AMENDED AND RESTATED
SHAREHOLDERS’ AGREEMENT
THIS AMENDED AND RESTATED SHAREHOLDERS’
AGREEMENT, entered into as of July 1, 2006, amends and restates in
its entirety the Amended and Restated Shareholders’ Agreement
made as of the 1 st day of August, 2004 (“Shareholders’
Agreement”), by and among Richard Berman
(“Richard”), Steven Berman (“Steven”),
Jordan Berman (“Jordan”), Marc Berman
(“Marc”), Fred Berman (“Fred”), Deanna
Berman (“Deanna”) and all of the shareholders set forth
on Exhibit A attached hereto (the “Additional
Shareholders”), all of whom are shareholders of Dorman
Products, Inc. (formerly R&B, Inc.), a Pennsylvania corporation
(the “Company”) (Richard, Steven, Jordan, Marc, Fred,
Deanna and the Additional Shareholders are sometimes hereinafter
collectively referred to as the “Shareholders” or
individually referred to as “Shareholder”).
BACKGROUND
A. As
of the date of this Agreement, the Shareholders each own that
certain amount of shares of the Company’s common stock as set
forth in the books and records of the Company (these shares now
owned, together with any other shares of the Company’s
capital stock which hereafter may be issued to or acquired by the
Shareholders, are collectively referred to in this Agreement as the
“Shares”).
B.
The Shareholders desire for the
Shareholders’ Agreement to be terminated, and to be replaced
in its entirety by this Amended and Restated Shareholders’
Agreement.
C.
The Shareholders desire to make certain provisions relating
to the rights of the Shareholders to dispose of their
Shares.
NOW, THEREFORE, incorporating the foregoing
herein, in consideration of the premises and of the mutual
covenants, conditions and agreements contained herein, the parties
hereto, each intending to be legally bound hereby, agree as
follows:
1.
Restrictions on Transfer and Issuance .
(a) Except
as set forth in Section 1(b), Section 1(c), Section
1(d), Section 1(e), and Section 1(f) herein, no
Shareholder shall sell, assign, transfer, give, bequeath or donate
(other than gifts, bequests or donations by a Shareholder which do
not, in the aggregate, exceed 5% of the Shares owned by that
Shareholder on the date of this Agreement) or otherwise dispose of,
or pledge, deposit or otherwise encumber, in any way or manner
whatsoever, whether voluntary or involuntary, any of the Shares now
or hereafter owned (of record or beneficially) by him or her except
in accordance with the terms and conditions of this
Agreement.
(b) Notwithstanding
anything herein to the contrary, the Shareholders may each transfer
their respective Shares, in whole or in part, and in all cases as
they shall determine in their sole discretion, to (i) their lineal
descendants (including, but not limited to, their children and
their children’s children (including but not limited to their
children’s adopted children) (collectively, “Lineal
Descendants”); (ii) the spouses or partners of their Lineal
Descendants; and/or (iii) a trust for the benefit of themselves, a
Lineal Descendant and/or the spouse or partner of a Lineal
Descendant.
(c) Notwithstanding
anything herein to the contrary, Jordan and/or Deanna, individually
or together, may sell up to 300,000 Shares in the aggregate to
third parties, without the prior consent of the Shareholders,
provided (1) such 300,000 Shares in the aggregate are sold over a
period of eighteen months or longer, and (2) no more
than 50,000 Shares are sold in any three month period.
(d) Notwithstanding
anything herein to the contrary, Jordan and/or Deanna, individually
or together, may transfer Shares, as they shall determine in their
sole discretion, to a Family Foundation (of which the initial
trustees shall be Jordan, Deanna, Richard, Steven, Marc and
Fred).
(e) Notwithstanding
anything herein to the contrary, Jordan and/or Deanna, individually
or together, may pledge to a third party, in the aggregate, an
amount not to exceed 175,000 Shares as security and collateral in
connection with financings and/or guarantees on behalf of Lineal
Descendants, the spouses or partners of their Lineal Descendants,
and/or trust for the benefit of a Lineal Descendant and/or the
spouse or partner of a Lineal Descendant.
(f) Any
and all Shares transferred by a Shareholder in accordance with, and
pursuant to, Section 1(b) herein, shall not then be transferred or
sold by the transferee, (except in accordance with, and pursuant
to, Section 1(b) herein), for three years (the “Restriction
Period”) from the date of such transfer (the foregoing shall
hereafter be referred to as the “Substantial Transfer
Restrictions”). Without limiting the foregoing,
and for the avoidance of doubt, the parties to this Agreement
acknowledge and agree that the Shares owned by the Additional
Shareholders, as of the date hereof, as well as certain of the
Shares owned by Richard, Steven, Fred and Marc (relating to Shares
transferred to them by Jordan and/or Deanna as of the date hereof)
are subject to the Substantial Transfer Restrictions for the
Restriction Period. Furthermore, the Shares subject to
the Substantial Transfer Restrictions shall not be sold pursuant to
Section 2 herein until after the Restriction Period has
lapsed.
2.
Shareholder’s Limited Right to Dispose of Shares
During His Lifetime .
(a) If
any Shareholder during his lifetime proposes to sell all or any of
his Shares, then that Shareholder (the “Selling
Shareholder”) shall first provide written notice (the
“Notice”) to the other Shareholders setting forth the
number of Shares which the Selling Shareholder proposes to sell
(the “Offered Shares”).
(b) The
Notice shall be deemed to be the Selling Shareholder’s offer
to sell any and all of his Offered Shares to the other Shareholders
(“Offeree Shareholders”) at the price set forth in
subparagraph 4(a) of this Agreement and upon the terms set forth in
subparagraph 4(b) of this Agreement. For a period of 30
days after the effective date of the Notice, the Offeree
Shareholders shall have options, exercisable by written notice to
the Selling Shareholder with a copy to each of the other Offeree
Shareholders, to accept the Selling Shareholder’s offer as to
the Offered Shares. Each Offeree Shareholder who
exercises this option agrees, by so doing, to purchase all or that
portion of the Offered Shares which he specifies in his written
notice of exercise. If the aggregate number of Offered
Shares as to which the Offeree Shareholders exercise their options
exceeds the total number of Offered Shares, then each Offeree
Shareholder who exercised his option shall be entitled to purchase
that proportionate part of the Offered Shares which the number of
Shares owned by that Offeree Shareholder bears to the total number
of Shares owned by all Offeree Shareholders exercising their
options under this subparagraph 2(b) (or any other proportionate
part as those Offeree Shareholders may agree among
themselves).
(c)
Sale to Third Parties . If, at the end of the
30-day period described in subparagraph 2(b) of this Agreement,
options have not been exercised by the Offeree Shareholders to
purchase all of the Offered Shares, then the Selling Shareholder
will be free for a period of 90 days thereafter to sell those of
the Offered Shares which the Offeree Shareholders have not agreed
to purchase to any prospective purchasers at any price and upon any
terms and conditions. If all of the Offered Shares are
not sold within this 90-day period, then the Selling Shareholder
may not sell any of his Shares thereafter without again complying
with this Paragraph 2.
(d)
Death of a Shareholder .
(e)
Options of Surviving Shareholders . Upon the
death of a Shareholder, the surviving Shareholders shall have
options, exercisable by written notice to the personal
representatives of the deceased Shareholder (or, if no personal
representative of the deceased Shareholder has been duly qualified
at the time of exercise, then to the Company, which will provide
the notice to the personal representative first appointed
immediately after appointment) within 30 days after the date of the
deceased Shareholder’s death, to purchase from the personal
representatives of the deceased Shareholder, and the personal
representatives of the deceased Shareholder shall sell to each
surviving Shareholder who exercises this option, all or that
portion of the deceased Shareholder’s Shares which that
surviving Shareholder specifies in his written notice of
exercise. If the aggregate number of the deceased
Shareholder’s Shares as to which the surviving Shareholders
exercise their options exceeds the number of the deceased
Shareholder’s Shares, then each surviving Shareholder who
exercised his option shall be entitled to purchase that
proportionate part of the Shares of the deceased Shareholder which
the number of Shares owned by that surviving Shareholder bears to
the total number of Shares owned by all surviving Shareholders who
have exercised their options under this subparagraph 3(a) (or any
other proportionate part as those surviving Shareholders may agree
among themselves). Purchases made under this Paragraph 3
shall be at the price set forth in subparagraph 4(a) of this
Agreement and upon the terms set forth in subparagraph 4(c) of this
Agreement.
(f)
Sale to Third Parties . If the
surviving Shareholders purchase less than all of the remaining
Shares of the deceased Shareholder pursuant to the exercise of the
options granted in subparagraph 3(a) of this Agreement, then the
personal representatives of the deceased Shareholder shall be free
to see all of the deceased Shareholder’s then remaining
Shares to any or all of the surviving Shareholders or to third
parties, provided that any sales to third parties may only be made
(i) in unsolicited broker’s transactions from time to time on
any exchange or in the over-the-counter market, if the Shares to be
sold in any such transaction may be sold without registration
pursuant to the Securities Act of 1933 (the “1933
Act”), or (ii) in an offering of Shares to be sold pursuant
to a registration statement under the 1933 Act, in which Shares may
only be sold in blocks of not more than 25,000 Shares.
3.
Purchase Price; Terms; Settlement .
(a) The
purchase price (“Purchase Price”) per share for any
Share to be sold pursuant to the exercise of an option or options
under this Agreement will be determined in the following
manner:
(i) If
the total number of votes which may be cast in the election of the
Company’s Directors by holders of the Shares to be purchased
pursuant to the exercise of options granted under this Agreement is
greater than or equal to 5% of the number of votes which may be
cast in the election of Directors by those holders of all of the
issued and outstanding voting securities of the Company (including
all votes which might be cast after conversion by the holders of
securities convertible into voting securities) at the time those
options first become exercisable who are not Shareholders, or if
the class of securities to be sold is neither listed on a national
securities exchange at the time of sale nor regularly traded in the
over-the-counter market, then the Purchase Price per share shall be
the value of the entire block of Shares to be so purchased (taking
into account any possible impact of the sale of a block of Shares
of that size upon the market for the Company’s securities
generally), as determined by a recognized investment banking firm
(the expenses of which shall be borne per capita by the seller and
the purchasers) selected by the Company, divided by the number of
Shares to be so purchased;
(ii) If
the total number of votes which may be cast in the election of the
Company’s Directors by holders of the Shares to be purchased
pursuant to the exercise of options granted under this Agreement is
less than 5% of the number of votes which may be cast in the
election of Directors by those holders of all of the issued and
outstanding voting securities of the Company (including all votes
which might be cast after conversion by the holders of securities
convertible into voting securities) at the time those options first
become exercisable who are not Shareholders, and if the class of
securities to be sold is either listed on a national securities
exchange at the time of sale or regularly traded in the
over-the-counter market, then the Purchase Price per Share shall be
95% (in order to take into account the absence of transaction costs
which would otherwise be incurred in open market transactions) of
the average closing market price per share of the class of
securities to be so purchased over the 30 days preceding the date
on which the options first become exercisable, or over any shorter
time within that 30-day period during which the securities have
been listed on a national securities exchange or regularly traded
in the over-the counter market.
(b) Settlement
for the purchase of Shares by a Shareholder pursuant to the options
granted in Paragraph 2 of this Agreement shall be made within 30
days following the effective date of the applicable notice giving
rise to the exercisability of the options. The Purchase
Price per Share shall be payable in full at settlement in
immediately available funds; provided, however, that if the total
price to be paid by any purchaser of Shares exceeds $500,000, then
payment for any purchase of those Shares by that Purchaser may be
made with not less than $500,000 of the total Purchase Price paid
in immediately available funds at settlement, and the balance by
the execution and del
