EXHIBIT 10.52
AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
BY AND AMONG
ROLLER BEARING HOLDING COMPANY, INC.,
XX. XXXXXXX X. XXXXXXXX AND
XXXXXXXX FAMILY INVESTMENTS, L.P.
AND
WHITNEY RBHC INVESTOR, LLC AND
WHITNEY V, L.P.
DATED AS OF JULY 29, 2002
TABLE OF CONTENTS
PAGE
----
1. DEFINITIONS...........................................................................................1
1.1 "Affiliate"....................................................................................1
1.2 "Applicable Subordinated Debt".................................................................2
1.3 "Board"........................................................................................2
1.4 "Class C Preferred Stock"......................................................................2
1.5 "Class D Preferred Stock.......................................................................2
1.6 "Common Stock".................................................................................2
1.7 "Control"......................................................................................2
1.8 "Derivative Securities"........................................................................2
1.9 "Exercise Price"...............................................................................2
1.10 "Xxxxxxxx Employment Agreement"................................................................2
1.11 "Immediate Family".............................................................................2
1.12 "Indemnification Shares".......................................................................2
1.13 "Initial Public Offering"......................................................................2
1.14 "Management Services Agreement"................................................................3
1.15 "Minimum Xxxxxxxx Ownership"...................................................................3
1.16 "Minimum Whitney Common Ownership".............................................................3
1.17 "Minimum Whitney Ownership"....................................................................3
1.18 "Minimum Whitney Preferred Ownership"..........................................................3
1.19 "New Stock Purchase Agreement".................................................................3
1.20 "Old Stock Purchase Agreement".................................................................3
1.21 "Outstanding Common Shares"....................................................................3
1.22 "Permitted Transfer"...........................................................................3
1.23 "Permitted Transferee".........................................................................4
1.24 "Person".......................................................................................4
1.25 "Preferred Stock"..............................................................................4
1.26 "Public Sale"..................................................................................4
1.27 "RBCA".........................................................................................4
1.28 "Sale of Business Transaction".................................................................4
1.29 "Securities"...................................................................................4
1.30 "Stock Purchase Agreement".....................................................................4
1.31 "Voting Power".................................................................................4
1.32 "Whitney IRR"..................................................................................5
1.33 "Whitney Management"...........................................................................5
1.34 "Whitney Notice Parties".......................................................................5
1.35 "Whitney Parties"..............................................................................5
1.36 Additional Defined Terms.......................................................................5
2. TRANSFER RESTRICTIONS.................................................................................8
2.1 Legends........................................................................................8
2.2 Restrictions on Transfer.......................................................................8
2.3 Right of First Offer...........................................................................9
2.4 Tag-Along Rights..............................................................................10
2.5 Right to Compel Sale..........................................................................12
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
2.6 Securities of Transferees.....................................................................15
2.7 Competitors...................................................................................16
2.8 Transfers Not in Compliance Void..............................................................17
2.9 Termination...................................................................................17
3. RIGHT OF FIRST OFFER; PARTICIPATION RIGHT............................................................17
3.1 Right of First Offer and Participation Right as to New Securities.............................17
3.2 Exceptions to Right of First Offer and Participation Right....................................19
3.3 Right of First Offer on Subordinated Debt Issuances...........................................20
3.4 Termination on Initial Public Offering........................................................20
4. REGISTRATION RIGHTS..................................................................................20
4.1 Piggyback Registration........................................................................20
4.2 Demand Registration...........................................................................21
4.3 Covenants With Respect to Registration........................................................22
4.4 Definition of Common Stock....................................................................29
4.5 Designation of Underwriters...................................................................30
5. SPECIAL WHITNEY PRIVILEGES...........................................................................30
5.1 Whitney Board Designee........................................................................30
5.2 Whitney's Written Consent.....................................................................32
5.3 Whitney's Right to Information................................................................33
6. Affirmative Covenants................................................................................34
6.1 Preservation of Corporate Existence...........................................................34
6.2 Payment of Obligations........................................................................34
6.3 Compliance with Laws..........................................................................34
6.4 Insurance.....................................................................................35
6.5 Books and Records.............................................................................35
6.6 Recourse......................................................................................35
7. TERMINATION; AMENDMENT; WAIVER.......................................................................35
7.1 Termination; Amendment........................................................................35
7.2 Waiver........................................................................................35
8. MISCELLANEOUS........................................................................................35
8.1 Notices.......................................................................................35
8.2 Entire Agreement..............................................................................37
8.3 Captions......................................................................................37
8.4 No Third Party Beneficiary....................................................................37
8.5 Remedies Cumulative...........................................................................37
8.6 Governing Law; Submission to Jurisdiction.....................................................38
8.7 Assignment....................................................................................38
8.8 No Inconsistent Agreements....................................................................38
8.9 Counterparts..................................................................................38
ii
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
This Amended and Restated Stockholder's Agreement, dated as of this 29th
day of July, 2002, by and among Roller Bearing Holding Company, Inc., a Delaware
corporation ("HOLDINGS"), Whitney RBHC Investor, LLC, a Delaware limited
liability company ("WHITNEY INVESTOR") and Whitney V, L.P., a Delaware limited
partnership ("WHITNEY V" and, collectively with Whitney Investor, "WHITNEY"),
Xx. Xxxxxxx X. Xxxxxxxx and Xxxxxxxx Family Investments, L.P., a Delaware
limited partnership (together with Xx. Xxxxxxx X. Xxxxxxxx, "XXXXXXXX" and
together with Whitney, collectively the "INITIAL PARTIES" and individually an
"INITIAL PARTY") and the Persons who by operation of Section 2.6 become a party
hereto.
WHEREAS, Whitney is the owner of (i) 2,368,265 shares (the "WHITNEY COMMON
SHARES") of Class A Voting Common Stock of Holdings, par value $0.01 per share
("CLASS A COMMON STOCK") and (ii) 230,000 shares (the "WHITNEY CLASS B PREFERRED
SHARES") of Class B Exchangeable Convertible Participating Preferred Stock of
Holdings, par value $0.01 per share ("CLASS B PREFERRED STOCK"); and
WHEREAS, Xxxxxxxx is the owner of (a) (i) 100 shares (the "XXXXXXXX COMMON
SHARES") of Class B Supervoting Common Stock of Holdings, par value $0.01 per
share ("CLASS B COMMON STOCK") and (ii) 10,000 shares of Class B Preferred Stock
(the "XXXXXXXX CLASS B PREFERRED SHARES," collectively with the Xxxxxxxx Common
Shares, the "XXXXXXXX SHARES" and collectively with the Xxxxxxxx Common Shares
and the Whitney Shares, the "Shares"); and (b) (i) a warrant to purchase 424,146
shares of Class B Common Stock at $1.00 per share, (ii) a warrant to purchase
125,000 shares of Class B Common Stock at $5.14 per share, (iii) an option to
purchase 9,250 shares of Class A Common Stock at $5.14 per share, and (iv) an
option to purchase 166,667 shares of Class A Common Stock at $1.00 per share
(collectively, the "WARRANTS"); and
WHEREAS, the Initial Parties entered into a Stockholders' Agreement (the
"EXISTING STOCKHOLDERS' AGREEMENT"), dated December 18, 2000, setting forth
their agreements regarding certain matters relating to their ownership of the
Shares and the Warrants; and
WHEREAS, the Initial Parties wish to amend and restate the Existing
Stockholders Agreement in the manner set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and intending to
be legally bound hereby, the parties hereto agree as follows:
1. DEFINITIONS
As used herein, the following terms shall have the meanings indicated:
1.1 "Affiliate" shall mean a Person Controlled by, in Control of, or
under common Control with, another Person.
1.2 "Applicable Subordinated Debt" shall mean indebtedness of Holdings
or any of its subsidiaries that (i) is in an amount of not less than $50
million, (ii) is unsecured, and (iii) is subordinated to all secured debt of
Holdings and/or such subsidiary.
1.3 "Board" shall mean the Board of Directors of Holdings.
1.4 "Class C Preferred Stock" shall mean the Class C Redeemable
Preferred Stock of Holdings, par value $0.01 per share.
1.5 "Class D Preferred Stock shall mean the Class D Preferred Stock of
Holdings, par value $0.01 per share.
1.6 "Common Stock" shall mean (i) the Class A Common Stock, (ii) the
Class B Common Stock and (iii) any other class or series of common stock of the
Company authorized after the date hereof.
1.7 "Control" (including the correlative terms "Controlled by", "in
Control of" and "under common Control with"), with respect to any Person, shall
mean possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
1.8 "Derivative Securities" shall mean options, warrants (including the
Warrants) and other rights to subscribe for, and securities convertible into or
exchangeable or exercisable for, shares of Common Stock, including, but not
limited to, the Class B Preferred Stock.
1.9 "Exercise Price" shall mean, as applicable, the exercise price of
options, warrants (including the Warrants) or rights to subscribe for shares of
Common Stock and the consideration payable upon the conversion or exchange of
securities convertible into or exchangeable for shares of Common Stock.
1.10 "Xxxxxxxx Employment Agreement" shall mean the Amended and Restated
Employment Agreement, dated December 18, 2000, by and between RBCA and Xxxxxxxx.
1.11 "Immediate Family" , with respect to an individual, shall mean his
brothers, sisters, spouse, children (including adopted children), parents,
parents-in-law, grandchildren, great grandchildren and other lineal descendants
and spouses of any of the foregoing.
1.12 "Indemnification Shares" shall mean any shares of Class A Preferred
Stock of Holdings, par value $0.01 per share ("Class A Preferred Stock") issued
by Holdings pursuant to Article 9 of the Stock Purchase Agreement or Article 8
of the New Stock Purchase Agreement.
1.13 "Initial Public Offering" shall mean the first underwritten public
offering of equity securities of Holdings pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "Act"), for which
Holdings receives not less than $50 million in net proceeds and following which
there is a public market for the securities so offered.
2
1.14 "Management Services Agreement" shall mean that certain Amended and
Restated Management Services Agreement, dated of even date herewith, by and
between Whitney & Co., a Delaware corporation, and RBCA.
1.15 "Minimum Xxxxxxxx Ownership" when stated as a percentage, shall mean
the indicated percentage of all Outstanding Xxxxxxxx Common Shares owned by the
Xxxxxxxx Parties as of the date hereof and always as adjusted to reflect any
stock split, stock dividend, reclassification, recapitalization or other
transaction having a similar effect.
1.16 "Minimum Whitney Common Ownership" when stated as a percentage,
shall mean the indicated percentage of all Whitney Common Shares owned by the
Whitney Parties as of the date hereof (and for the avoidance of doubt, excluding
Common Stock that may be obtained upon conversion of the Class B Preferred
Stock) and always as adjusted to reflect any stock split, stock dividend,
reclassification, recapitalization or other transaction having a similar effect.
For the purposes hereof and of Section 1.18 below, if the Whitney Parties
dispose of any shares of Class A Common Stock, the first shares of Class A
Common Stock actually disposed of shall be deemed to be Common Stock obtained
upon conversion of the Class B Preferred Stock (and not the Whitney Common
Shares or otherwise).
1.17 "Minimum Whitney Ownership" when stated as a percentage, shall mean
the indicated percentage of all Outstanding Whitney Common Shares owned by the
Whitney Parties as of the date hereof and always as adjusted to reflect any
stock split, stock dividend, reclassification, recapitalization or other
transaction having a similar effect.
1.18 "Minimum Whitney Preferred Ownership" when stated as a percentage,
shall mean the indicated percentage of each of (i) the Shares of Class A Common
Stock into which the Class B Preferred Stock have been converted, and (ii) the
Whitney Class B Preferred Shares, which for the purposes hereof shall be deemed
to be all (A) Class B Preferred Stock and (B) Class C Preferred Stock and Class
D Preferred Stock, in each case owned by the Whitney Parties, each as of the
date hereof and always as adjusted to reflect any stock split, stock dividend,
reclassification, recapitalization or other transaction having a similar effect.
Further, for the purposes hereof, the Whitney Parties shall be deemed not to
have transferred any shares of such Preferred Stock which shall have been
redeemed by Holdings.
1.19 "New Stock Purchase Agreement" shall mean that certain Stock
Purchase Agreement by and between Holdings and Whitney V, dated as of date
herewith.
1.20 "Old Stock Purchase Agreement" shall mean that certain Stock
Purchase Agreement dated as of November 20, 2000, among the Corporation, Xxxxxxx
X. Xxxxxxxx, Xxxxxxxx Family Investments, L.P. and Whitney Acquisition II, Inc.
1.21 "Outstanding Common Shares" including subsets of such terms such as
"Outstanding Whitney Common Shares" or "Outstanding Xxxxxxxx Common Shares,"
shall mean all Common Stock that may be issued by Holdings or its successors
upon conversion, exchange or exercise of any shares of Common Stock, Warrants or
other Derivative Securities, including the Class B Preferred Stock.
1.22 "Permitted Transfer" shall mean a Transfer to a Permitted
Transferee.
3
1.23 "Permitted Transferee" shall mean, with respect to any Person, (a)
if such Person is an individual, (i) a member of the Immediate Family of such
Person, (ii) a trust or other similar legal entity for the primary benefit of
such Person and/or one or more members of his Immediate Family, or (iii) a
partnership, limited partnership, limited liability company, corporation or
other entity in which such Person alone or together with members of his
Immediate Family possess 100% of the outstanding voting securities, (b) a Person
to whom Securities are Transferred in compliance with Rule 144 under the Act, so
long as Holdings is furnished with evidence reasonably satisfactory to it that
such Transfer complied with such rule, (c) if such Person is not a natural
person, (i) any Affiliate of such Person or (ii) any of such Person's
Affiliates, stockholders, general partners, limited partners, members,
directors, officers, or employees or their respective Affiliates to whom
Securities are Transferred, (d) Transferees pursuant to an effective
registration statement under the Act and (e) with respect to Whitney only, a
financial institution or institutions who are pledged the Whitney Securities as
Collateral Security on the date hereof.
1.24 "Person" shall mean any natural person, corporation, organization,
partnership, association, joint-stock company, limited liability company, joint
venture, trust or government, or any agency or political subdivision of any
government.
1.25 "Preferred Stock" shall mean all outstanding Class A Preferred
Stock, Class B Preferred Stock, Class C Preferred Stock and Class D Preferred
Stock.
1.26 "Public Sale" shall mean any sale of Securities to the public
pursuant to an offering registered under the Act or to the public effected
through a broker, dealer or market pursuant to the provisions of Rule 144 (other
than 144(k)) (if such rule is available) under the Securities Act (or any
similar rule or rules in effect).
1.27 "RBCA" shall mean Roller Bearing Company of America, Inc., a
Delaware corporation and a wholly-owned subsidiary of Holdings.
1.28 "Sale of Business Transaction" shall mean a transaction involving a
sale of all or substantially all of the capital stock of Holdings, a sale of all
or substantially all of the assets of Holdings and its subsidiaries or a merger,
consolidation, recapitalization or other transaction having a substantially
similar result.
1.29 "Securities" including subsets of such terms such as "Whitney
Securities" or "Xxxxxxxx Securities," shall mean the Shares and the Warrants, as
well as (a) any shares of capital stock or Derivative Securities that may be
issued by Holdings or its successors and owned by any of the Parties, and (b)
any shares of capital stock that may be issued by Holdings or its successors to
any of the Parties upon conversion, exchange or exercise of any shares of Common
Stock, Warrants, Preferred Stock or other Derivative Securities, in each case
whether currently owned or hereinafter acquired.
1.30 "Stock Purchase Agreement" shall mean that certain Stock Purchase
Agreement by and among Holdings, Xxxxxxx XX and Xxxxxxxx, dated November 20,
2000.
1.31 "Voting Power" shall mean the right to vote for directors and other
matters that are the subject of a vote of the stockholders of Holdings.
4
1.32 "Whitney IRR" shall mean as of any date of determination, the
annualized internal rate of return realized by the Whitney Parties as a result
of their investment in Class A Common Stock and Class B Preferred Stock pursuant
to the Old Stock Purchase Agreement and the New Stock Purchase Agreement through
such date of determination (it being understood that any proceeds received by
the Whitney Parties in respect of the shares of Class C Preferred Stock, Class D
Preferred Stock and/or Class A Common Stock issued in respect of the Class B
Preferred Stock shall be included in the calculation of the Whitney IRR). For
the avoidance of doubt, (i) all "Closing Fees" paid to Whitney & Co. on the date
hereof pursuant to Section 3(b) of the Management Services Agreement, and (ii)
$300,000 per year of the annual "Advisory Fees" payable to Whitney & Co. from
and after the date hereof pursuant to Section 3(a) of the Management Services
Agreement (so long as the amount of such annual "Advisory Fees" equals or
exceeds $450,000 per year) shall be included in the calculation of the Whitney
IRR, and all other fees or expenses paid to Whitney & Co. pursuant to the
Management Services Agreement shall be excluded from such calculation.
1.33 "Whitney Management" means Whitney & Co., a Delaware Corporation.
1.34 "Whitney Notice Parties" means (a) for so long as the Whitney
Securities are held by Whitney and its Permitted Transferees, Whitney
Management, and (b) if any Whitney Securities are owned by Persons other than
Whitney and its Permitted Transferees, (i) Whitney Management on behalf of
Whitney and its Permitted Transferees, and (ii) each of the other holders of
Whitney Securities.
1.35 "Whitney Parties" shall mean Whitney Investor, Whitney V, Whitney
Management and their respective Affiliates and Permitted Transferees.
1.36 Additional Defined Terms
The following terms are defined elsewhere in this Agreement in the Sections
and on the pages indicated:
Defined Term Section Page
------------ ------- ----
Act 1.13 2
Affiliate 1.1 1
Applicable Subordinated Debt 1.2 2
Board 1.3 2
Board Meetings 5.1(g) 7
Class A Common Stock Recitations 1
Class B Common Stock Recitations 1
Class A Preferred Stock 1.12 2
Class B Preferred Stock Recitations 1
Commission 4.2(a) 7
Common Stock 1.6 2
Company 2.1 7
Compelled Sale 2.5(a) 7
Compelled Sale Notice 2.5(a) 7
Compelled Sale Purchaser 2.5(a) 7
5
Defined Term Section Page
------------ ------- ----
Compelled Sale Transferor 2.5(a) 7
Competitor 2.7(a) 7
Control 1.7 2
Controlled by 1.7 2
Counter-Offer Terms 3.1(a)(ii) 7
Demanding Holders 4.2(a) 7
Demand Notice 4.2(a) 7
Demand Registration Period 4.3(a) 7
Demand Registration Statement 4.2(a) 7
Demand Securities 4.2(a) 7
Derivative Securities 1.8 2
Designees 5.1(d) 7
Exchange Act 4.3(d) 7
Exercise Price 1.9 2
Existing Stockholders' Agreement Recitations 1
First Offer Election 2.3(b) 7
First Offer Notice 2.3(a) 7
First Offer Terms 2.3(b) 7
GAAP 6.2(a) 7
Xxxxxxxx Introduction 1
Xxxxxxxx Acceptance Notice 2.3(c) 7
Xxxxxxxx Class B Preferred Shares Recitations 1
Xxxxxxxx Common Shares Recitations 1
Xxxxxxxx Designees 5.1(d) 7
Xxxxxxxx Employment Agreement 1.10 2
Xxxxxxxx Parties 2.3 7
Xxxxxxxx Preemptive Parties 3.1(b)(ii) 7
Xxxxxxxx Securities 1.29 4
Xxxxxxxx Shares Recitations 1
Holdings Introduction 1
Holdings Response 3.1(a)(ii) 7
Immediate Family 1.11 2
in Control of 2
Indemnification Shares 1.12 2
Indemnified Parties 4.3(d) 7
Indemnifying Party 4.3(f) 7
Independent Director 5.1(c)(iii) 7
Initial Parties Introduction 1
Initial Party Introduction 1
Initial Public Offering 1.13 2
Initiating Notice 2.5(a) 7
Investment Bank 2.5(b) 7
Joinder Agreement 2.6(d) 7
Xxxxxxx 5.1(b)(iii) 7
Management Services Agreement 1.14 3
6
Defined Term Section Page
------------ ------- ----
Minimum Xxxxxxxx Ownership 1.15 3
Minimum Whitney Common Ownership 1.16 3
Minimum Whitney Ownership 1.17 3
Minimum Whitney Preferred Ownership 1.18 3
New Issue Notice 3.1(a) 7
New Issue Terms 3.1(a)(i) 7
New Securities 3.1 7
New Stock Purchase Agreement 1.19 3
Old Stock Purchase Agreement 1.20 3
Other Parties 2.5(a) 7
Outstanding Common Shares 1.21 3
Outstanding Xxxxxxxx Common Shares 1.21 3
Outstanding Whitney Common Shares 1.21 3
Participation Right Recitations 7
Permitted Transfer 1.22 3
Permitted Transferee 1.23 4
Person 1.24 4
Piggyback Shares 4.1 7
Preemptive Issuance 3.1(b) 7
Preemptive Parties 3.1(b) 7
Public Sale 1.26 4
RBCA 1.27 4
Registered Securities 4.3(c)(ii)(D) 7
Registering Parties 4.1 7
Registration Statement 4.1 7
Required Holders 2.3(b) 7
Right of First Offer 3.1(a)(ii) 7
Sale of Business Transaction 1.28 4
Securities Recitations 4
Shares Recitations 1
Stock Purchase Agreement 1.30 4
Tag-Along Notice 2.4(c) 7
Tag-Along Notice Deadline 2.4(c) 7
Tag-Along Offer Notice 2.4(c) 7
Tag-Along Party 2.4(a) 7
Tag-Along Right 2.4(a) 7
Tag-Along Transferee 2.4(a) 7
Tag-Along Transferee Terms 2.4(c) 7
Tag-Along Transferor 2.4(a) 7
Third Party Securities 4.1 7
Transfer 2.2 7
under common Control with 1.7 2
Underwriter's Cutback 4.1 7
Voting Power 1.31 4
Warrants Recitations 1
7
Defined Term Section Page
------------ ------- ----
Whitney Introduction 1
Whitney Class B Preferred Shares Recitations 1
Whitney Common Shares Recitations 1
Whitney Counter-Offer 3.1(a)(ii) 7
Whitney Designees 5.1(d) 7
Whitney Investor Introduction 1
Whitney IRR 1.32 5
Whitney Management 1.33 5
Whitney Notice Parties 1.34 5
Whitney Parties 1.35 5
Whitney Securities 1.29 4
Whitney V Recitations 1
2. TRANSFER RESTRICTIONS
2.1 Legends.
None of the Securities, including the shares of Common Stock underlying the
Warrants and Class B Preferred Stock, have been registered under the Act.
Certificates representing the Shares, the Warrants, and upon exercise of the
Warrants, the shares of Common Stock issuable in connection therewith, shall
bear the following legend:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended
("ACT"), and may not be offered or sold except pursuant to (i)
an effective registration statement under the Act or (ii) an
exemption from registration under such Act.
The securities represented by this certificate are subject to
the restrictions contained in an amended and restated
stockholders' agreement dated as of July 29, 2002, by and
among the issuer of such securities (the "COMPANY") and the
Company's stockholders as such agreement may be amended from
time to time. A copy of such stockholders' agreement shall be
furnished without charge by the Company to the holder hereof
upon written request.
Holdings shall imprint such legend on certificates evidencing Securities
outstanding prior to the date hereof. The legend set forth above shall be
removed from the certificates evidencing any Securities upon Transfer pursuant
to a Public Sale.
2.2 Restrictions on Transfer.
No Party shall, directly or indirectly, voluntarily or involuntarily, sell,
assign, gift, transfer, pledge, mortgage, hypothecate or otherwise dispose of
(each such event, a "TRANSFER") any Securities other than (a) Transfers to
Permitted Transferees, and (b) Transfers in compliance with the provisions of
this Article 2.
8
2.3 Right of First Offer.
So long as the Minimum Whitney Common Ownership is at least twenty percent
(20%), neither Xxxxxxxx nor any of his Permitted Transferees (the "XXXXXXXX
PARTIES") may Transfer any Securities except in compliance with this Section
2.3.
(a) If any Xxxxxxxx Party desires to Transfer Securities, he shall
give notice thereof to the Whitney Notice Parties (a "FIRST OFFER NOTICE"). The
First Offer Notice shall include the number and type of Securities that are to
be the subject of the Transfer and, to the extent then known, the proposed
process applicable to the Transfer and the intended timing of such Transfer.
(b) The holders of a majority of the Whitney Common Shares (the
"REQUIRED HOLDERS") shall have the right, but not the obligation, exercisable at
any time within thirty (30) days after delivery of the First Offer Notice, to
deliver in writing to the Xxxxxxxx Party an offer to purchase all, but not less
than all, of such Securities (the "FIRST OFFER ELECTION") setting forth the
material terms and conditions on which it proposes to purchase such Securities
(the "FIRST OFFER TERMS").
(c) The Xxxxxxxx Party shall have a period of ten (10) days after
the delivery of the First Offer Election in which to accept or reject the offer
by the Required Holders on the First Offer Terms. Notice of such acceptance
shall be referred to as the "XXXXXXXX ACCEPTANCE NOTICE."
(d) Upon the acceptance of any such offer pursuant to (b) above,
the Required Holders shall designate a date to purchase the Securities to be
acquired, which date shall be not less than five (5) days following the date on
which the Required Holders notify the Xxxxxxxx Party thereof and not more than
thirty (30) days following delivery of the Xxxxxxxx Acceptance Notice, at which
time the Required Holders shall deliver payment in the appropriate amount to the
Xxxxxxxx Party against (i) delivery of certificates or other instruments
representing the Securities to be purchased, appropriately endorsed by the
Xxxxxxxx Party and (ii) completion of all documentation necessary to satisfy all
of the First Offer Terms.
(e) If the Required Holders do not make a First Offer Election or
if the Xxxxxxxx Party has not accepted the offer embodied in the First Offer
Notice within the ten (10) day period set forth in subparagraph (b) above, the
Xxxxxxxx Party shall have the unlimited right at his option, at any time within
the one hundred eighty (180) days following the date of the First Offer Notice
to sell all of the Securities that were the subject of the First Offer Notice
free of any obligation to sell any of such Securities to the Required Holders;
provided, however, that, if the Required Holders shall have made a First Offer
Election but the Xxxxxxxx Party did not accept such offer as aforesaid, the per
share price in such sale shall not be less than the per share price contained in
the First Offer Terms. Any subsequent or other proposed Transfer shall be
subject to the rights of first offer set forth herein.
(f) Notwithstanding any provision of this Section 2.3 to the
contrary, if the exercise by any holder of Whitney Securities of its Right of
First Offer would cause the Voting Power (on a fully-diluted basis, including in
respect of all Derivative Securities) which all of the
9
holders of the Whitney Securities own, directly or indirectly, to exceed
forty-nine and nine-tenths percent (49.9%) of the Voting Power of the Common
Stock (on a fully-diluted basis, including in respect of all Derivative
Securities), then such holders of Whitney Securities agrees that that portion of
the Securities so exceeding such forty-nine and nine-tenths percent (49.9%)
threshold shall be replaced with a different class of Securities without any
voting rights whatsoever (but in all other respects identical to the Securities
offered pursuant to this Section 2.3). Each of the Parties covenants and agrees
that it shall take all measures required to carry out the foregoing, including
approval of any required amendment to the Certificate of Incorporation of
Holdings.
(g) Notwithstanding anything contained herein to the contrary,
this Section 2.3 shall not apply to: any Transfer or series of related Transfers
of Securities by the Xxxxxxxx Parties that, in the aggregate, together with all
other Transfers subject to the exception set forth in this subsection (g)(i),
constitute Minimum Xxxxxxxx Ownership of less than ten percent (10%), (ii)
Transfers to Permitted Transferees and (iii) Transfers with respect to which the
Xxxxxxxx Transferors have exercised a right to compel sale pursuant to Section
2.5.
2.4 Tag-Along Rights.
(a) If Xxxxxxxx or any of his Permitted Transferees (the
"TAG-ALONG TRANSFEROR") wishes to transfer Securities owned by such Person (in a
transaction in which, if subject to the provisions of Section 2.3, such Person
shall not have accepted the offer, if any, by the holders of the Whitney
Securities to purchase such Securities) to any Person other than a Permitted
Transferee (a "TAG-ALONG TRANSFEREE"), each Party other than the Tag-Along
Transferor and his Permitted Transferees (each such Party, a "TAG-ALONG PARTY")
shall have the right (the "TAG-ALONG RIGHT") to require, as a condition to such
Transfer by the Tag-Along Transferor of such Securities, that the Tag-Along
Transferee purchase from such Tag-Along Party, at the same price and on the same
terms and conditions as involved in the Transfer by the Tag-Along Transferor, up
to that number of Outstanding Common Shares owned by such Tag-Along Party
equaling the number derived by multiplying (i) the total number of Outstanding
Common Shares owned by such Tag-Along Party by (ii) a fraction (A) the numerator
of which is the actual number of Outstanding Common Shares to be Transferred to
the Tag-Along Transferee by the Tag-Along Transferor as set forth in the
Tag-Along Offer Notice and (B) the denominator of which is the aggregate number
of Outstanding Common Shares owned by Xxxxxxxx and his Permitted Transferees
immediately prior to such Transfer. Notwithstanding the foregoing, in the event
the Tag-Along Transferee is unwilling to purchase the sum of the aggregate
number of Securities that the Tag-Along Transferor and the Tag-Along Parties
(and each of them) desire to Transfer to the Tag-Along Transferee pursuant
hereto, the Tag-Along Transferor and each Tag-Along Party who desires to
Transfer Securities to the Tag-Along Transferee shall be entitled to Transfer
only that number of Outstanding Common Shares equal to the number of Outstanding
Common Shares which such Party desires to Transfer to such Tag-Along Transferee,
as set forth in its Tag-Along Notice or, in the case of the Tag-Along
Transferor, in the Tag-Along Offer Notice, multiplied by a fraction, the
numerator of which is the total number of Outstanding Common Shares which the
Tag-Along Transferee is willing to acquire and the denominator of which is the
total number of Outstanding Common Shares which the Tag-Along Transferor and all
of the Tag-Along Parties wish to Transfer to such Tag-Along
10
Transferee (all as set forth, as applicable, in the Tag-Along Offer Notice and
the Tag-Along Notices).
(b) Unless the Tag-Along Transferee shall agree to the contrary,
prior to any Transfer to the Tag-Along Transferee, the Tag-Along Transferor and
the Tag-Along Parties shall exercise, convert or exchange such number of their
Derivative Securities as may be necessary so that only shares of Common Stock
are Transferred.
(c) If a Tag-Along Transferor proposes to Transfer any Securities
in a transaction subject to this Section 2.4, it shall notify the Whitney Notice
Parties in writing of such proposed Transfer (a "TAG-ALONG OFFER Notice"). Such
Tag-Along Offer Notice shall set forth: (i) the name of the Tag-Along
Transferee, (ii) the number and nature of the Securities proposed to be
Transferred, (iii) the proposed amount and form of consideration and all other
material terms and conditions of such offer, including the date of the proposed
Transfer and all applicable representations, indemnities and other contract
provisions required by the Tag-Along Transferee (the "TAG-ALONG TRANSFEREE
TERMS"), (iv) the total number and nature of Securities owned by the Tag-Along
Transferor and Xxxxxxxx and his Permitted Transferees and (v) that the Tag-Along
Transferee has been informed of the Tag-Along Right provided for in this Section
2.4 and has agreed to purchase Securities subject hereto in the manner set forth
in Subsections 2.4(a) and (b). The Tag-Along Right may be exercised by any
Tag-Along Party by delivery of a written notice to the Tag-Along Transferor (the
"TAG-ALONG NOTICE") within ten (10) days following delivery of the Tag-Along
Offer Notice (the "TAG-ALONG NOTICE DEADLINE") setting forth the number of
Securities the Tag-Along Party wishes to sell to the Tag-Along Transferee. The
failure by any Tag-Along Party to provide the Tag-Along Notice on or before the
Tag-Along Notice Deadline shall be deemed to be an election by such Tag-Along
Party not to exercise the Tag-Along Right with respect to the transaction
described in the Tag-Along Offer Notice.
(d) Upon delivery of a Tag-Along Notice, each participating
Tag-Along Party shall be obligated to sell to the Tag-Along Transferee the
number of Securities set forth in its Tag-Along Notice (but not to exceed the
number determined in accordance with subparagraph (a) of this Section 2.4)
subject to the Tag-Along Transfer Terms (including the same representations,
indemnities and the like made by the Tag-Along Transferor). Notwithstanding the
foregoing, no participating Tag-Along Party shall be required to provide
indemnification to the Tag-Along Transferee (i) other than on a several (and not
joint and several) basis and (ii) in excess of the proceeds actually received by
such participating Tag-Along Party. The Tag-Along Transferor and each of the
Tag-Along Parties shall bear their own costs and expenses related to the
Tag-Along Transfer.
(e) The Tag-Along Parties electing to participate in the sale of
Securities to the Tag-Along Transferee (and each of them) shall execute and
deliver to Holdings within fifteen (15) business days after delivery to such
Tag-Along Parties for such execution, all documents required to be executed by
each such Tag-Along Party in order to consummate the sale, subject to the
limitations on liability contained in Section 2.4(d) above.
(f) In the event that the Tag-Along Transfer Terms are at any time
changed in any material respect (including any decrease in the applicable
purchase price) prior to the consummation of the Tag-Along Transfer, the
Tag-Along Transferor shall notify each of the
11
Tag-Along Parties, and each of the Tag-Along Parties shall have the right,
exercisable at any time within five (5) days following delivery thereof, to
withdraw its participation in the Tag-Along-Transfer by so notifying the
Tag-Along Transferor and Holdings.
(g) To the extent that the Tag-Along Parties (or any of them)
elect not to participate in the Transfer described in the Tag-Along Offer
Notice, the Tag-Along Transferor shall have the right at any time within ninety
(90) days following the Tag-Along Notice Deadline to Transfer all or
substantially all of the Securities proposed to be Transferred, as set forth in
the Tag-Along Transfer Notice (and that are not being sold by participating
Tag-Along Parties) to the Tag-Along Transferee; provided that the terms of the
Transfer, taken as a whole, are substantially similar to those set forth in the
Tag-Along Notice.
(h) At the closing of the Transfer of Securities to a Tag-Along
Transferee (of which the Tag-Along Transferor shall give each participating
Tag-Along Party at least five (5) days' prior written notice), the Tag-Along
Transferee shall remit to Holdings the consideration for the total sales price
of Securities of such Parties sold pursuant hereto, against delivery by such
Parties of such evidence of ownership of such Parties' Securities as may be
requested by the Tag-Along Transferee, and the compliance by such Parties with
any other conditions to closing generally applicable to the Tag-Along Transferor
and all participating Tag-Along Parties. Holdings shall, as soon as practicable
but in no event later than the business day next following the closing, remit to
the Tag-Along Transferor and each participating Tag-Along Party its portion of
such consideration.
(i) If any proposed Transfer contemplated by Sections 2.4(e) and
(g) above is terminated or is otherwise not consummated for any reason (in the
case of Transfers contemplated by Section 2.4(g) within the ninety (90) day
period in which such Transfer may be made), the Tag-Along Transferor shall,
without prejudice to its rights hereunder to deliver a subsequent Tag-Along
Notice, provide written notice of such termination to the other Parties and
shall promptly return to all Tag-Along Parties who elected to participate in
such Transfer all documentation which such Tag-Along Parties had previously
delivered to Holdings in connection with such Transfer.
(j) Notwithstanding anything contained herein to the contrary,
this Section 2.4 shall not apply to: (i) Transfers to Permitted Transferees and
(ii) Transfers with respect to which the Xxxxxxxx Transferors have exercised a
right to compel sale pursuant to Section 2.5.
2.5 Right to Compel Sale.
(a) Subject to subsection (h) below, and so long as the Minimum
Xxxxxxxx Ownership equals or exceeds ninety percent (90%) or the Minimum Whitney
Ownership equals or exceeds twenty-five percent (25%), as the case may be, if
either (i) Xxxxxxxx and/or his Permitted Transferees or (ii) Whitney and/or its
Permitted Transferees (a "COMPELLED SALE TRANSFEROR") wish to cause a Sale of
Business Transaction with any Person other than to a Permitted Transferee of
such Persons ("COMPELLED SALE PURCHASER"), then each of the other Parties (the
"OTHER PARTIES") shall be obligated, upon the written request of the Compelled
Sale Transferor, to join and fully cooperate in such Sale of Business
Transaction (a "COMPELLED SALE"), all as more fully set forth in this Section
2.5. The Compelled Sale Transferor shall
12
evidence its intent to initiate a Compelled Sale by delivering notice of such
effect to the Other Parties (an "INITIATING NOTICE").
(b) From and after the delivery of an Initiating Notice, the party
delivering such Initiating Notice under this Section 2.5 may retain, or cause
Holdings to retain, the services of a nationally recognized investment bank (the
"INVESTMENT BANK") to conduct such Compelled Sale and a nationally recognized
law firm to advise on such sale, in each case at the expense of the Company.
Such Investment Bank will establish procedures reasonably acceptable to the
Compelled Sale Transferor and Holdings to effect an orderly sale of Holdings
with the objective of achieving the highest practicable value for the
stockholders of Holdings within a reasonable period of time. Each Party and
Holdings will cooperate with the Investment Bank in accordance with such
procedures, and agrees to use its reasonable best efforts to reach agreement on
the optimum structure and the terms and conditions for the Compelled Sale
(including whether such sale will be by merger or sale of assets or capital
stock or otherwise).
(c) The Compelled Sale Transferor shall notify the Other Parties
in writing of a Compelled Sale (a "COMPELLED SALE NOTICE"), as soon as
practicable after the definitive terms of such transaction are known. Such
Compelled Sale Notice shall set forth all of the material terms and conditions
of the Compelled Sale, including, without limitation, the proposed amount and
nature of consideration and all other material terms and conditions, including
the proposed closing date of the Compelled Sale and all applicable
representations, indemnities and other contract provisions. The Other Parties
(and each of them) shall execute and deliver to Holdings within (10) business
days after delivery to such Other Parties for such execution, all documents,
other than the Compelled Sale Shares, required to be executed by each such Other
Party in order to consummate such Compelled Sale, all subject to the following:
(i) Unless otherwise agreed upon by the Other Parties, if the Sale
of Business Transaction is structured as a sale of capital stock, the terms and
conditions applicable to the sale of the capital stock of Holdings owned by the
Other Parties shall be substantially the same to those applicable to the sale of
the capital stock by the Compelled Sale Transferor, including, without
limitation, the amount and nature of consideration and subject to the same
representations, indemnities and the like required of the Compelled Sale
Transferor.
(ii) Upon a Sale of Business Transaction, each party that owns
Preferred Stock will receive consideration in an amount per share of Preferred
Stock equal to the Liquidation Amount of such share as set forth in Holdings
Certificate of Incorporation. For the avoidance of doubt, if the total
consideration payable in respect of any such Sale of Business Transaction is not
sufficient to pay the aggregate Liquidation Amount of each share of Preferred
Stock then outstanding to the holders thereof, then such holders will share all
of such consideration in accordance with Section B(3) of Article Fourth of the
Holdings Certificate of Incorporation and the holders of Common Stock will not
be entitled to receive any consideration in respect of such Sale of the
Business.
(iii) Notwithstanding the foregoing, no Other Party shall be
required to provide for indemnification to the Compelled Sale Purchaser (A)
other than on a several (and not joint and several) basis and (B) in excess of
the proceeds actually received by such Other Party.
13
The Compelled Sale Transferor and each of the Other Parties shall bear their own
costs and expenses related to the Compelled Sale.
(iv) Unless the Compelled Sale Purchaser shall agree to the
contrary, prior to any Transfer to the Compelled Sale Purchaser, the Other
Parties shall exercise, convert or exchange such number of their Derivative
Securities as may be necessary so that only shares of Common Stock are
Transferred.
(d) The Other Parties shall (i) vote for, consent to and raise no
objections against any Compelled Sale pursuant to this Section 2.5, and (ii)
enter into such definitive agreements as are consistent with subsection (c)
above. If the Compelled Sale is structured as a sale of issued capital stock,
(A) each Other Party shall agree to sell all of such Other Party's capital stock
of Holdings on the terms and conditions of the Compelled Sale and (B) at the
closing of such Compelled Sale each Other Party will transfer to the Compelled
Sale Purchaser all shares of capital stock owned by it, with full title
guarantee free and clear of all liens and encumbrances, together with duly
executed written instruments of transfer with respect thereto, in form and
substance reasonably satisfactory to the Compelled Transferor. If the Compelled
Sale is structured as a sale of assets, the Other Parties agree to cause
Holdings to execute and deliver or cause to be executed and delivered all
documents, certificates, agreements and other writings and to take, or cause to
be taken, all such actions as may be necessary or desirable to vest in the
Compelled Sale Purchaser good and marketable title to such assets. If the sale
of Holdings is structured as a merger or consolidation, each Other Party shall
waive any dissenters' rights, appraisal rights or similar rights in conjunction
with such merger or consolidation.
(e) The Compelled Sale Transferor shall have the right at any time
within one hundred twenty (120) days following the execution of all required
documents pursuant to Subsection (d) above to consummate the Compelled Sale on
the terms set forth in such documents. The closing of the Compelled Sale shall
take place not less than five (5) business days' prior notice, setting forth the
date and location of such closing.
(f) At the closing of the Compelled Sale, if the Compelled Sale is
structured as a sale of issued capital stock or as a merger or consolidation,
the Compelled Sale Purchaser shall cause all amounts payable to the Other
Parties to be delivered directly to them (including, as to the cash portion of
the consideration, to accounts designated by each of the Other Parties).
(g) If any Compelled Sale Offer is withdrawn or terminated for any
reason prior to consummation (including by the failure of the Compelled Sale
Transferor to consummate the Compelled Sale within the one hundred twenty (120)
day period set forth in Section 2.5(e)), Holdings shall, without prejudice to
any of the Compelled Sale Transferor's rights hereunder to deliver a subsequent
Compelled Sale Notice, return to each of the Other Parties all documentation
which he had previously received from such Other Parties in connection with such
Compelled Sale Offer.
(h) Notwithstanding anything contained herein to the contrary, (i)
Xxxxxxxx and his Permitted Transferees shall have no rights under this Section
2.5 in respect of Whitney Securities and the holders of Whitney Securities shall
have no obligations under this Section 2.5, with respect to any proposed
Compelled Sale by Xxxxxxxx and/or his Permitted Transferees that is
14
to be consummated on or before thirty (30) months following the date hereof,
unless the Whitney IRR measured as of, and after giving effect to, the closing
of the Compelled Sale is equal to or greater than 25%; PROVIDED, HOWEVER, that
the limitation set forth in this subparagraph (i) shall not apply from and after
such time that Whitney transfers any Whitney Securities to a Person other than a
Permitted Transferee, (ii) (A) Whitney and its Permitted Transferees shall have
no rights under this Section 2.5 in respect of Xxxxxxxx Securities and the
holders of Xxxxxxxx Securities shall have no obligations under this Section 2.5,
as to any Compelled Sale that is initiated by Whitney and its Permitted
Transferees pursuant to an Initiating Notice that is delivered before January 1,
2007, and (B) Whitney and its Permitted Transferees shall have no rights under
this Section 2.5 in respect of Xxxxxxxx Securities and the holders of Xxxxxxxx
Securities shall have no obligations under this Section 2.5, unless Whitney
and/or its Permitted Transferees shall have (x) first provided Xxxxxxxx with
notice (a "NEGOTIATION NOTICE") of its intent to cause a Compelled Sale and (y)
for a period of thirty (30) days following delivery of the Negotiation Notice,
negotiated exclusively with Xxxxxxxx regarding the purchase of the Whitney
Securities by Xxxxxxxx or his designee (for a purchase price reflective of the
value of such securities in connection with a Compelled Sale), and (iii) neither
Xxxxxxxx and his Permitted Transferees or Whitney and its Permitted Transferees
shall have any rights to initiate a Compelled Sale process hereunder for a
period of one hundred twenty (120) days following such time that the other shall
have delivered an Initiating Notice; PROVIDED, that (x) such period shall be
extended for so long as may be reasonably requested by the Investment Bank
retained at the request of the Compelled Sale Transferor in order to pursue the
Sale of Business Transaction, and (y) in order to give effect to the rights of
Whitney and its Permitted Transferees to initiate a Compelled Sale process on
January 1, 2007, Xxxxxxxx and his Permitted Transferees may not initiate a
Compelled Sale process between September 1, 2006 and December 31, 2006.
2.6 Securities of Transferees.
(a) Securities are transferable only (i) in a Public Sale or (ii)
subject to the provisions of Section 2.6(b) below, by any other legally
available means of Transfer; provided, that any Transfer must also comply with,
or otherwise be permitted by, the terms of this Article 2 and the other
provisions of this Agreement.
(b) In connection with the Transfer of any Securities other than a
Transfer described in clause (i) of Section 2.6(a) above or any Transfer between
a Party and any of its Permitted Transferees, the holder thereof shall deliver
written notice to Holdings describing in reasonable detail the Transfer or
proposed Transfer, together with, if reasonably requested by Holdings, an
opinion of counsel reasonably acceptable to Holdings to the effect that such
Transfer of Shares may be effected without registration of such Securities under
the Act. In addition, if the holder of the Securities delivers to Holdings an
opinion of counsel that no subsequent Transfer of such Securities shall require
registration under the Act, Holdings shall upon such contemplated Transfer
deliver new certificates for such Securities which do not bear the relevant
legend set forth in Section 2.1 above. If Holdings is not required to deliver
new certificates for such Securities not bearing such legend, the holder thereof
shall not Transfer the same until the prospective transferee has confirmed to
Holdings in writing its agreement to be bound by the conditions contained
herein, as provided in Section 2.6(d).
15
(c) Upon the request of a holder of Securities, Holdings shall
supply to such Person or its prospective transferees all the information within
its possession regarding Holdings, required to be delivered in connection with a
Transfer pursuant to Rule 144A of the Commission (or any similar rule or rules
then in effect).
(d) Notwithstanding anything contained in this Article 2 to the
contrary, all Transfers by the Parties shall be conditioned upon the relevant
Transferee (including any Permitted Transferee) first entering into and
delivering to the other Parties a joinder agreement (a "JOINDER AGREEMENT"), in
the form attached hereto as Exhibit B, pursuant to which such Transferee, and
the Securities acquired, shall become subject to the terms and conditions of
this Agreement, including (f) below. In case of a Transfer of Indemnification
Shares, the Transfer by the Parties shall also be conditioned upon the relevant
Transferee (including any Permitted Transferee) first entering into and
delivering to the Other Parties a Joinder Agreement in the form attached hereto
as Exhibit C, pursuant to which such Transferee, and the Securities acquired,
shall become subject to the terms and conditions of the Stock Purchase Agreement
or the New Stock Purchase Agreement, as applicable.
(e) Upon any Transfer and the execution of a Joinder Agreement,
each Transferee, and the Securities acquired by it, shall be subject to all of
the limitations and obligations set forth herein and shall obtain the benefits
and rights of a Party hereunder with respect to the Securities so acquired;
provided that the Securities purchased by any Tag-Along Transferee in accordance
with the procedures set forth in Section 2.4 shall not be subject to tag-along
obligations under Section 2.4 upon any further Transfers otherwise subject
thereto.
(f) In the event that the Whitney Parties transfer any of their
Securities hereunder to a Permitted Transferee, thereafter: (i) any notices to
be given to such Permitted Transferees shall be deemed given if delivered to
Xxxxxxx XX, (ii) a notice from any such Permitted Transferee shall be deemed
delivered only if delivered by Xxxxxxx XX, and (iii) all of the Parties hereto
shall be permitted to rely upon any notice given by Xxxxxxx XX as containing the
intentions of the Whitney Parties' Permitted Transferees.
(g) In the event that any Initial Party (other than Whitney)
Transfers any of its Securities hereunder, thereafter: (i) any notices to be
given to such Transferees shall be deemed given if delivered to their Initial
Party Transferor, (ii) a notice from any such Transferee shall be deemed
delivered only if delivered by its Initial Party Transferor, and (iii) all of
the Parties hereto shall be permitted to rely upon any notice given by an
Initial Party (other than Whitney) as containing the intentions of its
Transferees. If an Initial Party (other than Whitney) wishes, it may designate,
by written notice to Holdings and all other Parties, a successor Person to give
and accept notices on behalf of all Transferees of such Person, as set forth
herein.
2.7 Competitors.
(a) Notwithstanding anything contained in this Article 2 to the
contrary, neither Whitney nor any holder of Whitney Securities may Transfer any
Securities to any Person who competes, directly or indirectly through one of its
Affiliates, with Holdings or its subsidiaries in any business which Holdings or
any such subsidiary is engaged or at the time of such Transfer intends to engage
(a "COMPETITOR").
16
(b) Whitney (to the extent it is the record holder of Whitney
Securities) shall not, and shall cause its Affiliates not to, acquire any debt
or equity securities in any Competitor (excepting less than 5% stock holdings
for investment purposes in securities of publicly held and traded companies that
Whitney or such holder of the Whitney Securities does not have the power to
appoint a director) without providing Xxxxxxxx and Holdings with written notice
thereof. Holdings' recourse against Whitney and, as applicable, Whitney V, in
case of breach of this subsection (b) shall be limited to demanding notification
of such acquisition by Whitney, the holders of the Whitney Securities or their
Affiliates in a Competitor.
2.8 Transfers Not in Compliance Void.
Any purported Transfer of Securities owned by a Party that is not in
compliance with this Agreement shall be null and void and of no force and effect
whatsoever. Accordingly, such Transfer shall not be reflected on the books of
Holdings and Holdings will not recognize any such proposed transferee as the
holder of any such Securities.
2.9 Termination.
The restrictions on Transfer of Securities and the other rights,
restrictions and obligations contained in Sections 2.3, 2.4, 2.5 and 2.7 shall
terminate and be of no further force and effect following an Initial Public
Offering.
3. RIGHT OF FIRST OFFER; PARTICIPATION RIGHT
3.1 Right of First Offer and Participation Right as to New Securities.
Holdings shall not issue any shares of Common Stock or Derivative
Securities ("NEW SECURITIES") except as set forth in Section 3.1.
(a) So long as the Minimum Whitney Common Ownership is at least
twenty percent (20%), if Holdings desires to issue New Securities, it shall give
first notice thereof to the Whitney Notice Parties (a "NEW ISSUE NOTICE").
(i) Any such New Issue Notice shall contain a description of
the material terms and conditions on which Holdings will offer the New
Securities including (A) the number and type of New Securities to be issued, (B)
the proposed process applicable to the issuance, (C) the desired purchase price
to be obtained in, and all other terms applicable to, such issue and (D) the
intended timing of such issuance (together, the "NEW ISSUE TERMS"). The New
Issue Notice shall constitute an offer by Holdings to sell the Securities that
are the subject of the New Issue Notice to the holders of the Whitney Securities
on the New Issue Terms.
(ii) The Required Holders shall have the right (the "RIGHT OF
FIRST OFFER"), exercisable at any time within thirty (30) days after delivery of
the New Issue Notice, to either (A) accept the offer made thereby by furnishing
written notice thereof to Holdings and agreeing to purchase all and not less
than all of the Securities so offered in, and at the New Issue Terms specified
in, the New Issue Notice or (B) make a counter-offer to Holdings to acquire such
New Securities on different terms (the "WHITNEY COUNTER-OFFER"). Any such
Whitney Counter-Offer shall contain a description of the material terms and
conditions on which the
17
Required Holders offer to buy all and not less than all of the New Securities
from Holdings (the "COUNTER-OFFER TERMS"). The Whitney Counter-Offer shall
constitute an offer by the holders of the Whitney Securities to purchase the
Securities that are the subject of the New Issue Notice at the Counter-Offer
Terms. Holdings shall have the right, exercisable at any time within thirty (30)
days after delivery of the Whitney Counter-Offer, to accept the Whitney
Counter-Offer made thereby by furnishing written notice thereof to the Required
Holders (the "HOLDINGS RESPONSE") and agreeing to sell all and not less than all
of the Securities so offered in the New Issue Notice and at the Counter-Offer
Terms specified in the Whitney Counter-Offer. Any Party who fails to deliver a
notice called for by the subsection to exercise a right within the time periods
provided for herein shall be deemed not be have exercised such right.
(iii) Upon the acceptance of any such offer or Counter-Offer
pursuant to (ii) above, Holdings shall designate a date on which it shall issue
the Securities to be sold, which date shall be not less than five (5) days nor
more than thirty (30) days following the date on which it accepts such offer or
Counter-Offer. At such closing, the Required Holders shall deliver payment in
the appropriate amount to Holdings against (A) delivery of certificates or other
instruments representing the Securities so purchased and (B) completion of all
documentation necessary to satisfy all of the terms of the purchase of the New
Securities. The closing for the purchase of Securities pursuant hereto shall
occur within thirty (30) days after acceptance by, as the case may be, Holdings
or the Required Holders, unless otherwise agreed to as between Holdings and the
Required Holders.
(iv) If the Required Holders do not elect to purchase all of
the Securities that were the subject of the New Issue Notice, Holdings shall
have the unlimited right at its option, at any time within the one hundred and
eighty (180) day period following the end of the notice period set forth in (ii)
above (but subject to the terms of Section 3.1(b)) to sell all of the Securities
that were the subject of the New Issue Notice (A) if no Whitney Counter-Offer is
made, on such terms as it deems appropriate, or (B) if a Whitney Counter-Offer
is made, for a per share price no less than was set forth in the Whitney
Counter-Offer; Any subsequent or other proposed Transfer shall be subject to the
right of first offer set forth in this Section 3.1(a).
(b) If the Required Holders do not purchase the New Securities
that are the subject of the New Issue Notice by operation of the provisions of
Section 3.1(a) and Holdings proceeds to issue such New Securities (a "PREEMPTIVE
ISSUANCE"), Whitney, Xxxxxxxx and their respective Permitted Transferees (the
"PREEMPTIVE PARTIES") shall each have the right (the "PARTICIPATION RIGHT") to
purchase New Securities of the same class and series issued in such Preemptive
Issuance at the price per New Security paid in connection therewith and
otherwise upon the same terms and conditions as the New Securities being issued
in the Preemptive Issuance.
(i) In the case of a Preemptive Issuance, Holdings shall
provide each Preemptive Party with written notice identifying the New
Securities, the Persons to whom the New Securities are being issued and
describing the terms and amount of the Preemptive Issuance. A Preemptive Party
may exercise its Participation Right by written notice to Holdings within ten
(10) days following delivery of the notice described in the preceding sentence.
The failure by any Preemptive Party to provide such notice before the expiration
of the ten (10) day period shall be deemed to be an election by such Preemptive
Party not to exercise its
18
Participation Right with respect to the Issuance. Each Preemptive Party electing
to exercise its Participation Right under this Section 3.1(b)(i) shall execute
such documents as may be reasonably requested by Holdings to evidence the
purchase of such New Securities; PROVIDED that the terms and conditions
applicable to the sale of such New Securities shall be the same as required of
the purchaser of such New Securities (including, without limitation, the amount
and nature of consideration and representations, indemnities and the like). The
closing of the issuance of such New Securities issued to Preemptive Parties
under this Section 3.1(b) (including the payment therefor by the Preemptive
Parties) shall occur at the same time as the closing of the issuance of such New
Securities to the third-party purchasers thereof.
(ii) The number of New Securities each Preemptive Party may
purchase under this Article 3 with respect to each Preemptive Issuance shall be
such number so that after exercise of the Participation Right such Preemptive
Party's Outstanding Common Shares will represent the same percentage of the
total Outstanding Common Shares following the Preemptive Issuance as such
Preemptive Party's Outstanding Common Shares represented of the total
Outstanding Common Shares prior thereto. Notwithstanding the foregoing, (i) the
Required Holders may assign their Participation Right to other holders of
Whitney Securities and (ii) Xxxxxxxx and his Permitted Transferees (the
"XXXXXXXX PREEMPTIVE PARTIES") shall have the right to assign their
Participation Right to other Xxxxxxxx Preemptive Parties.
3.2 Exceptions to Right of First Offer and Participation Right.
(a) The Right of First Offer and Participation Right provided for
in this Article 3 shall not apply to any New Securities being issued in
connection with, and the term "Preemptive Issuance" shall not include an
issuance in respect of, (i) the exercise, conversion or exchange of Derivative
Securities outstanding on the date hereof, (ii) a restructuring, including a
cancellation or modification of the terms of any, of the debt of Holdings or any
of its subsidiaries in which lenders or owners of debt securities of Holdings or
its subsidiaries receive equity interests in consideration of or in connection
with such restructuring or otherwise, (iii) any management equity plans
heretofore or hereafter approved by the Board to purchase Common Stock
(PROVIDED, that such Common Stock together with all shares of Common Stock
issued or issuable pursuant to this clause (iii) as to grants made after the
date hereof do not exceed 396,241.50 shares (subject to adjustment to reflect
any stock split, stock divided, reclassification, recapitalization or other
transaction having a similar effect), (iv) other preemptive rights or
anti-dilution provisions in favor of any other stockholder or warrant holder of
Holdings, (v) the issuance of New Securities (or the subsequent exercise,
conversion or exchange any Derivative Securities) as a component of the issuance
of debt by Holdings or its subsidiaries where such New Securities (assuming the
immediate exchange, conversion or exchange of Derivative Securities) would
represent less than ten percent (10%) of the Outstanding Common Shares on such
date, (vi) any issuance of New Securities to a seller in connection with an
acquisition of stock or assets of another entity by Holdings or any of its
subsidiaries, or (vii) an initial public offering of Common Stock of Holdings.
(b) Notwithstanding any provision of this Article 3 to the
contrary, if the exercise by any holder of Whitney Securities of their Right of
First Offer would cause the Common Stock (on a fully-diluted basis, assuming
conversion of all Derivative Securities) which all of the holders of Whitney
Securities own, directly or indirectly, to exceed forty-nine and nine-
19
tenths percent (49.9%) of the Voting Power of the Common Stock (on a
fully-diluted basis, assuming conversion of all Derivative Securities), then
such holders of Whitney Securities agrees that that portion of the New
Securities so exceeding such forty-nine and nine-tenths percent (49.9%)
threshold shall be replaced with a different class of Securities without any
voting rights whatsoever (but in all other respects identical to the New
Securities); PROVIDED that this Subsection 3.2(b) shall not apply to issuances
of New Securities which themselves constitute issuances of more than fifty
percent (50%) of the Voting Power of the Common Stock (on a fully-diluted basis,
assuming conversion of all Derivative Securities, after giving effect to such
issuance). Each of the Parties covenants and agrees that it shall take all
measures required to carry out the foregoing, including approval of any required
amendment to the Certificate of Incorporation of Holdings.
3.3 Right of First Offer on Subordinated Debt Issuances.
So long as the Minimum Whitney Ownership is at least 25%, prior to the
issuance by Holdings or any of its subsidiaries of Applicable Subordinated Debt,
Holdings shall provide notice to Whitney of such intended issuance (a "DEBT
NOTICE" which Debt Notice shall include, to the extent known, the amount and
terms of such Applicable Subordinated Debt), and neither Holdings nor any such
subsidiary shall issue such Applicable Subordinated Debt without providing
Whitney with the right for a period of thirty (30) days following delivery of
the Debt Notice to make an offer to purchase such Applicable Subordinated Debt.
It is specifically agreed that neither Holdings nor any such subsidiary shall be
obligated to accept such offer; and following such thirty (30) day period
Holdings or such subsidiary may issue such Applicable Subordinated Debt to such
party or parties and on such terms (irrespective of the terms offered by
Whitney), as it deems appropriate without regard to any rights under this
Section 3.3.
3.4 Termination on Initial Public Offering.
The Rights of First Offer and the Participation Right provided for in this
Article 3 shall terminate and be of no further force and effect following an
Initial Public Offering.
4. REGISTRATION RIGHTS.
4.1 Piggyback Registration.
If, at any time Holdings proposes to file a registration statement or
statements under the Act (together with any registration statement filed
pursuant to a demand made under Section 4.2, "REGISTRATION STATEMENT") for the
public sale of Common Stock for cash (other than in connection with a merger or
pursuant to Form X-0, Xxxx X-0 or comparable registration statement); it will
give written notice by registered mail, at least thirty (30) days prior to the
filing of each such registration statement, to each Party of its intention to do
so. If any Party (all such Parties collectively with any Parties who have made a
demand pursuant to Section 4.2 if the context so requires, the "REGISTERING
PARTIES") notifies Holdings within ten (10) business days after delivery of any
such notice of its desire to include any such Common Stock (including Common
Stock underlying Derivative Securities) (all such shares, "PIGGYBACK SHARES") in
such proposed Registration Statement, Holdings shall afford such Registering
Party the opportunity to have any Piggyback Shares owned by such Party
registered under such Registration Statement;
20
provided, however, that in the case of an underwritten offering, if the managing
underwriter notifies any Registering Party that the inclusion in the
registration statement of any portion of its Piggyback Shares would have an
adverse effect on such underwritten offering, then the managing underwriter may
limit the number of Piggyback Shares to be included in such registration
statement only to the extent necessary to avoid such adverse effect (an
"UNDERWRITER'S CUTBACK"). Such limit will apply pro rata among the Registering
Parties based upon the number of Piggyback Shares such Parties have requested to
be so included (provided that if the Registration Statement is being filed
pursuant to Section 4.2 below, then, as among the holders of Demand Securities
(as defined below) and the Securities held by other Parties, any Underwriter's
Cutback shall first be applied to such other Parties' Securities); and in the
event securities of Holdings held by any person or entity other than Holdings or
the Parties ("THIRD PARTY SECURITIES") are to be included in such underwritten
offering, and the managing underwriter shall have determined to effectuate an
Underwriter's Cutback, then such limitation shall first be applied to the Third
Party Securities, and then to the Piggyback Shares.
Notwithstanding the provisions of this Section 4.1, except in the case of a
Demand Registration Statement, Holdings shall have the right at any time after
it shall have given written notice pursuant to this Section 4.1 (irrespective of
whether a written request for inclusion of any such securities shall have been
made) to elect not to file any such proposed registration statements or to
withdraw the same after the filing but prior to the effective date thereof.
4.2 Demand Registration.
(a) (i) Commencing on the earlier of (A) six (6) months
following the effective date of an Initial Public Offering and (B) the third
anniversary of the date hereof, and expiring five (5) years thereafter and
provided that such Securities shall not at that time be eligible for sale
pursuant to Rule 144(k) under the Act, the holders of Whitney Securities shall
have the collective right, on two (2) occasions (which right is in addition to
the registration rights under Section 4.1 hereof), exercisable by written notice
to Holdings (the "DEMAND NOTICE") given by the holders of a majority (the
"DEMANDING HOLDERS") of the Whitney Securities then outstanding that have not
been sold pursuant to a Registration Statement or pursuant to Rule 144(k) of the
Commission without regard to limiting or qualifying of Securities to be sold and
have had all transfer restrictions contained thereon removed (the "DEMAND
SECURITIES"), to have Holdings prepare and file with the Securities and Exchange
Commission (the "COMMISSION") a registration statement ("DEMAND REGISTRATION
STATEMENT") and such other documents, including a prospectus, as may be
necessary in the opinion of counsel for Holdings, and shall keep such
registration statement effective and the disclosure in such documents current,
in order to comply with the provisions of the Act, so as to permit a public
offering and sale of the Demand Securities by the holders thereof for nine (9)
consecutive months.
(ii) A registration requested pursuant to this Section 4.2
shall not be deemed to have been effected (and thereby the right to make a
demand not used) (A) unless a Registration Statement with respect thereto has
become effective, provided that a registration which does not become effective
after Holdings has filed a Registration Statement with respect thereto solely by
reason of the refusal to proceed of the holders (other than a refusal to proceed
based upon the advice of counsel relating to a matter with respect to Holdings)
shall be deemed to have been effected by Holdings at the request of such holders
unless the holders of Demand
21
Securities shall have elected to pay all expenses referred to in Section 4.3(b)
in connection with such registration, (B) if, after it has become effective,
such registration becomes subject to any stop order, injunction or other order
or requirement of the Commission or other governmental agency or court for any
reason and such order, injunction or requirement is not promptly withdrawn or
lifted, (C) the conditions to closing specified in the purchase agreement or
underwriting agreement entered into in connection with such registration are not
satisfied, other than by reason of some act or omission by such holders, or (D)
if less than eighty-five percent (85%) of the Demand Securities were sold
pursuant to such registration.
(b) The holders of Whitney Securities shall have the right,
exercisable at any time and from time to time by written notice to Holdings of
the holders of twenty-five percent (25%) of the Whitney Securities, to have
Holdings prepare and file with the Commission, if available, a registration on
Form X-0, Xxxx X-0, or any similar form if not available, for the sale of
Securities held by such Parties.
(c) A registration requested pursuant to this Section 4.2
may, if determined by Holdings to have the potential to have a material adverse
effect on, or otherwise interfere with, any transaction or other business matter
with which Holdings is then involved or contemplates, at Holding's option be
deferred for no more than one hundred and eighty (180) days from the date of
delivery of the Demand Notice.
(d) Holdings shall have the right, at its option, following
receipt of the Demand Notice requiring the filing of a Registration Statement
that would result in the first public offering of equity securities of Holdings
under the Act, in lieu of filing a Registration Statement referred to in such
demand, to undertake the filing of a Registration Statement under the Act with
the Commission for the sale by Holdings of securities of Holdings, in which case
the Parties shall be permitted to exercise their rights under Section 4.1 above.
Should Holdings exercise its rights under this Section 4.2(d), the rights of the
Demanding Holders to make a demand under Section 4.2(a) above on two (2)
occasions shall not be deemed to have been exercised, and such parties shall
retain such right subject to the limitations contained herein.
(e) In Holdings' discretion, it may include a sale of shares
or shares owned by others or an issuance of shares by Holdings in a registration
pursuant to this Section 4.2. In the event of an Underwriter's Cutback in
connection with a registration pursuant to this Section 4.2, such Underwriter's
Cutback shall first be applied in respect of such shares owned by others, then
in respect of the shares to be included by Holdings, pursuant to this Section
4.2(e) and lastly in respect of the Demand Securities.
4.3 Covenants With Respect to Registration.
In connection with any registration under Section 4.1 or 4.2 hereof, as
applicable, Holdings covenants and agrees as follows:
(a) Holdings shall prepare and use commercially reasonable efforts
to, not later than sixty (60) days after (or if the sixtieth (60th) day is not a
business day, the first business day thereafter) of delivery of any demand
therefor, to cause such Demand Registration Statement to become effective under
the Act within one hundred fifty days (150) days (or if the one
22
hundred fiftieth (150th) day is not a business day, the first business day
thereafter) after demand therefor and shall keep the Demand Registration
Statement effective for not less than nine months after the date on which notice
of the effectiveness thereof is received (such period being called the "DEMAND
REGISTRATION PERIOD"), and shall furnish holders of Demand Securities such
number of prospectuses as shall reasonably be requested.
(b) Holdings shall pay all costs (including fees and expenses of
one counsel to the Registering Parties, selected in accordance with Section 4.5
below, if applicable, but excluding any underwriting or selling commissions or
discounts or other charges of any broker-dealer acting on behalf of any holder
of Demand Securities), fees and expenses in connection with all registration
statements filed pursuant to Sections 4.1 and 4.2 hereof and offers and sales
pursuant thereto including, without limitation, Holdings' legal and accounting
fees, printing expenses, blue sky fees and expenses, registration fees, filing
fees and listing fees.
(c) In connection with any registration contemplated by Section
4.1 or 4.2 hereof, the following provisions shall apply:
(i) Holdings shall (A) furnish to the Registering Parties,
prior to the filing of a Registration Statement with the Commission, a copy of
the Registration Statement and each amendment thereto (including any
incorporated documents) and each supplement, if any, to the prospectus included
therein and any document that is filed after the filing of the Registration
Statement and that is incorporated or would be deemed incorporated by reference
therein, and (B) include the names of the Registering Parties who propose to
sell securities pursuant to the Registration Statement as selling security
holders.
(ii) Holdings shall promptly give written notice to each
Registering Party:
(A) when the Registration Statement or any amendment
thereto has been filed with the Commission and when the Registration Statement
or any post-effective amendment thereto has become effective;
(B) of any request by the Commission or other
governmental authority for amendments or supplements to the Registration
Statement or the prospectus included therein or for additional information;
(C) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose;
(D) of the receipt by Holdings or its legal counsel of
any notification with respect to the suspension of the qualification of the
Piggyback Shares or Demand Securities (as applicable, the "REGISTERED
SECURITIES") for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose; and
(E) of the happening of any event that requires
Holdings to make changes in the Registration Statement or the prospectus in
order that the Registration Statement or the prospectus does not contain an
untrue statement of a material fact nor omit to
23
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or of the commencement of any Suspension
Period.
(iii) Holdings shall make every reasonable effort to prevent
the issuance of and obtain the withdrawal at the earliest possible time of any
order suspending the effectiveness of the Registration Statement or of the
qualification (or exemption therefrom) of any of the Piggyback Shares or Demand
Securities for sale in any jurisdiction.
(iv) Holdings shall furnish to each Registering Party,
without charge, at least one copy of the Registration Statement and any
post-effective amendment thereto, including financial statements and schedules,
and, if the Registering Party so requests in writing, all exhibits thereto
(including those, if any, incorporated by reference).
(v) Holdings shall deliver to each Registering Party,
without charge, as many copies of the prospectus (including each preliminary
prospectus) included in the Registration Statement and any amendment or
supplement thereto as such person may reasonably request. Holdings consents,
subject to the provisions of this Agreement, to the use of the prospectus or any
amendment or supplement thereto included in the Registration Statement by each
of the Registering Parties in connection with the offering and sale of the
Registered Securities covered by such prospectus or any such amendment or
supplement.
(vi) Prior to any public offering of the Registered
Securities, pursuant to any Registration Statement, Holdings shall register or
qualify or cooperate with the Registering Parties and their respective counsel
in connection with the registration or qualification of the Registered
Securities covered thereby for offer and sale under the securities or "blue sky"
laws of such states of the United States as any Registering Party reasonably
requests in writing and do any and all other acts or things necessary or
advisable to enable the offer and sale in such jurisdictions of the Registered
Securities covered by such Registration Statement; provided, however, that
Holdings shall not be required to (A) qualify generally to do business in any
jurisdiction where it is not then so qualified or (B) take any action which
would subject it to general service of process or to taxation in any
jurisdiction where it is not then so subject.
(vii) Holdings shall cooperate with the Registering Parties to
facilitate the timely preparation and delivery of certificates representing the
Registered Securities to be sold pursuant to any Registration Statement free of
any restrictive legends and in such denominations and registered in such names
as the Registering Parties may request (including being eligible for deposit
with The Depository Trust Company) a reasonable period of time prior to sales of
the Registered Securities pursuant to such Registration Statement.
(viii) Upon the occurrence of any event contemplated by
paragraphs (B) through (E) of Section 4.3(c)(ii) above during the period for
which Holdings is required to maintain an effective Registration Statement,
Holdings shall promptly prepare and file a post-effective amendment to the
Registration Statement or a supplement to the related prospectus and any other
required document so that, as thereafter delivered to the Registering Parties or
purchasers of Registered Securities covered by such Registration Statement, the
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact required to be
24
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. If Holdings notifies
the Registering Parties in accordance with paragraphs (B) through (E) of Section
4.3(c)(ii) above to suspend the use of the prospectus until the requisite
changes to the prospectus have been made, then the Registering Parties shall
suspend use of such prospectus, and the period of effectiveness of the
Registration Statement provided for in Section 4.2(a) above shall each be
extended by the number of days from and including the date of the giving of such
notice to and including the date when the Registering Parties shall have
received such amended or supplemented prospectus pursuant to this paragraph.
(ix) Not later than the effective date of the applicable
Registration Statement, Holdings will obtain one CUSIP number for all of the
Registered Securities covered by such Registration Statement.
(x) Holdings may require each Registering Party to furnish
to Holdings such information regarding the Registering Party and the
distribution of the Registered Securities as Holdings may from time to time
reasonably require for inclusion in the Registration Statement, and Holdings may
exclude from such registration the Registered Securities of any Registering
Party that fails to furnish such information within a reasonable time after
receiving such request.
(xi) In the case of any Demand Registration Statement,
Holdings shall (A) make reasonably available for inspection by the Registering
Parties, any underwriter participating in any disposition pursuant to the Demand
Registration Statement and any attorney, accountant or other agent retained by
the Registering Parties or any such underwriter all relevant financial and other
records, pertinent corporate documents and properties of Holdings and its
subsidiaries and (B) cause Holdings' and its subsidiaries, officers, directors,
employees, accountants and auditors to supply all relevant information
reasonably requested by the Registering Parties or any such underwriter,
attorney, accountant or agent in connection with the Demand Registration
Statement, in each case as shall be reasonably necessary, in the judgment of the
Registering Parties or any such underwriter, attorney, accountant or agent
referred to in this paragraph, to conduct a reasonable investigation within the
meaning of Section 11 of the Act; provided, however, that the foregoing
inspection and information gathering shall be coordinated on behalf of the
Registering Parties by one counsel designated by and on behalf of all
Registering Parties, selected in accordance with Section 4.5 below, if
applicable, and one counsel designated by and on behalf of the underwriters.
(xii) In the case of any Demand Registration Statement,
Holdings, if requested by holders of a majority of the Demand Securities, shall
cause (A) its counsel to deliver an opinion and updates thereof relating to the
Demand Securities to be registered in customary form addressed to holders of the
Demand Securities and the managing underwriters, if any, thereof and dated, in
the case of the initial opinion, the effective date of such Demand Registration
Statement; (B) its officers to execute and deliver all customary documents and
certificates and updates thereof reasonably requested by any underwriters of the
applicable Demand Securities and (including, without limitation, an underwriting
agreement in form and substance as is customary in underwritten public
offerings), and (C) its independent public accountants and the independent
public accountants with respect to any business acquired, to the
25
extent financial information with respect thereto is included or incorporated by
reference in the Demand Registration Statement to provide to the holders of the
Demand Securities and any underwriter therefor a comfort letter in customary
form and covering matters of the type customarily covered in comfort letters in
connection with primary underwritten offerings, subject to receipt of
appropriate documentation as contemplated, and only if permitted, by Statement
of Auditing Standards No. 72.
(xiii) Holdings shall comply with all applicable rules and
regulations of the Commission and make generally available to its security
holders earnings statements satisfying the provisions of Section 11(a) of the
Act and Rule 158 thereunder (or any similar rule promulgated under the Act) no
later than forty-five (45) days after the end of any twelve (12) month period
(or ninety (90) days after the end of any twelve (12) month period if such
period is a fiscal year) (or in each case within such extended period of time as
may be permitted by the Commission for filing the applicable report with the
Commission) (A) commencing at the end of any fiscal quarter in which Demand
Securities are sold to underwriters in a firm commitment or best efforts
underwritten offering and (B) if not sold to underwriters in such an offering,
commencing on the first day of the first fiscal quarter of Holdings after the
effective date of a Registration Statement, which statements shall cover said
twelve (12) month period.
(xiv) Holdings shall cooperate with each seller of Demand
Securities covered by any Registration Statement and each underwriter, if any,
participating in the disposition of such Demand Securities and their respective
counsel in connection with any filings required to be made with the NASD.
(xv) Holdings shall use commercially reasonable best efforts
to take all other steps necessary to effect the registration of the Registered
Securities covered by a Registration Statement contemplated hereby.
(d) Holdings agrees to indemnify and hold harmless each
Registering Party, the officers, directors, partners and fiduciaries of each
Registering Party and each person, if any, who controls such Party within the
meaning of the Act or the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), and the officers, directors, partners and fiduciaries of each
such controlling person (collectively the "INDEMNIFIED PARTIES") from and
against any losses, claims, damages or liabilities, joint or several, or any
actions in respect thereof (including, but not limited to, any losses, claims,
damages, liabilities or actions relating to purchases and sales of the
Registered Securities) to which each Indemnified Party may become subject under
the Act, the Exchange Act or otherwise, insofar as such losses, claims, damages,
liabilities or actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in a Registration
Statement or prospectus or in any amendment or supplement thereto or in any
preliminary prospectus relating to a Registration Statement, or arise out of, or
are based upon, the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and shall reimburse, as incurred, each Indemnified Party for any
legal or other expenses reasonably incurred by it in connection with
investigating or defending any such loss, claim, damage, liability or action in
respect thereof; provided, however, that (i) Holdings shall not be liable in any
such case to the extent that such loss, claim, damage, liability or action
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission made in a Registration
26
Statement or prospectus or in any amendment or supplement thereto or in any
preliminary prospectus relating to a Registration Statement in reliance upon and
in conformity with written information pertaining to such Registering Party and
furnished to Holdings by or on behalf of such Registering Party specifically for
inclusion therein; (ii) with respect to any untrue statement or omission or
alleged untrue statement or omission made in any prospectus relating to a
Registration Statement, the indemnity agreement contained in this subsection (d)
shall not inure to the benefit of any Registering Party from whom the person
asserting any such losses, claims, damages or liabilities purchased the
Registered Securities concerned, to the extent that a prospectus relating to
such Registered Securities was required to be delivered by such Registering
Party under the Act in connection with such purchase and any such loss, claim,
damage or liability of such Registering Party results from the fact that there
was not sent or given to such person, at or prior to the written confirmation of
the sale of such Registered Securities to such person, a copy of the final
prospectus, as amended or supplemented, if Holdings had previously furnished
copies thereof to such Registering Party and (iii) the foregoing indemnity
agreement with respect to any preliminary prospectus shall not inure to the
benefit of any underwriter or Registering Party from whom the person asserting
any such loss, claim, damage or liability purchased the Registered Securities if
a copy of the prospectus included in the applicable Registration Statement (as
then amended or supplemented, if such amendment or supplement was furnished by
Holdings) was not sent or given by or on behalf of any underwriter or
Registering Party to such person, if such is required by law, at or prior to the
written confirmation of the sale of such Registered Securities to such person
and if the prospectus (as so amended or supplemented) would have cured the
defect giving rise to such loss, claim, damage or liability; provided further,
however, that this indemnity agreement will be in addition to any liability
which Holdings may otherwise have to such Indemnified Party. Holdings shall also
indemnify underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in the distribution (in each case as
described in a Registration Statement), their officers and directors and each
person who controls such persons within the meaning of the Act or the Exchange
Act to the same extent as provided above with respect to the indemnification of
the Registering Parties if requested by such holders.
(e) Each Registering Party, severally and not jointly, will
indemnify and hold harmless Holdings and each person, if any, who controls
Holdings within the meaning of the Act or the Exchange Act from and against any
losses, claims, damages, liabilities or actions in respect thereof to which
Holdings or any such controlling person may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities
or actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement or prospectus
or in any amendment or supplement thereto or in any preliminary prospectus
relating to a Registration, or arise out of or are based upon the omission or
alleged omission to state therein a material fact necessary to make the
statements therein not misleading (in the case of the prospectus or preliminary
prospectus, in light of the circumstances under which they were made), but in
each case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information pertaining to such Registering Party and
furnished to Holdings by or on behalf of such Registering Party specifically for
inclusion therein; and, subject to the limitation set forth immediately
preceding this clause, shall reimburse, as incurred, Holdings for any legal or
other expenses reasonably incurred by Holdings or any such controlling person in
connection with investigating or defending any loss, claim, damage,
27
liability or action in respect thereof. This indemnity agreement will be in
addition to any liability which such Registering Party may otherwise have to
Holdings or any of its controlling persons.
(f) Promptly after receipt by an Indemnified Party under Section
4.3(d) or (e) of notice of the commencement of any action or proceeding
(including a governmental investigation), such Indemnified Party will, if a
claim in respect thereof is to be made against any person (the "INDEMNIFYING
PARTY") under Section 4.3(d) or (e), notify the Indemnifying Party of the
commencement thereof; but the omission so to notify the Indemnifying Party will
not, in any event, relieve the Indemnifying Party from any obligations to any
Indemnified Party other than the indemnification obligation provided in Section
4.3(d) or (e) above unless and to the extent that the Indemnifying Party has
been prejudiced in any material respect by such failure. In case any such action
is brought against any Indemnified Party, and it notifies the Indemnifying Party
of the commencement thereof, the Indemnifying Party will be entitled to
participate therein and, to the extent that it may wish, jointly with any other
Indemnifying Party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such Indemnified Party (who shall not, except
with the consent of the Indemnified Party, be counsel to the Indemnifying
Party), and after notice from the Indemnifying Party to such Indemnified Party
of its election so to assume the defense thereof the Indemnifying Party will not
be liable to such Indemnified Party under Section 4.3(d) or (e) for any legal or
other expenses, other than reasonable costs of investigation, subsequently
incurred by such Indemnified Party in connection with the defense thereof.
Notwithstanding the foregoing, an Indemnified Party shall have the right to
employ separate counsel in any such proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party or parties unless (i) the Indemnifying Party has agreed
to pay such fees and expenses; (ii) the Indemnifying Party shall have failed
promptly after notice to assume the defense of such proceeding or shall have
failed to employ counsel reasonably satisfactory to such Indemnified Party; or
(iii) the named parties to any such proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party or any of its
affiliates or controlling persons, and such Indemnified Party shall have been
advised in writing by counsel that either (A) a conflict of interest may exist
if such counsel represents such Indemnified Party and the Indemnifying Party (or
such affiliate or controlling person) or (B) there may be one or more legal
defenses available to such Indemnified Party that are different from or in
addition to those available to the Indemnifying Party or such affiliate or
controlling person (in which case, if such Indemnified Party notifies the
Indemnifying Parties in writing that it elects to employ separate counsel at the
expense of the Indemnifying Parties, the Indemnifying Parties shall not have the
right to assume the defense thereof and the fees and expenses of such counsel
shall be at the expense of the Indemnifying Party; it being understood, however,
that the Indemnifying Party shall not, in connection with any one such
proceeding or separate but substantially similar or related proceedings in the
same jurisdiction, arising out of the same general allegations or circumstances,
be liable for the fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for all such Indemnifying
Parties. No Indemnifying Party shall be liable for any settlement of any such
proceeding effected without its written consent, but if settled with its written
consent, or if there be a final unappealable judgment for the plaintiff in any
such proceeding, each Indemnifying Party jointly and severally agrees, subject
to the exceptions and limitations set forth above, to indemnify and hold
harmless each indemnified party from and against any and all losses, claims,
damages or liabilities by reason of such settlement or judgment. No Indemnifying
Party shall, without the prior written
28
consent of the Indemnified Party, effect any settlement of any pending or
threatened action in respect of which any Indemnified Party is or could have
been a party sand indemnity could have been sought hereunder by such Indemnified
Party unless such settlement includes an unconditional release of such
Indemnified Party from all liability on any claims that are the subject matter
of such action.
(g) If the indemnification provided for in Section 4.3(d) or (e)
is unavailable or insufficient to hold harmless an Indemnified Party thereunder,
then each Indemnifying Party shall contribute to the amount paid or payable by
such Indemnified Party as a result of the losses, claims, damages, liabilities
or actions in respect thereof referred to in Sections 4.3(d) and (e) above in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party or Parties on the one hand and the Indemnified Party on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities (or actions in respect thereof) as well
as any other relevant equitable considerations. The relative fault of the
parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by Holdings,
on the one hand, or such Registering Party or such other indemnified person, as
the case may be, on the other, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount paid by an Indemnified Party as a result of the losses,
claims, damages, liabilities or actions referred to in the first sentence of
this subsection (g) shall be deemed to include any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any action or claim which is the subject of this Section 4.3(g),
the Registering Party shall not be required to contribute any amount in excess
of the amount by which the net proceeds received by such holders from the sale
of Registered Securities pursuant to a Registration Statement exceeds the amount
of damages which such holders have otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The parties agree that it would not
be just and equitable if contribution pursuant to this section were determined
by pro rata allocation or by any other method that does not take account of the
equitable considerations referred to above. For purposes of this subsection (g),
each person, if any, who controls such Indemnified Party within the meaning of
the Act or the Exchange Act shall have the same rights to contribution as such
Indemnified Party and each person, if any, who controls the Company within the
meaning of the Act or the Exchange Act shall have the same rights to
contribution as the Company.
(h) The agreements contained in Sections 4.3(d) through (g) shall
survive the sale of the Registered Securities pursuant to a Registration
Statement and shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement or any investigation made by or on
behalf of any indemnified party.
4.4 Definition of Common Stock.
For the purposes of this Article 4, the term "common stock" shall include
any securities issued or issuable with respect to such securities by any of
stock dividend or stock split or in
29
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise.
4.5 Designation of Underwriters.
In connection with any underwritten public offering pursuant to a Demand
Registration, the holders of a majority of Demand Securities shall select the
managing underwriter, counsel and co-manager if one is desired by them (with the
consent of Holdings, such consent not to be unreasonably withheld).
5. SPECIAL WHITNEY PRIVILEGES
5.1 Whitney Board Designee.
Prior to an Initial Public Offering and subject to Section 5.1(i) below:
(a) the parties shall, at any annual meeting of stockholders of
Holdings or any special meeting of stockholders of Holdings, or by written
consent, vote their Shares to set the size of the Board to seven (7) directors.
(b) prior to January 1, 2007, the Parties shall, at any annual
meeting of stockholders of Holdings or any special meeting of stockholders of
Holdings called for the purpose of electing directors, or by written consent,
vote their Shares for the election of the following members of the Board:
(i) two (2) members of the Board designated by Whitney V;
(ii) four (4) members of the Board designated by the holders
of a majority of the Xxxxxxxx Securities; and
(iii) Xxxxxxx Xxxxxxx ("XXXXXXX"), or his successor determined
in accordance with Section 5.1(f).
(c) on and after January 1, 2007, the Parties shall, at any annual
meeting of stockholders of Holdings or any special meeting of stockholders of
Holdings called for the purpose of electing directors, or by written consent,
vote their Shares for the election of the following members of the Board:
(i) two (2) members of the Board designated by Whitney V;
(ii) three (3) members of the Board designated by the holders
of a majority of the Xxxxxxxx Securities;
(iii) one (1) other person mutually agreeable to Xxxxxxxx and
Whitney V (the "INDEPENDENT DIRECTOR"); and
(iv) Xxxxxxx, or his successor determined in accordance with
Section 5.1(f).
30
(d) the Board shall not act through any committee or similar body
unless the directors designated by Whitney V pursuant to Section 5.1(b)(i) or
5.1(c)(i) above (as the case may be, the "WHITNEY DESIGNEES") and the directors
designated by holders of a majority of the Xxxxxxxx Securities pursuant to
Section 5.1(b)(ii) or 5.1(c)(ii) above (as the case may be, the "XXXXXXXX
DESIGNEES" and together with the Whitney Designees, the "DESIGNEES") have been
provided the continuing opportunity to join as a member thereof.
(e) Whitney and the holders of a majority of the Xxxxxxxx
Securities, respectively, may remove from the Board the Whitney Designee or
Xxxxxxxx Designee, as applicable, in its or their sole discretion and without
providing notice to the other Parties. Upon the resignation or removal of any
Whitney Designee or Xxxxxxxx Designee, the other Parties shall vote their Shares
for such replacement director as shall be designated by Whitney or the holders
of a majority of the Xxxxxxxx Securities, as applicable. No Whitney Designee or
Xxxxxxxx Designee, respectively, may be removed from the Board without the vote
or consent of a majority of the holders of the Whitney Securities or the
Xxxxxxxx Securities, as applicable, absent fraud or willful misconduct by such
individual.
(f) Upon the resignation or removal of Xxxxxxx or the Independent
Director from the Board, the Parties shall vote their Shares for such
replacement director as shall be mutually agreeable to both Xxxxxxxx and
Xxxxxxx.
(g) in no event shall Board meetings or any meetings of a
committee of the Board (collectively, "BOARD MEETINGS") be convened without
affording the Designees with two (2) business days' written notice to attend
such a meeting. The Designees shall be provided with all information and
materials provided to the other directors for such a meeting. All Board Meetings
shall either be held at locations reasonably convenient to the Designees or, in
the alternative, the Designees shall be permitted to participate in such Board
Meeting telephonically.
(h) Holdings shall afford Whitney the opportunity to designate one
(1) member of the governing bodies of all entities over which Holdings has
Control, and such designee shall be entitled to all rights in respect of its
membership in the governing body of any such entity as the Whitney Designees
have in respect of the Board.
(i) (A) Whitney shall forfeit its right to appoint one member of
the Board pursuant to Sections 5.1(b)(i) and 5.1(c)(i) above at any time that
(x) the Minimum Whitney Common Ownership equals or is less than 20% or (y) the
Minimum Whitney Preferred Ownership equals or is less than 20%; (B) the
provisions of Section 5.1(c)(iii) shall not apply (and instead a majority of the
Xxxxxxxx Securities shall have the right to designate four (4) members of the
Board pursuant to Section 5.1(c)) at any time that the Minimum Whitney Preferred
Ownership equals or is less than 20%; and (C) Whitney shall forfeit its right to
appoint any member of the Board pursuant to Sections 5.1(b)(i) and 5.1(c)(i)
above and its right to participate in the designation under Section 5.1(c)(iii)
above, upon the occurrence of both (A)(x) and (B)(x) hereof.
31
5.2 Whitney's Written Consent.
Prior to an Initial Public Offering and for so long as the Minimum Whitney
Common Ownership exceeds twenty percent (20%), Holdings shall not take, and
shall cause its subsidiaries not to take, any of the following actions without
the prior written consent of Whitney:
(a) Any redemption or other repurchase of equity securities by
Holdings consisting of more than ten percent (10%) in the aggregate of the
Outstanding Common Shares on the date hereof; provided, however, that any
redemption or other repurchase of Securities held by Xxxxxxxx or his Permitted
Transferees may not be effected without the prior written consent of Whitney.
(b) A sale, lease, exchange or other distribution (including by
way of merger or consolidation) of all or substantially all of Holdings' and its
Subsidiaries' property and assets prior to thirty (30) months following the date
hereof for a consideration that will result in, after giving effect to such
transaction, a Whitney IRR of less than 25%; PROVIDED, HOWEVER, that such action
shall not require the prior written consent of Whitney from and after such time
that Whitney transfers any Whitney Securities to a Person other than a Permitted
Transferee.
(c) Any acquisition or series of related acquisitions by Holdings
or any of its subsidiaries, by way of merger, consolidation, stock purchase,
asset purchase or otherwise, of any Person in which Holdings or any of its
Subsidiaries will pay consideration of $30,000,000 or more in the aggregate.
(d) The entering into any agreement, transaction or arrangement
between Holdings or any of its subsidiaries, on the one hand, and Xxxxxxxx or
any holder of more than five percent (5%) of the Outstanding Common Shares, on
the other hand, other than the Xxxxxxxx Employment Agreement, the Management
Services Agreement, any grant of options or warrants to Xxxxxxxx permitted
pursuant to subsection (f) below or the issuance of any shares of Common Stock
or Preferred Stock to Whitney pursuant to the Holdings Certificate of
Incorporation, the New Stock Purchase Agreement or the Old Stock Purchase
Agreement.
(e) Changes in the general lines of business from those currently
conducted by Holdings and its subsidiaries.
(f) Any grant of options or warrants granted from and after the
date hereof pursuant to management option plans heretofore or hereafter approved
by the Board to purchase Common Stock which, when taken together with all other
options and warrants issued following the date hereof pursuant to this
subsection (f), exceed 396,241.50 shares (subject to adjustment to reflect any
stock split, stock dividend, reclassification, recapitalization or other
transaction having a similar effect); provided, however, that any grant of
options or warrants to Xxxxxxxx following the date hereof which, when taken
together with all other options and warrants granted to Xxxxxxxx pursuant to
this subsection (f), would be in excess of 242,669 shares (subject to adjustment
to reflect any stock split, stock dividend, reclassification, recapitalization
or other transaction having a similar effect) shall require prior written
consent of Whitney.
32
(g) Any issuance of Common Stock by Holdings at a price per share
below the fair market value of such shares as determined in good faith by the
Board. If the holders of a majority of the Whitney Securities disagree with such
Board determination, the disagreement regarding the fairness of the issuance
price shall be resolved by binding arbitration. In the event of a dispute, the
holders of a majority of the Whitney Securities may notify Holdings in writing
of its request for such arbitration and its choice of an arbitrator. Within
thirty (30) days following its receipt of such a request, Holdings shall notify
the holders of a majority of the Whitney Securities of its choice of an
arbitrator. The arbitrators so chosen shall meet within thirty (30) days
thereafter and select a third arbitrator and commence the arbitration in
accordance with rules agreed by the parties. If the parties are unable to agree
on such rules, the arbitrators shall establish them by a majority vote. The
holders of the Whitney Securities and Holdings shall bear their own costs and
expenses, and the fees and expenses of the arbitrators shall be divided equally
between the parties, unless arbitrators rule by a majority vote that a party has
not acted in good faith with regard to the institution, conduct and/or the
subject of the arbitration. In the event of such a ruling, the arbitrators shall
require such party to pay all of the arbitrators' costs and expenses, as well as
some or all of the other party's arbitration costs and expenses, in the
discretion of the arbitrators.
(h) Any issuance of capital stock having liquidation, dividend, or
distribution rights (i) senior to the Class B Preferred Stock, Class C Preferred
Stock or Class D Preferred Stock, or (ii) senior to, or pari passu with, the
Class A Preferred Stock.
5.3 Whitney's Right to Information.
(a) Prior to an Initial Public Offering, and so long as the
Minimum Whitney Common Ownership exceeds twenty percent (20%), Holdings shall
provide to Whitney or the Whitney Designee (i) monthly, quarterly and annual
financial statements, but only to the extent, and in such form, as are normally
prepared by Holdings and/or Roller Bearing Company of America, Inc., (ii) copies
of all significant reports submitted to Holding's certified public accountants
in connection with each annual, interim or special audit or review of any type
of the financial statements or related internal control systems of Holdings and
its subsidiaries made by such accountants, including any comment letter
submitted by such accountants, including any comment letter submitted to such
accountants to management in connection with their services, (iii) for so long
as Holdings is subject to the reporting requirements of Section 13(a) or 15(d)
of the Exchange Act, all information and reports required to be delivered by
Holdings under the reporting requirements of Section 13(a) or 15(d) of the
Exchange Act when and as delivered to the Commission or the securities holders
of Holdings, (iv) all press releases and other statements made available by
Holdings or any of its subsidiaries to the public concerning material
developments in the business of Holdings or its subsidiaries, (v) not less than
fifteen (15) days prior to creating a new subsidiary or acquiring the stock of,
or other equity interests in a Person, such that such Person will become a
subsidiary, written notice of the intention of Holdings or any of its
subsidiaries to create such a subsidiary or acquire such stock or equity
interests, and (vi) such other information and data with respect to Holdings or
any of its subsidiaries as from time to time may be reasonably required by the
holders of the Whitney Securities. The delivery of such financial statements
shall not be deemed to constitute a representation by Holdings respecting the
accuracy of the information contained therein.
33
(b) Holdings shall permit, and will cause each of its subsidiaries
to permit, representatives of Whitney or its Permitted Transferees to visit and
inspect any of their properties, to examine their corporate, financial and
operating records and make copies thereof or abstracts therefrom, and to discuss
their 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.
6. AFFIRMATIVE COVENANTS
Prior to an Initial Public Offering and so long as the Minimum Whitney
Common Ownership exceeds twenty percent (20%), Holdings hereby covenants with
Whitney as follows:
6.1 Preservation of Corporate Existence.
Holdings shall, and shall cause each of its subsidiaries to:
(a) preserve and maintain in full force and effect its corporate
(or, as applicable, limited liability company or other entity) existence;
provided, that Holdings and its subsidiaries will not be subject to such
requirement if the Board determines in good faith that it is not in Holdings'
best interest to do so; and
(b) file or cause to be filed in a timely manner all material
reports, applications and licenses that shall be necessary for the conduct of
its business.
6.2 Payment of Obligations.
Holdings shall, and shall cause each of its subsidiaries to, pay and
discharge, within a reasonable time from the time that such payment or liability
shall become due and payable, all their respective material obligations and
liabilities known to Holdings, including without limitation:
(a) all known tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with generally accepted accounting principles ("GAAP") are being
maintained by Holdings or such subsidiary; and
(b) all known lawful claims which Holdings and each of its
subsidiaries is obligated to pay, which are due and which, if unpaid, might by
law become a lien upon its property, unless the same are being contested in good
faith by appropriate proceedings and adequate reserves in accordance with GAAP
are being maintained by Holdings or such subsidiary.
6.3 Compliance with Laws.
Holdings shall comply, and shall cause each of its subsidiaries to comply,
in all material respects, with applicable laws and with the written directions
of each governmental authority
34
having jurisdiction over them or their business or property (including, without
limitation all applicable environmental laws).
6.4 Insurance.
Holdings and its subsidiaries will maintain or cause to be maintained with
financially sound and reputable insurers that have a rating of "A" or better as
established by Best's Rating Guide (or an equivalent rating with such other
publication of a similar nature as shall be in current use), public liability
and property damage insurance with respect to their respective businesses and
properties against loss or damage of the kinds and in amounts customarily
carried or maintained by companies of established reputation engaged in similar
businesses.
6.5 Books and Records.
Holdings shall, and shall cause each of its Subsidiaries to, keep proper
books of record and account, in which full and correct entries shall be made of
all financial transactions and the assets and business of Holdings and each of
its Subsidiaries in accordance with GAAP consistently applied to Holdings and
its Subsidiaries taken as a whole.
6.6 Recourse.
Any monetary proceeds received by Whitney for a violation of this Article 6
must be shared with the other holders of equity Securities of Holdings on a pro
rata basis.
7. TERMINATION; AMENDMENT; WAIVER
7.1 Termination; Amendment.
(a) This Agreement may be terminated and the terms hereof amended
at any time by the execution of a written instrument signed by each of the
Initial Parties or, as to any of them, a Person designated by any such Initial
Party in accordance with Section 2.6.
(b) In the event of the termination of this Agreement, this
Agreement shall forthwith become void and have no effect, without any liability
on the part of any party hereto or any of their directors, officers, partners or
stockholders.
7.2 Waiver.
Any agreement on the part of any Party hereto as to any waiver of any of
its rights hereunder shall be valid only if set forth in an instrument in
writing signed on behalf of such Party.
8. MISCELLANEOUS
8.1 Notices.
Any notice, request, instruction, or other communication to be given
hereunder by any party to another shall be in writing and shall be deemed to
have given if delivered by hand or
35
sent by telecopier (transmission confirmed), certified or registered mail
(return receipt requested), postage prepaid, or by overnight express service,
addressed to the respective party or parties at the following addresses:
If to Holdings:
Roller Bearing Holding Company, Inc.
00 Xxxxx Xxxx Xxxx
X.X. Xxx 000
Xxxxxxxxx, Xxxxxxxxxxx 00000-0000
Telecopier: 000-000-0000
Attention: Chief Executive Officer
with a copy (which shall not constitute notice) to:
XxXxxxxxx, Will & Xxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: 000-000-0000
Attention: C. Xxxxx Xxxxxxx, Esq.
If to any Whitney Party, to:
Whitney & Co.
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telecopier:
Attention: Xxxxxxx X. Xxxxx, Xxxxxx X. Xxxxxxxx,
Xxxxx Xxxxxx
With a copy (which shall not constitute notice) to:
Xxxxxxxx & Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Telecopier: 212-446-4900
Attention: Xxxxxxxxx Xxxxx, Esq.
With a copy (which shall not constitute notice) to:
XxXxxxxxx, Will & Xxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: 000-000-0000
Attention: C. Xxxxx Xxxxxxx, Esq.
36
If to Xxxxxxxx:
Xx. Xxxxxxx X. Xxxxxxxx
c/o Roller Bearing Holding
Company, Inc.
00 Xxxxx Xxxx Xxxx
P.O. Box 430
Fairfield, Connecticut 06430-0430
Telecopier: 000-000-0000
with a copy (which shall not constitute notice) to:
XxXxxxxxx, Will & Xxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: 000-000-0000
Attention: C. Xxxxx Xxxxxxx, Esq.
or to such other address or addresses as any party may designate to the others
by like notice as set forth above. Any notice given hereunder shall be deemed
given and received on the date of hand delivery or transmission by telecopier,
or three days after mailing by certified or registered mail or one day after
delivery to an overnight express service for next day delivery, as the case may
be.
8.2 Entire Agreement.
This Agreement contains the entire agreement between the Parties with
respect to the subject matter contemplated hereby and expressly supersedes in
its entirety the Existing Stockholders' Agreement.
8.3 Captions.
The captions of the various Articles and Sections of this Agreement have
been inserted only for convenience of reference and shall not be deemed to
modify, explain, enlarge or restrict any provision of this Agreement or affect
the construction hereof.
8.4 No Third Party Beneficiary.
Nothing expressed or implied in this Agreement is intended, or shall be
construed, to confer upon or give any person other than the parties hereto and
their respective heirs, personal representatives, legal representatives, and
successors, any rights or remedies under or by reason of this Agreement.
8.5 Remedies Cumulative.
No remedy made available by any of the provisions of this Agreement is
intended to be exclusive of any other remedy, and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity.
37
8.6 Governing Law; Submission to Jurisdiction.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE
LAWS OF THE STATE OF
NEW YORK AND FOR ALL PURPOSES SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF SAID STATE WITHOUT GIVING EFFECT TO THE RULES OF
SAID STATE GOVERNING THE CONFLICTS OF LAWS.
(b) The Parties hereby agree that any action, proceeding or claim
against it arising out of, or relating in any way to, this Agreement may be
brought and enforced in the courts of the State of
New York or of the United
States of America for the Southern District of
New York, and irrevocably submits
to such jurisdiction for such purpose. The Parties hereby irrevocably waive any
objection to such exclusive jurisdiction or inconvenient forum. Any such process
or summons to be served upon any of the Parties (at the option of the party
bringing such action, proceeding or claim) may be served by transmitting a copy
thereof, by registered or certified mail, return receipt requested, postage
prepaid, addressed to it at the address set forth in Section 8.1 hereof. Such
mailing shall be deemed personal service and shall be legal and binding upon the
Party so served in any action, proceeding or claim. Except with respect to
disputes to be resolved in accordance with Section 5.2(g), nothing herein shall
affect the right of any party hereto to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
any other party in any other jurisdiction.
8.7 Assignment.
Except as otherwise set forth in this Agreement, neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the Parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns.
8.8 No Inconsistent Agreements.
Holdings will not, on or after the date of this Agreement, enter into any
agreement or grant any rights to any Person that conflicts with the provisions
hereof.
8.9 Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall be considered one and the same agreement and shall become effective when a
counterpart has been signed by each of the parties and delivered to the other
party, it being understood that all parties need not sign the same counterpart.
38
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Stockholders' Agreement on this ____ day of July, 2002.
ROLLER BEARING HOLDING COMPANY, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------
Xxxxxxx X. Xxxxxxxx
President and CEO
XXXXXXX X. XXXXXXXX
/s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx
XXXXXXXX FAMILY INVESTMENTS, L.P.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------
Xxxxxxx X. Xxxxxxxx
General Partner
WHITNEY RBHC INVESTOR, LLC
By:Whitney V, L.P.,
its Managing Member
By:Whitney Equity Partners V, LLC,
its General Partner
By: /s/ Xxxxxx Xxxxxxxx
---------------------------
Name: Xxxxxx Xxxxxxxx
Title:
WHITNEY V, L.P.
By: Whitney Equity Partners V, LLC,
its General Partner
By: /s/ Xxxxxx Xxxxxxxx
---------------------------
Name: Xxxxxx Xxxxxxxx
Title:
39
