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EXHIBIT 10.j
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SHAREHOLDERS AGREEMENT
BY AND AMONG
MASCOTECH, INC.
MASCO CORPORATION
RICHARD MANOOGIAN
RICHARD AND JANE MANOOGIAN FOUNDATION
THE HEARTLAND ENTITIES LISTED ON THE
SIGNATURE PAGES HERETO
THE HIP CO-INVESTORS LISTED ON THE SIGNATURE PAGES HERETO
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DATED AS OF NOVEMBER 28, 2000
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
SECTION 1.01.
Definitions..............................................
1
SECTION 1.02.
Rules of Construction....................................
10
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.01.
Authority; Enforceability................................
10
SECTION 2.02. No
Breach................................................ 11
SECTION 2.03.
Consents.................................................
11
SECTION 2.04.
Share Ownership..........................................
11
ARTICLE III
SHARE TRANSFERS
SECTION 3.01.
Restrictions on Transfer.................................
12
SECTION 3.02.
Exceptions to Restrictions...............................
12
SECTION 3.03.
Improper Transfer........................................
13
SECTION 3.04.
Restrictive Legend.......................................
13
ARTICLE IV
RIGHTS OF CERTAIN SHAREHOLDERS
SECTION 4.01.
Rights of First Offer....................................
14
SECTION 4.02.
Tag-Along Rights.........................................
15
SECTION 4.03.
Drag-Along Rights........................................
17
SECTION 4.04.
Information..............................................
18
SECTION 4.05.
Preemptive Rights........................................
20
SECTION 4.06.
Board of Directors.......................................
23
SECTION 4.07.
Right to Observer........................................
24
SECTION 4.08.
Consultation Right.......................................
25
SECTION 4.09.
Approval Rights..........................................
25
SECTION 4.10.
Transactions with Affiliates.............................
26
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ARTICLE V
REGISTRATION RIGHTS
SECTION 5.01.
Company Registration.....................................
27
SECTION 5.02.
Demand Registration Rights...............................
28
SECTION 5.03.
Registration Procedures..................................
32
SECTION 5.04.
Registration Expenses....................................
36
SECTION 5.05.
Indemnification..........................................
36
SECTION 5.06.
1934 Act Reports.........................................
40
SECTION 5.07.
Holdback Agreements......................................
40
SECTION 5.08.
Participation in Registrations...........................
41
SECTION 5.09.
Remedies.................................................
41
SECTION 5.10.
Other Registration Rights................................
41
SECTION 5.11.
Rule 144.................................................
41
ARTICLE VI
RIGHTS OF HOLDERS OF CLASS A PREFERRED STOCK
SECTION 6.01.
Series A Preferred Stock.................................
42
SECTION 6.02.
Management Fee...........................................
42
ARTICLE VII
MISCELLANEOUS
SECTION 7.01.
Notices..................................................
42
SECTION 7.02.
Binding Effect; Benefits; Entire Agreement...............
43
SECTION 7.03.
Waiver...................................................
43
SECTION 7.04.
Amendment................................................
43
SECTION 7.05.
Assignability............................................
43
SECTION 7.06.
Applicable Law...........................................
44
SECTION 7.07.
Specific Performance.....................................
44
SECTION 7.08.
Severability.............................................
44
SECTION 7.09.
Additional Securities Subject to Agreement...............
44
SECTION 7.10.
Name Change..............................................
44
SECTION 7.11.
Section and Other Headings...............................
45
SECTION 7.12.
Counterparts.............................................
45
SECTION 7.13.
Termination of Certain Provisions........................
45
SECTION 7.14.
ERISA Matters............................................
45
SECTION 7.15.
Regulatory Cooperation...................................
45
SECTION 7.16.
Publicity................................................
46
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SECTION 7.17.
Expenses.................................................
46
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SHAREHOLDERS AGREEMENT
THIS AGREEMENT (the "Agreement"), dated as of November 28, 2000,
by
and among MASCOTECH, INC. a Delaware corporation (the "Company"),
RICHARD
MANOOGIAN ("IS"), the RICHARD AND JANE MANOOGIAN FOUNDATION
("Foundation
Shareholder" and, together with IS, "RM"), MASCO CORPORATION, a
Delaware
corporation (together with RM, the "Rollover Investors"), the
HEARTLAND ENTITIES
(as defined herein), LONG POINT CAPITAL FUND, L.P. and LONG POINT
CAPITAL
PARTNERS L.L.C. (collectively "Long Point"), CRM 1999 ENTERPRISE
FUND, LLC
("Cramer" and with Long Point collectively the "Masco Transferees"
or
individually as a "Masco Transferee") and the entities identified
as HIP
CO-INVESTORS on the signature pages hereof (the HIP Co-Investors
(including,
without limitation, the Masco Transferees), the Rollover Investors,
Sponsor and
each Person executing a Joinder Agreement are collectively referred
to herein as
the "Shareholders" and individually as a "Shareholder").
WHEREAS, the Company and Riverside Acquisition Corporation
(formerly
Riverside Company LLC), a Delaware corporation ("Riverside") and an
affiliate of
Sponsor, have entered into a Recapitalization Agreement, dated as
of August 1,
2000, as amended by Amendment No. 1 thereto, dated as of October
23, 2000, and
Amendment No. 2 thereto, dated as of November 28, 2000 (the
"Recapitalization
Agreement"), which provides for, among other things, the merger of
Riverside
with and into the Company (the "Recapitalization Merger").
WHEREAS, as a result of and in connection with the
Recapitalization
Merger, each Shareholder will own the number of shares of common
stock of the
Company, $1.00 par value (the "Common Stock"), set forth on
Schedule 2.04 hereto
and Company Shareholder will own 361,001 shares of class A
preferred stock of
the Company, $1.00 par value (the "Class A Preferred Stock").
WHEREAS, the parties hereto desire to enter into this agreement
to
provide for certain rights and restrictions with respect to the
Common Stock.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the parties mutually agree as
follows:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
SECTION 1.01. Definitions. The following terms, as used herein,
have
the following meanings:
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"ADJUSTMENTS" means adjustments to the number of shares of
Common
Stock outstanding as a result of a stock split, stock dividend,
reclassification, subdivision or reorganization, recapitalization
or similar
event.
"ADVICE" see Section 5.03(p).
"AFFILIATE" of any specified Person means any other Person directly
or
indirectly controlling, controlled by or under direct or indirect
common control
with such specified Person. For the purposes of this definition,
"control" when
used with respect to any Person means the power to direct the
management and
policies of such Person, directly or indirectly, whether through
the ownership
of voting securities, by contract or otherwise; and the terms
"controlling" and
"controlled" have meanings correlative to the foregoing.
"AGREEMENT" see the recitals to this Agreement.
"ASSIGNEE" see Section 4.01(c).
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday
and
Friday which is not a day on which banking institutions in the City
of New York
are authorized or obligated by law or executive order to close.
"CAPITAL STOCK" means, with respect to any Person, except as
otherwise
provided in Section 4.05, any and all shares, interests,
participations, rights
in or other equivalents (however designated) of such Person's
capital stock, and
any rights (other than debt securities convertible into capital
stock), warrants
or options exchangeable for or convertible into such capital
stock.
"CLASS A PREFERRED STOCK" see the recitals to this Agreement.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" see the recitals to this Agreement.
"COMPANY" see the recitals to this Agreement.
"COMPANY OPTION PERIOD" see Section 4.01(b).
"COMPANY SHAREHOLDER" means Masco Corporation, a Delaware
corporation,
provided that upon the transfer of all of Masco Corporation's
shares of Common
Stock to Masco Capital Corporation, a wholly-owned subsidiary of
Masco
Corporation, Masco Capital Corporation shall also be deemed Company
Shareholder
for all purposes of this Agreement; provided that Masco Capital
Corporation
executes a Joinder Agreement.
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"CSFB" means, collectively, the CSFB Plan Partner and the CSFB
Funds,
or the CSFB Plan Partner acting on behalf of such other
Persons.
"CSFB DIRECTOR" see Section 4.06(a)(ii)(c).
"CSFB FUNDS" means, collectively, Credit Suisse First Boston
Equity
Partners (Bermuda), L.P., Credit Suisse First Boston U.S. Executive
Advisors,
L.P., EMA Partners Fund 2000, L.P. and EMA Private Equity Fund
2000, L.P.
"CSFB PLAN PARTNER" means Credit Suisse First Boston Equity
Partners,
L.P.
"DEMAND HOLDERS" means any of Company Shareholder (on behalf of
itself
and its Direct Permitted Transferees), RM (on behalf of himself,
itself and his
or its Direct Permitted Transferees), a QI Demand Holder (on behalf
of itself
and its Direct Permitted Transferees), CSFB (on behalf of itself
and its Direct
Permitted Transferees and other Transferees to the extent permitted
by Section
5.02(g)) or Sponsor (on behalf of itself and its Direct Permitted
Transferees).
"DEMAND REGISTRATION" see Section 5.02(a).
"DIRECT PERMITTED TRANSFEREE" means:
(i) with respect to any Shareholder who is a natural person, (1)
the
spouse or any lineal descendant (including by adoption and
stepchildren) of
such
Shareholder, (2) any trust of which such Shareholder is the
trustee
and
which is established solely for the benefit of any of the
foregoing
individuals or (3) any partnership, all of the general partner(s)
and
limited partner(s) (if any) of which are one or more Persons
identified in
this
clause (i);
(ii) with respect to Sponsor, any Affiliate of Sponsor;
(iii) with respect to Company Shareholder, any controlled Affiliate
of
Company Shareholder (including any wholly-owned subsidiary of
Company
Shareholder);
(iv) with respect to any Institutional Shareholder, any Affiliate
of
such
Institutional Shareholder;
(v) with respect to Foundation Shareholder, any Affiliate of
Foundation Shareholder;
(vi) with respect to MetLife, (a) any Affiliates of MetLife or
(b)
Portfolio Advisors, LLC or any controlled Affiliate of Portfolio
Advisors,
LLC;
and
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(vii) with respect to any Shareholder, any institutional lender
to
which such Shareholder pledges or grants a security interest in
shares of
Common Stock in a bona fide transaction effected in good faith,
provided
that
(x) such pledgee executes a Joinder Agreement and (y) prior to
any
subsequent foreclosure or sale of such shares or any Transfer
resulting
from
such foreclosure is effected, the provisions of Section 4.01 must
be
satisfied.
"ELIGIBLE OFFERING" see Section 4.05(a).
"FIRST OPTION" see Section 4.01(b).
"FIRST UNION CAPITAL PARTNERS" means First Union Capital
Partners,
LLC.
"FOUNDATION SHAREHOLDER" see the recitals to this Agreement.
"GAAP" means United States generally accepted accounting
principles
consistently applied throughout the specified period.
"HEARTLAND ENTITIES" means Heartland Industrial Partners, L.P.,
Heartland Industrial Partners (FF), L.P., Heartland Industrial
Partners (E1),
L.P., Heartland Industrial Partners (K1), L.P., Heartland
Industrial Partners
(C1), L.P. and Direct Permitted Transferees of any of the
foregoing.
"HIP CO-INVESTOR" means (i) each Shareholder that is a limited
partner, or an Affiliate of a limited partner, in Sponsor or in any
other fund
or investment vehicle established or managed by Sponsor or an
Affiliate of
Sponsor, (ii) CSFB, (iii) each Masco Transferee and (iv) MetLife;
provided that,
upon the Transfer by MetLife of all of its shares of Common Stock
to Portfolio
Advisors, LLC or any controlled Affiliate of Portfolio Advisors,
LLC in
accordance with Section 3.02(a) of this Agreement, Portfolio
Advisors, LLC or
such controlled Affiliate of Portfolio Advisors, LLC shall be
deemed to be a HIP
Co-Investor under this Agreement.
"HOLDER" means any Demand Holder or Incidental Demand Holder.
"INCIDENTAL DEMAND HOLDER" see Section 5.02.
"INITIAL PUBLIC OFFERING" means either (x) an underwritten
initial
public offering of the Company pursuant to an effective
registration statement
filed under the 1933 Act (excluding registration statements filed
on Form S-8,
or any similar successor form or another form used for a purpose
similar to the
intended use for such forms) or (y) the listing of the Common Stock
on a
national securities exchange or authorization for quotation on the
Nasdaq
National Market System.
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"INSTITUTIONAL SHAREHOLDER" means any Shareholder that is not a
natural person (other than Company Shareholder, Foundation
Shareholder or
Sponsor).
"INVESTORS" see Section 4.01(a).
"INVESTOR'S NOTICE" see Section 4.01(a).
"IS" see the recitals to this Agreement.
"JOINDER AGREEMENT" means a joinder agreement, a form of which
is
attached hereto as Exhibit A.
"MASCO TRANSFEREES" see the recitals to this Agreement.
"MATERIAL EVENT" see Section 4.09(a).
"METLIFE" means Metropolitan Life Insurance Company.
"1933 ACT" means the Securities Act of 1933.
"1934 ACT" means the Securities Exchange Act of 1934, as
amended.
"OBSERVER" see Section 4.07.
"OFFERED SHARES" see Section 4.01(a).
"PERMITTED TRANSFEREE" means:
(i) with respect to any Shareholder who is a natural person, (1)
the
spouse or any lineal descendant (including by adoption and
stepchildren) of
such
Shareholder, (2) any trust of which such Shareholder is the
trustee
and
which is established solely for the benefit of any of the
foregoing
individuals, (3) any charitable foundation selected by such
Shareholder, or
(4)
any partnership, all of the general partner(s) and limited
partner(s)
(if
any) of which are one or more Persons identified in this clause
(i),
provided that, in the case of clauses (1), (2), (3) or (4), such
Person
executes a Joinder Agreement;
(ii) with respect to Sponsor, (a) any investor in Sponsor or an
Affiliate of such investor in Sponsor or an investor in any fund or
other
investment vehicle established or managed by Sponsor or any of
its
controlled Affiliates or any other Person which is an Affiliate of
Sponsor
on
the date hereof, (b) any of the Shareholders and any of their
respective
Affiliates, (c) any controlled Affiliate of Sponsor, and (d) any
investor
in
Sponsor that is an investment fund in connection with a pro
rata
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distribution of shares of Common Stock to all investors in Sponsor
at the
time
of the expiration or termination of the fund, provided that, in
the
case
of clauses (a), (b), (c) or (d), any such investor executes a
Joinder
Agreement; and provided, further, that, in the case of these
clauses (a),
(b)
or (c) Transfers to such Persons would not cause Sponsor to
own,
together with its Affiliates, a number of shares equal to less than
thirty
percent (30%) of the outstanding shares of Common Stock of the
Company as
of
the date of any such Transfer;
(iii) with respect to Company Shareholder, any controlled Affiliate
of
Company Shareholder (including any wholly-owned subsidiary of
Company
Shareholder), provided that such Affiliate or wholly-owned
subsidiary
executes a Joinder Agreement;
(iv) with
respect to any Institutional Shareholder (other than
MetLife), (a) any Affiliate of such Institutional Shareholder, (b)
any
investor of such Institutional Shareholder that is an investment
fund in
connection with a pro rata distribution of shares of Common Stock
to all
investors (a "Shareholder Investor" or collectively
"Shareholder
Investors") in such Institutional Shareholder at the time of the
expiration
or
termination of the fund, or (c) any Person acquiring all or
substantially all of the investment portfolio of such Institutional
Holder;
and
provided, further, that, in the case of clause (a), (b) or (c),
all
such
investors execute a Joinder Agreement;
(v) with respect to Foundation Shareholder, any Affiliate of
Foundation Shareholder, provided such Affiliate executes a
Joinder
Agreement;
(vi) with respect to MetLife, (a) any Affiliate of MetLife, (b)
Portfolio Advisors, LLC or any controlled Affiliate of Portfolio
Advisors,
LLC
or (c) any Shareholder Investor of such Institutional Shareholder
that
is
an investment fund in connection with a pro rata distribution to
all
Shareholder Investors of such Institutional Shareholder at the time
of the
expiration or
termination of the fund; provided, further, that, in the case
of
clause (a), (b) or (c), such investors execute a Joinder Agreement;
and
(vii) with respect to any Shareholder, any institutional lender
to
which such Shareholder pledges or grants a security interest in
shares of
Common Stock in a bona fide transaction effected in good faith,
provided
that
(x) such pledgee executes a Joinder Agreement and (y) prior to
any
subsequent foreclosure or sale of such shares or any Transfer
resulting
from
such foreclosure is effected, the provisions of Section 4.01 must
be
satisfied.
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"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including
a
government, a political subdivision or an agency or instrumentality
thereof.
"PIGGYBACK HOLDER" see Section 5.01(a).
"PIGGYBACK REGISTRATION" see Section 5.01(a).
"PROPORTIONATE PERCENTAGE" see Section 4.05(a).
"PRO RATA PORTION" means, with respect to shares of Common Stock
held
by a Shareholder at any date of determination such number of shares
of Common
Stock owned by such Shareholder as would result in such Shareholder
selling the
same percentage of the total number of shares of Common Stock held
by such
Shareholder in the Transfer subject to the applicable Transfer
Notice (the
"Subject Sale") as the Sponsor Transferor sells in the Subject Sale
(assuming,
with respect to the Transfer Notice, that all Shareholders have
exercised their
Tag-Along Right).
"PUBLIC OFFERING" see Section 4.05(a)(i).
"PURCHASER" see Section 4.02(a).
"QI DEMAND HOLDER" means any Qualified Investor other than
CSFB.
"QUALIFIED INVESTOR" means a HIP Co-Investor who (x), together
with
its Affiliates, at or prior to any date of determination, has made
an aggregate
cash investment in Common Stock of the Company equal to at least
$40.0 million
(based upon the original cost of such investment) or (y) owns,
together with its
Direct Permitted Transferees, at least 10% or more of the
outstanding shares of
Common Stock of the Company at the date of determination. For
purposes of this
definition and any other definitions containing thresholds for the
dollar amount
of cash invested in Common Stock of the Company or the percentage
ownership of
Common Stock of the Company, the cash investments and the
beneficial ownership
of the CSFB Funds and the CSFB Plan Partner will be deemed to be
aggregated.
"QUALIFYING PUBLIC EQUITY OFFERING" means either (x) one or
more
underwritten public offerings of common equity securities of the
Company
pursuant to an effective registration statement filed under the
1933 Act
(excluding registration statements filed on Form S-8, or any
similar successor
form) resulting in aggregate gross proceeds to the Company of
$100,000,000 or
more or (y) the listing of the Common Stock on a national
securities exchange or
authorization for quotation on the Nasdaq National Market System
for which there
is a public float of least $100,000,000 held by non-Affiliates of
the Company.
"RECAPITALIZATION AGREEMENT" see the recitals to this
Agreement.
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"RECAPITALIZATION MERGER" see the recitals to this Agreement.
"REGISTRABLE SECURITIES" shall mean any of (i) the shares of
Common
Stock owned by any Shareholder at the time of determination and
(ii) any other
securities issued or issuable with respect to the Common Stock by
way of a stock
split, stock dividend, reclassification, subdivision or
reorganization,
recapitalization or similar event. As to any particular Registrable
Securities,
such securities shall cease to be Registrable Securities when (a) a
registration
statement with respect to the offering of such securities by the
holder thereof
shall have been declared effective under the 1933 Act and such
securities shall
have been disposed of by such holder pursuant to such registration
statement,
(b) such securities have been sold to the public pursuant to Rule
144 (or any
similar provision then in force) promulgated under the 1933 Act,
(c) except for
purposes of Section 5.02, such securities shall have been otherwise
transferred
and new certificates for such securities not bearing a legend
restricting
further transfer shall have been delivered by the Company or its
transfer agent
and subsequent disposition of such securities shall not require
registration or
qualification under the 1933 Act or any similar state law then in
force or (d)
such securities shall have ceased to be outstanding.
"REGISTRATION" see Section 5.03.
"REPRESENTATIVES" means the officers, employees, directors and
agents
of such Shareholder, including, representatives of its legal,
accounting and
financial advisors.
"REQUEST NOTICE" see Section 5.02(a).
"REQUISITE INVESTORS" means (i) Company Shareholder for so long
as
Company Shareholder either (a) has outstanding commitments or loans
under the
Subordinated Loan Agreement, (b) owns, together with its Permitted
Transferees,
$10.0 million or more in liquidation preference of Class A
Preferred Stock, or
(c) owns, together with its Direct Permitted Transferees, at least
1,571,569
shares (as adjusted for Adjustments) of Common Stock, (ii) RM,
(iii) CSFB (on
behalf of itself and its Direct Permitted Transferees) and (iv) HIP
Co-Investors
(other than CSFB) (on behalf of the HIP Co-Investors and their
Direct Permitted
Transferees) owning a majority of the number of shares of Common
Stock owned by
all HIP Co-Investors (other than CSFB) and their Direct Permitted
Transferees as
a group at the applicable date of determination.
"RIVERSIDE" see the recitals to this Agreement.
"RM" see the recitals to this Agreement.
"ROLLOVER DEMAND HOLDERS" means Company Shareholder, RM and
their
respective Direct Permitted Transferees.
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"ROLLOVER INVESTORS" see the recitals to this Agreement.
"SECOND OPTION" see Section 4.01(c).
"SENIOR CREDIT FACILITIES" means the Credit Agreement, dated as of
the
date hereof, among The Chase Manhattan Bank, Chase Securities Inc.,
the Company
and certain of its subsidiaries and the other lenders and financial
institutions
party thereto from time to time, as the same may be amended,
modified, waived,
refinanced or replaced from time to time (whether under a new
credit agreement
or otherwise).
"SHAREHOLDERS" see the recitals to this Agreement.
"SIGNIFICANT SUBSIDIARY" means any subsidiary of the Company
that
would be a "significant subsidiary" as such term is defined in Rule
1.02 of
Regulation S-X under the 1933 Act.
"SPONSOR" means collectively the Heartland Entities or
Heartland
Industrial Partners, L.P. acting on behalf of the other Heartland
Entities.
"SPONSOR OPTION PERIOD" see Section 4.01(c).
"SUBORDINATED LOAN AGREEMENT" means the subordinated loan
agreement
dated the date hereof between Company Shareholder and the
Company.
"SUBSTANTIAL CHANGE OF CONTROL" means the sale, lease or transfer
in
one or a series of related transactions of at least a majority of
the
consolidated assets of the Company and its subsidiaries or a
majority of the
Capital Stock of the Company representing the right to vote for
directors to any
Person or "group" of Persons (other than Sponsor and its
Affiliates) whether
direct or indirect or by way of any merger, consolidation or other
business
combination or purchase of beneficial ownership or otherwise.
"TRANSACTIONS" means (i) the Recapitalization Merger and (ii) all
of
the other transactions contemplated by the Recapitalization
Agreement, including
the transactions contemplated by the subscription agreements to be
entered into
in connection with the Recapitalization Merger.
"TRANSFER" means the direct or indirect offer, sale, donation,
assignment (as collateral or otherwise), pledge, hypothecation,
encumbrance,
transfer or disposition of any security.
"TRANSFER NOTICE" see Section 4.02(a).
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"TRANSFEREE" means any Person who acquires shares of Common Stock
from
a Shareholder and who is not a Permitted Transferee.
"TRIGGERING EVENT" means:
(i) with respect to a Rollover Demand Holder or CSFB, after the
earlier of (1) the fifth anniversary of the date hereof if an
Initial
Public Offering has not been consummated by the fifth anniversary
of the
date
hereof and (2) 180 days after an Initial Public Offering;
(ii) with respect to a QI Demand Holder, 180 days after an
Initial
Public Offering; and
(iii) with respect to Sponsor, at any time.
SECTION 1.02. Rules of Construction. For purposes of this
Agreement
whenever a threshold for the dollar amount of cash invested in
Common Stock of
the Company or the percentage of ownership of Common Stock is to be
determined
as to a Shareholder, the cash investments and the beneficial
ownership of Direct
Permitted Transferees of such Shareholder shall be aggregated with
the cash
investments and beneficial ownership of such Shareholder and the
cash
investments and the beneficial ownership of the Heartland Entities
will be
deemed to be aggregated.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Each of the parties hereby severally represents and warrants to
each
of the other parties as follows:
SECTION 2.01. Authority; Enforceability. Such party has the
legal
capacity or corporate power and authority to enter into this
Agreement and to
carry out its obligations hereunder. Such party (in the case of
parties that are
not natural persons) is duly organized and validly existing under
the laws of
its jurisdiction of organization, and the execution of this
Agreement and the
consummation of the transactions contemplated herein have been duly
authorized
by all necessary action. No other act or proceeding, corporate or
otherwise, on
its part is necessary to authorize the execution of this Agreement
or the
consummation of any of the transactions contemplated hereby. This
Agreement has
been duly executed by such party and constitutes its legal, valid
and binding
obligation, enforceable against it in accordance with the terms of
this
Agreement, subject to applicable bankruptcy, insolvency,
reorganization,
moratorium and other laws affecting the rights of creditors
generally and to the
exercise of judicial discretion in accordance with general
principles of equity
(whether applied by a court of law or of equity).
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SECTION 2.02. No Breach. Neither the execution of this Agreement
nor
the performance by such party of its obligations hereunder nor the
consummation
of the transactions contemplated hereby or by the Transactions does
or will:
(a) in the case of parties that are not natural persons, conflict
with
or
violate its certificate of incorporation, bylaws or other
organizational
documents;
(b) violate, conflict with or result in the breach or termination
of,
or
otherwise give any other person the right to accelerate,
renegotiate or
terminate or receive any payment or constitute a default or an
event of
default (or an event which with notice, lapse of time, or both,
would
constitute a default or event of default) under the terms of, any
contract
or
agreement to which it is a party or by which it or any of its
assets or
operations are bound or affected, including, in the case of the
Company,
the
Senior Credit Facilities or Subordinated Loan Agreement; or
(c)
constitute a violation by such party of any laws, rules or
regulations of any governmental, administrative or regulatory
authority or
any
judgments, orders, rulings or awards of any court, arbitrator or
other
judicial authority or any governmental, administrative or
regulatory
authority.
SECTION 2.03. Consents. No consent, waiver, approval,
authorization,
exemption, registration, license or declaration is required to be
made or
obtained by such party, other than those which have been made or
obtained, in
connection with (i) the execution or enforceability of this
Agreement or (ii)
the consummation of any of the transactions contemplated hereby or
by the
Transactions.
SECTION 2.04. Share Ownership. (a) The Company represents and
warrants
that in the case of a Shareholder, such party will own, immediately
following
the consummation of the transactions contemplated by the
Recapitalization
Agreement, the number of shares of Capital Stock of the Company set
forth
opposite such party's name in Schedule 2.04 attached hereto, free
and clear of
any and all liens, claims and encumbrances, other than those
created by this
Agreement.
(b) The Company represents and warrants that, as of the date
hereof
after giving effect to the Transactions, the authorized capital
stock of the
Company consists of (A) 250,000,000 shares of Common Stock, of
which 30,177,943
shares of Common Stock are issued and outstanding (without giving
effect to the
restricted stock awards, whether or not vested, or shares of Common
Stock
issuable to the former stockholders of K-Tech Mfg., Inc. pursuant
to
documentation in existence prior to the Transactions), and (B)
25,000,000 shares
of preferred stock, of which 361,001 shares of Class A Preferred
Stock are
issued and outstanding. Without giving effect to any cash elections
or any
accretion in respect of restricted stock awards after the date of
the
Transactions and assuming full vesting of
<PAGE>
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restricted stock awards granted as of the date of the Transactions,
there are
approximately 3,741,325 shares of Common Stock subject to
restricted stock
awards on the date hereof after giving effect to the Transactions.
The maximum
number of shares of Common Stock issuable to the former K-Tech
Mfg., Inc.
stockholders is not presently determinable, but is estimated at up
to
approximately 550,000 shares of Common Stock. Except (i) as
provided for in this
Agreement, (ii) for accretion in respect of restricted stock awards
after the
date hereof, (iii) for Common Stock to be issued to former
stockholders of
K-Tech Mfg., Inc. arising out of obligations existing prior to the
Transactions,
as of the date of the Transactions, no subscription, warrant,
option,
convertible or exchangeable security or other right to purchase or
acquire any
shares of Capital Stock of the Company is authorized or outstanding
and the
Company has no obligation to issue any subscription, warrant,
option,
convertible or exchangeable security or other such right.
(c) The Company represents and warrants that the shares of
Common
Stock issued to each Shareholder in connection with the
Recapitalization Merger
were duly and validly authorized, and when issued to each
Shareholder in
connection with the Recapitalization Merger will be duly and
validly issued,
fully paid and non-assessable and such shares are not subject to
preemptive or
similar rights except as provided by this Agreement.
(d) Each Shareholder hereby consents to and approves of the
contribution by the Company in connection with the Transactions of
all of its
assets to Metalync Company LLC, its wholly-owned subsidiary, as
required by the
Senior Credit Facilities.
ARTICLE III
SHARE TRANSFERS
SECTION 3.01. Restrictions on Transfer. During the term of this
Agreement, each Shareholder agrees that it will not Transfer any
Common Stock,
except as permitted by or in accordance with this Agreement.
SECTION 3.02. Exceptions to Restrictions. Subject to all
applicable
laws, the restrictions on Transfer set forth in Section 3.01 hereof
shall not
apply to any of the following:
(a) a Transfer by a Shareholder of Common Stock to one of its
Permitted Transferees; provided that such Permitted Transferee
shall agree
to
execute a Joinder Agreement in the form annexed hereto as Exhibit A
(the
"Joinder Agreement");
(b) a Transfer of Common Stock by a Shareholder in accordance
with
Sections 4.02 and 4.03 of this Agreement;
<PAGE>
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(c) a Transfer by a Shareholder after such Shareholder has
complied
with
Section 4.01; provided that the Transferee shall agree to execute
a
Joinder Agreement; and
(d) a Transfer of Common Stock by a Shareholder pursuant to an
effective registration statement under the 1933 Act or a Transfer
pursuant
to
Rule 144 under the 1933 Act.
SECTION 3.03. Improper Transfer. Any attempt to Transfer any shares
of
Common Stock not in accordance with this Agreement shall be null
and void and
the Company will not give nor permit the Company's transfer agent
to give any
effect to such attempted Transfer in its stock records.
SECTION 3.04. Restrictive Legend. Each certificate representing
shares
of Common Stock and held by a Shareholder will bear a legend
substantially
similar to the following (with such additions thereto or changes
therein as the
Company may be advised by counsel are required by law or necessary
to give full
effect to this Agreement):
"THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED OR
SOLD
EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE UNITED
STATES SECURITIES ACT OF 1933 OR (ii) AN APPLICABLE EXEMPTION
FROM
REGISTRATION THEREUNDER. ANY SALE PURSUANT TO CLAUSE (ii) OF THE
PRECEDING
SENTENCE MUST BE ACCOMPANIED BY AN OPINION OF COUNSEL
REASONABLY
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH EXEMPTION
FROM
REGISTRATION IS AVAILABLE IN CONNECTION WITH SUCH SALE.
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO
THE
TERMS AND CONDITIONS, INCLUDING WITH RESPECT TO THE DIRECT OR
INDIRECT
TRANSFER THEREOF, OF A SHAREHOLDERS AGREEMENT DATED AS OF NOVEMBER
28,
2000. THE SHAREHOLDERS AGREEMENT CONTAINS, AMONG OTHER THINGS,
SIGNIFICANT
RESTRICTIONS ON TRANSFER OF THE SECURITIES OF THE COMPANY. A COPY
OF THE
SHAREHOLDERS AGREEMENT IS AVAILABLE UPON REQUEST FROM THE
COMPANY."
<PAGE>
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ARTICLE IV
RIGHTS OF CERTAIN SHAREHOLDERS
SECTION 4.01. Rights of First Offer. (a) At any time or from time
to
time prior to a Qualifying Public Equity Offering, in the event
that (x) at any
time following the first anniversary of the date hereof (provided,
however,
that, prior to the second anniversary of the date hereof, such
Rollover Investor
does not in the good faith judgment of the Company jeopardize
the
"recapitalization" accounting treatment afforded the Company in
the
Recapitalization Merger), a Rollover Investor desires to Transfer,
or (y) at any
time following the date hereof, a HIP Co-Investor desires to
Transfer, all or
part of its Common Stock ("Offered Shares"), other than pursuant to
Section
3.02(a), 3.02(d), 4.02 or 4.03 of this Agreement, such Rollover
Investor or HIP
Co-Investor (individually, an "Investor") shall give prompt written
notice (an
"Investor's Notice") of its desire to sell the Offered Shares to
the Company and
Sponsor. The Investor's Notice shall identify (i) the number of
Offered Shares
and (ii) all other material terms and conditions of the proposed
Transfer
including the purchase price and the form of the consideration.
(b) The Company shall have the right, but not the obligation,
to
purchase all, but not less than all, the Offered Shares (the "First
Option") on
the same terms and conditions as set forth in the Investor's
Notice, which
option shall be exercised by delivering to such Investor
irrevocable written
notice of its commitment to purchase the Offered Shares within
fifteen (15)
business days after receipt of the Investor's Notice (the "Company
Option
Period"). Failure by the Company to give such notice within such
fifteen (15)
business day period shall be deemed an election by the Company not
to purchase
the Offered Shares.
(c) In the event that the Company decides not to purchase the
Offered
Shares pursuant to Section 4.01(b), then Sponsor shall have the
right, but not
the obligation, to purchase all, but not less than all, the Offered
Shares (the
"Second Option") on the same terms and conditions as set forth in
the Investor's
Notice, which option shall be exercised by delivering to such
Investor
irrevocable written notice of its commitment to purchase the
Offered Shares
within ten (10) business days after the termination of the Company
Option Period
(the "Sponsor Option Period"); provided that Sponsor may, at its
sole option,
assign its rights to purchase an Investor's Offered Shares pursuant
to this
Section 4.01 to another Shareholder or a Permitted Transferee of
Sponsor (such
person an "Assignee"); provided that if the Assignee is a HIP
Co-Investor, each
HIP Co-Investor will be able to participate in such assignment on a
pro rata
basis. Failure by Sponsor or its Assignee to give such notice
within such ten
(10) business day period shall be deemed an election by Sponsor or
its Assignee
not to purchase the Offered Shares.
(d) Delivery of written notice by the Company, Sponsor or its
Assignee
accepting the First Option or the Second Option, as the case may
be, shall
constitute a
<PAGE>
-15-
contract between the Company, Sponsor or its Assignee, on the one
hand, and such
Investor on the other hand, for the purchase and sale of the
Offered Shares on
the terms and conditions set forth in the Investor's Notice. The
purchase of any
shares pursuant to the exercise of the First Option or the Second
Option, as the
case may be, shall be completed not later than forty-five (45) days
following
receipt of the Investor's Notice with respect to the Offered
Shares, subject to
receipt of any required material third-party or governmental
approvals,
compliance with applicable laws and the absence of any injunction
or similar
legal order preventing such transaction (collectively, the
"Conditions") in
which case the purchase of the Offered Shares shall be delayed
pending the
satisfaction of the Conditions up to an additional thirty (30)
days. As a
condition to entering into the contract referred to above, the
Company, Sponsor
and its Assignee will agree to use commercially reasonable efforts
to satisfy
the Conditions as soon as possible. In the event that neither the
First Option
nor the Second Option is exercised, the Investor shall have the
right for a
period of seventy-five (75) days after the termination of the
Sponsor Option
Period to Transfer (the "Investor Sale") the Offered Shares at a
price not less
than ninety percent (90%) of the price contained in, and otherwise
on terms and
conditions no less favorable to such Investor than those set forth
in, the
Investor's Notice, except that the purchase of the Offered Shares
may be delayed
up to an additional thirty (30) days pending satisfaction of the
Conditions;
provided that the Transferee agrees to execute a Joinder Agreement.
If the
Investor Sale is not consummated pursuant to the terms of the
immediately
preceding sentence, the Investor will not effect Transfer of any of
the Offered
Shares without commencing de novo the procedures set forth in this
Section 4.01.
SECTION 4.02. Tag-Along Rights. (a) If, at any time or from time
to
time prior to a Qualifying Public Equity Offering, Sponsor or any
of its
Affiliates (the "Sponsor Transferor") proposes to Transfer any
shares of Common
Stock to a Person (the "Purchaser"), other than pursuant to Section
3.02(a),
3.02(d), 5.01 or 5.02 or in a circumstance where all of the shares
owned by all
of the Shareholders are being purchased pursuant to Section 4.03,
the Sponsor
Transferor shall give written notice (a "Transfer Notice") of such
proposed
Transfer to the Shareholders at least fifteen (15) days prior to
the
consummation of such proposed Transfer, setting forth (A) the total
number of
shares of Common Stock offered to be Transferred to Purchaser, (B)
the
consideration to be received for such shares of Common Stock by the
Sponsor
Transferor, (C) the identity of the Purchaser(s), (D) any other
material terms
and conditions of the proposed Transfer, (E) the expected date of
the proposed
Transfer and (F) that each such Shareholder shall have the right
(the "Tag-Along
Right") to elect to sell up to its Pro Rata Portion of such shares
of Common
Stock to be Transferred to Purchaser. If any portion of the
consideration
contained in the Transfer Notice includes consideration other than
cash, the
Sponsor Transferor shall provide the Shareholders with a summary of
a valuation
study, if any, that the Sponsor Transferor has prepared concerning
such
consideration, but the Sponsor Transferor shall have no liability
to any
Shareholder with respect to any such summary or study and no
obligation to
undertake any such valuation. Notwithstanding the first sentence of
this Section
4.02(a), a Shareholder will have a Tag-Along Right in connection
with Transfers
of shares of Common Stock by the Sponsor
<PAGE>
-16-
Transferor to a Permitted Transferee (other than an Affiliate of
the Sponsor
Transferor) when the Sponsor Transferor Transfers shares of Common
Stock to such
Person at a price per share (as adjusted for Adjustments) that is
greater than
the price per share (as adjusted for Adjustments) paid for such
shares by the
Sponsor Transferor.
(b) Upon delivery of a Transfer Notice, each Shareholder has
the
option, but not the obligation, to sell up to the Pro Rata Portion
of its shares
of Common Stock at the same price per share of Common Stock and
pursuant to the
same terms and conditions with respect to payment for the shares of
Common Stock
as agreed to by the Sponsor Transferor, by sending written notice
to the Sponsor
Transferor within ten (10) days of the date of the Transfer Notice,
indicating
its election to sell up to the Pro Rata Portion of its shares of
Common Stock in
the same transaction. To the extent that elections pursuant to this
Section
4.02(b) are not made with respect to any shares of Common Stock
included in a
Transfer Notice within such 10-day period, then the Sponsor
Transferor shall
re-offer to Shareholders who have elected to sell their Pro Rata
Portion (the
"Tag-Along Shareholders") for one additional three day period, the
right to sell
such additional number of shares as will result in the Tag-Along
Shareholders
being able to sell their pro rata share of such remaining shares of
Common
Stock, based upon all the shares of Common Stock being sold by all
the Tag Along
Shareholders (not including the remaining shares). For a sixty (60)
day period
following such ten (10) day period (which period may be extended an
additional
thirty (30) days in order to satisfy the Conditions), each
Tag-Along Shareholder
shall be permitted to sell to the Purchaser(s) on the terms and
conditions set
forth in the Transfer Notice that amount of its shares of Common
Stock as to
which it has made its election and the Sponsor Transferor shall be
permitted to
concurrently sell the balance of the shares of Common Stock that
are the subject
of the Transfer Notice that are not sold by the Tag-Along
Shareholders.
(c) The provisions of Section 4.02(a) and (b) shall not apply to
any
Transfer or series of Transfers by Sponsor of shares of Common
Stock to one or
more Persons other than Permitted Transferees which in the
aggregate do not
exceed ten percent (10%) of such shares of Common Stock owned by
Sponsor
immediately following the Transactions.
(d) Each Tag-Along Shareholder shall not be required to make
representations and warranties in connection with such sale other
than customary
representations and warranties with respect to (i) such
Shareholder's due
organization, power and authority, (ii) such Shareholder's
ownership of the
shares of Common Stock and ability to freely convey such shares of
Common Stock
without liens or encumbrances, (iii) customary representations
regarding
non-contravention of such Shareholder's charter, bylaws or other
organizational
documents or material agreements of such Tag-Along Shareholder and
(iv) the
enforceable nature of such Tag-Along Shareholder's obligations
under the
documents for such sale to which it is a party (collectively, the
"Shareholder
Representations"). No Tag-Along Shareholder shall be liable in
respect of any
indemnification provided in connection with a Tag-Along Sale (with
respect to
such Shareholder's Shareholder Representations) in
<PAGE>
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excess of the consideration received by such Tag-Along Shareholder
in such
Tag-Along Sale and no Tag-Along Shareholder shall be required to
participate in
any escrow relating to such Tag-Along Sale in excess of such
Tag-Along
Shareholder's participation in the Tag-Along Sale.
(e) In the event that no Shareholder elects to sell shares of
Common
Stock pursuant to this Section 4.02, Sponsor and/or its Affiliates
(as the case
may be) shall have the right for a period of seventy-five (75) days
(which
period may be extended by an additional thirty (30) days to satisfy
the
Conditions) after the expiration of the 10-day period referred to
in Section
4.02(b) to Transfer the Shares subject to the Transfer Notice to
the Purchaser
at a price not greater than the price contained in, and otherwise
on terms and
conditions no more favorable to Sponsor and/or such Affiliates than
those set
forth in, the Transfer Notice; it being agreed that, after the end
of the 75-day
period referred to in this Section 4.02(e) (including any permitted
extension
thereof), Sponsor and/or such Affiliates will not effect any
transaction in any
shares of Common Stock that are the subject of the Transfer Notice
without
commencing de novo the procedures set forth in this Section
4.02.
SECTION 4.03. Drag-Along Rights. If at any time prior to a
Qualifying
Public Equity Offering, Sponsor and its Affiliates intend to effect
a
Substantial Change of Control, Sponsor shall have the right to
require the other
Shareholders (the "Drag-Along Shareholders") to sell the same
percentage of
Common Stock held by them relative to such Shareholder's ownership
of Common
Stock as Sponsor and its Affiliates are selling in such transaction
in
connection with such Substantial Change of Control; to vote such
Common Stock,
whether by proxy, voting agreement or otherwise in favor of the
transactions
constituting a Substantial Change of Control; to waive their
appraisal or
dissenters' rights with respect to such transaction; or otherwise,
participate
in such Substantial Change of Control and each other Shareholder
agrees to take
any and all reasonably necessary action in furtherance of the
foregoing;
provided that (a) the consideration to be received by the other
Shareholders
shall be for the same type and amount per share of consideration
received by
Sponsor, and (b) after giving effect to such transaction, Sponsor
and its Direct
Permitted Transferees shall have sold the same percentage of their
holdings of
Common Stock of the Company as sold by the Drag-Along Shareholders;
provided,
however, that CSFB will not be obligated to participate in such
transaction if
the consideration per share in such transaction is less than $16.90
per share
(as adjusted for Adjustments) of the Common Stock of the Company
paid by CSFB in
connection with the Transactions and provided, further, that if
Sponsor and its
Affiliates are selling all of their shares of Common Stock in
connection with
such Substantial Change of Control, the Drag-Along Shareholders
will be required
to sell all of their shares pursuant to this Section 4.03. In
connection with
the sale of their shares of Common Stock pursuant to this Section
4.03, the
Drag-Along Shareholders shall not be required to make any
representations and
warranties other than the Shareholder Representations. In addition,
no
Drag-Along Shareholder shall be liable in respect of any
indemnification in
connection with a transaction effected pursuant to this Section
4.03 (a
<PAGE>
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"Drag-Along Transaction") (with respect to such Shareholder's
Shareholder
Representations) in excess of the consideration received by such
Drag-Along
Shareholder in such Drag-Along Transaction and no such Drag-Along
Shareholder
shall be required to participate in any escrow relating to such
Drag-Along
Transaction in excess of such Drag-Along Shareholder's Pro Rata
Portion.
SECTION 4.04. Information. (a) Prior to the occurrence of an
Initial
Public Offering, the Company shall deliver to each Shareholder:
(1) as soon as available, but in any event within forty-five (45)
days
after the end of each quarter, copies of:
(i) consolidated balance sheets of the Company and its
subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, stockholders' equity
and
cash flows of the Company and its subsidiaries, for such quarter
and
for the portion of the fiscal year ending with such quarter,
in
each case prepared in accordance with GAAP applicable to
periodic
financial statements generally, fairly presenting, in all
material
respects, the financial position of the Persons being reported on
and their
results of operations and cash flows, subject to changes resulting
from
normal year-end adjustments;
(2) as soon as available, but in any event within ninety (90)
days
after the end of each fiscal year of the Company, copies of:
(i) consolidated balance sheets of the Company and its
subsidiaries as at the end of such year, and
(ii) consolidated statements of income, stockholders' equity
and
cash flows of the Company and its subsidiaries for such year,
in
each case prepared in accordance with GAAP, fairly presenting, in
all
material respects, the financial position of the Persons being
reported on
and
their results of operations and cash flows, and accompanied by
an
opinion thereon of independent certified public accountants of
recognized
national standing, which opinion shall state that such financial
statements
present fairly, in all material respects, the financial position of
the
Persons being reported upon and their results of operations and
cash flows
and
have been prepared in conformity with GAAP;
(b) In the case of any Shareholder (other than CSFB) prior to
the
occurrence of a Qualifying Public Equity Offering, and for so long
as such
Shareholder owns
<PAGE>
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twenty-five percent (25%) or more of the number of shares of Common
Stock (as
adjusted for Adjustments) owned by such Shareholder immediately
following the
Transactions, or in the case of CSFB, for so long as CSFB retains a
number of
shares of Common Stock equal to at least twenty-five (25%) of the
number of
shares of Common Stock (as adjusted for Adjustments) owned by CSFB
immediately
following the Transactions, the Company shall deliver to each such
Shareholder
and CSFB:
(1) the information and reports provided pursuant to Sections
4.04(a)(1) and (2);
(2) monthly "flash reports" utilized by the Company in its own
management containing summarized, abbreviated data with respect to
income
statement amounts, balance sheet data and cash flows; and
(3) such other information concerning the condition or
operations,
financial or otherwise, of the Company and its Subsidiaries as
a
Shareholder may, from time to time, reasonably request.
(c) The rights to receive the information set forth in subsections
(1)
and (2) of paragraph (a) shall be assignable to Transferees of
Common Stock. The
rights to receive the information set forth in subsections (2) and
(3) of
paragraph (b) shall be assignable to a Transferee that acquires
from CSFB at
least 25% of the shares of Common Stock owned by CSFB as of the
date hereof (as
adjusted for Adjustments).
(d) Prior to the occurrence of a Qualifying Public Equity
Offering,
and for so long as a Shareholder owns twenty-five percent (25%) or
more of the
number of shares of Common Stock owned by such Shareholder
immediately following
the Transactions (as adjusted for Adjustments), Representatives of
such
Shareholder shall be provided with a reasonable opportunity to
discuss the
business and affairs of the Company with the Company's senior
managers,
directors, officers and senior employees upon reasonable advance
notice during
normal business hours; provided that such Company representatives
shall be
available (A) to such Shareholder for an annual meeting with senior
management
at which the following year's budget is presented and (B) to
Qualified
Investors, RM and Company Shareholder for quarterly meetings at
which the most
recent quarterly results are discussed.
(e) Each Shareholder hereby agrees that neither it nor its
Representatives will disclose to any third party any information
provided to it
or its Representatives by the Company hereunder which is not
generally available
to the public, except with the prior express approval of the
Company or as may
be required by applicable law; it being understood that nothing in
this Section
4.04(e) will restrict the ability of Sponsor or a HIP Co-Investor
to disclose
certain information to its investors in accordance with the
governing
<PAGE>
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documents of their partnership arrangement; provided that such
investors agree
to be bound by the confidentiality provisions of this
Agreement.
(f) Notwithstanding the above, access to highly confidential
proprietary information and facilities need not be provided by the
Company, nor
shall the Company be required to provide information to any
Shareholder that is
a competitor or reasonably likely to become a competitor of the
Company or any
of its subsidiaries; it being understood that the Shareholders
existing as of
the date hereof are not competitors.
(g) Notwithstanding the foregoing, (x) MetLife in addition to
Portfolio Advisors, LLC or any controlled Affiliate of Portfolio
Advisors, LLC
shall have the rights provided by this Section 4.04 notwithstanding
the fact it
has transferred all of its shares of Common Stock to Portfolio
Advisors, LLC or
any controlled Affiliate of Portfolio Advisors, LLC, provided such
Person would
have such rights as a Shareholder (it being agreed that, solely for
purposes of
paragraphs (b) and (d) of this Section 4.04, such Person shall be
deemed to have
held its shares of Common Stock since the consummation of the
Transactions) and
(y) Company Shareholder shall be entitled to receive the
information provided by
this Section 4.04 so long as Company Shareholder owns any Class A
Preferred
Stock or has outstanding commitments or loans under the
Subordinated Loan
Agreement.
SECTION 4.05. Preemptive Rights. (a) Prior to the occurrence of
an
Initial Public Offering, the Company hereby grants and hereby
agrees to cause
each Significant Subsidiary of the Company to grant to each HIP
Co-Investor and
its Direct Permitted Transferees and Sponsor and its Direct
Permitted
Transferees the right to purchase up to such Shareholder's
Proportionate
Percentage (as hereinafter defined) of any future Eligible Offering
(as
hereinafter defined) and in the case such Eligible Offering is in
whole or in
part to Sponsor or any of its Affiliates, then the Company shall
also grant
Company Shareholder and RM the right to purchase up to their
Proportionate
Percentage. For purposes of this Section 4.05, the following terms
shall have
the meanings set forth below.
"Proportionate Percentage" means, with respect to any Shareholder
as
of
any given date with respect to an Eligible Offering, the lower of
(i)
twenty percent (20%) of such Eligible Offering or (ii) the
number
(expressed as a percentage) obtained by dividing (A) the number of
shares
of
Common Stock owned by such Shareholder as of such date by (B) the
total
number of shares of Common Stock outstanding as of such date, in
each case,
assuming all shares of Capital Stock of the Company convertible
into or
exercisable for Common Stock have been so converted; provided that
CSFB
should not be limited by the foregoing clause (i) in the event that
the
Eligible Offering consists of Capital Stock of the Company for
a
consideration per share of Capital Stock which is less than the
purchase
price per share of Common Stock paid by CSFB in connection with
the
Transactions (as such price is adjusted by the Adjustments).
<PAGE>
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"Eligible Offering" means an offer by the Company or a
Significant
Subsidiary of the Company to sell to any Person or Persons
(including any
of
the Shareholders) for cash, any Capital Stock of the Company or
any
Significant Subsidiary, other than an offering by the Company or
a
Significant Subsidiary of the Company:
(i) of Common Stock in an underwritten public offering (a
"Public
Offering") registered under the 1933 Act or pursuant to a Rule
144A
offering under the 1933 Act;
(ii) of Common Stock of the Company issued upon the exercise of
options, warrants or convertible securities outstanding as of the
date
hereof;
(iii) of Common Stock of the Company or options to purchase
shares of Common Stock in connection with or pursuant to any
stock
option, stock purchase plan or agreement or other benefit plans
approved by the Board of Directors of the Company to full-time
employees, officers, directors, consultants and/or advisors to
the
Company or its subsidiaries;(excluding employees of Sponsor)
(iv) of Common Stock of the Company issued in connection with
restricted stock awards pursuant to and in accordance with the
Recapitalization Agreement;
(v) of Common Stock of the Company having a value of up to $5.2
million in order to comply with Section 5.15 of the Senior
Credit
Facilities;
(vi) of Capital Stock of the Company issued as consideration to
any seller in connection with the acquisition by the Company or
any
subsidiary of the Company of the assets of any Person in any
transaction approved by the Board of Directors of the Company;
(vii) of Capital Stock of the Company issued as an inducement
in
connection with any debt financing of the Company, subject to
terms
and conditions approved by the Board of Directors of the
Company;
(viii) of Capital Stock of a Significant Subsidiary of the
Company in connection with any sale of control of such
Significant
Subsidiary to, or any joint venture between such Significant
Subsidiary and, a third party that is not a financial sponsor
or
investor, which sale or joint venture is approved by the Board of
the
Directors of the Company;
(ix) of director qualifying or similar shares of a Significant
Subsidiary;
<PAGE>
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(x) of Capital Stock of the Company issued as consideration in
connection with the acquisition by the Company or any subsidiary
of
the Company of Simpson Industries, Inc. or Global Metal
Technologies,
Inc. (or any parent company thereof); and
(xi) of Capital Stock of the Company issued to former
stockholders of K-Tech Mfg., Inc. arising out of obligations
existing
prior to the Transactions.
For purposes of this Section 4.05 only, "Capital Stock" means any
and
all shares of common stock or options, warrants or similar
instruments or any
other securities convertible or exchangeable therefor
(collectively, "Equity
Interests") or any equity security linked to or offered or sold in
connection
with any Equity Interests of such Person or any of its Significant
Subsidiaries,
as the case may be.
(b) The Company shall, before any securities are issued pursuant to
an
Eligible Offering, give written notice (a "Preemptive Notice")
thereof to each
Shareholder that is entitled to preemptive rights hereunder. Such
notice shall
specify the security or securities proposed to be issued, the
proposed date of
issuance, the consideration that the Company or such Significant
Subsidiary, as
the case may be, intends to receive therefor and all other material
terms and
conditions of such proposed issuance. For a period of ten (10)
business days
following the date of such notice, each such Shareholder shall be
entitled, by
written notice to the Company, to elect to purchase all or part of
such
Shareholder's Proportionate Percentage of the securities being sold
in the
Eligible Offering. To the extent that elections pursuant to this
Section 4.05(b)
shall not be made with respect to any shares of Common Stock
included in a
Preemptive Notice within such 10-day period, then the Company shall
re-offer to
Shareholders who have elected to purchase their Proportionate
Percentage (the
"Preemptive Shareholders") for one additional three-day period, the
right to
purchase any part of the shares of Common Stock not purchased by
other
Shareholders (the "Section 4.05 Remaining Shares") pursuant to this
Section 4.05
which is equal to the product obtained by multiplying (i) the
number of Section
4.05 Remaining Shares by (ii) a fraction, the numerator of which is
the number
of shares of Common Stock then owned by any such Preemptive
Shareholder and the
denominator of which is the aggregate number of shares owned by all
Preemptive
Shareholders. To the extent that elections pursuant to this Section
4.05(b)
shall not be made with respect to any securities included in an
Eligible
Offering within such ten (10) business day period, then the Company
or such
Significant Subsidiary, as the case may be, shall not be obligated
to issue to
such Shareholder such securities for which such Shareholder has
elected not to
purchase. To the extent that there are securities that have not
been purchased
pursuant to this Section 4.05, then the Company or such Significant
Subsidiary,
as the case may be, may issue such
