than in the ordinary course of business) or any merger, consolidation,
tender offer or similar transaction; provided that, in such event, the
Initiating Holders will be entitled to withdraw such request.
17
8F. Selection of Underwriters. If any Demand Registration is an
underwritten offering, the Board will have the right to select the investment
banker(s) and manager(s) which will administer such offering.
8G. Other Registration Rights. Except as provided in this Agreement,
the Company will not grant to any Person or group of Persons the right to
request the Company to register any equity securities of the Company (whether as
a demand registration or a piggyback registration), or any securities
convertible or exchangeable into or exercisable for such securities, without the
prior written consent of the Required Controlling Holder(s).
8H. Demand Registration Expenses. The Registration Expenses incurred
in connection with any Demand Registration requested in accordance with Section
8A shall be paid by the Company, including the reimbursement of the holders of
Registrable Securities included in such registration for the reasonable fees and
disbursements of one counsel chosen by the holder(s) of a majority of the
Registrable Securities included in such registration.
SECTION 9. PIGGYBACK REGISTRATIONS
9A. Right to Piggyback. Whenever the Company proposes to register any
of its securities under the Securities Act (other than (i) in connection with
the Company's initial primary Public Offering (i.e., the initial Public Offering
for the Company's own account) consummated after the date hereof (unless
Registrable Securities are otherwise included in such offering), (ii) pursuant
to a Demand Registration (but subject to the rights of holders of Registrable
Securities to participate in Demand Registrations pursuant to Section 8) or
(iii) pursuant to a registration on Form S-4 or S-8 or any successor or similar
forms) and the registration form to be used may be used for the registration of
Registrable Securities (a "Piggyback Registration"), the Company shall give
prompt written notice to all holders of Registrable Securities of its intention
to effect such a registration and will use its reasonable best efforts to
include in such registration all Registrable Securities with respect to which
the Company has received written requests for inclusion therein within fifteen
(15) days after the receipt of the Company's notice.
9B. Piggyback Expenses. The Registration Expenses of the holders of
Registrable Securities will be paid by the Company in all Piggyback
Registrations.
9C. Priority on Primary Registrations. If a Piggyback Registration is
an underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering in an orderly manner within a price range
acceptable to the Company (the "Primary Optimal Number"), the Company will
include in such registration, if any, (i) first, the securities the Company
proposes to sell on its own behalf up to the Primary Optimal Amount, (ii)
second, if all securities the Company proposes to sell on its own behalf are
included in such registration, the Registrable Securities requested to be
included in such registration, pro rata among the holders of such Registrable
Securities on the basis of the number of shares owned by each such holder, up to
an aggregate number of such Registrable Securities that, when combined with the
securities being sold by the Company on its own behalf in such registration,
causes the total number of securities
18
(including all Registrable Securities) included in such registration to be less
than or equal to the Primary Optimal Number, and (iii) third, if all Registrable
Securities requested to be included in such registration by the holders thereof
have been so included, such other securities requested to be included in such
registration up to a number of such securities that, when combined with the
securities being sold by the Company on its own behalf and the Registrable
Securities included in such registration, causes the total number of securities
(including all securities being sold by the Company on its own behalf and all
Registrable Securities) included in such registration to be equal to the Primary
Optimal Number.
9D. Other Registrations. If the Company has previously filed a
registration statement with respect to Registrable Securities pursuant to
Section 8 or pursuant to this Section 9 and if such previous registration has
not been withdrawn or abandoned, the Company will not file or cause to be
effected any other registration of any of its equity securities or securities
convertible or exchangeable into or exercisable for its equity securities under
the Securities Act (except on Form S-4 or S-8 or any successor form), whether on
its own behalf or at the request of any holder or holders of such securities,
until a period of at least six (6) months has elapsed from the effective date of
such previous registration.
9E. Postponement or Withdrawal. If, at any time after giving written
notice of its intention to register any of its securities as set forth in
Section 9A and prior to the effective date of such registration statement filed
in connection with such registration, the Board shall determine in its good
faith judgment for any reason not to register such securities, the Company may,
at its election, give written notice of such determination to each holder of
Registrable Securities and thereupon shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses incurred prior to such
notice in connection therewith as provided herein).
SECTION 10. HOLDBACK AGREEMENTS
10A. Agreement of Holders of Registrable Securities. No holder of
Stockholder Shares shall (a) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, lend, or otherwise Transfer, directly
or indirectly, any equity securities of the Company, or any securities, options
or rights convertible into or exchangeable or exercisable for such securities or
(b) enter into any swap or other arrangement that transfers to another, in whole
or in part, any of the economic consequences of ownership of equity securities
of the Company, in either case during the seven (7) days prior to and the
180-day period beginning on the effective date of the Company's initial primary
Public Offering (i.e., the initial Public Offering for the Company's own
account) consummated after the date hereof, any underwritten Demand Registration
or any underwritten Piggyback Registration (except as part of such underwritten
registration), unless the underwriters managing such registered Public Offering
otherwise agree in writing. The foregoing restrictions set forth in this Section
10A shall not apply to (i) transactions relating to shares of Common Stock or
other securities acquired in open market transactions after the completion of
the Company's initial primary Public Offering consummated after the date hereof,
(ii) Transfers to a Permitted Transferee of such holder in accordance with the
terms of this Agreement, or (iii) conversions of equity securities of the
Company into other classes of equity securities of the Company without change of
holder.
19
10B. Company Agreement. The Company will (i) not effect any public
sale or distribution of its equity securities, or any securities convertible
into or exchangeable or exercisable for such securities, during the seven days
prior to and during the 180-day period beginning on the effective date of the
Company's initial primary Public Offering (i.e., the initial Public Offering for
the Company's own account) consummated after the date hereof, any underwritten
Demand Registration or any underwritten Piggyback Registration (except as part
of such underwritten registration or pursuant to registrations on Form S-4 or
S-8 or any successor form), unless the underwriters managing such registered
Public Offering otherwise agree, and (ii) cause each holder of shares of Common
Stock, or any securities convertible into or exchangeable or exercisable for
shares of Common Stock, purchased from the Company at any time after the date of
this Agreement (other than in a Public Offering or as a distribution under the
Plan of Reorganization to a Person who is not a Stockholder hereunder) to agree
not to, directly or indirectly, offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, lend, or otherwise Transfer any such
shares or other securities during the seven (7) days prior to and the 180-day
period beginning on the effective date of the Company's initial primary Public
Offering consummated after the date hereof, any underwritten Demand Registration
or any underwritten Piggyback Registration (except as part of such underwritten
registration), unless the underwriters managing such registered Public Offering
otherwise agree in writing.
SECTION 11. REGISTRATION PROCEDURES
Whenever the holders of Registrable Securities have requested that any
Registrable Securities be registered pursuant to this Agreement, the Company
will use its reasonable best efforts to effect the registration and the sale of
such Registrable Securities in accordance with the intended method of
disposition thereof, and pursuant thereto the Company will as expeditiously as
reasonably possible:
(i) prepare and file with the Securities and Exchange Commission a
registration statement with respect to such Registrable Securities and
thereafter use its best efforts to cause such registration statement to become
effective (provided that before filing a registration statement or prospectus or
any amendments or supplements thereto, the Company will furnish to the counsel
selected by the holders of a majority of the Registrable Securities initiating
such registration statement copies of all such documents proposed to be filed,
which documents will be subject to review of such counsel);
(ii) notify each holder of Registrable Securities of the effectiveness
of each Registration Statement filed hereunder and prepare and file with the
Securities and Exchange Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period of either
(i) not less than six (6) months (subject to extension pursuant to Section 14)
or, if such registration statement relates to an underwritten offering, such
longer period as in the opinion of counsel for the underwriters a prospectus is
required by law to be delivered in connection with sales of Registrable
Securities by an underwriter or dealer or (ii) such shorter period as will
terminate when all of the securities covered by such registration statement have
been disposed of in accordance with the intended methods of disposition by the
seller or sellers thereof set forth in such registration statement (but in any
event not before the
20
expiration of any longer period required under the Securities Act), and to
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement until such time as all
of such securities have been disposed of in accordance with the intended methods
of disposition by the seller or sellers thereof set forth in such registration
statement; provided that the Company shall not be obligated to maintain the
effectiveness of any registration statement for a period of more than twelve
(12) months from the date on which the such registration statement initially
becomes effective;
(iii) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(iv) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
any seller reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller (provided that the Company will not be required to (i) qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph, (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction);
(v) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, upon discovery that, or upon the discovery of the happening of
any event as a result of which, the prospectus included in such registration
statement contains an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made, and, at the request of any such
seller, the Company will prepare and furnish to such seller a reasonable number
of copies of a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus will
not contain an untrue statement of a material fact or omit to state any fact
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made;
(vi) use its best efforts to cause all such Registrable Securities to
be listed on each securities exchange or market on which similar securities
issued by the Company are then listed and, if not so listed, to be listed on the
NASD automated quotation system (if such Registrable Securities are eligible to
be so listed) and, if listed on the NASD automated quotation system, use its
best efforts to secure designation of all such Registrable Securities covered by
such registration statement as a NASDAQ "national market system security" within
the meaning of Rule 11Aa2-1 of the Securities and Exchange Commission or,
failing that, to secure NASDAQ authorization for such Registrable Securities (if
such Registrable Securities are so eligible) and, without limiting the
generality of the foregoing, to arrange for at least two market makers to
register as such with respect to such Registrable Securities with the NASD,
subject to the applicable rules of the NASD;
21
(vii) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(viii) enter into such customary agreements (including underwriting
agreements in customary form) as may be requested by the underwriters and take
all such other actions as the holders of a majority of the Registrable
Securities being sold or the underwriters, if any, reasonably request in order
to expedite or facilitate the disposition of such Registrable Securities
(including, without limitation, effecting a stock split or a combination of
shares);
(ix) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(x) otherwise use its best efforts to comply with all applicable rules
and regulations of the Securities and Exchange Commission, and make available to
its security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first day of
the Company's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder;
(xi) permit any holder of Registrable Securities which holder, in its
sole and exclusive judgment, might be deemed to be an underwriter or a
controlling person of the Company, to participate in the preparation of such
registration or comparable statement and to require the insertion therein of
material, furnished to the Company in writing, which in the reasonable judgment
of such holder and its counsel should be included;
(xii) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any Securities included in such registration statement for sale in any
jurisdiction, the Company will use its reasonable best efforts promptly to
obtain the withdrawal of such order;
(xiii) obtain one or more comfort letters, dated the effective date of
such registration statement (and, if such registration includes an underwritten
Public Offering, dated the date of the closing under the underwriting
agreement), signed by an independent public accounting firm (reasonably
acceptable to the holders of a majority of the Registrable Securities included
in such registration) in customary form and covering such matters of the type
customarily covered by comfort letters as the holders of a majority of the
Registrable Securities included in such registration reasonably request
(provided that such Registrable Securities constitute at least 10% of the
securities covered by such registration statement); and
(xiv) as required by the Securities Act or by an underwriter, provide
a legal opinion of the Company's outside counsel, dated the effective date of
such registration statement
22
(and, if such registration includes an underwritten public offering, dated the
date of the closing under the underwriting agreement), with respect to the
registration statement, each amendment and supplement thereto, the prospectus
included therein (including the preliminary prospectus) and such other documents
relating thereto in customary form and covering such matters of the type
customarily covered by legal opinions of such nature.
The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company such information relating
to the Registrable Securities held by such seller and the intended method of
distribution of such securities as the Company may from time to time reasonably
request in writing.
SECTION 12. REGISTRATION EXPENSES
12A. Company Expenses. All expenses incident to the Company's
performance of or compliance with Sections 8, 9, 10, 11, 12, 13 and/or 14 of
this Agreement, 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 disbursements of counsel
for the Company and all independent certified public accountants, underwriters
(excluding discounts and commissions) and other Persons retained by the Company
(all such expenses being herein called "Registration Expenses"), will be borne
as provided in this Agreement, except that the Company will, in any event, pay
its internal expenses (including, without limitation, all salaries and expenses
of its officers and employees performing legal or accounting duties), the
expense of any annual audit or quarterly review, the expense of any liability
insurance and the expenses and fees for listing the securities to be registered
on each securities exchange on which similar securities issued by the Company
are then listed or on the NASD automated quotation system.
12B. Reimbursement. In connection with each Demand Registration and
each Piggyback Registration, the Company will reimburse the holders of
Registrable Securities covered by such registration for the reasonable fees and
disbursements of one counsel chosen by the holders of a majority of the
Registrable Securities included in such registration. In addition, in connection
with each Demand Registration and each Piggyback Registration, the Company shall
reimburse the holders of Registrable Securities included in such registration
for the reasonable fees and disbursements of each additional counsel retained by
any holder of Registrable Securities to the extent related to the rendering of
any legal opinion required by the Company or the managing underwriter(s) to be
rendered on behalf of such holder in connection with any underwritten Demand
Registration or Piggyback Registration.
SECTION 13. INDEMNIFICATION
13A. Indemnification Obligation of the Company. In connection with any
registration statement in which a holder of Registrable Securities is
participating, the Company agrees to indemnify and hold harmless, to the extent
permitted by law, each such holder of Registrable Securities, its officers and
directors and each Person who controls such holder (within the meaning of the
Securities Act) against any losses, claims, damages, liabilities and expenses
caused by (i) any untrue or alleged untrue statement of material fact contained
in such registration statement and/or related prospectus or preliminary
prospectus or in any disclosure
23
document incorporated by reference in such registration statement, prospectus or
preliminary prospectus, or any amendment thereof or supplement thereto, or (ii)
any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, except in so
far as the same are caused by or contained in any information furnished in
writing to the Company by or on behalf of such holder expressly for use therein
or by such holder's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto after the Company has
furnished such holder with a sufficient number of copies of the same. In
connection with an underwritten offering, the Company will indemnify such
underwriters, their officers and directors and each Person who controls such
underwriters (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the holders of Registrable
Securities.
13B. Indemnification of the Company. In connection with any
registration statement in which a holder of Registrable Securities is
participating, each such holder will furnish to the Company in writing such
information and affidavits relating to such holder's Registrable Securities as
the Company reasonably requests for use in connection with any such registration
statement or prospectus and, to the extent permitted by law, will indemnify and
hold harmless the Company, its directors and officers and each other Person who
controls the Company (within the meaning of the Securities Act) against any
losses, claims, damages, liabilities and expenses caused by (i) any untrue or
alleged untrue statement of material fact contained in the registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or (ii) any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or omission is
contained in any information or affidavit so furnished (or provided under
Section 11(xi)) in writing by or on behalf of such holder; provided that the
obligation to indemnify will be individual to each holder and will be limited to
the net amount of proceeds received by such holder from the sale of Registrable
Securities pursuant to such registration statement.
13C. Indemnification Procedures. Any Person entitled to
indemnification hereunder will (i) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
(provided that the failure to give prompt notice shall not impair any Person's
right to indemnification hereunder to the extent such failure has not adversely
affected the indemnifying party) and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
13D. Other Indemnification Provisions. The indemnification provided
for under this Agreement will remain in full force and effect regardless of any
investigation made by
24
or on behalf of the indemnified party or any officer, director or controlling
Person of such indemnified party and will survive the transfer of securities.
The Company and any other indemnifying party with respect to the matters set
forth in Sections 8 through 13 of this Agreement also agree to make such
provisions, as are reasonably requested by any indemnified party, for
contribution to such party in the event the Company's indemnification is
unavailable for any reason.
SECTION 14. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Person may participate in any registration hereunder which is
underwritten unless such Person (i) agrees to sell such Person's securities on
the basis provided in any underwriting arrangements approved by the Person or
Persons entitled hereunder to approve such arrangements (including, without
limitation, pursuant to the terms of any over-allotment or "green shoe" option
requested by the managing underwriter(s), provided that no holder of Registrable
Securities will be required to sell more than the number of Registrable
Securities that such holder has requested the Company to include in any
registration) and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements. Each Person that is
participating in any registration hereunder agrees that, upon receipt of any
notice from the Company of the occurrence of any event of the kind described in
Section 11(v) above, such Person will forthwith discontinue the disposition of
its Registrable Securities pursuant to the registration statement until such
Person's receipt of the copies of a supplemented or amended prospectus as
contemplated by such Section 11(v). In the event the Company shall give any such
notice, the applicable time period mentioned in Section 11(ii) during which a
Registration Statement is to remain effective shall be extended by the number of
days during the period from and including the date of the giving of such notice
pursuant to this Section 14 to and including the date when each seller of
Registrable Securities covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
Section 11(v).
SECTION 15. COVENANTS
15A. Restrictive Covenants. Except as otherwise expressly set forth in
the Plan of Reorganization or the related confirmation order, the Company shall
not, without the prior written consent of the Required Controlling Holder(s):
(i) directly or indirectly declare or pay any dividends or make any
distributions upon any of its capital stock or other equity securities, except
for dividends payable in shares of Common Stock issued upon the outstanding
shares of Common Stock;
(ii) directly or indirectly redeem, purchase or otherwise acquire, or
permit any subsidiary of the Company to redeem, purchase or otherwise acquire,
any of the Company's or any such subsidiary's capital stock or other equity
securities (including, without limitation, warrants, options and other rights to
acquire such capital stock or other equity securities), except for repurchases
of Common Stock from current or former employees of the Company and its
subsidiaries upon termination of employment, or for repurchases of Common Stock
under
25
stock-related employee benefit plans, in each case pursuant to arrangements
approved after the date hereof by the Company's Board and except as otherwise
required by applicable law;
(iii) authorize, issue or enter into, or permit any subsidiary of the
Company to authorize, issue or enter into, any agreement providing for the
issuance (contingent or otherwise) of, (a) any notes or debt securities
containing equity features (including, without limitation, any notes or debt
securities convertible into or exchangeable for capital stock or other equity
securities, issued in connection with the issuance of capital stock or other
equity securities or containing profit participation features) or (b) any
capital stock or other equity securities (or any securities convertible into or
exchangeable for any capital stock or other equity securities);
(iv) make, or permit any of its subsidiaries to make, any loans or
advances to, guarantees for the benefit of, or investments in, any Person (other
than a subsidiary of the Company), except for (a) reasonable advances to
employees, directors and officers in the ordinary course of business, (b)
reasonable and customary advances to customers and vendors of the Company in the
ordinary course of business consistent with past practice and (c) investments
having a stated maturity no greater than one year from the date the Company
makes such investment in (1) obligations of the United States government or any
agency thereof or obligations guaranteed by the United States government, (2)
certificates of deposit of commercial banks having combined capital and surplus
of at least $50 million, (3) commercial paper with a rating of at least
"Prime-1" by ▇▇▇▇▇'▇ Investors Service, Inc., or (4) money market mutual funds
and other investments constituting cash or cash equivalents under generally
accepted accounting principles, in each case whose investment guidelines
restrict such funds' investments primarily to those satisfying the provisions of
clauses (1) through (3) above;
(v) merge or consolidate with any Person or permit any subsidiary of
the Company to merge or consolidate with any Person (other than with a
wholly-owned subsidiary of the Company);
(vi) sell, lease or otherwise dispose of, or permit any subsidiary of
the Company to sell, lease or otherwise dispose of, more than 10% of the
consolidated assets of the Company and its subsidiaries (computed on the basis
of book value, determined in accordance with generally accepted accounting
principles consistently applied, or fair market value, determined by the
Company's board of directors in its reasonable good faith judgment) in any
transaction or series of related transactions (other than sales in the ordinary
course of business);
(vii) liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction (including, without limitation, any
reorganization into a limited liability company, a partnership or any other
non-corporate entity which is treated as a partnership for federal income tax
purposes) or permit any subsidiary to take any such action;
(viii) acquire, or permit any subsidiary of the Company to acquire,
any interest in any company or business (whether by a purchase of assets,
purchase of stock, merger or otherwise, but excluding extension of ordinary
trade credit), or enter into any joint venture (other than strategic alliances
entered into in the ordinary course of business consistent with past practice);
26
(ix) become subject to, or permit any of its subsidiaries to become
subject to, (including, without limitation, by way of amendment to or
modification of) any agreement or instrument which by its terms would (under any
circumstances) restrict the Company's right to perform the provisions of this
Agreement, the Certificate of Incorporation or the Company's bylaws, or
otherwise take any action which would impair, or otherwise be inconsistent with,
the rights hereunder of the holders of Controlling Stockholder Shares
(including, without limitation, the rights of the Required Controlling Holder(s)
under Section 7A of this Agreement);
(x) make, or permit any of its subsidiaries to make, any amendment to
such Person's Certificate of Incorporation or bylaws (except as required by law
in connection with the consummation of the Plan of Reorganization);
(xi) enter into, amend, modify or supplement, or permit any subsidiary
of the Company to enter into, amend, modify or supplement, any agreement,
transaction, commitment or arrangement with any officers, directors, senior
executives or Affiliates of the Company or any of its subsidiaries or with any
individual related by blood, marriage or adoption to any such individual or with
any entity in which any such Person or individual owns a beneficial interest
(excluding for this purpose ownership of less than 2% of any publicly traded
securities), except as otherwise provided by this Agreement and except for
customary employment arrangements with, and customary benefit programs for,
employees of the Company and its subsidiaries on reasonable terms (other than
any such arrangements primarily benefiting senior executives) and except for
directors' fees paid to directors of the Company, in each case under
arrangements approved after the date hereof by the Board;
(xii) create, incur, assume or suffer to exist, or permit any
subsidiary of the Company to create, incur, assume or suffer to exist, at any
time after the date hereof, indebtedness exceeding an aggregate principal amount
of $5,000,000 outstanding at any time on a consolidated basis (excluding (1) any
indebtedness incurred under the Company's $40 million "Exit Revolver," (2) the
Company's $120 million "Exit Term Loan," (3) the industrial revenue bonds of
approximately $3.3 million reflected on the balance sheet of the Company as of
the end of the month immediately preceding the Consummation Date (the "Latest
Balance Sheet"), and (4) the other debt not to exceed $5 million reflected on
the Latest Balance Sheet);
(xiii) create, incur, assume or suffer to exist, or permit any
subsidiary of the Company to create, incur, assume or suffer to exist, any
material liens or encumbrances, except for (1) liens for taxes not yet due and
payable or which are being contested in good faith and by appropriate
proceedings, (2) carrier's, warehousemen's, mechanic's, materialmen's and
similar liens, (3) purchase money liens and liens securing rental payments under
capital lease arrangements otherwise permitted hereunder, (4) liens and
encumbrances securing indebtedness incurred under the Company's $40 million
"Exit Revolver," $120 million "Exit Term Loan" or any industrial revenue bonds
reflected on the Latest Balance Sheet, (5) liens and encumbrances disclosed in
the disclosure schedule attached to the Company's "Exit Revolver" or "Exit Term
Loan," (6) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other social
security laws or regulations, (7) cash deposits to secure the performance of
bids, trade contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case in the
ordinary course of business consistent with past practice, (8) judgment liens in
respect of
27
judgments, (9) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary course
of business that do not secure any monetary obligations, (10) bankers' liens and
similar liens, including rights of offset or set-off in respect of deposit
accounts and liens in favor of securities intermediaries in respect of
securities accounts securing fees and costs owing to such securities
intermediaries, (11) licenses, sublicenses, leases or subleases granted to
others that do not materially interfere with the ordinary course of business of
the Company and its subsidiaries, taken as a whole, and (12) any interest or
title of a lessor in any property (and the proceeds, accession or products
thereof) subject to an operating lease;
(xiv) make, or permit any of its subsidiaries to make, any capital
expenditures (including, without limitation, payments with respect to
capitalized leases, as determined in accordance with generally accepted
accounting principles consistently applied) exceeding $6,500,000 (or such higher
number as may be approved by the Board in the Company's annual budget) in the
aggregate for the Company and its subsidiaries on a consolidated basis during
any twelve-month period; or
(xv) increase the authorized size of its board of directors above
seven members;
provided that the rights of the Required Controlling Holder(s) under this
Section 15A shall terminate upon the earliest to occur of (a) an Approved Sale,
(b) the initial date on which the Controlling Stockholder Shares no longer
represent at least a majority of the voting power of the then outstanding shares
of voting capital stock of the Company held by all Stockholders, and (c) the
initial date on which the Controlling Stockholder Shares represent 20% or less
of the voting power of the then outstanding shares of voting capital stock of
the Company.
15B. Financial Statements and Other Information. The Company shall
deliver to each holder of Controlling Stockholder Shares (so long as such Person
holds any Controlling Stockholder Shares) and to each Other New Stockholder who,
together with the Affiliates of such Other New Stockholder, holds at least 5% of
the then outstanding shares of Common Stock:
(i) (A) within 30 days after the end of each monthly accounting period
in each fiscal year (except within 45 days after the end of each fiscal quarter
of the Company (other than the fourth quarter) and within 90 days after the end
of each fiscal year of the Company), the unaudited consolidated balance sheet
and statements of operations and cash flows of the Company and its subsidiaries
for such monthly period and the then elapsed portion of such fiscal year, and
all such statements shall be prepared in accordance with generally accepted
accounting principles, consistently applied, subject to the absence of footnote
disclosures and to normal year-end adjustments for recurring accruals and (B)
within 30 days after the end of each fiscal quarter of the Company, a draft of
such consolidated balance sheet and related statements of operations and cash
flows as of the end of and for such month and the then elapsed portion of such
fiscal year;
(ii) within 45 days after the end of each fiscal quarter, the
unaudited consolidated balance sheet and related statements of operations and
cash flows of the Company
28
and its subsidiaries as of the end of and for such fiscal quarter and the then
elapsed portion of such fiscal year, setting forth, in each case, in comparative
form the figures for (or, in the case of the balance sheet, as of the end of)
the corresponding period or periods of the previous fiscal year, and all such
statements shall be prepared in accordance with generally accepted accounting
principles, consistently applied, subject to the absence of footnote disclosures
and to normal year-end adjustments for recurring accruals;
(iii) within 90 days after the end of each fiscal year, the audited
consolidated balance sheet and related statements of operations and cash flows
of the Company and its subsidiaries as of the end of and for such fiscal year,
setting forth, in each case, in comparative form the figures for (or, in the
case of the balance sheet, as of the end of) the previous fiscal year, all
prepared in accordance with generally accepted accounting principles,
consistently applied, and accompanied by, with respect to the consolidated
portions of such statements, an opinion of an independent accounting firm of
recognized national standing;
(iv) as promptly as practicable, notice of (i) any default under any
agreement with respect to material indebtedness for borrowed money and (ii) any
action, suit or proceeding by or before any governmental instrumentality or
agency which, if adversely determined, would have a material adverse effect on
the business or operations of the Company and its subsidiaries, taken as a
whole; and
(v) as promptly as practicable, such other information and financial
data concerning the Company and its subsidiaries as any Person entitled to
receive information under this Section 15A may reasonably request (including
annual budgets and projections of the Company).
Each Stockholder agrees that it will keep confidential and will not disclose,
divulge or use for any purpose, other than to monitor and manage its investment
in the Company and for purposes incidental thereto, any Confidential
Information, unless such Confidential Information (a) is known or becomes known
generally to the public (other than as a result of a breach of this paragraph by
such Stockholder) or (b) is made known or disclosed to the Stockholder by a
third party who is not known by the Stockholder to owe a duty of trust or
confidence to the Company; provided, however, such Stockholder may disclose
Confidential Information (i) to its representatives, attorneys, accountants,
consultants, and other professionals on a confidential basis in connection with
monitoring and managing its investment in the Company, (ii) to any prospective
purchaser of any Stockholder Shares from such Stockholder as long as such
prospective purchaser agrees to be bound by the provisions of this paragraph and
names the Company as a third party beneficiary of such agreement, (iii) to any
Affiliate of such Stockholder on a confidential basis or (iv) as may otherwise
be required by law, legal process or regulatory requirements (including, without
limitation, tax regulatory requirements). For purposes of this paragraph, with
respect to any particular Stockholder, "Confidential Information" means any
information that such Stockholder obtains from the Company pursuant to financial
statements, reports and other materials provided by the Company to such
Stockholder pursuant to this Agreement or pursuant to visitation, attendance or
inspection rights hereunder, but in each case only to the extent that such
information has been designated by the Company in writing to such Stockholder as
confidential, proprietary or secret.
29
15C. Expenses. The Company agrees to pay, and hold each Controlling
Stockholder and its Affiliates and their respective directors, officers and
employees harmless against liability for the payment of, the reasonable
expenses, legal fees and other out-of-pocket costs incurred after the date
hereof by or on behalf of such Controlling Stockholder or any of its Affiliates
in connection with (i) any Company-related financing, strategic initiative or
other growth strategy or (ii) the rendering of any other services to the Company
by such Controlling Stockholder or its Affiliates (including assistance with
evaluating business opportunities); it being understood and agreed that nothing
in this Section 15C is intended to require the Company to pay any management or
other fees to any Controlling Stockholder or any Affiliate thereof in connection
with any event or service described in clause (i) or (ii) above.
SECTION 16. DEFINITIONS
"Additional Controlling Director" has the meaning set forth in Section
7A.
"Additional Controlling Number" of directors at any time means that
number equal to (a) one (1) plus (b) if and so long as the authorized number of
directors on the Board is nine or more, 50% of the amount, if any, by which the
authorized number of directors exceeds eight (8) (disregarding for such purposes
any fractional number resulting therefrom).
"Additional Stockholder" has the meaning set forth in the Preamble.
"Affiliate" of a Stockholder means any other Person controlling,
controlled by or under common control with the Stockholder and, in the case of
any Controlling Stockholder that is a partnership or a limited liability
company, any partner or member of such Stockholder (provided that the Company
shall not be deemed to be an Affiliate of any Stockholder, nor shall any other
Person be deemed to be an Affiliate of a Stockholder solely by reason of such
Stockholder's control of the Company).
"Agreement" has the meaning set forth in the Preamble.
"Allocable Share" has the meaning set forth in Section 2C.
"Approved Sale" has the meaning set forth in Section 3A.
"Audax" has the meaning set forth in the Preamble.
"Board" has the meaning set forth in the Preamble.
"Certificate of Incorporation" means the Company's certificate of
incorporation in effect at the time as of which any determination is being made.
"Common Stock" means the Common Stock of the reorganized Company, $.01
par value per share.
"Company" has the meaning set forth in the Preamble.
"Controlling Director" has the meaning set forth in Section 7A.
30
"Controlling Stockholder" has the meaning set forth in the Preamble.
"Controlling Stockholder Registrable Securities" means (i) any shares
of Common Stock issued to a Controlling Stockholder pursuant to the Plan of
Reorganization, (ii) any shares of Common Stock otherwise acquired by a
Controlling Stockholder or any of its Affiliates after the date hereof, (iii)
any shares of Common Stock issued or issuable upon conversion of other
Stockholder Shares from time to time acquired by a Controlling Stockholder, and
(iv) any equity securities issued or issuable directly or indirectly with
respect to the securities referred to in any of clauses (i) through (iii) above
by way of a stock dividend or split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization. As to
any particular shares constituting Controlling Stockholder Registrable
Securities, such shares will cease to be Controlling Stockholder Registrable
Securities when they have been transferred pursuant to a Public Sale (provided
that, if shares sold in a Public Sale are thereafter acquired by a Stockholder,
such shares shall again be subject to the provisions of this Agreement). For
purposes of this Agreement, a Person will be deemed to be a holder of
Controlling Stockholder Registrable Securities whenever such Person has the
right to acquire directly or indirectly such Controlling Stockholder Registrable
Securities (upon conversion or exercise in connection with a transfer of
securities or otherwise, but disregarding any restrictions or limitations upon
the exercise of such right), whether or not such acquisition has actually been
effected.
"Controlling Stockholder Shares" means, at any particular time,
without duplication (i) any Stockholder Shares issued to a Controlling
Stockholder pursuant to the Plan of Reorganization or acquired thereafter by a
Controlling Stockholder or any Affiliate of a Controlling Stockholder, in each
case whether or not such Stockholder Shares are held at such time by a
Controlling Stockholder or any Affiliate of a Controlling Stockholder, and (ii)
any securities issued or issuable directly or indirectly with respect to the
Stockholder Shares referred to in clause (i) above by way of a stock dividend or
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. As to any particular shares constituting
Controlling Stockholder Shares, such shares shall cease to be Controlling
Stockholder Shares when they have been sold in a Public Sale or transferred in
an In-Kind Distribution.
"Demand Registration" has the meaning set forth in Section 7A.
"Electing Purchaser" has the meaning set forth in Section 2B.
"Election Notice" has the meaning set forth in Section 4A.
"Eligible Purchaser" has the meaning set forth in Section 2B.
"Eligible Stockholder" has the meaning set forth in Section 2C.
"Executive Director" has the meaning set forth in Section 7A.
"Exempt Transfer" has the meaning set forth in Section 2D.
"Existing Stockholder" has the meaning set forth in the Preamble.
31
"Family Group" with respect to any Stockholder, means such
Stockholder's spouse, siblings and descendants (whether or not adopted) and any
trust, family limited partnership or limited liability company that is and
remains solely for the benefit of such Stockholder and/or such Stockholder's
spouse, siblings and/or descendants.
"Fully Diluted Basis" means, in respect of any class of Company
capital stock at any time, (i) all shares of such class of stock outstanding at
such time plus (ii) all shares of such class of stock which are issuable
directly or indirectly upon conversion of all then outstanding convertible
securities or upon the exercise or exchange of all then outstanding options,
warrants or other rights, whether or not such convertible securities, options,
warrants or other rights are then convertible, exercisable or exchangeable.
"Independent Third Party" means any Person who, immediately prior to
the contemplated transaction, does not own in excess of 5% of the Company's
Common Stock on a Fully Diluted Basis (a "5% Owner"), who is not controlling,
controlled by or under common control with any such 5% Owner and who is not the
spouse or descendent (by birth or adoption) of any such 5% Owner or a trust for
the benefit of such 5% Owner and/or such other Persons.
"In-Kind Distribution" has the meaning set forth in Section 2D.
"Initial Board Designee" has the meaning set forth in Section 7A.
"Initiating Holders" has the meaning set forth in Section 8B.
"Interim Executive Director" has the meaning set forth in Section 7A.
"Issuance Notice" has the meaning set forth in Section 4A.
"Joinder Agreement" has the meaning set forth in the Preamble.
"Long-Form Registration" has the meaning set forth in Section 8A.
"Majority New Non-Controlling Holder(s)" means, at any time, the
holder of record at such time of a majority of the outstanding shares of Common
Stock that are New Non-Controlling Stockholder Shares, determined on a Fully
Diluted Basis; provided that, if at such time no single Person is the holder of
record of a majority of the outstanding shares of Common Stock that are New
Non-Controlling Stockholder Shares on a Fully Diluted Basis, then "Majority New
Non-Controlling Holder(s)" means, at such time, any two or more Persons who are
collectively the holders of record at such time of a majority of the outstanding
shares of Common Stock that are New Non-Controlling Stockholder Shares,
determined on a Fully Diluted Basis.
"New Non-Controlling Stockholder Shares" means, at any particular
time, without duplication (i) any Stockholder Shares issued to an Other New
Stockholder pursuant to the Plan of Reorganization or acquired thereafter by an
Other New Stockholder or any Affiliate of an Other New Stockholder, in each case
whether or not such Stockholder Shares are held at such time by an Other New
Stockholder, and (ii) any securities issued or issuable directly or indirectly
with respect to the Stockholder Shares referred to in clause (i) above by way of
a stock
32
dividend or split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular shares constituting New Non-Controlling Stockholder Shares, such
shares shall cease to be New Non-Controlling Stockholder Shares when they have
been Transferred to a Controlling Stockholder or any of its Affiliates or sold
in a Public Sale or transferred in an In-Kind Distribution.
"New Securities" has the meaning set forth in Section 4C.
"New Non-Controlling Stockholders Director" has the meaning set forth
in Section 7A.
"Oaktree" has the meaning set forth in the Preamble.
"Other New Stockholder(s)" has the meaning set forth in the Preamble.
"Offer Notice" has the meaning set forth in Section 2B.
"Offering Period" has the meaning set forth in Section 4A.
"Optimal Number" has the meaning set forth in Section 8D.
"Other Registrable Securities" means (i) any shares of Common Stock
issued to an Other Stockholder pursuant to the Plan of Reorganization, (ii) any
shares of Common Stock (other than shares of Common Stock that are Controlling
Stockholder Shares) otherwise acquired by an Other Stockholder after the date
hereof, (iii) any shares of Common Stock issued or issuable upon conversion of
other Stockholder Shares (other than Controlling Stockholder Shares) from time
to time acquired by an Other Stockholder after the date hereof, and (iv) any
equity securities issued or issuable directly or indirectly with respect to the
securities referred to in any of clauses (i) through (iii) above by way of a
stock dividend or split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular shares constituting Other Registrable Securities, such shares will
cease to be Other Registrable Securities when they have been Transferred to a
Controlling Stockholder or pursuant to a Public Sale (provided that, if shares
sold in a Public Sale are thereafter acquired by a Stockholder, such shares
shall again be subject to the provisions of this Agreement). For purposes of
this Agreement, a Person will be deemed to be a holder of Other Registrable
Securities whenever such Person has the right to acquire directly or indirectly
such Other Registrable Securities (upon conversion or exercise in connection
with a transfer of securities or otherwise, but disregarding any restrictions or
limitations upon the exercise of such right), whether or not such acquisition
has actually been effected.
"Other Stockholders" has the meaning set forth in the Preamble.
"Participating Stockholder" has the meaning set forth in Section 2C.
"Permitted Transferee" has the meaning set forth in Section 2D.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated
33
organization and a governmental entity or any department, agency or political
subdivision thereof.
"Piggyback Registration" has the meaning set forth in Section 9A.
"Plan of Reorganization" has the meaning set forth in the Preamble.
"Primary Optimal Number" has the meaning set forth in Section 9C.
"Public Offering" means a public offering and sale of Stockholder
Shares or other capital stock or equity securities of the Company pursuant to an
effective registration statement under the Securities Act.
"Public Sale" means any sale of Stockholder Shares (i) to the public
pursuant to an offering registered under the Securities Act, (ii) to the public
through a broker, dealer or market maker pursuant to the provisions of Rule 144
adopted under the Securities Act or (ii) to the public through a broker, dealer
or market maker for which registration under the Securities Act is not required
under Section 1145 of Title 11 of the United States Code.
"Qualified Public Offering" means a Public Offering which results in
aggregate proceeds to the Company and/or the Stockholders of at least
$50,000,000.
"Registrable Securities" means, collectively, the Controlling
Stockholder Registrable Securities and the Other Registrable Securities.
"Registration Expenses" has the meaning set forth in Section 12A.
"Required Controlling Holder(s)" means, at any time, the holder of
record at such time of at least 75% of the outstanding shares of Common Stock
that are Controlling Stockholder Shares; provided that, if at such time no
single Person is the holder of record of at least 75% of the outstanding shares
of Common Stock that are Controlling Stockholder Shares, then "Required
Controlling Holder(s)" means, at such time, any two or more Persons who are
collectively the holders of record at such time of at least 75% of the
outstanding shares of Common Stock that are Controlling Stockholder Shares.
"ROFO Election Period" has the meaning set forth in Section 2B.
"Sale of the Company" means the sale of the Company to an Independent
Third Party or group of Independent Third Parties pursuant to which such party
or parties acquire (i) capital stock of the Company possessing the voting power
to elect a majority of the Board (whether by merger, consolidation or sale or
transfer of the Company's capital stock) or (ii) all or substantially all of the
Company's assets determined on a consolidated basis.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal law then in force.
"Securities and Exchange Commission" includes any governmental body or
agency succeeding to the functions thereof.
34
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended, or any similar federal law then in force.
"Short-Form Registration" has the meaning set forth in Section 8A.
"Stockholder Shares" means (i) any Common Stock or other capital stock
or equity securities issued to any Stockholder pursuant to the Plan of
Reorganization or acquired by any Stockholder at any time thereafter, and (ii)
any capital stock or other equity securities issued or issuable directly or
indirectly with respect to the securities referred to in clause (i) above by way
of stock dividend or split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular shares constituting Stockholder Shares, such shares shall cease to be
Stockholder Shares when they have been sold in a Public Sale or transferred in
an In-Kind Distribution (provided that, if shares sold in a Public Sale or
transferred in an In-Kind Distribution are thereafter acquired by a Stockholder,
such shares shall again be Stockholder Shares hereunder).
"Stockholder" has the meaning set forth in the Preamble.
"Sub Board" has the meaning set forth in Section 7A.
"Tag-along Sale Notice" has the meaning set forth in Section 2C.
"Tag-Along Shares" has the meaning set forth in Section 2C.
"Transfer" has the meaning set forth in Section 2A.
"Transfer Shares" has the meaning set forth in Section 2B.
"Transferring Stockholder" has the meaning set forth in Section 2B.
Unless otherwise stated, other capitalized terms contained herein have
the meanings set forth in the Plan of Reorganization.
SECTION 17. MISCELLANEOUS
17A. Amendment and Waiver. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the Stockholders unless such modification,
amendment or waiver is approved in writing by the Company and the Required
Controlling Holder(s) (and, in the case of an amendment to the definition of
Other Registrable Securities or the definition of New Securities, the Majority
New Non-Controlling Holder(s)); provided that in the event that any such
amendment or waiver by its terms treats disproportionately one or more groups of
Stockholders hereunder (i.e., the Controlling Stockholders, the holders of
Controlling Stockholder Shares, the Other New Stockholders and/or the Existing
Stockholders) in an adverse manner relative to any other such group of
Stockholders hereunder, then such amendment or waiver will require the prior
written approval of the holders of a majority of the Stockholder Shares then
held by such group or groups of Stockholders so disproportionately and adversely
treated.
35
17B. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if 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 shall not affect
any other provision or the effectiveness or validity of any provision in any
other jurisdiction, and this Agreement shall be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
17C. Entire Agreement. Except as otherwise expressly set forth herein,
this Agreement, the Plan of Reorganization and the documents referenced therein
embody the complete agreement and understanding among the parties hereto with
respect to the subject matter hereof and supersede and preempt any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.
17D. No Inconsistent Agreements. The Company will not hereafter enter
into any agreement with respect to its securities which is inconsistent with or
violates the rights granted to the holders of Registrable Securities in this
Agreement.
17E. Adjustments Affecting Registrable Securities. The Company will
not take any action, or permit any change to occur, with respect to its
securities which would materially and adversely affect the ability of the
holders of Registrable Securities to include such Registrable Securities in a
registration undertaken pursuant to this Agreement or which would adversely
affect the marketability of such Registrable Securities in any such registration
(including, without limitation, effecting a stock split or a combination of
shares).
17F. Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Stockholders and any subsequent
holders of Stockholder Shares and the respective successors and assigns of each
of them, so long as they hold Stockholder Shares.
17G. Counterparts. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
17H. Remedies. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that the Company and any Stockholder shall have the right to
injunctive relief, in addition to all of its rights and remedies at law or in
equity, to enforce the provisions of this Agreement. Nothing contained in this
Agreement shall be construed to confer upon any Person who is not a signatory
hereto any rights or benefits, as a third party beneficiary or otherwise.
17I. Notices. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, or received by certified mail,
return receipt requested, or sent by reputable overnight courier service
(charges prepaid) to the Company at the address set forth below and to any other
recipient at the address indicated in schedules hereto and to any
36
subsequent holder of Stockholder Shares at such address as indicated by the
Company's records or at such address or to the attention of such other person as
the recipient party has specified by prior written notice to the sending party.
Notices will be deemed to have been given hereunder (i) when delivered
personally to the recipient, (ii) one (1) business day after being sent to the
recipient by reputable overnight courier service (charges prepaid), (iii) upon
machine-generated acknowledgment of receipt after transmittal by facsimile if so
acknowledged to have been received before 5:00 p.m. on a business day at the
location of receipt and otherwise on the next following business day, provided
that such notice, demand or other communication is also deposited within 24
hours thereafter with a reputable overnight courier service (charges prepaid)
for delivery to the same Person, or (iv) five (5) days after being mailed to the
recipient by certified or registered mail, return receipt requested and postage
prepaid. The Company's address is:
Chart Industries, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Chief Executive Officer
with copies to (which shall not constitute notice to the Company):
Oaktree Capital Management, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Audax Management Company, LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
37
17J. Governing Law. All issues concerning this Agreement (including
all issues concerning the relative rights and obligations of the Company and the
Stockholders) shall be governed by and construed in accordance with the laws of
the State of Delaware without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the law of any jurisdiction
other than the State of Delaware.
17K. Mutual Waiver of Jury Trial. Because disputes arising in
connection with complex transactions are most quickly and economically resolved
by an experienced and expert person and the parties wish applicable state and
federal laws to apply (rather than arbitration rules), the parties desire that
their disputes be resolved by a judge applying such applicable laws. Therefore,
to achieve the best combination of the benefits of the judicial system and of
arbitration, each party to this agreement hereby waives all rights to trial by
jury in any action, suit, or proceeding brought to resolve any dispute between
or among any of the parties hereto, whether arising in contract, tort, or
otherwise, arising out of, connected with, related or incidental to this
agreement and/or the transactions contemplated hereby.
17L. Termination of Certain Provisions. The rights and obligations
under Sections 6, 8, 9, 10, 11, 12, 14 and 15 of this Agreement shall expire no
later than the tenth anniversary of the consummation of a Qualified Public
Offering.
17M. Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
* * * * *
38
IN WITNESS WHEREOF, the parties hereto have executed this Investor
Rights Agreement on the day and year first above written.
THE COMPANY: CHART INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Its: Chief Financial Officer and Treasurer
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OAKTREE: OCM PRINCIPAL OPPORTUNITIES FUND II, L.P.
By: Oaktree Capital Management, LLC
Its: General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Its: Managing Director
--------------------------------------
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Its: Vice President
------------------------------
Initial Stockholder Shares
-----------------------
AUDAX: AUDAX CHART LLC
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Its: Authorized Signatory
--------------------------------------
Initial Stockholder Shares
-----------------------
▇▇▇▇ ▇▇▇▇▇ STRATEGIC INVESTMENTS III, L.P.
By ▇▇▇▇ ▇▇▇▇▇ Management Company, L.P.
as General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Its: General Partner
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▇▇▇ ▇▇▇▇▇▇ SENIOR LOAN FUND
By: ▇▇▇ ▇▇▇▇▇▇ Investment Advisory Corp.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Its: Vice President
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KZHCYPRESSTREE-1 LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Its: Authorized Agent
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KZH STERLING LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Its: Authorized Agent
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▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Its: Managing Director
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SENIOR DEBT PORTFOLIO
By: Boston Management and Research
As Investment Advisor
By: /s/ Payson ▇. ▇▇▇▇▇▇▇▇▇
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Its: Vice President
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SCHEDULE OF controlling stockholders
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Name and Address Initial Stockholder Shares
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OCM Principal Opportunities Fund II, L.P.
c/o Oaktree Capital Management, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with copies to (which shall not constitute notice):
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Audax Chart LLC
c/o Audax Management Company, LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
with copies to (which shall not constitute notice):
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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SCHEDULE OF OTHER NEW STOCKHOLDERS
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Name and Address Initial Stockholder Shares
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Senior Debt Portfolio
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▇▇▇ ▇▇▇▇▇▇ Senior Loan Fund
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▇▇▇▇ ▇▇▇▇▇ Strategic Investments III, L.P.
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▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
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KZH Sterling LLC
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KZH CypressTree-1 LLC
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SCHEDULE OF EXISTING STOCKHOLDERS
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Name and Address Initial Stockholder Shares
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None
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SCHEDULE OF ADDITIONAL STOCKHOLDERS
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Name and Address Initial Stockholder Shares
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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EXHIBIT A
FORM OF TRANSFER NOTICE AND JOINDER AGREEMENT
This notice is being delivered to Chart Industries, Inc., a Delaware
corporation (the "Company"), pursuant to Section 6 of that certain Investor
Rights Agreement, dated as of September 15, 2003 (as amended from time to time,
the "Investor Rights Agreement"), among the Company, OCM Principal Opportunities
Fund II, L.P., a Delaware limited partnership, Audax Chart LLC, a Delaware
limited liability company, and certain other stockholders of the Company who are
from time to time party thereto. Capitalized terms used herein shall have the
meanings assigned to such terms in the Investor Rights Agreement.
The undersigned hereby notifies the Company that [name of Stockholder]
has transferred to the undersigned shares of Common Stock that are
-----
Stockholder Shares. In connection with such transfer, the undersigned hereby
becomes a party to the Investor Rights Agreement and agrees to be bound by the
provisions of the Investor Rights Agreement affecting such Stockholder Shares.
Any notice provided for in the Investor Rights Agreement should be
delivered to the undersigned at the address set forth below:
-----------------------------------
-----------------------------------
-----------------------------------
Telephone:
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Facsimile:
------------------------
Attention:
------------------------
Dated:
-----------------
--------------------------
[Transferee]
