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Exhibit 10.17
INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT (this " Agreement ") is
made as of December 26, 2006, by and among Aldabra Acquisition
Corporation, a Delaware corporation (the " Company ");
Madison Dearborn Capital Partners IV, L.P., a Delaware corporation
(" MDCP "), certain directors and officers of the Company
who are shareholders of the Company on the date hereof and who are
signatories to this Agreement (the " Aldabra Shareholders
"), each of the Persons listed on the signature pages hereto as
"Other Investors" (the " Other Investors "), and for the
purposes set forth in Section 13(e), Great Lakes Dredge & Dock
Holdings Corp. (" Holdco "). Certain capitalized terms
have the meanings set forth in Section 12 hereof.
Capitalized terms used, but not otherwise defined, herein shall
have the meanings set forth in the Merger Agreement (as hereinafter
defined).
The Company, GLDD Acquisitions Corp. (" GLDD "), Aldabra
Merger Sub, L.L.C., a Delaware limited liability company ("
Merger Sub "), MDCP (solely in its capacity as Company
Representative) and the Buyer Representative (as named therein) are
parties to that certain Agreement and Plan of Merger, dated as of
June 20, 2006 (as amended, modified, supplemented or waived from
time to time, the " Merger Agreement ") pursuant to which
GLDD is merging with and into Merger Sub (the " Merger
").
The Aldabra Shareholders own shares of Common Stock of the
Company and warrants exercisable for shares of Common Stock and are
agreeing to the covenants herein as a condition to the obligation
of the Company to consummate the Merger.
Certain Other Investors are members of management of GLDD and
its Subsidiaries are parties to a Management Equity Agreement among
such Other Investors and the Company dated as of December 26, 2003
(as amended or modified from time to time, the " Management
Equity Agreement ") and are acquiring shares of Common Stock of
the Company in connection with the Merger and agreeing that the
Common Stock so acquired remain subject to certain restrictions of
the Management Equity Agreement and that certain other provisions
of the Management Equity Agreement are hereby terminated.
MDCP and certain Other Investors that are not members of
management of the Company are acquiring shares of Common Stock of
the Company in connection with the Merger.
The Company’s execution and delivery of this Agreement is
a condition to GLDD’s obligations under the Merger
Agreement.
The parties hereto agree as follows:
1.
Board Representatives . Subject to the limitations set
forth in this Section 1 , the holders of a majority of MDCP
Registrable Securities shall have the right to designate up to the
Applicable Number of representatives for election to the Board
(individually a " Board Representative " and collectively
the " Board Representatives "). The terms and
conditions governing the election, term of office, filling of
vacancies and other features of such directorships shall be as
follows:
(a)
Interim Appointment of Directors . From and after the
date that MDCP is no longer entitled to designate directors with
multiple votes (as determined in accordance with the
Company’s Certificate of Incorporation) (the " Beginning
Date ") until the Expiration Date, the holders of a majority of
the MDCP Registrable Securities may nominate up to the Applicable
Number of Board Representatives to be elected to the Board.
Subject only to such actions not being in violation of the
fiduciary duties of members of the Board to the Company, the
Company shall take all action necessary such that the number of
directors on the Board shall (if necessary) be increased by the
Applicable Number and such vacancies shall be filled by the
designees of the holders of a majority of MDCP Registrable
Securities effective as of the day following the Beginning Date
(or, if later, the date that the holders of a majority of MDCP
Registrable Securities determines to appoint such Board
Representative); provided that if the Company avoids its
obligations under this sentence or this Section 1(a) because
it deems such nomination to be in violation of fiduciary duties of
members of the Board, the holders of MDCP Registrable Securities
shall be entitled to appoint an alternative nominee to be a Board
Representative. Each Board Representative appointed pursuant
to this Section 1(a) shall continue to hold office until
such Board Representative’s term expires, subject, however,
to prior death, resignation, retirement, disqualification or
termination of term of office as provided in this Section 1
.
(b)
Continuing Designation of Board Representatives . On
and prior to the Expiration Date, in connection with the expiration
of the term of any Board Representative, the Company shall, subject
to the provisions of Section 1(c) and subject only to such
nomination not being in violation of the fiduciary duties of
members of the Board, nominate the Board Representative(s)
designated by the holders of a majority of MDCP Registrable
Securities for election to the Board by the holders of voting
capital stock and solicit proxies from the Company’s
stockholders in favor of the election of such Board
Representative(s); provided that if the Company avoids its
obligations under this sentence or this Section 1(b) because
it deems such nomination to be in violation of fiduciary duties of
members of the Board, the holders of MDCP Registrable Securities
shall be entitled to appoint an alternative nominee to be a Board
Representative. Subject to the provisions of Section
1(c) , the Company shall use commercially reasonable efforts to
cause such Board Representative(s) to be elected to the Board
(including voting all unrestricted proxies in favor of the election
of such Board Representative(s) and including recommending approval
of such Board Representative(s)’ appointment to the Board as
provided for in the Company’s proxy statement) and shall not
take any action which would diminish the prospects of such Board
Representative(s) being elected to the Board.
(c)
Termination of Board Representative Designation Rights
. The right of holders of a majority of MDCP Registrable
Securities to designate a Board Representative pursuant to this
Section 1 shall terminate on the Expiration Date. If
the rights of holders of a majority of MDCP Registrable Securities
to designate a Board Representative cease under the immediately
preceding sentence, then the Company may use commercially
reasonable efforts to effect the removal of such director.
(d)
Resignation; Removal; and Vacancies .
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notice is given to the Company, unless a later
effective time is specified in the notice.
(ii)
Removal . So long as the holders of
a majority of MDCP Registrable Securities retain the right to
designate a director pursuant to Section 1(b) , the Company
shall use commercially reasonable efforts to remove any Board
Representative only if so directed in writing by the holders of a
majority of MDCP Registrable Securities.
(iii)
Vacancies . In the event of a
vacancy on the Board resulting from the death, disqualification,
resignation, retirement or termination of term of office of the
Board Representative designated by the holders of a majority of
MDCP Registrable Securities, then the Company shall use
commercially reasonable efforts to fill such vacancy with a
representative designated by the holders of a majority of the MDCP
Registrable Securities as provided hereunder, in either case to
serve until the next annual or special meeting of the stockholders
(and at such meeting, such representative, or another
representative designated by such holders, will be elected to the
Board in the manner set forth in the Company’s Bylaws).
If the holders of MDCP Registrable Securities fail or decline to
fill the vacancy, then the directorship shall remain open until
such time as the holders of a majority of MDCP Registrable
Securities elect to fill it with a representative designated
hereunder. During any such period that the holders of MDCP
Registrable Securities, as the case may be, are entitled to, but
have failed or declined to, designate a Board Representative, the
holders of a majority of MDCP Registrable Securities shall have the
right to designate one representative to attend all Board meetings
as a non-voting observer. The observer shall be entitled to
notice of all Board meetings in the manner that notice is provided
to members of the Board, shall be entitled to receive all materials
provided to members of the Board, shall be entitled to attend
(whether in person, by telephone, or otherwise) all meetings of the
Board as a non-voting observer, and shall be entitled to fees and
expenses paid to Board Representatives pursuant to Section 1(e)
.
(e)
Fees & Expenses . Board Representatives shall be
entitled to fees, other compensation and reimbursement of expenses
paid to Board members who are not employees of the Company or its
Subsidiaries.
(f)
Subsidiary Boards; Committees . Subject to applicable
law, at the request of MDCP, the Company shall use commercially
reasonable efforts to cause the Board Representative(s) to have
proportional representation (relative to their percentage on the
whole Board) on the board of directors (or similar governing body)
of each Subsidiary of the Company (each, a " Sub Board ")
and each committee of the Board and each Sub Board.
(g)
Reporting Information . With respect to each Board
Representative designated pursuant to the provisions of this
Section 1 , the holders of MDCP Registrable Securities shall
cause the Board Representative to provide to the Company with all
necessary
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assistance and information related to such Board
Representative that is required under Regulation 14A under the
Securities Exchange Act of 1934 (as amended) to be disclosed in
solicitations of proxies or otherwise, including such
Person’s written consent to being named in the proxy
statement (if applicable) and to serving as a director if
elected.
2.
Covenants .
(a)
Financial Statements and Other Information. The
Company shall deliver to each holder of more than 25% of the MDCP
Registrable Securities:
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(i)
as soon as available but in any event within 30 days
after the end of each monthly accounting period in each fiscal
year, unaudited consolidating and consolidated statements of income
and cash flows of the Company and its Subsidiaries for such monthly
period and for the period from the beginning of the fiscal year to
the end of such month, and unaudited consolidating and consolidated
balance sheets of the Company and its Subsidiaries as of the end of
such monthly period, setting forth in each case comparisons to the
Company’s annual budget and to the corresponding period in
the preceding fiscal year;
(ii)
within 45 days after the end of each quarterly
accounting period in each fiscal year, unaudited consolidating and
consolidated statements of income and cash flows of the Company and
its Subsidiaries for such quarterly period and for the period from
the beginning of the fiscal year to the end of such quarter, and
unaudited consolidating and consolidated balance sheets of the
Company and its Subsidiaries as of the end of such quarterly
period, setting forth in each case comparisons to the
Company’s annual budget and to the corresponding period in
the preceding fiscal year, and all such items shall be prepared in
accordance with generally accepted accounting principles,
consistently applied and shall be certified by a senior executive
officer of the Company;
(iii)
within 90 days after the end of each fiscal year,
consolidating and consolidated statements of income, cash flows and
shareholders’ equity of the Company and its Subsidiaries for
such fiscal year, and consolidating and consolidated balance sheets
of the Company and its Subsidiaries as of the end of such fiscal
year, setting forth in each case comparisons to the Company’s
annual budget and to the preceding fiscal year, all prepared in
accordance with generally accepted accounting principles,
consistently applied, and accompanied by (a) with respect to the
consolidated portions of such statements, an opinion containing no
material exceptions or qualifications (except for qualifications
regarding specified contingent liabilities) of an independent
accounting firm of recognized national standing, and (b) when
applicable, a copy of such firm’s annual management letter to
the Company’s board of directors;
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(iv)
promptly upon receipt thereof, any additional
reports, management letters or other detailed information
concerning significant aspects of the Company’s or its
Subsidiaries’ operations or financial affairs given to the
Company by its independent accountants (and not otherwise contained
in other materials provided hereunder);
(v)
not later than 45 days after the beginning of each
fiscal year, an annual budget prepared on a monthly basis for the
Company and its Subsidiaries for such fiscal year (displaying
anticipated statements of income and cash flows and balance
sheets), and promptly upon preparation thereof any other
significant budgets prepared by the Company and any revisions of
such annual or other budgets; and
(vi)
with reasonable promptness, such other information
and financial data concerning the Company and its Subsidiaries as
any Person entitled to receive information under this Section
2(a) may reasonably request.
Each of the financial statements referred to in subparagraphs
(i), (ii) and (iii) above shall be true and correct in all material
respects as of the dates and for the periods stated therein,
subject in the case of the unaudited financial statements to
changes resulting from normal year-end adjustments for recurring
accruals (none of which would, alone or in the aggregate, be
materially adverse to the business, condition (financial or
otherwise), operating results, assets, liabilities, operations,
business prospects or customer, supplier or employee relations of
the Company and its Subsidiaries taken as a whole).
(b)
Inspection Rights . The Company shall permit any
representatives designated by any holder of more than 25% of the
MDCP Registrable Securities, upon reasonable notice and during
normal business hours to (i) visit and inspect any of the
properties of the Company and its Subsidiaries, (ii) examine the
corporate and financial records of the Company and its Subsidiaries
and make copies thereof or extracts therefrom and (iii) discuss the
affairs, finances and accounts of any such corporations with the
directors, officers, key employees and independent accountants of
the Company and its Subsidiaries. The presentation of an
executed copy of this Agreement by any such holder to the
Company’s independent accountants shall constitute the
Company’s permission to its independent accountants to
participate in discussions with such Persons.
(c)
Confidentiality . To the extent that any such
information made available to any holder of MDCP Registrable
Securities would require disclosure under Regulation FD, such
holder shall as a condition to receiving any such information that
is not otherwise publicly available agree in writing to keep such
information confidential and not disclose such information to any
Person (i) unless such Person agrees to keep such information
confidential or (ii) except as may be required by applicable law
(including securities law). Each holder of Registrable
Securities party to this Agreement shall be deemed by its execution
hereof to have satisfied the condition referred to in this
Section 2(c) .
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(d)
Restrictions . As long as MDCP owns at least 25% of
the voting power of all shares of capital stock of the Company,
from and after the Effective Time, the Company shall not, without
the prior written consent of MDCP:
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(i)
directly or indirectly declare or pay any dividends
or make any distributions upon any of its capital stock or other
equity securities, except that the Company may declare and pay
dividends payable in shares of Common Stock issued upon the
outstanding shares of Common Stock and any Subsidiary may declare
and pay dividends or make distributions to the Company or any
Wholly-Owned Subsidiary;
(ii)
directly or indirectly redeem, purchase or otherwise
acquire, or permit any Subsidiary to redeem, purchase or otherwise
acquire, any of the Company’s or any Subsidiary’s
capital stock or other equity securities (including, without
limitation, warrants, options and other rights to acquire such
capital stock or other equity securities) or directly or indirectly
redeem, purchase or make any payments with respect to any stock
appreciation rights, phantom stock plans or similar rights or
plans, except for acquisitions of capital stock pursuant to
agreements or plans, including equity incentive agreements with
service providers, which allow the Company to repurchase shares of
Common Stock upon the termination of services or an exercise of the
Company’s right of first refusal upon a proposed
transfer.
(iii)
except as expressly contemplated by this Agreement
and the Merger Agreement, authorize, issue or enter into any
agreement providing for the issuance (contingent or otherwise) of,
(a) any notes or debt securities containing equity or voting
features (including, without limitation, any notes or debt
securities convertible into or exchangeable for capital stock or
other equity securities, issued in connection with the issuance of
capital stock or other equity securities or containing profit
participation features) or (b) any capital stock or other equity
securities (or any securities convertible into or exchangeable for
any capital stock or other equity securities);
(iv)
make, or permit any Subsidiary to make, any loans or
advances to, guarantees for the benefit of, or investments in, any
Person (other than the Company or a Wholly-Owned Subsidiary),
except for (a) reasonable advances to employees in the
ordinary course of business, (b) acquisitions permitted
pursuant to subparagraph (viii) below, (c) Investments having
a stated maturity no greater than one year from the date the
Company or any Subsidiary makes such Investment in (1) obligations
of the United States government or any agency thereof or
obligations guaranteed by the United States government, (2)
certificates of deposit of commercial banks having combined capital
and surplus of at least $50 million, (3) commercial paper with a
rating of at least "Prime-1" by Moody’s Investors Service,
Inc., or (d) loans for acquisitions of capital stock pursuant
to agreements or plans,
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including equity incentive agreements with
service providers, which allow the Company to repurchase shares of
Common Stock upon the termination of services or an exercise of the
Company’s right of first refusal upon a proposed
transfer;
(v)
merge or consolidate with any Person;
(vi)
sell, lease or otherwise dispose of, or permit any
Subsidiary to sell, lease or otherwise dispose of, more than 25% of
the consolidated assets of the Company and its Subsidiaries
(computed on the basis of book value, determined in accordance with
generally accepted accounting principles consistently applied, or
fair market value, determined by the Company’s board of
directors in its reasonable good faith judgment) in any transaction
or series of related transactions or sell or permanently dispose of
any of its or any Subsidiary’s Intellectual Property
Rights;
(vii)
liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction (including, without
limitation, any reorganization into a limited liability company, a
partnership or any other non-corporate entity which is treated as a
partnership for federal income tax purposes);
(viii)
acquire or enter into, or permit any Subsidiary to
acquire or enter into, any interest in any company or business
(whether by a purchase of assets, purchase of stock, merger or
otherwise), except acquisitions for purchase consideration of not
more than $20,000,000 in the aggregate, or any joint
venture;
(ix)
reclassify or recapitalize any securities of the
Company or any of its Subsidiaries;
(x)
enter into, or permit any Subsidiary to enter into,
the ownership, active management or operation of any business other
than dredging and demolition;
(xi)
make any amendment to or rescind (including, without
limitation, in each case by merger or consolidation) any provision
of the certificate of incorporation or articles of incorporation,
or the by-laws, of the Company or any of its Subsidiaries, or file
any resolution of the board of directors with the secretary of
state of the state of incorporation of the Company or any of its
Subsidiaries;
(xii)
enter into, amend, modify or supplement, or permit
any Subsidiary to enter into, amend, modify or supplement, any
agreement, transaction, commitment or arrangement with any of its
or any Subsidiary’s officers, directors, employees,
stockholders or Affiliates or with any individual related by blood,
marriage or adoption to any such individual or with any entity in
which any such Person or individual owns a beneficial interest,
except for customary employment arrangements and benefit programs
on
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reasonable terms and except as otherwise
expressly contemplated by this Agreement;
(xiii)
create, incur, assume or suffer to exist, or permit
any Subsidiary to create, incur, assume or suffer to exist,
indebtedness for borrowed money and/or capitalized lease
obligations exceeding an aggregate principal amount of $20,000,000
outstanding at any time on a consolidated basis, other than
pursuant to facilities in effect on the date of this
Agreement;
(xiv)
issue or sell, or permit any Subsidiary to issue or
sell, any shares of the capital stock, or rights to acquire shares
of the capital stock, of any Subsidiary to any Person other than
the Company or a Wholly-Owned Subsidiary; or
(xv)
agree to any of the foregoing.
(e)
Affirmative Covenants . As long as MDCP owns at least
25% of the voting power of all shares of capital stock of the
Company, from and after the Effective Time, the Company shall
unless it has received the prior written consent of MDCP:
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(i)
at all times cause to be done all things necessary
to maintain, preserve and renew its corporate existence and all
material licenses, authorizations and permits necessary to the
conduct of its businesses;
(ii)
maintain and keep its material properties in good
repair, working order and condition, and from time to time make all
necessary or desirable repairs, renewals and replacements, so that
its businesses may be properly and advantageously conducted in all
material respects at all times;
(iii)
pay and discharge when payable all taxes,
assessments and governmental charges imposed upon its properties or
upon the income or profits therefrom (in each case before the same
becomes delinquent and before penalties accrue thereon) and all
claims for labor, materials or supplies which if unpaid would by
law become a lien, encumbrance or other restriction upon any
of its property, unless and to the extent that the same are being
contested in good faith and by appropriate proceedings and adequate
reserves (as determined in accordance with generally accepted
accounting principles, consistently applied) have been established
on its books and financial statements with respect
thereto;
(iv)
comply with all other material obligations which it
incurs pursuant to any contract or agreement, whether oral or
written, express or implied, as such obligations become due, unless
and to the extent that the same are being contested in good faith
and by appropriate proceedings and adequate reserves (as determined
in accordance with generally accepted accounting principles,
consistently applied) have been established on its books and
financial statements with respect thereto;
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(v)
comply with all applicable laws, rules and
regulations of all governmental authorities, the violation of which
would reasonably be expected to have a material adverse effect upon
the business, condition (financial or otherwise), operating
results, assets, liabilities, operations, business prospects or
customer, supplier or employee relations of the Company and its
Subsidiaries taken as a whole;
(vi)
apply for and continue in force with good and
responsible insurance companies adequate insurance covering risks
of such types and in such amounts as are customary for well-insured
companies of similar size engaged in similar lines of business;
and
(vii)
maintain proper books of record and account which
present fairly in all material respects its financial condition and
results of operations and make provisions on its financial
statements for all such proper reserves as in each case are
required in accordance with generally accepted accounting
principles, consistently applied.
3.
Demand Registrations .
(a)
Requests for Registration . At any time after the date
hereof, the holders of at least a majority of MDCP Registrable
Securities may request registration under the Securities Act of all
or any portion of their Registrable Securities (i) on Form S-1 or
any similar long-form registration (" Long-Form
Registrations ") and (ii) on Form S-3 or any similar short-form
registration (" Short-Form Registrations ") if
available. In addition, from and after February 17, 2008, the
holders of at least a majority of Aldabra Registrable Securities
may request registration under the Securities Act of all or any
portion of their Registrable Securities in the form of (i) a
Long-Form Registration and (ii) a Short-Form Registration ,
if available. All registrations requested pursuant to this
Section 3(a) are referred to herein as " Demand
Registrations ." Each request for a Demand Registration
shall specify the approximate number of Registrable Securities
requested to be registered and the anticipated per share price
range for such offering. Within ten days after receipt of any
such request, the Company shall give written notice of such
requested registration to all other holders of Registrable
Securities and (subject to the remainder of this Section 3 )
shall include in such registration all Registrable Securities with
respect to which the Company has received written requests for
inclusion therein within 15 days after the receipt of the
Company’s notice.
(b)
Number of Demand Registrations . The holders of MDCP
Registrable Securities shall be entitled to request three Long-Form
Registrations and an unlimited number of Short-Form Registrations
and the holders of Aldabra Registrable Securities shall be
entitled, to the extent provided under Section 3(a) , to
request one Long-Form Registration and one Short-Form Registration,
as applicable, with respect to which the Company shall pay all
Registration Expenses as set forth in Section 4 ;
provided that the aggregate offering value of the
Registrable Securities requested to be registered in any Long-Form
Registration must equal at least $20 million. A registration
shall not count as one of the permitted Long-Form Registrations
until it has become effective, and no Long-Form Registration shall
count as one of the permitted Long-Form Registrations unless the
holders of Registrable Securities are able to register and sell
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least 90% of the Registrable Securities requested
to be included in such registration; provided that in any
event the Company shall pay all Registration Expenses in connection
with any registration initiated as a Demand Registration whether or
not it has become effective.
(c)
Priority on Demand Registrations . The Company shall
not include in any Demand Registration any securities which are not
Registrable Securities without the prior written consent of the
holders of 50% or more of the Registrable Securities included in
such registration. If a Demand Registration is an
underwritten offering and the managing underwriters advise the
Company in writing that in their opinion the number of Registrable
Securities and, if permitted hereunder, other securities requested
to be included in such offering exceeds the number of Registrable
Securities and other securities, if any, which can be sold therein
in an orderly manner in such offering within a price range
acceptable to the holders of a majority of the Registrable
Securities requested to be included therein, then the Company (i)
shall include in such registration only such number as may be sold
therein in such an orderly manner, and (ii) prior to the inclusion
of any securities which are not Registrable Securities shall
include Registrable Securities pro rata among the respective
holders thereof on the basis of the amount of Registrable
Securities owned by each such holder (with the pro rata share of
each such holder determined in accordance with Section 4 of this
Agreement); provided , however, that if the managing
underwriters determine that the inclusion of the number of Other
Investor Registrable Securities and Aldabra Registrable Securities
proposed to be included in any such offering would adversely affect
the marketability of such offering, the Company may exclude such
number of Other Investor Registrable Securities and Aldabra
Registrable Securities as necessary to negate such a
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