Exhibit 10.85
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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
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Dated July 3, 2001
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TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS
1.1 Definitions........................................................ 2
ARTICLE II
TRANSFER
2.1 Limitation on Transfer............................................. 8
2.2 Permitted Transfers................................................ 8
2.3 Permitted Transfer Procedures...................................... 8
2.4 Transfers in Compliance with Law; Substitution of Transferee....... 8
ARTICLE III
RIGHT OF FIRST REFUSAL; TAG-ALONG RIGHTS;
DRAG-ALONG RIGHTS
3.1 Proposed Voluntary Transfers....................................... 9
3.2 Involuntary Transfers............................................. 14
3.3 Prohibition on Encumbrance........................................ 16
3.4 Certain Transactions.............................................. 16
3.5 Waiver of Right to Participate in Proposed Offering............... 17
ARTICLE IV
[INTENTIONALLY OMITTED]
ARTICLE V
AFTER-ACQUIRED SECURITIES; AGREEMENT TO BE BOUND
5.1 After-Acquired Securities......................................... 18
5.2 Beneficial Ownership.............................................. 18
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PAGE
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ARTICLE VI
CORPORATE GOVERNANCE
6.1 General........................................................... 18
6.2 Election of Directors............................................. 19
6.3 Vacancy........................................................... 19
6.4 Reimbursement of Expenses; D&O Insurance.......................... 20
ARTICLE VII
COVENANTS
7.1 Financial Statements and Other Information........................ 20
7.2 Inspection........................................................ 20
ARTICLE VIII
STOCK CERTIFICATE LEGEND
ARTICLE IX
MISCELLANEOUS
9.1 Recapitalizations, Exchanges, etc................................. 21
9.2 Notices........................................................... 22
9.3 Successors and Assigns; Third Party Beneficiaries................. 24
9.4 Amendment and Waiver.............................................. 24
9.5 Counterparts...................................................... 24
9.6 Specific Performance.............................................. 24
9.7 Headings.......................................................... 25
9.8 Governing Law..................................................... 25
9.9 Severability...................................................... 25
9.10 Rules of Construction............................................. 25
9.11 Entire Agreement.................................................. 25
9.12 Further Assurances................................................ 25
EXHIBITS
A Form of Transfer Agreement
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STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT dated July 3, 2001, by and among ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ Corporation, a Delaware corporation (the "Company"), Heartland
Industrial Partners, L.P. ("Heartland") and the other Heartland Entities named
herein, the ▇▇▇▇▇▇ 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, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
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
Company and (y) warrants to purchase an aggregate of 500,000 shares (the
"Warrant Shares") of Common Stock;
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 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 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
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:
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ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"Affiliate" shall mean, when used with respect to any Person, any
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,
supplemented or modified in accordance with the terms hereof.
"▇▇▇▇▇▇ Investors" means the Persons named on the signature pages
hereof as "▇▇▇▇▇▇ Investors" that own Shares.
"▇▇▇▇▇▇ Stockholders" means the ▇▇▇▇▇▇ Investors and any 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.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means any day other than a Saturday, Sunday or other
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
and the By-laws of the Company each as in effect from time to time.
"Commission" means the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act.
"Common Stock" has the meaning set forth in the recitals to this
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.
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"Common Stock Equivalents" means any security or obligation which is
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.
"Company Option" has the meaning set forth in Section 3.1(c).
"Company Option Period" has the meaning set forth in Section 3.1(c).
"Contract Date" has the meaning set forth in Section 3.1(e).
"Direct Permitted Transferee" of any Stockholder has the meaning set
forth in the definition of "Permitted Transferee".
"Drag-Along Notice" has the meaning set forth in Section 3.1(g).
"Drag-Along Rightholders" has the meaning set forth in Section 3.1(g).
"Drag-Along Sellers" has the meaning set forth in Section 3.1(g).
"Excess Offered Securities" has the meaning set forth in Section
3.1(b).
"Exempt Issuance" means (i) a subdivision of the outstanding shares
of 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, (iv) an
issuance of capital stock to all holders of Common Stock on a pro rata basis,
or (v) as to the New Stockholders only, any issuance of capital stock to one or
more Heartland Entities the net proceeds of which are applied towards the
purchase price for the acquisition of the TAC-Trim division of Textron Inc.
("TAC-Trim").
"Exempt Transfer" has the meaning set forth in Section 2.1.
"Existing Stockholders Agreement" means the Stockholders Agreement
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,"
as such term is defined under the Existing Stockholders Agreement.
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"Fair Value" has the meaning set forth in Section 3.2(b).
"Future Tag-Along Rightholder" means any Person who is granted
tag-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,
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.
"Heartland Entities" means Heartland Industrial Partners, L.P.,
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
3.1(f).
"Investor Stockholders" means each Heartland Entity and any Permitted
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
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).
"IT Rightholder" has the meaning set forth in Section 3.2(a).
"J Transaction" has the meaning set forth in the preamble.
"▇▇▇▇ Investors" has the meaning set forth in the preamble.
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"▇▇▇▇ Stockholders" means the ▇▇▇▇ Investors that own Shares and any
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,
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.
"Merger Agreement" has the meaning set forth in the preamble.
"New Issuance Notice" has the meaning set forth in Section 3.4.
"New Securities" has the meaning set forth in Section 3.4.
"New Stockholders" means, collectively, the ▇▇▇▇▇▇ Stockholders and
the ▇▇▇▇ Stockholders.
"Offer Price" has the meaning set forth in Section 3.1(a).
"Offered Securities" has the meaning set forth in Section 3.1(a).
"Offering Notice" has the meaning set forth in Section 3.1(a).
"Permitted Transferee" means:
(i) (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
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇; provided that, in the case of clauses (a) and (b), such
Person to whom Shares are transferred (who is not already a signatory to
this Agreement) executes a Transfer Agreement (any such Permitted
Transferee being a "Direct Permitted Transferee" of such person);
(ii) 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, in the case of clause (1), (2),
(3), (4) or (5) any such transferee executes a Transfer Agreement; and
(iii) 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 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, 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.
"Proposed Price" has the meaning set forth in Section 3.4.
"Registration Rights Agreement" has the meaning set forth in the
preamble, as such agreement may be amended, modified or waived.
"Rightholder(s)" has the meaning set forth in Section 3.1(b).
"Securities Act" means the United States Securities Act of 1933, as
amended, and the rules and regulations of the Commission promulgated thereunder.
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"Selling Stockholder" has the meaning set forth in Section 3.1(a).
"Shares" means, with respect to each Stockholder, all shares, whether
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 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
3.1(b).
"Stockholders" means the (i) Heartland Entities, (ii) the New
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.
"Tag-Along Notice" has the meaning set forth in section 3.1(f).
"Tag-Along Rightholder" has the meaning set forth in Section 3.1(f).
"Tag-Along Securities" has the meaning set forth in Section 3.1 (f).
"Tag-Along Third Party Purchaser" has the meaning set forth in
Section 3.1(f).
"Third Party Purchaser" has the meaning set forth in Section 3.1(a).
"transfer" has the meaning set forth in Section 2.1.
"Transfer Agreement" means an agreement in the form attached hereto
as Exhibit A.
"Transferred Shares" has the meaning set forth in Section 3.2(a).
"Warrant Shares" has the meaning set forth in the preamble.
"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 ▇▇▇▇ 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
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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),
if any New Stockholder (a "Selling Stockholder") wishes to transfer all or any
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 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
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 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 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.
(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
Period"), each of the Investor Stockholders (for the purpose of Section
3.1, each, a "Rightholder" and collectively, the "Rightholders") shall
have 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
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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 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 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
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 right (the "Company Option") but not the obligation to purchase any
remaining 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
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Company Option, provided that the Company may waive its rights under this
Section 3.1(c) 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
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 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,
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
provided further, that such sale shall not be consummated unless and until such
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.
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(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,
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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,
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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
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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.
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(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,
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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.
3.5 Waiver of Right to Participate in Proposed Offering. Each New
Stockholder hereby irrevocably waives on behalf of itself and each transferee
to whom it may transfer Shares (whether or not a Permitted Transferee) any
right such New Stockholder or transferee, as the case may be, may have to
participate in the proposed offering of the Company's Common Stock to its
existing stockholders the net proceeds of which are to be applied towards the
purchase price for the acquisition of TAC-Trim.
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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
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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, other than any
Stockholder that is a ▇▇▇▇ Stockholder or a Permitted Transferee of a ▇▇▇▇
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, subject to Section 6.3(a), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 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, subject to Section 6.3(b), ▇▇▇▇▇
▇▇▇▇▇▇▇▇ 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 under Section 6.2(a), 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.
If at any time ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall have resigned from the Board of
Directors (other than as a result of his incapacity or death) and for as long
as ▇▇. ▇▇▇▇▇▇ and/or his Direct Permitted Transferees own Shares in the
requisite amounts under Section 6.2(a) such that ▇▇. ▇▇▇▇▇▇ would be entitled
to be a member of the Board of Directors, ▇▇. ▇▇▇▇▇▇ shall by written
instrument filed with the Secretary of the Company have the right to attend as
an observer (or in the case of telephonic meetings, monitor) all meetings of
the Board of Directors of the Company and each committee thereof and to
participate in all discussions held at such meetings; provided that ▇▇. ▇▇▇▇▇▇
shall not in such capacity as an observer be considered a member of the Board
of Directors or be entitled to vote or consent with respect to any matter
brought before the Board of Directors.
(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 ▇▇▇▇
Fabrics Corporation, ▇▇▇
-▇▇-
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇ and/or the Direct Permitted Transferees of any of
them own Shares in the requisite amounts under Section 6.2(b), 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. If at any time ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall have resigned
from the Board of Directors (other than as a result of his incapacity or death)
and for as long as ▇▇▇▇ Fabrics Corporation, JFC Holdings Trust, ▇▇. ▇▇▇▇▇▇▇▇
and/or the Direct Permitted Transferees of any of them own Shares in the
requisite amounts under Section 6.2(b) such that ▇▇. ▇▇▇▇▇▇▇▇ would be
entitled to be a member of the Board of Directors, ▇▇. ▇▇▇▇▇▇▇▇ shall by
written instrument filed with the Secretary of the Company have the right to
attend as an observer (or in the case of telephonic meetings, monitor) all
meetings of the Board of Directors of the Company and each committee thereof
and to participate in all discussions held at such meetings; provided that ▇▇.
▇▇▇▇▇▇▇▇ shall not in such capacity as an observer be considered a member of
the Board of Directors or be entitled to vote or consent with respect to any
matter brought before the Board of Directors.
(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; provided, however, nothing in this Section 6.3
or in Section 6.2 shall require any person to serve as a member of the Board of
Directors or to designate a successor member to the Board of Directors.
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
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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
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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: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-23-
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.
-24-
(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
-25-
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]
S-1
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__.
SCHEDULE 6.1
The Matters referred to in Section 6.1 of the Stockholders Agreement
are as follows:
(a) Each New Stockholder agrees to vote its, his or her shares of
Common Stock to effect:
(1) any necessary approvals or consents to effectuate the proposed
acquisition by ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Corporation (or any successor
thereto or parent thereof) or any of its affiliates of ▇▇▇▇
Fabrics and its affiliates;
(2) any necessary approvals or consents to effectuate the potential
acquisition by ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Corporation (or any successor
thereto or parent thereof) or any of its affiliates of
businesses identified as TAC-Trim; and
(3) any necessary approvals or consents to create a new holding
company for ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Corporation.
(b) Each of the ▇▇▇▇▇▇ Stockholders agrees to vote its, his or her
shares of Common Stock to approve the election of designees of Heartland
Industrial Partners, L.P. as directors of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Corporation (or any
successor thereto or parent thereof).