EXHIBIT 2
STOCKHOLDERS AGREEMENT
by and among
HEARTLAND INDUSTRIAL PARTNERS, L.P.
AND THE OTHER HEARTLAND ENTITIES NAMED HEREIN,
THE ▇▇▇▇▇▇ STOCKHOLDERS NAMED HEREIN,
THE ▇▇▇▇ STOCKHOLDERS NAMED HEREIN
and
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ CORPORATION
______________________________
Dated July 3, 2001
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS
1.1 DEFINITIONS
ARTICLE II - TRANSFER
2.1 LIMITATION ON TRANSFER
2.2 PERMITTED TRANSFERS
2.3 PERMITTED TRANSFER PROCEDURES
2.4 TRANSFERS IN COMPLIANCE WITH LAW; SUBSTITUTION OF TRANSFEREE
ARTICLE III - RIGHT OF FIRST REFUSAL; TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS
3.1 PROPOSED VOLUNTARY TRANSFERS
3.2 INVOLUNTARY TRANSFERS
3.3 PROHIBITION ON ENCUMBRANCE
3.4 CERTAIN TRANSACTIONS
ARTICLE IV
[INTENTIONALLY OMITTED]
ARTICLE V - AFTER-ACQUIRED SECURITIES; AGREEMENT TO BE BOUND
5.1 AFTER-ACQUIRED SECURITIES
5.2 BENEFICIAL OWNERSHIP
ARTICLE VI - CORPORATE GOVERNANCE
6.1 GENERAL
6.2 ELECTION OF DIRECTORS.
6.3 VACANCY
6.4 REIMBURSEMENT OF EXPENSES; D&O INSURANCE
ARTICLE VII - COVENANTS
7.1 FINANCIAL STATEMENTS AND OTHER INFORMATION
7.2 INSPECTION
ARTICLE VIII - STOCK CERTIFICATE LEGEND
ARTICLE IX - MISCELLANEOUS
9.1 RECAPITALIZATIONS, EXCHANGES, ETC
9.2 NOTICES
9.3 SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES
9.4 AMENDMENT AND WAIVER
9.5 COUNTERPARTS
9.6 SPECIFIC PERFORMANCE
9.7 HEADINGS
9.8 GOVERNING LAW
9.9 SEVERABILITY
9.10 RULES OF CONSTRUCTION
9.11 ENTIRE AGREEMENT
9.12 FURTHER ASSURANCES
EXHIBITS
A FORM OF TRANSFER AGREEMENT
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT dated July 3, 2001, by and among ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ Corporation, a Delaware corporation (the "Company"), Heartland Industrial
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Partners, L.P. ("Heartland") and the other Heartland Entities named herein, the
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▇▇▇▇▇▇ Stockholders party hereto and the ▇▇▇▇ Stockholders party hereto.
WHEREAS, pursuant to an Agreement and Plan of Merger, dated May 14,
2001 (the "Merger Agreement"), by and among the Company, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
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Products Co., ▇▇▇▇▇▇ Group, L.L.C., the ▇▇▇▇▇▇ Investors and the other parties
named therein, the ▇▇▇▇▇▇ Investors will receive (x) an aggregate of 17,000,000
shares of common stock, par value $0.01 per share (the "Common Stock"), of the
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Company and (y) warrants to purchase an aggregate of 500,000 shares (the
"Warrant Shares") of Common Stock;
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WHEREAS, in order to induce each of the ▇▇▇▇▇▇ Investors to enter into
the Merger Agreement, the Company has agreed to grant registration rights with
respect to the Common Stock as set forth in the Registration Rights Agreement
executed as of the date hereof (the "Registration Rights Agreement") and has
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agreed to enter into this Agreement;
WHEREAS, the acquisition of ▇▇▇▇ Automotive Industries, Inc. is under
consideration and remains subject to the negotiation of terms and definitive
documentation at the time that the Merger Agreement has been signed, and the
▇▇▇▇▇▇ Investors and the Company intend that, to the extent shares of Common
Stock are issued in connection with such acquisition, the recipients of such
Common Stock at the time of such acquisition (the "▇▇▇▇ Investors") receive the
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rights provided herein pursuant to the same documentation to the extent agreed
to by the ▇▇▇▇ Investors by executing signature pages hereto (the "J
-
Transaction"); and
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WHEREAS, the parties hereto wish to restrict the transfer of the
Shares (as hereinafter defined) and to provide for, among other things, first
offer and tag-along and certain other rights.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the context
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requires a different meaning, the following terms have the meanings indicated:
"Affiliate" shall mean, when used with respect to any Person, any
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other Person which directly or indirectly beneficially owns or controls 25% or
more of the total voting power of shares of capital stock of such Person having
the right to vote for directors under ordinary circumstances, any Person
controlling, controlled by or under common control with any such Person (within
the meaning of Rule 405 of the Securities Act), and any director or executive
officer of any such Person.
"Agreement" means this Agreement as the same may be amended,
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supplemented or modified in accordance with the terms hereof.
"▇▇▇▇▇▇ Investors" means the Persons named on the signature pages
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hereof as "▇▇▇▇▇▇ Investors" that own Shares.
"▇▇▇▇▇▇ Stockholders" means the ▇▇▇▇▇▇ Investors and any Direct
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Permitted Transferee thereof to whom Shares are transferred in accordance with
Section 2.2 of this Agreement, and the term "▇▇▇▇▇▇ Stockholder" shall mean any
such Person.
"Board of Directors" means the Board of Directors of the Company.
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"Business Day" means any day other than a Saturday, Sunday or other
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day on which commercial banks in the State of New York are authorized or
required by law or executive order to be closed for business.
"Charter Documents" means the Restated Certificate of Incorporation
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and the By-laws of the Company each as in effect from time to time.
"Commission" means the Securities and Exchange Commission or any
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similar agency then having jurisdiction to enforce the Securities Act.
"Common Stock" has the meaning set forth in the recitals to this
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Agreement and any other capital stock of the Company into which such stock is
reclassified or reconstituted and any other common stock of the Company.
"Common Stock Equivalents" means any security or obligation which is
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by its terms convertible, exchangeable or exercisable into or for shares of
Common Stock, including any option, warrant or other subscription or purchase
right with respect to Common Stock.
"Company" has the meaning set forth in the preamble to this Agreement.
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"Company Option" has the meaning set forth in Section 3.1(c).
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"Company Option Period" has the meaning set forth in Section 3.1(c).
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"Contract Date" has the meaning set forth in Section 3.1(e).
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"Direct Permitted Transferee" of any Stockholder has the meaning set
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forth in the definition of "Permitted Transferee".
"Drag-Along Notice" has the meaning set forth in Section 3.1(g).
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"Drag-Along Rightholders" has the meaning set forth in Section 3.1(g).
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"Drag-Along Sellers" has the meaning set forth in Section 3.1(g).
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"Excess Offered Securities" has the meaning set forth in Section
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3.1(b).
"Exempt Issuance" means (i) a subdivision of the outstanding shares of
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Common Stock into a larger number of shares of Common Stock, including by way of
stock split or stock dividend, (ii) capital stock issued upon exercise,
conversion or exchange of any Common Stock Equivalents either (x) previously
issued or (y) issued in accordance with Section 3.4, (iii) an issuance pursuant
to an effective registration statement filed under the Securities Act, or (iv)
an issuance of capital stock to all holders of Common Stock on a pro rata basis.
"Exempt Transfer" has the meaning set forth in Section 2.1.
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"Existing Stockholders Agreement" means the Stockholders Agreement
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dated February 23, 2001 among Blackstone Capital Company II, L.L.C., Heartland
Industrial Partners, L.P. and the other named Heartland Entities,
▇▇▇▇▇▇▇▇▇▇▇/C&A Holdings, L.L.C. and the Company, as amended, supplemented or
modified in accordance with its terms.
"Existing Tag-Along Rightholders" means the "Tag-Along Rightholders,"
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as such term is defined under the Existing Stockholders Agreement.
"Fair Value" has the meaning set forth in Section 3.2(b).
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"Future Tag-Along Rightholder" means any Person who is granted tag-
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along rights on transfers of shares of Common Stock by any Heartland Selling
Stockholder pursuant to any agreement entered into in the future.
"Governmental Authority" means the government of any nation, state,
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city, locality or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"Heartland" has the meaning set forth in the preamble.
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"Heartland Entities" means Heartland Industrial Partners, L.P.,
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Heartland Industrial Partners (FF), L.P., Heartland Industrial Partners (E1),
L.P., Heartland Industrial Partners (K1), L.P., Heartland Industrial Partners
(C1), L.P. and Permitted Transferees under clause (ii)(1) of the definition of
Permitted Transferees of any of the foregoing.
"Heartland Selling Stockholder" has the meaning set forth in Section
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3.1(f).
"Investor Stockholders" means each Heartland Entity and any Permitted
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Transferee thereof to whom Shares are transferred in accordance with Section 2.2
of this Agreement, and the term "Investor Stockholder" shall mean any such
person.
"Involuntary Transfer" means any transfer, proceeding or action by or
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in which a Stockholder shall be deprived or divested of any right, title or
interest in or to any of the Shares, including, without limitation, (i) any
seizure under levy of attachment or execution, (ii) any transfer in connection
with bankruptcy (whether pursuant to the filing of a voluntary or an involuntary
petition under the United States Bankruptcy Code of 1978, or any modifications
or revisions thereto) or other court proceeding to a debtor in possession,
trustee in bankruptcy or receiver or other officer or agency, (iii) any transfer
to a state or to a public officer or agency pursuant to any statute pertaining
to escheat or abandoned property, (iv) any transfer pursuant to a divorce or
separation agreement or a final decree of a court in a divorce action and (v)
any transfer by way of foreclosure.
"Involuntary Transferee" has the meaning set forth in Section 3.2(a).
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"IT Rightholder" has the meaning set forth in Section 3.2(a).
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"J Transaction" has the meaning set forth in the preamble.
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"▇▇▇▇ Investors" has the meaning set forth in the preamble.
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"▇▇▇▇ Stockholders" means the ▇▇▇▇ Investors that own Shares and any
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Direct Permitted Transferee thereof to whom Shares are transferred in accordance
with Section 2.2 of this Agreement, and the term "▇▇▇▇ Stockholder" shall mean
any such Person.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
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assignment, encumbrance, lien (statutory or other) or preference, priority,
right or other security interest or preferential arrangement of any kind or
nature whatsoever (excluding preferred stock and equity related preferences).
"Matters" has the meaning set forth in Section 6.1.
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"Merger Agreement" has the meaning set forth in the preamble.
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"New Issuance Notice" has the meaning set forth in Section 3.4.
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"New Securities" has the meaning set forth in Section 3.4.
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"New Stockholders" means, collectively, the ▇▇▇▇▇▇ Stockholders and
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the ▇▇▇▇ Stockholders.
"Offer Price" has the meaning set forth in Section 3.1(a).
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"Offered Securities" has the meaning set forth in Section 3.1(a).
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"Offering Notice" has the meaning set forth in Section 3.1(a).
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"Permitted Transferee" means:
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(a) with respect to any Stockholder who is a natural person, (1) the spouse
(or another individual designated in writing by a Stockholder who has no
spouse), parent or any lineal descendant (including by adoption and
stepchildren) of such Stockholder, (2) any trust of which such Stockholder
is a trustee and which is established solely for the benefit of any of the
foregoing individuals, (3) any charitable foundation selected by such
Stockholder, (4) the estate of such Stockholder or any Person to whom
Common Stock is transferred by will or due to the intestacy of such
Stockholder, (5) any partnership, all of the general partner(s) and limited
partner(s) (if any) of which are one or more Persons identified in this
clause (i)(a), or (6) any corporation or limited liability company, all of
the equity owners of which are one or more Persons identified in this
clause (i)(a) and (b) with respect to the ▇▇▇▇ Investors, (1) JFC Holdings
Trust, a Massachusetts Business Trust, as long as its beneficiaries are
natural persons who were beneficiaries of such Trust at the time the ▇▇▇▇
Investors acquired the Shares and/or one or more Persons that would be
Permitted Transferees of any such beneficiaries pursuant to clause (a) of
this paragraph (i) or (2) ▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇; provided that, in the
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case of clauses (a) and (b), such Person executes a Transfer Agreement (any
such Person being a "Direct Permitted Transferee" of such person);
with respect to a Heartland Entity, (1) any Affiliate of a Heartland
Entity, (2) any investor in a Heartland Entity or an Affiliate of such
investor in a Heartland Entity or an investor in any fund or other
investment vehicle established or managed by any Heartland Entity or any of
its Affiliates, (3) any of the New Stockholders or any of their respective
Affiliates, (4) any investor in a Heartland Entity in connection with a pro
rata distribution of shares of Common Stock to all investors in a Heartland
Entity at the time of the expiration or termination of the fund or any
Affiliate of such investor, or (5) any other Person that is a "Stockholder"
within the meaning of the Existing Stockholders Agreement; provided that,
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in the case of clause (1), (2), (3), (4) or (5) any such transferee
executes a Transfer Agreement; and
with respect to any Stockholder, any institutional lender to which such
Stockholder pledges or grants a security interest in shares of Common Stock
in a bona fide transaction effected in good faith provided that (a) such
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pledgee executes a Transfer Agreement (and acknowledges that it shall not
receive any of the rights granted to Stockholders under this Agreement),
(b) such pledgee is not granted any voting rights with respect to the
Common Stock prior to foreclosure and (c) prior to any subsequent
foreclosure or sale of such shares or any transfer resulting from such
foreclosure is effected, the provisions of Article III must be satisfied.
"Person" means any individual, firm, corporation, partnership, trust,
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incorporated or unincorporated association, joint venture, joint stock company,
limited liability company, Governmental Authority or other entity of any kind,
and shall include any successor (by merger or otherwise) of such entity.
"Proportionate Percentage" has the meaning set forth in Section 3.4.
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"Proposed Price" has the meaning set forth in Section 3.4.
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"Registration Rights Agreement" has the meaning set forth in the
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preamble, as such agreement may be amended, modified or waived.
"Rightholder(s)" has the meaning set forth in Section 3.1(b).
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"Securities Act" means the United States Securities Act of 1933, as
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amended, and the rules and regulations of the Commission promulgated thereunder.
"Selling Stockholder" has the meaning set forth in Section 3.1(a).
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"Shares" means, with respect to each Stockholder, all shares, whether
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now owned or hereafter acquired, of Common Stock of the Company and all Common
Stock Equivalents other than Shares that would not constitute Registrable
Securities pursuant to the Registration Rights Agreement; provided, however, for
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the purposes of any computation of the number of Shares pursuant to Sections 2,
3 and 7, all outstanding Common Stock Equivalents shall be deemed converted,
exercised or exchanged as applicable and the shares of Common Stock issuable
upon such conversion, exercise or exchange shall be deemed outstanding, whether
or not such conversion, exercise or exchange has actually been effected.
"Stockholder Option Period" has the meaning set forth in Section
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3.1(b).
"Stockholders" means the (i) Heartland Entities, (ii) the New
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Stockholders and (iii) any Permitted Transferee of any of the foregoing who has
agreed to be bound by the terms and conditions of this Agreement in accordance
with Section 2.4(a).
"Stockholders Meeting" has the meaning set forth in Section 6.1.
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"Tag-Along Notice" has the meaning set forth in section 3.1(f).
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"Tag-Along Rightholder" has the meaning set forth in Section 3.1(f).
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"Tag-Along Securities" has the meaning set forth in Section 3.1 (f).
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"Tag-Along Third Party Purchaser" has the meaning set forth in Section
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3.1(f).
"Third Party Purchaser" has the meaning set forth in Section 3.1(a).
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"transfer" has the meaning set forth in Section 2.1.
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"Transfer Agreement" means an agreement in the form attached hereto as
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Exhibit A.
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"Transferred Shares" has the meaning set forth in Section 3.2(a).
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"Warrant Shares" has the meaning set forth in the preamble.
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"Written Consent" has the meaning set forth in Section 6.1.
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ARTICLE II
TRANSFER
2.1 Limitation on Transfer. No Stockholder shall directly or
indirectly sell, give, assign, hypothecate, pledge, encumber, grant a security
interest in, subject to a Lien or otherwise dispose of (whether by operation of
law or otherwise) (each a "transfer") any Shares or any right, title or interest
therein or thereto, except (1) pursuant to (a) Sections 2.2, 2.3, 2.4, 3.1, 3.2
or 3.3 of this Agreement, (b) market sales in compliance with Rule 144 under the
Securities Act, (c) a registration statement filed under the Securities Act or
(d) a transaction in which all stockholders of the Company have a right to
transfer their shares on a pro rata basis and (2) otherwise in compliance with
this Agreement. Transfers referred to in clauses (1)(b), (c) and (d) are
"Exempt Transfers." Any attempt to transfer any Shares or any rights
thereunder in violation of this Section 2.1 shall be null and void ab initio.
2.2 Permitted Transfers. Notwithstanding anything to the contrary
contained in this Agreement, but subject to Sections 2.3 and 2.4, at any time,
each Stockholder may transfer all or a portion of its Shares to any of its
Permitted Transferees.
2.3 Permitted Transfer Procedures. If any New Stockholder wishes to
transfer Shares to a Permitted Transferee under Section 2.2, such New
Stockholder shall give notice to the Company of its intention to make such a
transfer not less than five (5) Business Days prior to effecting such transfer
(except in the case of a transfer to the estate of a deceased Stockholder, and
such estate shall give such notice as soon as practicable after such transfer)
which notice shall state the name and address of each Permitted Transferee to
whom such transfer is proposed, the relationship of such Permitted Transferee
to such Stockholder, and the number of Shares proposed to be transferred to such
Permitted Transferee; provided that no such notice will be required for the ▇▇▇▇
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Stockholders to pledge Shares on the Closing Date of the ▇▇▇▇ Transactions in
accordance with and subject to compliance on the Closing Date with the
requirements of clause (iii) of the definition of "Permitted Transferee."
2.4 Transfers in Compliance with Law; Substitution of Transferee.
Notwithstanding any other provision of this Agreement, no transfer may be made
pursuant to this Section 2 or Section 3 (except in an Exempt Transfer in the
case of the following clauses (a) and (b)) unless (a) if to a Permitted
Transferee, the transferee executes, prior to such transfer, a Transfer
Agreement, (b) the transfer complies in all respects with the applicable
provisions of this Agreement and (c) the transfer complies in all respects with
applicable federal and state securities laws, including, without limitation, the
Securities Act. If requested by the Company, an opinion of counsel to such
transferring Stockholder shall be supplied to the Company, at such transferring
Stockholder's expense, to the effect that such transfer complies with the
applicable federal and state securities laws. Upon becoming a party to this
Agreement, the Permitted Transferee shall be substituted for the transferring
Stockholder and deemed to be subject to this Agreement to the extent provided
herein.
ARTICLE III
RIGHT OF FIRST REFUSAL; TAG-ALONG RIGHTS;
DRAG-ALONG RIGHTS
3.1 Proposed Voluntary Transfers.
(a) Offering Notice. Subject to Sections 2.2, 2.3, 2.4 and 3.1(h),
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if any New Stockholder (a "Selling Stockholder ") wishes to transfer all or any
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portion of its Shares to any Person (other than to its Permitted Transferee) (a
"Third Party Purchaser") and such Selling Stockholder wants to make any offer to
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sell such Shares to, or has received a bona fide offer to purchase such Shares
from a Third Party Purchaser, such Selling Stockholder shall then offer to sell
such Shares by sending notice (an "Offering Notice") to each Investor
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Stockholder and the Company, which shall state (i) the number of Shares proposed
to be transferred (the "Offered Securities"); (ii) the purchase price per Share
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proposed by the Selling Stockholder or offered by the Third Party Purchaser for
the Offered Securities (the "Offer Price"); and (iii) the other terms and
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conditions of such sale. Upon delivery of the Offering Notice, such offer shall
be irrevocable unless and until the rights of first refusal provided for herein
shall have been waived or shall have expired.
(b) Stockholder Option; Exercise.
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(i) For a period of ten (10) Business Days after the giving of
the Offering Notice pursuant to Section 3.1(a) (the "Stockholder Option
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Period"), each of the Investor Stockholders (for the purpose of Section
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3.1, each, a "Rightholder" and collectively, the "Rightholders") shall have
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the right to purchase the Offered Securities at a purchase price equal to
the Offer Price and upon the terms and conditions set forth in the Offering
Notice. Each Rightholder shall have the right to purchase that percentage
of the Offered Securities determined by dividing (A) the total number of
Shares then owned by such Rightholder by (B) the total number of Shares
then owned by all such Rightholders. If the consideration consists wholly
or in material part of consideration other than cash or marketable
securities and the Rightholder or the Company would be willing to exercise
its rights hereunder based upon the value ascribed to such consideration by
the Selling Stockholder, the Company, Heartland or any Selling Stockholder
may require that a determination of Fair Value of the Offered Securities be
made in the same manner as would apply to a determination of Fair Value
under Section 3.2(b) (with Heartland substituted for IT Rightholders and
the Selling Stockholder requesting such an appraisal substituted for the
Involuntary Transferee), and in such event, all time periods under this
Section 3.1(a) through 3.1(e) shall be tolled pending the determination of
Fair Value. If any Rightholder does not fully subscribe for the number or
amount of Offered Securities it or he is entitled to purchase, then each
other fully participating Rightholder shall have the right to purchase that
percentage of the Offered Securities not so subscribed for (for the
purposes of this Section 3.1(b), the
"Excess Offered Securities") determined by dividing (x) the total number of
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Shares then owned by such fully participating Rightholder by (y) the total
number of Shares then owned by all fully participating Rightholders. The
calculation described in the preceding sentence shall be made in successive
proration calculations until there are no remaining Excess Offered
Securities or there is no remaining Rightholder who indicated a willingness
in the notice referred to in Section 3.1(b)(ii) to subscribe for additional
Offered Securities.
(ii) The right of each Rightholder to purchase the Offered
Securities under subsection (i) above shall be exercisable by delivering
written notice of the exercise thereof, prior to the expiration of the
Stockholder Option Period, to the Selling Stockholder with a copy to the
Company. Each such notice shall state (a) the number of Shares held by
such Rightholder, (b) the number of Offered Securities that such
Rightholder is willing to purchase pursuant to this Section 3.1(b),
including the number of Excess Offered Securities, if any, such Rightholder
shall wish to purchase. The giving of such notice shall constitute a
binding obligation to purchase the number of Shares elected, subject to the
provisions of this Section 3.1(b) and in accordance with Section 3.1(d).
The failure of a Rightholder to respond within the Stockholder Option
Period to the Selling Stockholder shall be deemed to be a waiver of such
Rightholder's rights under subsection (i) above, provided that each
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Rightholder may waive its rights under subsection (i) above prior to the
expiration of the Stockholder Option Period by giving written notice to the
Selling Stockholder, with a copy to the Company.
(c) Company Option; Exercise. If the Rightholders do not elect to
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purchase all of the Offered Securities, then on the Business Day next following
the earlier to occur of (A) the expiration of the Stockholder Option Period and
(B) the date upon which the Company shall have received written notice from each
of the Rightholders of its exercise of its right pursuant to Section 3.1(b) or
its waiver thereof (the "Company Option Period"), the Company shall have the
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right (the "Company Option") but not the obligation to purchase any remaining
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Excess Offered Securities at a purchase price equal to the Offer Price and upon
the terms and conditions set forth in the Offering Notice. The right of the
Company to purchase any of the remaining Excess Offered Securities under this
Section 3.1(c) shall be exercisable by delivering written notice of the exercise
thereof, prior to the expiration of the Company Option Period, to the Selling
Stockholder. The failure of the Company to respond within the Company Option
Period to the Selling Stockholder shall be deemed to be a waiver of the Company
Option, provided that the Company may waive its rights under this Section 3.1(c)
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prior to the expiration of the Company Option Period by giving written notice to
the Selling Stockholder. If the Company and/or the Rightholders do not purchase
all of the Offered Securities pursuant to Section 3.1(b) and/or Section 3.1(c),
then the Selling Stockholder may, subject to Section 3.1(f), sell the remaining
Excess Offered Securities to a Third Party Purchaser in accordance with Section
3.1(e).
(d) Closing. The closing of the purchases of Offered Securities
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subscribed for by the Rightholders under Section 3.1(b) and/or the Company under
Section 3.1(c) shall be held at the executive office of the Company at 11:00
a.m., local time, on the fifteenth Business Day after the giving of the Offering
Notice pursuant to Section 3.1(a) or at such other time and place as the parties
to the transaction may agree. At such closing, the Selling Stockholder shall
deliver certificates representing the Offered Securities, duly endorsed for
transfer and accompanied by all requisite transfer taxes, if any, and such
Offered Securities shall be free and clear of any Liens (other than those
arising hereunder and those attributable to actions by the purchasers thereof)
and the Selling Stockholder shall so represent and warrant, and shall further
represent and warrant that it is the sole beneficial and record owner of such
Offered Securities. The Company and/or each Rightholder, as the case may be,
purchasing Offered Securities shall deliver at the closing payment in full for
the Offered Securities purchased by it or him. At such closing, all of the
parties to the transaction shall execute such additional documents as are
otherwise necessary or appropriate.
(e) Sale to a Third Party Purchaser. Unless the Company and/or the
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Rightholders elect to purchase all the Offered Securities under Sections 3.1(b)
and 3.1(c), the Selling Stockholder may sell any remaining Excess Offered
Securities to a Third Party Purchaser at a price not less than the Offer Price
and otherwise on terms and conditions not materially more favorable to the Third
Party Purchaser than those set forth in the Offering Notice; provided, however,
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that such sale is bona fide and made pursuant to a contract within thirty (30)
days after the earlier to occur of (i) the exercise or waiver by the Company and
all of the Rightholders of their options to purchase the Offered Securities and
(ii) the expiration of the Company Option Period (the "Contract Date"); and
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provided further, that such sale shall not be consummated unless and until such
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Third Party Purchaser shall represent in writing to the Company and each
Rightholder that it is aware of the rights of the Company and the Stockholders
contained in this Agreement. If such sale is not consummated within thirty (30)
days after the Contract Date for any reason, then the restrictions provided for
herein shall again become effective as to such remaining Excess Offered
Securities, and no transfer of such remaining Excess Offered Securities may be
made thereafter by the Selling Stockholder without again offering the same to
the Company and the Rightholders in accordance with this Section 3.1.
(f) Tag-Along Rights.
----------------
(i) Subject to Sections 2.2, 2.3, 2.4 and 3.1(h), if a Heartland
Entity (a "Heartland Selling Stockholder") wishes to transfer
-----------------------------
Shares to any Person (other than a Permitted Transferee) (a "Tag-Along
---------
Third Party Purchaser"), the Company or any of its subsidiaries other than
---------------------
in an Exempt Transfer, such Heartland Entity shall give notice (a "Tag-
---
Along Notice") to each other Stockholder (each, a "Tag-Along Rightholder")
------------ ---------------------
and the Company, which shall state (i) the number of Shares proposed to be
transferred (the "Tag-Along Securities"); (ii) the purchase price per Share
--------------------
proposed by the Heartland Selling Stockholder or offered by the Tag-Along
Third Party Purchaser for the Tag-Along Securities (the "Tag Along Offer
---------------
Price"); and (iii) the other terms and conditions of such sale. Each Tag-
-----
Along Rightholder shall have the right to sell to such Tag-Along Third
Party Purchaser, the Company, or any of its subsidiaries, upon the terms
set forth in the Tag-Along Notice, that number of Shares held by such Tag-
Along Rightholder equal to that percentage of the Tag-Along Securities
determined by dividing (A) the total number of Shares then owned by such
Tag-Along Rightholder by (B) the sum of (1) the total number of Shares then
owned by all such Tag-Along Rightholders with respect to which Tag-Along
Rightholders are exercising their rights pursuant to this Section 3.1(f)(i)
plus (2) the total number of Shares then owned by the Heartland Selling
Stockholder plus (3) the total number of Shares then owned by all Existing
Tag-Along Rightholders with respect to which Existing Tag-Along
Rightholders are exercising their rights pursuant to the Existing
Stockholders Agreement (but without duplication of Shares included in the
preceding clause (2)) plus (4) the total number of shares of Common Stock
than owned by all Future Tag-Along Rightholders with respect to which
Future Tag-Along Rightholders are exercising tag along rights on sales by
the Heartland Selling Stockholders; provided the Heartland Selling
Stockholders and the Tag-Along Rightholder(s) exercising their rights
pursuant to this Section 3.1(f)(i) shall sell the entire number of Shares
required to be sold by such Tag-Along Rightholder(s) pursuant to this
Section 3.1(f)(i), with the number of Tag-Along Securities to be sold to
such Tag-Along Third Party Purchaser, the Company or any of its
subsidiaries by the Heartland Selling Stockholder being reduced
accordingly.
(ii) The Heartland Selling Stockholder shall give the Tag-Along
Notice at least ten (10) Business Days prior to the proposed consummation
of such sale, setting forth the name of such Heartland Selling Stockholder,
the number of Tag-Along Securities, the name and address of the proposed
Tag-Along Third Party Purchaser, the Company or its subsidiaries, as
applicable, the proposed amount and form of consideration and terms and
conditions of payment offered by or to such Tag-Along Third Party
Purchaser, the Company or its subsidiary, as applicable, the percentage of
Shares that such Tag-Along Rightholder may sell to such Tag-Along Third
Party Purchaser, the Company or its subsidiary, as applicable, (determined
in accordance with Section 3.1(f)(i)), and a representation that such Tag-
Along Third Party Purchaser, or the Company or its subsidiary, as
applicable, has been informed of the "tag-along" rights provided for in
this Section 3.1(f) and has agreed to purchase Shares in accordance with
the terms hereof. The tag-along rights provided by this Section 3.1(f)
must be exercised by any Tag-Along Rightholder wishing to sell his Shares
within ten (10) days following receipt of the notice required by the
preceding sentence by delivery of a written notice to the Heartland Selling
Stockholder indicating such Tag-Along Rightholder's wish to exercise his
rights and specifying the number of Shares (up to the maximum number of
Shares owned by such Tag-Along Rightholder required to be purchased by such
Tag-Along Third Party Purchaser) he wishes to sell, provided that any Tag-
--------
Along Rightholder may waive his rights under this Section 3.1(f) prior to
the expiration of such 10-day period by giving written notice to the
Heartland Selling Stockholder, with a copy to the Company. The failure of
a Tag-Along Rightholder to respond within such 10-day period shall be
deemed to be a waiver of such Tag-Along Rightholder's rights under this
Section 3.1(f). If a Tag-Along Third Party Purchaser, the Company or its
subsidiary, as applicable, fails to purchase Shares from any Tag-Along
Rightholder that has properly exercised his tag-along rights pursuant to
this Section 3.1(f)(ii), then the Heartland Selling Stockholder shall not
be permitted to consummate the proposed sale of the Tag-Along Securities,
and any such attempted sale shall be null and void ab initio.
(g) Drag-Along Rights. For so long as Heartland is entitled to the
-----------------
right to designate directors as set forth in Section 6.3 of the Existing
Stockholders Agreement, in the event that one or more of the Heartland Entities
(the "Drag-Along Rightholders") receive a bona fide offer from a Tag-Along Third
-----------------------
Party Purchaser to purchase (including a purchase by merger) all or
substantially all of the Shares held by the Heartland Entities or all or a
substantial portion of the Common Stock or consolidated assets of the Company,
the Drag-Along Rightholders may send written notice (the "Drag-Along Notice") to
-----------------
the Company and the other Stockholders (the "Drag-Along Sellers") notifying them
------------------
they will be required to sell all (but not less than all) of their Shares in
such sale (or, in the case of a merger or asset sale, vote as stockholders in
favor of such sale). Upon receipt of a Drag-Along Notice, each Drag-Along
Seller receiving such notice shall be obligated to (i) sell all of its Shares in
the transaction (including a sale by merger or asset sale) contemplated by the
Drag-Along Notice for the same consideration per Share and otherwise on the same
terms and conditions as the Drag-Along Rightholders (including payment of its
pro rata share of all costs associated with such transaction) and (ii) otherwise
take all necessary action in its capacity as a stockholder to cause the
consummation of such transaction, including voting its Shares in favor of such
transaction and not exercising any appraisal rights in connection therewith.
The obligations of the Drag-Along Sellers in respect of a transaction under this
Section 3.1(g) are subject to the satisfaction of the following conditions: (i)
upon the consummation of any such transaction, each Drag-Along Seller shall have
the right to receive cash and/or other consideration in the same form and amount
per share of consideration paid to Drag-Along Rightholders in such transaction
or any other transaction related thereto (such as a payment for consulting or
management services or non-compete payments); (ii) if any Drag-Along Seller is
given an option as to the form and amount of consideration to be received, each
other Drag-Along Seller will be given the same option with respect to its
applicable pro rata share; and (iii) no Drag-Along Seller shall be obligated
under the terms of any agreement respecting any transaction subject to this
Section 3.1(g) to indemnify any person in an amount greater than the proceeds to
be received by such Drag-Along Seller in such transaction.
(h) Additional Exempt Transfers. Notwithstanding anything to the
---------------------------
contrary contained in this Agreement, the following transfers will not be
subject to the provisions of Section 2.4 or Sections 3.1(a) through (e): a
transfer of any Shares pursuant to Rule 144 or a transfer pursuant to a
registration statement filed under the Securities Act. Any Shares so
transferred will cease to be subject to this Agreement.
3.2 Involuntary Transfers.
(a) Rights of First Offer upon Involuntary Transfer. If an
-----------------------------------------------
Involuntary Transfer of any Shares (the "Transferred Shares") owned by any
------------------
Stockholder shall occur, then the Investor Stockholders (unless such Stockholder
is the Stockholder transferring the Transferred Shares) and the Company (for the
purpose of Section 3.2, each, an "IT Rightholder" and collectively, the "IT
-------------- --
Rightholders") shall have the same rights as specified in Sections 3.1(a),
------------
3.1(b) and 3.1(c), respectively, with respect to such Transferred Shares as if
the Involuntary Transfer had been a proposed voluntary transfer by a Selling
Stockholder and shall be governed by Section 3.1 except that (i) the time
periods shall run from the later of the date of agreement as to the purchase
price applicable to such Transferred Shares or with written determination of
Fair Value in accordance with Section 3.2(b), (ii) such rights shall be
exercised by notice to the transferee of such Transferred Shares (the
"Involuntary Transferee") rather than to the Stockholder who suffered or will
----------------------
suffer the Involuntary Transfer and (iii) the purchase price per Transferred
Share shall be agreed upon by the Involuntary Transferee and the purchasing IT
Rightholders purchasing a majority of the Transferred Shares and/or the Company,
as the case may be; provided, however, that if such parties fail to agree as to
-------- -------
such purchase price, the purchase price shall be the Fair Value thereof as
determined in accordance with Section 3.2(b).
(b) Fair Value. If the parties fail to agree upon the purchase price
----------
of the Transferred Shares in accordance with Section 3.2(a) hereof, then the IT
Rightholders or the Company, as the case may be, shall purchase the Transferred
Shares at a purchase price equal to the Fair Value thereof. The Fair Value of
the Transferred Shares shall be determined by a nationally recognized investment
banking firm or nationally recognized expert experienced in the valuation of
corporations engaged in the business conducted by the Company. Within five (5)
Business Days after the date the applicable parties determine that they cannot
agree as to the purchase price, the Involuntary Transferee and the Board of
Directors (in the case of a purchase by the Company), or the purchasing IT
Rightholders purchasing a majority of the Transferred Shares being purchased by
the purchasing IT Rightholders (if the Company is not purchasing any Transferred
Shares), or the Board of Directors and such purchasing IT Rightholders jointly
(in the case of a purchase by the Company and IT Rightholders), as the case may
be, shall designate one such appraiser that is willing and able to conduct such
determination. If either the Involuntary Transferee or the Board of Directors
or the purchasing IT Rightholders or both, or all, as the case may be, fails to
make such designation within such period, then any other party may apply to the
American Arbitration Association or a court of appropriate jurisdiction for the
appointment of such an appraiser. The appraiser shall conduct its determination
as promptly as practicable, and the Fair Value of the Transferred Shares shall
be determined by such appraiser. Such determination shall be final and binding
on the Involuntary Transferee, the Company and the IT Rightholders. The
Involuntary Transferee shall be responsible for one-half the fees and expenses
of the appraiser designated by or on behalf of it, and the Company and/or the
purchasing IT Rightholders in proportion to the ratio in which they are
purchasing Transferred Shares shall be responsible for one-half of the fees and
expenses of the appraiser. For purposes of this Section 3.2(b), the "Fair
----
Value" of the Transferred Shares means the fair market value of such Transferred
-----
Shares determined in accordance with this Section 3.2(b) based upon all
considerations that the appraiser determines to be relevant.
(c) Closing. The closing of any purchase under this Section 3.2
-------
shall be held at the executive office of the Company at 11:00 a.m., local time,
on the earlier to occur of (a) the fifth Business Day after the purchase price
per Transferred Share shall have been agreed upon by the Involuntary Transferee
and the Company or the purchasing IT Rightholders, as the case may be, in
accordance with Section 3.2(a)(iii), or (b) the fifth Business Day after the
determination of the Fair Value of the Transferred Shares in accordance with
Section 3.2(b), or at such other time and place as the parties to the
transaction may agree. At such closing, the Involuntary Transferee shall
deliver certificates, if applicable, or other instruments or documents
representing the Transferred Shares being purchased under this Section 3.2, duly
endorsed with a signature guarantee for transfer and accompanied by all
requisite transfer taxes, if any, and such Transferred Shares shall be free and
clear of any Liens (other than those arising hereunder) arising through the
action or inaction of the Involuntary Transferee and the Involuntary Transferee
shall so represent and warrant, and further represent and warrant that it is the
beneficial owner of such Transferred Shares. The Company or each IT
Rightholder, as the case may be, purchasing such Transferred Shares shall
deliver at closing payment in full in immediately available funds for such
Transferred Shares. At such closing, all parties to the transaction shall
execute such additional documents as are otherwise necessary or appropriate.
(d) General. In the event that the provisions of this Section 3.2
shall be held to be unenforceable with respect to any particular Involuntary
Transfer, the Company and the IT Rightholders shall have the rights specified in
Sections 3.1(b) and 3.1(c), respectively, with respect to any transfer by an
Involuntary Transferee of such Shares, and each IT Rightholder agrees that any
Involuntary Transfer shall be subject to such rights, in which case the
Involuntary Transferee shall be deemed to be the Selling Stockholder for
purposes of Section 3.1 of this Agreement and shall be bound by the provisions
of Section 3.1 and other related provisions of this Agreement.
3.3 Prohibition on Encumbrance. No Stockholder shall pledge,
hypothecate, grant a security interest in or subject to a Lien any of the shares
of Common Stock held by it; provided, however, that a Stockholder may pledge,
-------- -------
hypothecate, grant a security interest in or subject to a Lien such shares to a
Person described in clause (iii) of the definition of "Permitted Transferee".
3.4 Certain Transactions. Except for an Exempt Issuance, subject to
--------------------
the last sentence below, the Heartland Entities shall not acquire from the
Company or any of its subsidiaries any Common Stock of the Company or any other
securities convertible into or exchangeable for Common Stock of the Company
(collectively, "New Securities") unless the Heartland Entities shall offer to
--------------
each of the New Stockholders an opportunity to participate therein on a pro rata
basis in the manner set forth in this Section 3.4 by sending a written notice
(the "New Issuance Notice") to the New Stockholders, which New Issuance Notice
-------------------
shall state (x) the number of New Securities proposed to be issued and (y) the
proposed purchase price per security of the New Securities (the "Proposed
--------
Price"). Subject to the last sentence below, upon delivery of the New Issuance
-----
Notice, such offer shall be irrevocable unless and until the rights provided for
in this Section 3.4 shall have been waived or shall have expired. For a period
of twenty (20) days after the giving of the New Issuance Notice, each of the New
Stockholders shall have the right to purchase its Proportionate Percentage (as
hereinafter defined) of the New Securities, at a purchase price equal to the
Proposed Price and upon the same terms and conditions set forth in the New
Issuance Notice. Each such New Stockholder shall have the right to purchase
that percentage of the New Securities determined pro rata based on the number of
Shares then owned by the Investor Stockholders, the other parties to the
Existing Stockholders Agreement and the New Stockholders that were acquired
directly from the Company or any subsidiary of the Company, whether pursuant to
this Stockholders Agreement or in issuances made in compliance with this Section
3.4 or otherwise, as applicable (the "Proportionate Percentage"). The rights of
------------------------
each New Stockholder to purchase the New Securities shall be exercisable by
delivering written notice of the exercise thereof prior to the expiration of the
20-day period referred to above to the Heartland Entities, which notice shall
state the amount of
New Securities that such New Stockholder elects to purchase pursuant to this
Section 3.4. The failure of a New Stockholder to respond within such 20-day
period shall be deemed to be a waiver of such New Stockholder's rights under
this Section 3.4, provided that each New Stockholder may waive its rights under
this Section 3.4 prior to the expiration of such 20-day period by giving written
notice to the Company. Where reasonably possible, the Heartland Entities shall
give the New Issuance Notice at least 20 days prior to the issuance of New
Securities to the Heartland Entities, but in any event, such notice shall be
given not later than five (5) days following any such issuance. It is understood
that the obligation to provide the New Stockholders with an opportunity to
purchase their Proportionate Percentage of New Securities will be reduced to the
extent that such opportunity is afforded directly by the Company or any
subsidiary of the Company to such New Stockholder. The Heartland Entities will
use commercially reasonable best efforts to accommodate the intent and purposes
of the foregoing provisions. Notwithstanding the foregoing, the Heartland
Entities shall not be required to comply with the foregoing provisions of
Section 3.4 if: (1) compliance would delay or have a material adverse impact
upon any financing or other significant business activity of the Company,
whether by reason of timing, the extent of the investment to be made by the New
Stockholders or otherwise, in the good faith judgment of the Company, or (2)
after giving effect to the exercise of any similar rights under the Existing
Stockholders Agreement, to the extent that the Heartland Entities would not be
entitled to their Proportionate Percentage of the New Securities (which will
result in a reduction in the amount to which the New Stockholders will be
entitled) or (3) the exercise of such rights by any New Stockholder would
conflict with the Existing Stockholders Agreement or any constituent agreement
of any Heartland Entity by reason of any investment in any Heartland Entity by a
New Stockholder.
ARTICLE IV
[Intentionally Omitted]
ARTICLE V
AFTER-ACQUIRED SECURITIES; AGREEMENT TO BE BOUND
5.1 After-Acquired Securities. Except as otherwise provided herein,
all of the provisions of this Agreement shall apply to all of the Shares and
Common Stock Equivalents (a) in the case of the ▇▇▇▇▇▇ Investors, owned or
acquired pursuant to the Merger Agreement, (b) in the case of the ▇▇▇▇
Investors, owned or acquired pursuant to the J Transaction and (c) in each case
owned or acquired on or after the date hereof, which may be issued or
transferred hereafter to a Stockholder in consequence of any additional
issuance, purchase, exchange or reclassification of any of such Shares or Common
Stock Equivalents, corporate reorganization, or any other form of
recapitalization, consolidation, merger, share split or share dividend, or which
are acquired by a Stockholder in any other manner, except to the extent any such
securities would not be Registrable Securities( as defined in the Registration
Rights Agreement.)
5.2 Beneficial Ownership. In making calculations under this
Agreement, no Shares or Common Stock Equivalents owned by any Stockholder shall
be deemed to be beneficially owned by any other Stockholder solely because of
this Agreement and the transactions contemplated hereby.
ARTICLE VI
CORPORATE GOVERNANCE
6.1 General. Each New Stockholder agrees to vote its, her or his
shares of Common Stock to approve the identified potential matters to be
presented for shareholder approval and set forth in Schedule 6.1 separately
------------
delivered (the "Matters"). From and after the execution of this Agreement, each
-------
New Stockholder shall vote its Shares at any regular or special meeting of
stockholders of the Company (a "Stockholders Meeting") or in any written consent
--------------------
executed in lieu of a Stockholders Meeting (a "Written Consent"), and shall take
---------------
all other
actions as a shareholder necessary, to give effect to the Matters. In addition,
each New Stockholder shall vote his, her or its Shares at any Stockholders
Meeting or act by Written Consent with respect to such Shares, upon any matter
submitted for action by the Company's stockholders or with respect to which such
Stockholder may vote or act by Written Consent, in conformity with the specific
terms and provisions of this Agreement, the Charter Documents and the Matters.
6.2 Election of Directors. (a) Each Stockholder shall vote its
Shares at any Stockholders Meeting, or act by Written Consent with respect to
such Shares, and take all other actions necessary to ensure that ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ is a member of the Board of Directors and Vice Chairman of the Board of
Directors so long as the ▇▇▇▇▇▇ Stockholders continue to hold at least 25% of
the Shares (subject to equitable adjustments for stock splits, stock
combinations and similar events) which the ▇▇▇▇▇▇ Stockholders hold on the date
hereof after giving effect to the transactions contemplated by the Merger
Agreement.
(b) Each Stockholder shall vote its Shares at any Stockholders
Meeting, or act by Written Consent with respect to such Shares, and take all
other actions necessary to ensure that ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ is a member of the Board
of Directors so long as the ▇▇▇▇ Stockholders continue to hold at least 25% of
the Shares (subject to equitable adjustments for stock splits, stock
combinations and similar events) which the ▇▇▇▇ Stockholders hold on the date
hereof after giving effect to the J Transaction.
6.3 Vacancy. (a) If at any time, a vacancy is created on the Board
of Directors by reason of the incapacity or death of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and for
as long as ▇▇. ▇▇▇▇▇▇ and or his Direct Permitted Transferees own Shares in the
requisite amounts, his executor, heir or legal representative that inherits or
exercises authority with respect to any Shares held (or formerly held) by him
may designate a replacement director to fill the vacancy; provided that no such
replacement person shall be entitled to serve as Vice Chairman of the Board of
Directors solely by virtue of such designation.
(b) If at any time, a vacancy is created on the Board of Directors by
reason of the incapacity or death of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and for as long as ▇▇.
▇▇▇▇▇▇▇▇ and or his Direct Permitted Transferees own Shares in the requisite
amounts, his executor, heir or legal representative that inherits or exercises
authority with respect to any Shares held (or formerly held) by him may
designate a replacement director to fill the vacancy.
(c) Upon receipt of notice of the designation of a nominee pursuant
to Section 6.3(a) or 6.3(b), each Stockholder shall, as soon as practicable
after the date of such notice, take all reasonable actions, including the voting
of its Shares or executing a Written Consent, to elect the director so
designated to fill the vacancy.
6.4 Reimbursement of Expenses; D&O Insurance. The Company shall
----------------------------------------
reimburse each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or their respective
designees pursuant to Section 6.3 for all reasonable travel and accommodation
expenses incurred by him in connection with attendance at meetings of the Board
of Directors and committees thereof upon presentation of appropriate
documentation therefor.
ARTICLE VII
COVENANTS
7.1 Financial Statements and Other Information. The Company shall
deliver to each New Stockholder such financial statements (including monthly
financial statements), reports and information as may be reasonably requested by
any of the New Stockholders, including a copy of any filings by the Company with
the Commission.
7.2 Inspection. The Company shall permit representatives of the
initial New Stockholders party to the Merger Agreement or the definitive
documentation for the J Transaction to visit and inspect any of its properties,
to examine its corporate, financial and operating records and make copies
thereof or abstracts therefrom, and to discuss its affairs, finances and
accounts with their respective directors, officers and independent public
accountants, all at such reasonable times during normal business hours and as
often as may be reasonably requested upon reasonable advance notice to the
Company. No Stockholder, which directly or together with its Affiliates or
Direct Permitted Transferees beneficially owns less than 5% of the outstanding
Common Stock shall be entitled to any of the rights under this Section 7.2.
ARTICLE VIII
STOCK CERTIFICATE LEGEND
8.1 A copy of this Agreement shall be filed with the Secretary of the
Company and kept with the records of the Company. Each certificate representing
Shares now held or hereafter acquired by any Stockholder shall for as long as
this Agreement is effective (until a transfer pursuant to Rule 144 or an
effective registration statement filed under the Securities Act) bear legends
substantially in the following forms:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR QUALIFIED UNDER ANY STATE SECURITIES LAWS,
AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT
WHILE A REGISTRATION STATEMENT IS IN EFFECT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY
IS SUBJECT TO THE APPLICABLE TERMS OF THE STOCKHOLDERS AGREEMENT,
DATED AS OF JULY 3, 2001, AND THE REGISTRATION RIGHTS AGREEMENT,
DATED AS OF JULY 3, 2001. COPIES OF SUCH AGREEMENTS ARE AVAILABLE
AT THE OFFICES OF THE ISSUER.
ARTICLE IX
MISCELLANEOUS
9.1 Recapitalizations, Exchanges, etc. The provisions of this
Agreement shall apply to the full extent set forth herein with respect to (i)
the shares of Common Stock, (ii) any and all shares of common stock of the
Company into which the shares of Common Stock are converted, exchanged or
substituted in any recapitalization or other capital reorganization by the
Company and (iii) any and all equity securities of the Company or any successor
or assign of the Company (whether by merger, consolidation, sale of assets or
otherwise) which may be issued in respect of, in conversion of, in exchange for
or in substitution of, the shares of Common Stock and shall be appropriately
adjusted for any stock dividends, splits, reverse splits, combinations,
recapitalizations and the like occurring after the date hereof. The Company
shall cause any successor or assign (whether by merger, consolidation, sale of
assets or otherwise) to assume this Agreement with the Designated Holders (as
defined in the Registration Rights Agreement) on terms substantially the same as
this Agreement as a condition of any such transaction.
9.2 Notices. All notices, demands or other communications provided
for or permitted hereunder shall be made in writing and shall be by telecopier,
courier service, or personal delivery:
(a) ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, CEO
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, General Counsel
with copies to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇/▇▇/ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: W. ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
(b) if to the Heartland Entities:
Heartland Industrial Partners, L.P.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇/▇▇/ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: W. ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
(c) if to ▇▇▇▇▇▇ Stockholders:
▇▇▇▇▇▇ Ventures, L.L.C.
▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇ PLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: D. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
(d) if to ▇▇▇▇ Stockholders:
▇▇▇▇ Fabrics Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
with a copy to
Goulston & Storrs, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
(e) if to any other Stockholder, at its address as it appears
on the record books of the Company.
All such notices, demands and other communications shall be deemed to have been
duly given when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial courier service; and when receipt is
mechanically acknowledged, if telecopied. Any party may by notice given in
accordance with this Section 9.2 designate another address or Person for receipt
of notices hereunder and the Company shall update its record books accordingly.
9.3 Successors and Assigns; Third Party Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon successors and
permitted assigns of the parties hereto. This Agreement is not assignable
except in connection with a transfer of Shares in accordance with this
Agreement. No Person other than the parties hereto and their successors and
permitted assigns is intended to be a beneficiary of this Agreement.
9.4 Amendment and Waiver.
(a) Except as set forth herein, no failure or delay on the part of
any party hereto in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to the parties hereto at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any provision
of this Agreement, any waiver of any provision of this Agreement, and any
consent to any departure by any party from the terms of any provision of this
Agreement, shall be effective only if it is made or given in writing and signed
by (i) the Company, (ii) Heartland, (iii) a Majority of the ▇▇▇▇▇▇ Stockholders
(as defined in the Registration Rights Agreement) and (iv) a Majority of the
▇▇▇▇ Stockholders (as defined in the Registration Rights Agreement), in each
case, to the extent such Stockholder group is adversely affected by such
amendment, supplement, modification, waiver, consent or departure. Any such
amendment, supplement, modification, waiver or consent shall be binding upon the
Company and all of the Stockholders.
9.5 Counterparts. This Agreement may be executed in any number of
counterparts, and by the parties hereto in separate counterparts each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
9.6 Specific Performance. The parties hereto intend that each of the
parties have the right to seek damages or specific performance in the event that
any other party hereto fails to perform such party's obligations hereunder.
Therefore, if any party shall institute any action or proceeding to enforce the
provisions hereof, any party against whom such action or proceeding is brought
hereby waives any claim or defense therein that the party seeking the injunction
has an adequate remedy at law.
9.7 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
9.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW THEREOF.
9.9 Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall materially impair the benefits of the
remaining provisions hereof.
9.10 Rules of Construction. Unless the context otherwise requires,
references to sections or subsections refer to sections or subsections of this
Agreement.
9.11 Entire Agreement. This Agreement, together with the exhibits
and schedules hereto, is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein. There are no restrictions, promises,
representations, warranties or undertakings, other than those set forth or
referred to herein or therein. This Agreement, together with the exhibits and
schedules hereto, supersedes all prior agreements and understandings among the
parties with respect to such subject matter.
9.12 Further Assurances. Each of the parties shall, and shall cause
their respective Affiliates to, execute such documents and perform such further
acts as may be reasonably required or desirable to carry out or to perform the
provisions of this agreement.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the undersigned have executed, or have caused to
be executed this Agreement on the date first written above.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ CORPORATION
By:
Name:
Title:
HEARTLAND INDUSTRIAL PARTNERS, L.P.
By: Heartland Industrial Associates, L.L.C.
its general partner
By:
Name:
Title:
HEARTLAND INDUSTRIAL PARTNERS (FF), L.P.
By: Heartland Industrial Associates, L.L.C.
its general partner
By:
Name:
Title:
HEARTLAND INDUSTRIAL PARTNERS (E1), L.P.
By: Heartland Industrial Associates, L.L.C.
its general partner
By:
Name:
Title:
HEARTLAND INDUSTRIAL PARTNERS (K1), L.P.
By: Heartland Industrial Associates, L.L.C.
its general partner
By:
Name:
Title:
HEARTLAND INDUSTRIAL PARTNERS (C1), L.P.
By: Heartland Industrial Associates, L.L.C.
its general partner
By:
Name:
Title:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, a ▇▇▇▇▇▇ Investor
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, a ▇▇▇▇▇▇ Investor
JENS HOHNEL, a ▇▇▇▇▇▇ Investor
▇▇▇▇ FABRICS CORPORATION
By: _______________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chairman of the Board; Chief
Executive Officer
JFC HOLDINGS TRUST
By: _______________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, as Trustee and not
individually
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, a ▇▇▇▇ Investor
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, a ▇▇▇▇ Investor
EXHIBIT A
ACKNOWLEDGMENT AND AGREEMENT
The undersigned wishes to receive from [NAME] ("Transferor") certain
shares or certain options, warrants or other rights to purchase [NUMBER] shares,
par value $[NUMBER] per share, of Common Stock (the "Shares") of ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ Corporation, a Delaware corporation (the "Company");
The Shares are subject to the Stockholders Agreement, dated July 3,
2001 (the "Agreement"), among the Company and the other parties listed on the
signature pages thereto;
The undersigned has been given a copy of the Agreement and afforded
ample opportunity to read and to have counsel review it, and the undersigned is
thoroughly familiar with its terms;
Pursuant to the terms of the Agreement, the Transferor is prohibited
from transferring such Shares and the Company is prohibited from registering the
transfer of the Shares unless and until a transfer is made in accordance with
the terms and conditions of the Agreement and the recipient of such Shares
acknowledges the terms and conditions of the Agreement and agrees to be bound
thereby; and
The undersigned wishes to receive such Shares and have the Company
register the transfer of such Shares.
In consideration of the mutual promises contained herein and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and to induce the Transferor to transfer such shares to the
undersigned and the Company to register such transfer, the undersigned does
hereby acknowledge and agree that (i) he[/she] has been given a copy of the
Agreement and afforded ample opportunity to read and to have counsel review it,
and the undersigned is thoroughly familiar with its terms, (ii) the Shares are
subject to the terms and conditions set forth in the Agreement, and (iii) the
undersigned does hereby agree fully to be bound thereby as an ["Investor
Stockholder"] ["▇▇▇▇▇▇ Stockholder"] ["▇▇▇▇ Stockholder"] (as therein defined).
This ____________ day of ________, 20__.