TEMTEX INDUSTRIES, INC.
FIRST AMENDED AND RESTATED
VOTING AGREEMENT
This First Amended and Restated Voting Agreement (this
"Agreement") is made and entered into as of the 23rd day of
January, 2003, by and among Temtex Industries, Inc., a Delaware
corporation (the "Company"), ▇▇▇▇▇ ▇. Upfield, a Texas resident
("Upfield") and the current holder of approximately 1,354,440
shares of common stock of the Company, and the holders of the
Company's Subordinated Convertible Notes due July 19, 2007
identified on the signature pages hereof (collectively, but
excluding Upfield in his capacity as a holder of one of the
Company's Subordinated Convertible Notes, the "Investors"). The
Company, the Investors, and Upfield are individually referred to
herein as a "Party" and are collectively referred to herein as
the "Parties." The Company's Board of Directors is referred to
herein as the "Board."
Recitals
WHEREAS, the Company, the Investors, and Upfield have
entered into or joined to that certain Note Purchase Agreement
dated July 19, 2002 (the "Note Purchase Agreement"), which
provides for, among other things, the purchase by the Investors
of an aggregate of $1,360,000 of the Company's Convertible
Subordinated Convertible Notes due July 19, 2007 (the
"Convertible Notes");
WHEREAS, the Company, the Investors, and Upfield have also
entered into or joined to that certain Investors' Rights
Agreement dated July 19, 2002 (the "Investors' Rights Agreement")
providing for certain registration and other rights of Upfield
and the Investors relating to the Convertible Notes and the
securities of the Company issuable upon conversion of the
Convertible Notes;
WHEREAS, to provide for certain individuals to become
Investors under the Note Purchase Agreement, the Parties have
agreed to enter into this Agreement and to amend that certain
Voting Agreement dated July 19, 2003 (the "Original Voting
Agreement"); and
WHEREAS, the Company, Upfield, and the Investors desire to
amend and restate the Original Voting Agreement, in accordance
with Section 15 thereof, as set forth in this Agreement
NOW, THEREFORE, in consideration of the mutual promises and
covenants set forth herein, the Parties hereto agree as follows:
1. Agreement to Vote.
(a) Upfield hereby agrees, on behalf of himself and any
transferee or assignee of any such shares (except to the extent
expressly excluded pursuant to Section 1(b) below), to hold all
shares of Common Stock and any other securities of the Company
acquired by Upfield or such transferees or assignees in the
future (and any securities of the Company issued with respect to,
upon conversion of, or in exchange or substitution for such
securities) (the "Upfield Shares") subject to, and to vote the
Upfield Shares with respect to the election of directors of the
Company being elected at any regular or special meeting of
stockholders (or by written consent) in accordance with, the
provisions of this Agreement. Each of the Investors hereby
agrees, on behalf of himself and any transferee or assignee of
any such shares (except to the extent expressly excluded pursuant
to Section 1(b) below), to hold all shares of Common Stock and
any other securities of the Company acquired by such Investors or
such transferees or assignees in the future (and any securities
of the Company issued with respect to, upon conversion of, or in
exchange or substitution for such securities) (the "Investors'
Shares") subject to, and to vote the Investors' Shares with
respect to the election of directors of the Company being elected
at any regular or special meeting of stockholders (or by written
consent) in accordance with, the provisions of this Agreement.
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(b) The term "Upfield Shares" shall not include, and the
agreement to vote the shares of Common Stock set forth in
Section 1(a) above shall not apply to shares of Common Stock held
by HUTCO, a partnership of which Mr. Upfield is general partner.
Further, neither the term "Upfield Shares" nor the term
"Investors' Shares" shall include any shares of Common Stock at
one time constituting Upfield Shares or Investors' Shares but
subsequently transferred or assigned in a transaction effected
through the public markets under an effective registration
statement, through Rule 144 or otherwise.
(c) Nothing contained herein shall be construed to imply that
any holder of the Upfield Shares or the Investors' Shares has any
obligation to maintain, during the term hereof or otherwise, any
number of shares of Common Stock, all such persons being free to
sell his, her or its shares of Common Stock as he, she or it
shall deem appropriate, provided, however, that any such sale or
transfer shall be subject to the provisions of this Agreement.
2. Election of Directors.
(a) The Investors shall have the right to notify the Company and
Upfield (or the then current owner of a majority of the Upfield
Shares who shall then be obligated to coordinate with all other
owners of the Upfield Shares), as early as possible prior to the
election of the directors of the Company, but, in any event,
according to the provisions of the Bylaws of the Company and at
least thirty (30) calendar days prior to such vote, the names of
up to four (4) persons to be nominated by the Investors (the
"Investor Nominees") to serve as directors of the Company
pursuant to this Voting Agreement. To do so, the Investors
holding more than one-half of the Registrable Securities (as
defined in the Investors' Rights Agreement) held by the
Investors, assuming, if necessary, that any Convertible Notes
then outstanding have been converted pursuant to the terms
thereof (a "Majority"), shall provide the Company and Upfield (or
the then current owner of a majority of the Upfield Shares) with
written notice of the Investor Nominees, their individual
qualifications for directorship, any information necessary to be
included in the Company's proxy or information statement (if then
a public reporting corporation under the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) and any other
information the Company may need or shall reasonably request in
order to assess qualification under the provisions of Section
2(c) below (collectively, "Relevant Information"). Subject to a
determination by the Company that the Investor Nominees meet the
requirements specified in Section 2(c) below and further subject
to Section 2(e) below, the Investor Nominees will be included in
the slate proposed by the Company and the Company agrees that the
Investor Nominee so proposed will be included in the slate of
directors supported by management in the election of directors of
the Company. Nomination as provided herein must occur prior to
each election of directors with respect to which the Investors
shall desire to propose Investor Nominees, whether at an annual
or special meeting or otherwise, and neither the holders of the
Upfield Shares nor the Company are under any obligation to seek
out such nominations from the Investors or to assume that the
Investors intend for existing directors to stand for re-election.
In no event shall the Investors be required to propose any
Investor Nominee for election as a director of the Company.
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(b) Upfield and any subsequent owners of the Upfield Shares
shall have the right to notify the Company and the Investors (or
the then current owner of a majority of the Investors' Shares who
shall then be obligated to coordinate with all other owners of
the Investors' Shares) as early as possible prior to the election
of the directors of the Company, but, in any event, according to
the provisions of the Bylaws of the Company and at least thirty
(30) calendar days prior to such vote, the names of up to four
(4) persons to be nominated by Upfield or any subsequent owners
of the Upfield Shares (the "Upfield Nominees") to serve as
directors of the Company pursuant to this Voting Agreement. To do
so, the owners holding more than one-half of the Upfield Shares
shall provide the Company and the Investors (or the then current
owner of a Majority) with written notice of all Relevant
Information regarding the Upfield Nominees. Subject to a
determination by the Company that the Upfield Nominees meet the
requirements specified in Section 2(c) below and further subject
to Section 2(e) below, the Upfield Nominees will be included in
the slate proposed by the Company and the Company agrees that the
Upfield Nominees so proposed will be included in the slate of
directors supported by management in the election of directors of
the Company. Nomination as provided herein must occur prior to
each election of directors with respect to which Upfield or any
subsequent owner of the Upfield Shares shall desire to propose
Upfield Nominees, whether at an annual or special meeting or
otherwise, and the Company is under no obligation to seek out
such nominations from the owners of the Upfield Shares or to
assume that such owners intend for existing directors to stand
for re-election. At any time any Upfield Nominees are proposed
for election as directors of the Company ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall
be one of the designated Upfield Nominees, provided he is then
willing and able to serve as a director of the Company. In no
event shall Upfield or any subsequent owner of the Upfield Shares
be required to propose any Upfield Nominee for election as
director of the Company.
(c) The persons maintaining rights of nomination under the
provisions of Section 2(a) and 2(b) above (collectively, the
"Nominators"), agree to only nominate those persons as Investor
Nominees or Upfield Nominees, as appropriate, who possess the
qualifications, business experience, industry exposure and/or
other attributes appropriate for a director of a business
corporation such as the Company. In furtherance of the foregoing,
Investors acknowledge that the Company is currently a reporting
corporation under the Exchange Act and, as such, certain
statutes, rules, guidelines and/or other criteria promulgated
under or by the Exchange Act, the NASD, one or more applicable
stock exchange or automated quotation system and/or otherwise,
either currently applicable to the Company or applicable to the
Company in the future, regulate who is a suitable person to serve
as a director of the Company. Consequently, the Nominators agree
to ensure that any and all Investor Nominees or Upfield Nominees,
as appropriate, nominated by the Nominators pursuant to the
provisions hereof meet all such statutes, rules, guidelines and
other criteria applicable to and binding upon the Company.
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(d) In any election of directors of the Company to elect the
Investor Nominees, the persons or entities holding Upfield Shares
each hereby agree to vote at any regular or special meeting of
stockholders (or by written consent) such number of shares of
Common Stock then owned by them (or as to which they then have
voting power) for the Investor Nominees. Further, in any election
of directors of the Company to elect the Upfield Nominees, the
persons or entities holding Investors' Shares each hereby agree
to vote at any regular or special meeting of stockholders (or by
written consent) such number of shares of Common Stock then owned
by them (or as to which they then have voting power) for the
Upfield Nominees. As of the date hereof, the size of the Board
has been set at six (6) members and will remain so until such
time as the size of the Board shall be increased, pursuant to
Section 3 hereof. The Investors and Upfield unanimously agree
that the Investor Nominees shall be current Board members
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ and the
Upfield Nominees shall be current Board members ▇▇▇▇▇ ▇. Upfield,
▇▇▇▇▇ ▇. Upfield and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
(e) Nothing contained herein shall be deemed to supersede,
override or otherwise control the Board of Directors' fiduciary
obligations, including any obligation relating to the nomination
of appropriate persons to the Board.
(f) To the extent the Nominators do not timely exercise their
right to nominate the Investor Nominees, or the Upfield Nominees,
as the case may be, under the terms hereof, (1) the Board is free
to propose any slate of nominees to the shareholders it shall
deem appropriate, (2) the holders of the Upfield Shares are free
to vote such Upfield Shares any way they deem appropriate and (3)
the holders of the Investors' Shares are free to vote such
Investors' Shares any way they deem appropriate.
3. Board Size.
At such time as either Upfield, on the one hand, or the
Investors, on the other hand, select a fourth individual to
propose as an Upfield Nominee or Investor Nominee, as the case
may be, then at such time the Company and its then current set of
directors will use their best efforts to increase the size of the
board to at least eight (8) directors in order to provide both
Upfield and the Investors the opportunity to select the maximum
number of Upfield Nominees and Investor Nominees allowed under
this Agreement. Notwithstanding the foregoing, the Parties
hereto acknowledge and agree that shareholders of the Company not
Parties to this Agreement may have certain rights to increase or
decrease the size of the Board as a matter of applicable law
and/or under the Bylaws of the Company.
4. Removal; Vacancies; Chairmanship.
(a) Any director of the Company may be removed from the Board in
the manner allowed by law and the Company's Certificate of
Incorporation and Bylaws, but with respect to an Investor Nominee
or an Upfield Nominee, only upon the vote or written consent of
the Investors or the holder of a majority of the Upfield Shares,
respectively.
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(b) Should any Upfield Nominee or Investor Nominee die, become
disabled or otherwise fail to complete his or her term of office
as a director of the Company for any reason whatsoever and a
vacancy shall be created thereby, the Parties agree to take all
actions deemed necessary or appropriate so that the vacancy of
any Upfield Nominee shall be filled by the remaining Upfield
Nominees and the vacancy of any Investor Nominee shall be filled
by the remaining Investor Nominees.
(c) In the event of the death of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ during the
three (3) year term of ▇▇. ▇▇▇▇▇▇▇▇'▇ Services Agreement with the
Company dated as of July 19, 2002 (the "▇▇▇▇▇▇▇▇ Services
Agreement"), the ▇▇▇▇▇▇▇▇ Nominees then serving on the Board
shall be entitled to select the Chairman of the Board (the "New
Chairman") to fill the vacancy in the Chairmanship created by
▇▇. ▇▇▇▇▇▇▇▇'▇ death for the period commencing on the death of
▇▇. ▇▇▇▇▇▇▇▇ and terminating on the date that the ▇▇▇▇▇▇▇▇
Services Agreement would have terminated (i.e., July 19, 2005).
In such event, the ▇▇▇▇▇▇▇▇ Nominees serving on the Board at that
time may authorize the payment of a salary to the New Chairman
not to exceed $120,000, annually payable during the period of
such person's service as Chairman of the Board, provided that the
New Chairman enters into a services agreement with the Company
with an expiration not later than the date upon which the
▇▇▇▇▇▇▇▇ Services Agreement would have expired (i.e., July 19,
2005) and which contains similar duties and responsibilities as
those contained in the ▇▇▇▇▇▇▇▇ Services Agreement.
5. Legend on Share Certificates.
Each certificate representing any shares of Common Stock
affected by this Agreement shall be endorsed by the Company with
a legend reading substantially as follows:
"The Shares evidenced hereby are subject to a
First Amended and Restated Voting Agreement
(a copy of which may be obtained upon written
request from the issuer), and by accepting
any interest in such shares the person
accepting such interest shall be deemed to
agree to and shall become bound by all the
provisions of said First Amended and Restated
Voting Agreement."
The Company is hereby granted the authority to
affix to the face of the Original Voting Agreement
appropriate notice which shall clearly state that to
the extent any security bears a legend which references
the Original Voting Agreement, that such legend is
deemed a reference to this First Amended and Restated
Voting Agreement, a copy of which will be provided to
the Company upon written request.
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6. Covenants of the Company.
The Company agrees to use its best efforts to ensure that
the rights granted hereunder are effective and that the Parties
hereto enjoy the benefits thereof. The Company will not, by any
voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be performed hereunder by the
Company, but will at all times in good faith assist in the
carrying out of all of the provisions of this Agreement and in
the taking of all such actions as may be necessary, appropriate
or reasonably requested in order to protect the rights of the
Parties hereunder against impairment.
7. No Liability for Election of Recommended Directors.
Neither the Company, the Investors, Upfield nor any officer,
director, stockholder, partner, employee or agent of such Party,
makes any representation or warranty as to the fitness or
competence of the nominee of any Party hereunder to serve on the
Company's Board by virtue of such Party's execution of this
Agreement or by the act of such Party in voting for such nominee
pursuant to this Agreement.
8. Grant of Proxy.
Should the provisions of this Agreement be construed to
constitute the granting of proxies, such proxies shall be deemed
coupled with an interest and are irrevocable for the term of this
Agreement.
9. Specific Enforcement.
It is agreed and understood that monetary damages would not
adequately compensate an injured Party for the breach of this
Agreement by any Party, that this Agreement shall be specifically
enforceable, and that any breach or threatened breach of this
Agreement shall be the proper subject of a temporary or permanent
injunction or restraining order. Further, each Party hereto
waives any claim or defense that there is an adequate remedy at
law for such breach or threatened breach.
10. Execution by the Company.
The Company, by its execution in the space provided below,
agrees that it will cause the certificates evidencing the shares
of Common Stock to bear the legend required by Section 5 herein,
and it shall supply, free of charge, a copy of this Agreement to
any holder of a certificate evidencing shares of capital stock of
the Company upon written request from such holder to the Company
at its principal office. The Parties hereto do hereby agree that
the failure to cause the certificates evidencing the shares of
Common Stock to bear the legend required by Section 5 herein
and/or failure of the Company to supply, free of charge, a copy
of this Agreement as provided under this Section 10 shall not
affect the validity or enforcement of this Agreement.
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11. Captions.
The captions, headings and arrangements used in this
Agreement are for convenience only and do not in any way limit or
amplify the terms and provisions hereof.
12. Notices.
Any notice required or permitted by this Agreement shall be
in writing and shall be sent prepaid registered or certified
mail, return receipt requested, addressed to the other Party at
the address shown below or at such other address for which such
Party gives notice hereunder. Such notice shall be deemed to have
been given three (3) days after deposit in the mail.
13. Term.
This Agreement shall terminate and be of no further force or
effect upon (a) the acquisition of the Company by another entity
by means of any transaction or series of related transactions
(including, without limitation, any reorganization, merger or
consolidation) that results in the transfer of fifty percent
(50%) or more of the outstanding voting power of the Company or a
sale of all or substantially all of the assets of the Company,
(b) such time as the Investors (together with their respective
affiliates and partners) shall own less than $200,000 of the
Convertible Notes or less than 120,000 shares of Common Stock
received upon conversion thereof, (c) July 19, 2007, or (d) the
written consent of the holders of a Majority and the holders of a
majority of the then outstanding Upfield Shares. In addition, the
owner(s) of a majority of the Upfield Shares shall maintain the
right to terminate this Agreement earlier if, in any election of
directors of the Company, any one or more of the Upfield Nominees
duly nominated hereunder is not included in the slate of nominees
proposed by management of the Company or otherwise supported by
management as provided hereunder. Further, the owner(s) of a
Majority shall maintain the right to terminate this Agreement
earlier if, in any election of directors of the Company, any one
or more of the Investor Nominees duly nominated hereunder is not
included in the slate of nominees proposed by management of the
Company or otherwise supported by management as provided
hereunder.
14. Manner of Voting.
The voting of shares pursuant to this Agreement may be
effected in person, by proxy, by written consent, or in any other
manner permitted by applicable law
15. Amendments and Waivers.
Any term hereof may be amended and the observance of any
term hereof may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the
written consent of the holders of a Majority of the Investors and
the holders of a majority of the then outstanding Upfield Shares.
Any amendment or waiver so effected shall be binding upon the
Parties hereto.
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16. Stock Splits, Stock Dividends, etc.
In the event of any issuance of shares of the Company's
voting securities hereafter to any of the Parties hereto
(including, without limitation, in connection with any stock
split, stock dividend, recapitalization, reorganization, or the
like), such shares shall become subject to this Agreement and
shall be endorsed with the legend set forth in Section 5.
17. Severability.
Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be
held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
18. Binding Effect; Assignment and Transfer.
In addition to any restriction or transfer that may be
imposed by any other agreement by which any Party hereto may be
bound, this Agreement shall be binding upon the Parties, their
respective heirs, successors and assigns. Notwithstanding the
foregoing, the Investors agree that their collective right to
nominate the Investor Nominees as provided in Section 2(a) above
shall continue only so long as they actually own the Convertible
Notes; it being understood that the right to nominate the
Investor Nominees shall not be severable from the ownership of
the Convertible Notes (or the shares of Common Stock issued upon
conversion thereof). Consistent with the provisions of Section
1(c) above, Upfield and any subsequent assignee or transferee of
the Upfield Shares and the Investors and any subsequent assignee
or transferee of the Investors' Shares may sell (both publicly or
privately), convey, gift, pledge, hypothecate or otherwise assign
or transfer the Upfield Shares or the Investors' Shares, as the
case may be; provided, however, as a condition precedent to doing
so, any holder of Upfield Shares or Investors' Shares must obtain
the written agreement of such subsequent assignee or transferee
to be bound by the terms of this Agreement (except to the extent
expressly excluded pursuant to Section 1(b) above). Upon the
execution and delivery of such an agreement by any transferee
reasonably acceptable to the Company, such transferee shall be
deemed to be a Party hereto as if such transferee's signature
appeared on the signature pages hereto.
19. Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard
to conflicts of law principles thereof.
20. Entire Agreement.
This Agreement is intended to be the sole agreement of the
Parties as it relates to this subject matter and does hereby
supersede all other agreements of the Parties relating to the
subject matter hereof.
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21. Counterparts.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the Parties have executed this First
Amended and Restated Voting Agreement as of the date first above
written.
COMPANY:
TEMTEX INDUSTRIES, INC.
By: /s/
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Name:
--------------------------
Title:
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▇▇▇▇▇ UPFIELD
/s/ ▇▇▇▇▇ UPFIELD
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Address: ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
INVESTORS:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇ LIVING TRUST
By: ▇▇▇▇▇▇▇ ▇▇▇, as Sole Trustee
/s/ ▇▇▇▇▇▇▇ ▇▇▇
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Address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Address: ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Address: ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
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Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇
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Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇