EXHIBIT 10.10
EXECUTION COPY
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT dated as of November 30, 2004 (this
"Agreement")
among AFFINIA GROUP HOLDINGS INC., a Delaware corporation
("Parent"), CYPRESS
MERCHANT BANKING PARTNERS II L.P., a Delaware limited partnership
("Cypress
Onshore"), CYPRESS MERCHANT BANKING II C.V., a limited partnership
formed under
the laws of The Netherlands ("Cypress Offshore"), 55TH STREET
PARTNERS II L.P.,
a Delaware limited partnership ("55th Street"), CYPRESS
SIDE-BY-SIDE LLC, a
Delaware limited liability company ("Side-by-Side" and, together
with Cypress
Onshore, Cypress Offshore and 55th Street, the "Cypress Group"),
ONTARIO
MUNICIPAL EMPLOYEES RETIREMENT BOARD, a corporation established
under the
Ontario Municipal Employees Retirement System Act ("OMERS"), THE
NORTHWESTERN
MUTUAL LIFE INSURANCE COMPANY, a Wisconsin corporation ("NW
Mutual"), CALIFORNIA
STATE TEACHERS' RETIREMENT SYSTEM, a government employee benefit
plan
("CalSTRS"), and STOCKWELL FUND, L.P., a Delaware limited
partnership
("Stockwell").
WHEREAS, each Stockholder (as defined below) has entered into
a
subscription agreement with Parent (each a "Subscription
Agreement") pursuant to
which such Stockholder has agreed to acquire shares of Common Stock
(as defined
below) and to enter into this Agreement;
WHEREAS, pursuant to the Stock and Asset Purchase Agreement,
dated as of
July 8, 2004 (the "Purchase Agreement") between Affinia Group Inc.
(f/k/a AAG
Opco Corp.), a Delaware corporation ("Affinia") and an indirect,
wholly owned
subsidiary of Parent, and Dana Corporation, a Virginia corporation
("Dana"),
Affinia will purchase the automotive aftermarket business from
Dana;
WHEREAS, as of the date hereof, as a result of the
consummation of the
transactions contemplated by the Subscription Agreements: (i)
Cypress Onshore
owns 825,214.3427 shares of Common Stock; (ii) Cypress Offshore
owns 35,081.2121
shares of Common Stock; (iii) 55th Street owns 7,963.4352 shares of
Common
Stock; (iv) Side-by-Side owns 1,740 shares of Common Stock; (v)
OMERS owns
280,000 shares of Common Stock; (vi) NW Mutual owns 160,000 shares
of Common
Stock; (vii) CalSTRS owns 80,000 shares of Common Stock; and
Stockwell owns
30,000 shares of Common Stock;
WHEREAS, the parties desire to enter into an agreement which
imposes
certain restrictions and obligations on themselves, and on the
shares of capital
stock of Parent in order to promote their mutual interests.
NOW, THEREFORE, in consideration of the mutual promises and
agreements set
forth herein, the adequacy of which is hereby acknowledged, the
parties hereto
agree as follows:
ARTICLE I
DEFINED TERMS; INTERPRETATION
1.1. Terms. As used in this Agreement, the following terms
shall have the
meanings set forth below.
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"Affiliate" of any Person means any other Person directly or
indirectly
controlling, controlled by or under common control with such
Person. The term
"control" means, with respect to any Person, the power to direct or
cause the
direction of the management or 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.
"Board of Directors" means the Board of Directors of Parent.
"Business Day" means any day other than a Saturday, Sunday or
day on which
commercial banks in New York, New York or Toronto, Ontario are
authorized or
required by law to remain closed.
"Call Period" means the period beginning on the date of
delivery of an IPO
Demand Notice and ending upon the earlier of (x) the 91st day after
delivery of
such IPO Demand Notice and (y) the commencement of bona fide "road
shows" in
respect of a Public Offering with respect to such IPO Demand
Notice.
"Charter Documents" means the Certificate of Incorporation and
the Bylaws
of Parent, as amended from time to time.
"Common Stock" means the common stock, par value $.01 per
share, of Parent
or any other capital stock of Parent into which such stock is
reclassified or
reconstituted.
"Convertible Security" means any security of Parent which is
convertible
into or exercisable or exchangeable for Common Stock, whether or
not the
conversion, exercisability or exchangeability of such security is
subject to the
passage of time or any event or contingency.
"Cypress Member" means each of Side-by-Side, Cypress Onshore,
Cypress
Offshore and 55th Street and their Permitted Transferees.
"Demand Registration" means registration requested pursuant to
Sections
5.2(a) or 5.3.
"Fully Diluted Shares" means, with respect to any Stockholder
at any time,
a number of shares of Common Stock equal to the sum of (i) the
number of such
Stockholder's Shares plus (ii) the number of shares of Common Stock
that such
Stockholder would acquire upon the conversion, exercise or exchange
of all
Convertible Securities then owned by such Stockholder, but only to
the extent
such Convertible Securities are then (or, if being determined in
connection with
a Transfer, at the time of Transfer will be) vested, exercisable
and
"in-the-money".
"Illiquid Consideration" means assets that are not cash or
Marketable
Securities.
"Independent" means, with respect to any Person, that such
Person is not an
Affiliate of any Stockholder or Parent.
"Investor Group Stockholders" means OMERS, NW Mutual, CalSTRS,
and
Stockwell.
"IPO Completion Date" means the first date upon which shares
of Common
Stock are sold pursuant to a Registration Statement.
"Line of Business" means the design, manufacture and
distribution of (A)
aftermarket automotive parts, including brake drums and rotors,
calipers, brake
pads and shoes, hydraulic brake system components, chassis,
steering and
suspension components, shock absorbers and coil springs, together
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with related services, including design engineering, catalog,
electronic
interface and technical assistance, (B) original equipment
automotive parts,
including brake drums and rotors, calipers, shock absorbers, coil
springs and
steering components for light- and medium-duty vehicle applications
and (C)
aftermarket and original equipment filtration products for light-,
medium- and
heavy-duty vehicle applications, including oil, fuel, cabin, water
separation
and air filters.
"Marketable Securities" means securities that are traded on an
established
United States or foreign securities exchange, reported through the
National
Association of Securities Dealers, Inc. Automated Quotation System
or comparable
foreign established over-the-counter trading system, otherwise
traded
over-the-counter or traded on PORTAL (in the case of securities
eligible for
trading pursuant to Rule 144A); provided that any such securities
shall be
deemed "Marketable Securities" only if they are freely tradable or
are the
subject of registration rights under applicable securities laws.
Freely tradable
for this purpose shall mean securities that either are (A)
transferable by a
Stockholder pursuant to a then effective registration statement
under the
Securities Act (or similar applicable statutory provision in the
case of foreign
securities), (B) transferable by a Stockholder who is not an
Affiliate of the
issuer pursuant to Rule 144(k) under the Securities Act or any
successor rule
thereto (or similar applicable rule in the case of foreign
securities) or (C)
transferable by a Stockholder pursuant to Rule 144A (which shall
include (x) a
covenant by the issuer of such security to comply with the
reporting and
informational requirements under Rule 144A and (y) eligibility for
trading such
securities on PORTAL).
"NW Mutual Member" means NW Mutual and its Permitted
Transferees.
"OMERS Member" means OMERS and its Permitted Transferees.
"Permitted Transferee" means,
(i) in the case of each Cypress Member (1) any other
Cypress Member or
any Affiliate (other than an individual) of Cypress Associates
II LLC or
any of its managing members; (2) any general or limited
partner, member,
director, officer or employee of such Cypress Member (or other
entity
referred to in clause (1)); (3) the heirs, executors,
administrators,
testamentary trustees, legatees or beneficiaries of any of the
individuals
referred to in clause (2); (4) for estate planning purposes,
any trust, the
beneficiaries of which include only (A) Permitted Transferees
referred to
in clauses (1), (2) and (3) and (B) parents, spouses and
lineal descendants
of Permitted Transferees referred to in clause (2); (5) a
corporation,
partnership or other entity, a majority of the equity of which
is owned and
controlled by such entity and/or Permitted Transferees
referred to in
clauses (1), (2), (3) and (4); and (6) any bank or financial
institution to
which a bona fide pledge of Shares is made, provided that
immediately
following any foreclosure upon such pledged Shares, such bank
or financial
institution shall cease to be a Permitted Transferee for all
purposes of
this Agreement; and
(ii) in the case of the Investor Group Stockholders (1)
any Affiliate
(other than an individual) of any Investor Group Stockholder;
(2) any
general or limited partner, member, director, officer or
employee of such
Investor Group Stockholder (or other entity referred to in
clause (1)); (3)
the heirs, executors, administrators, testamentary trustees,
legatees or
beneficiaries of any of the individuals referred to in clause
(2); (4) for
estate planning purposes, any trust, the beneficiaries of
which include
only (A) Permitted Transferees referred to in clauses (1), (2)
and (3) and
(B) parents, spouses and lineal descendants of Permitted
Transferees
referred to in clause (2); (5) a corporation, partnership or
other entity,
a majority of the equity of which is owned and controlled by
such entity
and/or Permitted Transferees referred to in clauses (1), (2),
(3) and (4);
and (6) any bank or financial institution to which a bona fide
pledge of
Shares is made, provided that immediately following any
foreclosure upon
such pledged Shares, such bank or financial
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institution shall cease to be a Permitted Transferee for all
purposes of
this Agreement;
"Person" means any individual, firm, corporation, partnership,
limited
liability company, trust, incorporated or unincorporated
association, joint
venture, joint stock company, governmental body or other entity of
any kind.
"Public Offering" means any offer for sale of Common Stock or
other equity
securities of Parent or any of its subsidiaries pursuant to an
effective
Registration Statement.
"Registration Statement" means a registration statement filed
pursuant to
the Securities Act.
"Rule 144" means Rule 144 under the Securities Act, or any
successor rule.
"SEC" means the Securities and Exchange Commission or any
similar agency
then having jurisdiction to enforce the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended,
and the
rules and regulations of the SEC thereunder.
"Shares" means, with respect to any Stockholder, all
outstanding shares,
whether now owned or hereafter acquired, of Common Stock owned by
such
Stockholder.
"Stockholder" means each party to this Agreement from time to
time other
than Parent including any Transferee of Shares who agrees as
provided for in
Section 2.1(c)(ii).
"Stockwell Member" means Stockwell and its Permitted
Transferees.
"Total Fully Diluted Shares" means, at any time, a number of
shares of
Common Stock equal to the sum of (i) the number of shares of Common
Stock then
outstanding plus (ii) the number of shares of Common Stock that
would be issued
as a result of the conversion, exercise or exchange of all
Convertible
Securities then outstanding, but only to the extent such
Convertible Securities
are then (or, if being determined in connection with a Transfer, at
the time of
Transfer will be) vested, exercisable and "in-the-money".
1.2. Other Definitions. The following terms are defined within
this
Agreement in the Sections noted below.
Term
Section
----
-------
55th Street
Preamble
Affinia
Preamble
Agreement
Preamble
Bring-Along Stockholders [SS]
2.5(a)
Buyout Notice [SS]
2.5(a)
CalSTRS
Preamble
Call Notice [SS]
5.2(b)
Call Right [SS]
5.2(b)
Called Shares [SS]
5.2(b)
Cypress Directors [SS]
4.2(a)
Cypress Group
Preamble
Cypress Independent Directors [SS]
4.2(c)
Cypress Offshore
Preamble
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Cypress Onshore
Preamble
Dana
Preamble
Demand Holder [SS]
5.1
Designated Percentage [SS]
2.5(a)
Fair Market Value [SS]
5.2(b)
Final Buyout Notice [SS]
5.2(c)
Final Sale [SS]
5.2(c)
Final Sales Notice [SS]
5.2(c)
Holder [SS]
5.1
indemnified party [SS]
5.12(c)
indemnifying party [SS]
5.12(c)
Independent Directors [SS]
4.2(e)
Investors' Director [SS]
4.2(b)
IPO Demand Notice [SS]
5.2(a)
Last-Chance Notice [SS]
2.3(c)
NASD [SS]
5.9
New Issuance [SS]
3.1(a)
NW Mutual
Preamble
Notice Period [SS]
2.3(b)
Offer Price [SS]
2.3(a)
Offered Shares [SS]
2.3(a)
Offeree Stockholders [SS]
2.3(a)
Offering Notice [SS]
2.3(a)
OMERS
Preamble
Parent
Preamble
Participating Tag-Along Shares [SS]
2.4(b)
Participating Tag-Along Stockholder [SS]
2.4(b)
Proposed Sale [SS]
2.4(a)
Proposed Sale Shares [SS]
2.4(a)
Purchase Agreement
Preamble
Register, registered, registration [SS]
5.1
Registrable Security [SS]
5.1
Registration Expenses [SS]
5.1
Remaining Offered Shares [SS]
2.3(c)
Requesting Demand Holder [SS]
5.3(a)
Section 2.3 Participating Stockholder [SS]
2.3(b)
Selling Stockholder(s) [SS]
2.3(a)
Side-by-Side
Preamble
Stockwell
Preamble
Subscription Agreement
Preamble
Tag-Along Notice [SS]
2.4(a)
Tag-Along Notice Period [SS]
2.4(b)
Tag-Along Price Per Share [SS]
2.4(a)
Tag-Along Shares [SS]
2.4(b)
Tag-Along Stockholders [SS]
2.4(a)
Third Investment Bank [SS]
5.2(b)
Third Party Purchaser [SS]
2.3(a)
Transfer [SS]
2.1
Valid Business Reason [SS]
5.7
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1.3. Interpretation. When a reference is made in this
Agreement to
Sections, Schedules or Exhibits, such reference shall be to a
Section, Schedule
or Exhibit of this Agreement, respectively, unless otherwise
indicated. The
table of contents and headings contained in this Agreement are for
reference
purposes only and shall not affect in any way the meaning or
interpretation of
this Agreement. Whenever the words "include," "includes" or
"including" are used
in this Agreement, they shall be deemed to be followed by the words
"without
limitation". The words "hereof," "herein" and "hereunder" and words
of similar
import when used in this Agreement shall refer to this Agreement as
a whole and
not to any particular provision of this Agreement. The definitions
contained in
this Agreement are applicable to the singular as well as the plural
forms of
such terms. References to a person are also to its permitted
successors and
assigns. Whenever the context may require, any pronoun shall
include the
corresponding masculine, feminine and neuter forms.
ARTICLE II
LIMITATIONS ON TRANSFER
2.1. General Restrictions on Transfer. (a) Each Stockholder
agrees that
such Stockholder shall not, either directly or indirectly, sell,
transfer,
assign, mortgage, hypothecate, pledge, create a security interest
in or lien
upon, encumber, donate, contribute, place in trust, or otherwise
voluntarily or
involuntarily dispose of any Shares, or any economic or other
interest therein
(including by means of any participation or swap transaction) (any
of the
foregoing actions, to "Transfer" and, any sale, transfer,
assignment, mortgage,
hypothecation, pledge, security interest or lien, encumbrance,
donation,
contribution, placing in trust or other disposition, a "Transfer")
except in a
transaction in accordance with this Agreement.
(b) Any attempt to Transfer any Shares that is not in
compliance with
this Agreement shall be null and void ab initio, and neither
Parent nor any
transfer agent shall give any effect in Parent's stock records
to such
attempted Transfer.
(c) Notwithstanding any other provision of this
Agreement, no Transfer
of Shares may be made pursuant to this Agreement, unless:
(i) such Transfer complies in all respects with all
applicable
federal, state and foreign securities laws, including,
without
limitation, if applicable, the Securities Act;
(ii) except in the case of a Transfer in connection
with a Public
Offering or pursuant to Rule 144 or to Parent, the
Transferee agrees
in writing to be bound by the terms and conditions of
this Agreement
with respect to the Shares Transferred to such Transferee
to the same
extent the Transferor of such Shares is or was bound
hereby;
(iii) except with Parent's consent or in the case of
a Transfer
(A) in connection with a Public Offering, (B) pursuant to
Rule 144 or
(C) to Parent, a Permitted Transferee or a Cypress
Member, such
Transfer is not to any Person that, directly or
indirectly (including
through its Affiliates), competes with Parent or its
subsidiaries; and
(iv) if requested by Parent, in its sole discretion,
an opinion
of counsel to such Transferee shall be supplied to
Parent, at such
Transferee's expense, to the effect that such Transfer
complies with
all applicable federal, state and foreign securities
laws.
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2.2. Certain Permitted Transfers. (a) Subject to Sections
2.1(c) and, if
applicable, 2.2(b), each Stockholder may Transfer Shares:
(i) to a Permitted Transferee of such Stockholder;
(ii) other than in the case of a Transfer by a
Cypress Member or
a Transfer permitted by clause (i) above, with the prior
written
consent of any Cypress Member (which consent (x) until
the fifth
anniversary of the date of this Agreement, may be
withheld for any
reason, or no reason, in the sole discretion of each
Cypress Member
and (y) on or after the fifth anniversary of the date of
this
Agreement, shall not be unreasonably withheld); and
(iii) to the extent required by applicable law or
regulation.
(b) In the event that any Stockholder wishes to Transfer
Shares in a
transaction permitted by Section 2.2(a), such Stockholder
shall give
written notice to Parent and the other Stockholders of its
intention to
make such Transfer not less than 10 days prior to effecting
such Transfer,
which notice shall state the name and address of each
Transferee to whom
such Transfer is proposed and the number of Shares proposed to
be
Transferred to such Transferee.
2.3. Right of First Offer. (a) If any Stockholder (other than
a Cypress
Member) (each a "Selling Stockholder" and, collectively, the
"Selling
Stockholders") shall desire to sell Shares to any Person (other
than (x) a
transfer to Parent (or any of its subsidiaries), any Cypress Member
or a
Permitted Transferee of such Stockholder, (y) Transfers to the
public pursuant
to a Public Offering or Rule 144 and (z) Transfers as a Tag-Along
Stockholder
pursuant to Section 2.4 or as a Bring-Along Stockholder pursuant to
Section 2.5)
(a "Third Party Purchaser"), then such Selling Stockholder shall
first offer the
other Stockholders (for purpose of this Section 2.3, the "Offeree
Stockholders")
the right to purchase such Shares (the "Offered Shares") by sending
written
notice (the "Offering Notice") to Parent and the Offeree
Stockholders, which
notice shall (i) state the number of Offered Shares, (ii) state the
proposed
purchase price per Share (the "Offer Price") and all other material
terms and
conditions of such sale and (iii) if applicable, be accompanied by
any written
offer from the Third Party Purchaser. Upon delivery of the Offering
Notice, the
offer made therein to the Offeree Stockholders shall be irrevocable
unless and
until the first offer rights provided for therein shall have been
waived or
shall have expired in accordance with this Agreement.
(b) Each applicable Offeree Stockholder shall have the
right, but not
the obligation, to purchase at the Offer Price per Share (and
otherwise
upon the same economic terms and conditions as those set forth
in the
Offering Notice; it being understood that the phrase "economic
terms and
conditions", when used in this Agreement, shall include terms
and
conditions, applied on a pro rata basis, concerning amount,
form and type
of consideration and liquidity (including bring-along and
tag-along terms
and conditions), but shall exclude terms and conditions
concerning
management, directors, advisory, oversight or consulting) all
but not less
than all of its pro rata portion of the Offered Shares, in the
proportion
that the number of Shares owned by such Offeree Stockholder
bears to the
total number of Shares owned by all Offeree Stockholders. Such
right of
each Offeree Stockholder shall be exercisable by written
notice to the
Selling Stockholders with copies to Parent given within 20
Business Days
after receipt of the Offering Notice (the "Notice Period").
Failure by the
Offeree Stockholder to respond within the Notice Period shall
be regarded
as a rejection of the offer made pursuant to the Offering
Notice. Each
Offeree Stockholder who elects to purchase its full pro rata
portion of the
Offered Shares is referred to in this Section 2.3 as the
"Section 2.3
Participating Stockholder."
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(c) The Selling Stockholders shall, promptly after the
end of the
Notice Period, notify (the "Last-Chance Notice") all Section
2.3
Participating Stockholders whether the Offered Shares have
been fully
subscribed for, and, if not, the number of Offered Shares not
subscribed
for (the "Remaining Offered Shares"). Subject to the further
provisions of
this Section 2.3(c), each Section 2.3 Participating
Stockholder shall have
the right to purchase all, but not less than all, of the
Remaining Offered
Shares. The right of each Section 2.3 Participating
Stockholder to purchase
the Remaining Offered Shares shall be exercisable by written
notice
delivered to the Selling Stockholders, with a copy to Parent,
given within
five (5) Business Days after receipt of the Last-Chance
Notice. If more
than one Section 2.3 Participating Stockholder timely elects
to exercise
its right to purchase the Remaining Offered Shares, the right
to purchase
the Remaining Offered Shares shall (unless the Section 2.3
Participating
Stockholders shall otherwise agree) be allocated pro rata
among the Section
2.3 Participating Stockholders electing to purchase the
Remaining Offered
Shares, in the proportion that the number of Shares owned by
each such
Section 2.3 Participating Stockholder bears to the total
number of Shares
owned by all Section 2.3 Participating Stockholders that elect
to purchase
the Remaining Offered Shares. A failure of any Section 2.3
Participating
Stockholder to exercise such right within such five (5)
Business Day period
shall be regarded as a waiver of its right to purchase the
Remaining
Offered Shares as provided herein.
(d) Notwithstanding anything in this Section 2.3 to the
contrary, the
right of the Offeree Stockholders and/or the Section 2.3
Participating
Stockholders to purchase the Offered Shares pursuant to this
Section 2.3
shall be exercisable only if the Offeree Stockholders and/or
the Section
2.3 Participating Stockholders collectively agree to purchase
all, but not
less than all, of the Offered Shares.
(e) The closing of the purchase of Offered Shares by the
Section 2.3
Participating Stockholders herein shall be held at the
principal office of
Parent at 11:00 a.m., local time, on the 60th day after the
giving of the
Last-Chance Notice, or at such other time and place as the
parties to the
transaction may agree; provided that, if the closing of the
purchase
requires any consent, waiver, approval, order, permit or
authorization of,
or declaration or filing with, or notification or report to,
any
governmental body, then the closing shall occur on the later
of (x) the
30th day after such action and (y) the 60th day after the
giving of the
Last-Chance Notice, or at such other time and place as the
parties to the
transaction may agree. The sale of the Offered Shares to the
Section 2.3
Participating Stockholders hereunder shall otherwise be on
customary terms
and conditions (but in any event in accordance with the terms
of the
Offering Notice); provided that the documents to be executed
in connection
with the sale of the Offered Shares shall not require any
Selling
Stockholder to (A) provide a non-competition covenant or
restrict its
ability to make investments in any business or (B) accept
salary in lieu of
any amount which is reasonably attributable to the purchase
price.
(f) If the Section 2.3 Participating Stockholders either
(x) do not
elect to purchase all of the Offered Shares pursuant to this
Section 2.3 or
(y) fail to diligently pursue any consent, waiver, approval,
order, permit
or authorization of, or declaration or filing with, or
notification or
report to, any governmental body necessary for the closing of
the purchase
to occur, then the Selling Stockholders may sell all, but not
less than all
of the Offered Shares not being purchased by Section 2.3
Participating
Stockholders at a price per Share equal to or greater than the
Offer Price
and otherwise on terms and conditions that are in the
aggregate not
materially more favorable to the Third Party Purchaser than
the terms and
conditions set forth in the Offering Notice and the written
offer, if any,
delivered therewith pursuant to Section 2.3(a). Any such sale
shall be bona
fide and completed within 100 days of the Offering Notice (or,
if none of
the Offeree Stockholders is a Section 2.3 Participating
Stockholder, then
within 70 days of the Offering
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Notice). In the event that such sale is not consummated within
such
applicable period for any reason, then the restrictions
provided for herein
shall again become effective, and no Transfer of such Offered
Shares may be
made thereafter by the Selling Stockholders without again
offering the same
to the Offeree Stockholders in accordance with this Section
2.3.
(g) Any Offeree Stockholder may, with respect to any
Offering Notice,
with the prior written consent of the Cypress Members in each
instance, at
any time assign any or all of its rights under this Section
2.3 to Parent
with respect to such Offering Notice, in which event Parent
shall have the
right, but not the obligation, to purchase the Offered Shares
on the same
economic terms and subject to the same conditions as such
Offeree
Stockholder may do so under this Section 2.3. No such
assignment shall be
binding upon any Selling Stockholder unless and until notice
thereof shall
have been provided to such Selling Stockholder, whereupon,
without further
action by any Person, unless otherwise set forth in the
instrument of
assignment and reflected in such notice to such Selling
Stockholder, such
Offeree Stockholder shall be relieved of all obligations it
may have under
this Section 2.3 to such Selling Stockholder with respect to
the Offered
Shares subject to such assignment. Any such assignment shall
not extend any
of the time periods set forth in this Section 2.3.
2.4. Tag-Along Right. (a) If any Cypress Member shall desire
to sell Shares
to any Third Party Purchaser or to Parent (or any of its
subsidiaries) (a
"Proposed Sale"), then such Cypress Member shall offer the other
Stockholders
which are not Cypress Members (the "Tag-Along Stockholders") the
right to
participate in the Proposed Sale with respect to a number of shares
of Common
Stock determined as provided in this Section 2.4 by sending written
notice (the
"Tag-Along Notice") to Parent and the Tag-Along Stockholders, which
notice shall
(i) state the number of Shares (the "Proposed Sale Shares")
proposed to be sold
in such Proposed Sale by such selling Cypress Member, (ii) state
the proposed
purchase price per Proposed Sale Share (the "Tag-Along Price Per
Share") and all
other material terms and conditions of such Proposed Sale and (iii)
if
applicable, be accompanied by any written offer from the Third
Party Purchaser.
(b) Each Tag-Along Stockholder shall have the right to
require the
Cypress Member to cause the Third Party Purchaser (or, if
applicable,
Parent or its subsidiaries) to purchase from such Tag-Along
Stockholder at
the Tag-Along Price Per Share (and otherwise upon the same
economic terms
and conditions as those set forth in the Tag-Along Notice,
including form
of consideration) a number of Shares owned by such Tag-Along
Stockholder
(such Tag-Along Stockholder's "Tag-Along Shares") not in
excess of the
product of (i) the total number of Proposed Sale Shares, and
(ii) a
fraction, the numerator of which is the total number of Shares
owned by the
Tag-Along Stockholder and the denominator of which is equal to
the sum of
the total number of Fully Diluted Shares owned by the selling
Cypress
Member(s) and the Tag-Along Stockholders; provided that the
documents to be
executed in connection with the sale of the Tag-Along
Stockholder's Shares
shall not require any Tag-Along Stockholder to (A) provide a
non-competition covenant or restrict its ability to make
investments in any
business, (B) accept salary in lieu of any amount which is
reasonably
attributable to the purchase price, (C) make representations
or warranties
or provide indemnities regarding any other Stockholder, (D)
provide
indemnities (except with respect to representations and
warranties made as
to itself and its conduct and status (and that of its
Affiliates (other
than Parent and its subsidiaries)) other than on a pro rata
basis (based
upon such Tag-Along Stockholder's portion of Shares and
Convertible
Securities sold in the transaction) or (E) agree to
indemnities that exceed
the proceeds received by such Tag-Along Stockholder in
connection with such
sale. Such right of the Tag-Along Stockholders shall be
exercisable by
written notice to the selling Cypress Member(s) with copies to
Parent given
within 10 Business Days after receipt of the Tag-Along Notice
(the
"Tag-Along Notice Period"), which notice shall state the
number of
Tag-Along Shares that the Tag-Along
10
Stockholder elects to sell in the Proposed Sale, if less than
the maximum
number of the Tag-Along Stockholder's Tag-Along Shares;
provided that if
such notice shall not state a number of Tag-Along Shares, then
the
Tag-Along Stockholder will be deemed to have elected to sell
the maximum
number of the Tag-Along Stockholder's Tag-Along Shares.
Failure by a
Tag-Along Stockholder to respond within the Tag-Along Notice
Period shall
be regarded as a rejection of the offer made pursuant to the
Tag-Along
Notice. Each Tag-Along Stockholder that elects to sell any or
all of the
Tag-Along Shareholder's Tag-Along Shares shall be referred to
in this
Section 2.4 as a "Participating Tag-Along Stockholder" and the
number of
Tag-Along Shares elected, or deemed to be elected, by the
Tag-Along
Stockholder to be sold as provided above is referred to in
this Section 2.4
as the Tag-Along Stockholder's "Participating Tag-Along
Shares". The number
of Shares to be sold by the selling Cypress Member in the
Proposed Sale
shall be reduced by the aggregate number of Participating
Tag-Along Shares
to be sold pursuant to this Section 2.4 by the Participating
Tag-Along
Stockholders.
(c) The closing of the sale of the Participating
Tag-Along Shares by
the Participating Tag-Along Stockholders shall be held at the
same place
and time as the closing of the sale by the Cypress Member in
the Proposed
Sale. Promptly after the consummation of the Transfer of the
Participating
Tag-Along Shares pursuant to this Section 2.4, the
Participating Tag-Along
Stockholders shall receive (i) the consideration with respect
to the
Participating Tag-Along Shares so Transferred and (ii) such
other evidence
of the completion of such Transfer and the terms and
conditions (if any)
thereof as may reasonably be requested by the Participating
Tag-Along
Stockholders. The costs and expenses of the sale by the
Cypress Members and
the Participating Tag-Along Stockholders shall be borne by all
such
Stockholders, pro rata based on their percentage participation
in such
sale.
(d) Notwithstanding anything to the contrary in this
Agreement, the
provisions of this Section 2.4 shall not be applicable to any
Transfer
proposed to be made by a Cypress Member (i) to a Permitted
Transferee of
such Cypress Member, (ii) to the public pursuant to a Public
Offering or
pursuant to Rule 144, (iii) pursuant to a merger or
consolidation in which
Parent is a constituent company, (iv) pursuant to a redemption
or
repurchase by Parent offered on a pro rata basis to all
Stockholders or (v)
to which Section 2.5 applies.
2.5. Bring-Along Right. (a) In the event that any Cypress
Member receives a
bona fide offer from a Third Party Purchaser to purchase (including
a purchase
by merger or otherwise) either (i) at least 75% of the outstanding
Fully Diluted
Shares or (ii) 100% of the Cypress Members' then aggregate
ownership interest in
Parent, in each case, on arm's length terms, Cypress Members
holding a majority
of the Cypress Members' Shares may send written notice (a "Buyout
Notice") to
Parent and the other Stockholders (the "Bring-Along Stockholders")
notifying the
Bring-Along Stockholders that they will be required to sell the
same percentage
(which percentage shall be specified in such Buyout Notice) (the
"Designated
Percentage") of their Shares in such sale.
(b) Upon receipt of a Buyout Notice, each Bring-Along
Stockholder
receiving such notice shall be obligated, subject to paragraph
(c) below:
(i) to sell the Designated Percentage of such
Bring-Along
Stockholder's Shares in the transaction (including a sale
or merger)
contemplated by the Buyout Notice on the same economic
terms and
conditions as the selling Cypress Member(s), including
form of
consideration;
(ii) to sell the Designated Percentage of such
Bring-Along
Stockholder's Convertible Securities (which shall be
calculated based
on the number of
11
shares of Common Stock issuable upon conversion, exercise
or exchange
of such Convertible Securities) in the transaction
(including a sale
or merger) contemplated by the Buyout Notice on the same
economic
terms and conditions as the selling Cypress Member(s),
including form
of consideration, subject to appropriate adjustment to
reflect terms
of such Convertible Security with respect to conversion,
exercise or
exchange thereof into shares of Common Stock; and
(iii) otherwise to take all necessary action to
cause the
consummation of such transaction, including voting its
Shares in favor
of such transaction and not exercising any appraisal
rights in
connection therewith.
(c) Each Bring-Along Stockholder further agrees to (i)
take all
actions (including executing documents) in connection with the
consummation
of the proposed transaction as may reasonably be requested of
it by any
Cypress Member and (ii) appoint any Cypress Member as its
attorney-in-fact
to do the same on its behalf; provided that the documents to
be executed in
connection with the sale of the Bring-Along Stockholder's
Shares shall not
require any Bring-Along Stockholder to (A) provide a
non-competition
covenant or restrict its ability to make investments in any
business, (B)
accept salary in lieu of any amount which is reasonably
attributable to the
purchase price, (C) make representations or warranties or
provide
indemnities regarding any other Stockholder, (D) (D) provide
indemnities
(except with respect to representations and warranties made as
to itself
and its conduct and status (and that of its Affiliates (other
than Parent
and its subsidiaries)) other than on a pro rata basis (based
upon such
Bring-Along Stockholder's portion of Shares and Convertible
Securities sold
in the transaction) or (E) agree to indemnities that exceed
the proceeds
received by such Bring-Along Stockholder in connection with
such sale.
(d) Each Cypress Member further agrees that, in the event
any of the
consideration received by a Bring-Along Stockholder in
connection with a
transaction covered by this Section 2.5 consists of Illiquid
Consideration,
then such Cypress Member shall, in the event it disposes of
such Illiquid
Consideration, provide each Bring-Along Stockholder an
opportunity to
participate in such disposition on a pro rata basis with all
Stockholders
(based on the number of Shares held by a Bring-Along
Stockholder as
compared to all participating Stockholders).
(e) In the event a contract with respect to the
transaction
contemplated by the Buyout Notice has not been entered into
within the 270
days after the date of delivery of the Buyout Notice, the
obligations of
the Stockholders under this Section 2.5 with respect to such
Buyout Notice
shall terminate, subject, however, to the right of any Cypress
Member to
deliver a further Buyout Notice with respect to a subsequent
transaction.
(f) Parent or its subsidiaries shall pay all costs and
expenses
associated with any transaction contemplated by this Section
2.5.
ARTICLE III
RIGHT TO PARTICIPATE IN CERTAIN ISSUANCES OF CAPITAL
STOCK
3.1. Right to Participate in Certain Issuances.
(a) Prior to the IPO Completion Date, if Parent
determines to issue
any capital stock or any security convertible into or
exercisable or
exchangeable for capital stock, including without limitation
any
Convertible Security, to any Person (including a Stockholder)
(other than
capital
12
stock to be issued (i) in connection with an employee stock
option plan or
other bona fide employment compensation arrangement that is
approved by the
Board of Directors, (ii) pursuant to a stock split or stock
dividend, (iii)
pursuant to the exercise of any option, warrant or convertible
security
(including without limitation any Convertible Security) issued
and
outstanding on the date hereof, (iv) as consideration in
connection with a
bona fide acquisition by Parent or any of its subsidiaries or
(v) pursuant
to a Public Offering) (each such issuance not excluded by the
immediately
preceding parenthetical being herein referred to as a "New
Issuance"), then
Parent shall notify each Stockholder of the proposed New
Issuance. The
notice shall specify the number and class of securities to be
issued, the
rights, terms and privileges of the securities and the
estimated price at
which such securities will be issued.
(b) Exercise of Right. By written notice to Parent given
within
fifteen Business Days of being notified of such New Issuance,
each
Stockholder who is required to receive the notice referred to
in Section
3.1(a) shall be entitled to purchase that percentage of the
New Issuance
determined by dividing (a) the total number of Shares owned by
such
Stockholder by (b) the total number of Shares then owned by
all
Stockholders. If any such Stockholder does not fully subscribe
for the
number or amount of shares of capital stock or securities
convertible into
or exercisable or exchangeable for capital stock that it is
entitled to
purchase pursuant to this Section 3.1, Parent shall notify the
Stockholders
of the same and each Stockholder participating in such
purchase to the full
extent provided for in the preceding sentence shall have the
right to
purchase that percentage of the New Issuance not so subscribed
for on the
terms in the notice, based on a fraction, the numerator of
which is the
total number of Shares then owned by such fully participating
Stockholder
and the denominator of which is the total number of Shares
then owned by
all fully participating Stockholders who elect to purchase
such
unsubscribed securities. Such right shall be exercisable
within two
Business Days following the receipt of the notice delivered
pursuant to the
previous sentence. To the extent the Stockholders do not elect
to purchase
all of the securities proposed to be offered and sold in the
New Issuance,
Parent may issue those securities not so subscribed for,
provided that such
sales are consummated within 180 days after the Stockholders'
rights
hereunder have expired or been waived.
(c) Closing. The closing of the New Issuance shall be
held at such
time as Parent shall designate in writing to the Stockholders
that elect to
purchase securities in the New Issuance pursuant to this
Section 3.1 not
fewer than fifteen Business Days prior to the date of such
closing, at
Parent's principal offices, or at another place designated by
Parent in
writing to such Stockholders in such notice.
3.2. Right to Participate in Issuances and Sales to Cypress
Members.
(a) Prior to the IPO Completion Date, if any subsidiary
of Parent
determines to issue any capital stock or any security
convertible into or
exercisable or exchangeable for capital stock (or to Transfers
any such
stock or security) to any Cypress Member or any of its
Affiliates (other
than Parent and its subsidiaries) (other than capital stock to
be issued or
sold pursuant to a Public Offering) (each such issuance or
sale not
excluded by the immediately preceding parenthetical being
herein referred
to as a "New Subsidiary Issuance"), then Parent shall notify
each
Stockholder of the proposed New Subsidiary Issuance. The
notice shall
specify the number and class of securities to be issued or
sold, the
rights, terms and privileges of the securities and the
estimated price at
which such securities will be issued or sold.
(b) Exercise of Right. By written notice to Parent given
within
fifteen Business Days of being notified of such New Subsidiary
Issuance,
each Stockholder who is required to receive the notice
referred to in
Section 3.2(a) shall be entitled to purchase that percentage
of the New
13
Subsidiary Issuance determined by dividing (a) the total
number of Shares
owned by such Stockholder by (b) the total number of Shares
then owned by
all Stockholders. If any such Stockholder does not fully
subscribe for the
number or amount of shares of capital stock or securities
convertible into
or exercisable or exchangeable for capital stock that it is
entitled to
purchase pursuant to this Section 3.2, Parent shall notify the
Stockholders
of the same and each Stockholder participating in such
purchase to the full
extent provided for in the preceding sentence shall have the
right to
purchase that percentage of the New Subsidiary Issuance not so
subscribed
for on the terms in the notice, based on a fraction, the
numerator of which
is the total number of Shares then owned by such fully
participating
Stockholder and the denominator of which is the total number
of Shares then
owned by all fully participating Stockholders who elect to
purchase such
unsubscribed securities. Such right shall be exercisable
within two
Business Days following the receipt of the notice delivered
pursuant to the
previous sentence. To the extent the Stockholders do not elect
to purchase
all of the securities proposed to be offered and sold in the
New Subsidiary
Issuance, the applicable subsidiary may issue (or Parent or
the applicable
subsidiary may sell) those securities not so subscribed for,
provided that
such sales are consummated within 180 days after the
Stockholders' rights
hereunder have expired or been waived.
(c) Closing. The closing of the New Subsidiary Issuance
shall be held
at such time as Parent shall designate in writing to the
Stockholders that
elect to purchase securities in the New Subsidiary Issuance
pursuant to
this Section 3.2 not fewer than fifteen Business Days prior to
the date of
such closing, at Parent's principal offices, or at another
place designated
by Parent in writing to such Stockholders in such notice.
ARTICLE IV
CORPORATE GOVERNANCE
4.1. General. Each Stockholder shall vote its Shares at any
regular or
special meeting of stockholders of Parent, or in any written
consent executed in
lieu of such a meeting of stockholders, and shall take all other
actions
necessary, to give effect to the provisions of this Agreement
(including,
without limitation, Sections 4.2 and 4.3 hereof), and to ensure
that the Charter
Documents do not, at any time hereafter, conflict in any respect
with the
provisions of this Agreement. At the request of Parent, each
Stockholder agrees
to vote its Shares at any regular or special meeting of
stockholders of Parent,
or in a written consent executed in lieu of such a special meeting
of
stockholder, to effect any increase in the authorized number of
shares of Common
Stock of Parent in connection with a stock split or a stock
dividend or a
proposed Public Offering.
4.2. Election of Directors. Each Stockholder agrees that the
number of
directors constituting the entire Board of Directors shall be at
least seven but
no more than 11, comprised of the following individuals:
(a) three individuals designated by the Cypress Members
(the "Cypress
Directors"), which individuals initially will be James A.
Stern, Ronald A.
Rittenmeyer and Michael F. Finley;
(b) so long as the OMERS Members own at least 50% in the
aggregate of
the number of Shares owned by them on the date hereof (as
adjusted for
stock splits, stock dividends, consolidations,
recapitalizations and
similar share capital transactions), one individual designated
by OMERS
(the "Investors' Director"), which individual initially will
be Donald J.
Morrison;
14
(c) three individuals who must be Independent designated
by the
Cypress Members (the "Cypress Independent Directors"), which
individuals
initially will be Larry W. McCurdy, Joseph A. Onorato and John
M. Riess;
(d) (i) the individual from time to time serving as the
Chief
Executive Officer and (ii) if approved by the Board of
Directors, another
individual who is also a senior officer of Parent selected by
the Chief
Executive Officer (which individuals initially will be (i)
Terry McCormack
and (ii) John Washbish, respectively); and
(e) up to two individuals who must be Independent and
will be selected
from time to time by the Nominating Committee pursuant to
Section
4.5(b)(ii)(B) (the "Independent Directors").
4.3. Removal and Replacement. (a) Each of (x) OMERS, so long
as the OMERS
Members own, in the aggregate, at least 50% of the number of Shares
owned by
them on the date hereof (as adjusted for stock splits, stock
dividends,
consolidations, recapitalizations and similar share capital
transactions), and
(y) the Cypress Members shall be entitled at any time and for any
reason (or for
no reason) to designate any or all of the directors designated
under (x) Section
4.2(b) and (y) Sections 4.2(a), 4.2(c) and 4.2(e), respectively,
for removal,
and the Board of Directors shall be entitled at any time and for
any reason (or
for no reason) to designate the directors designated under Section
4.2(d) and,
if the OMERS Members cease to own, in the aggregate, at least 50%
of the number
of Shares owned by them on the date hereof (as adjusted for stock
splits, stock
dividends, consolidations, recapitalizations and similar share
capital
transactions), Section 4.2(b) for removal. If at any time a vacancy
is created
on the Board of Directors by reason of the death, removal or
resignation of any
director, then:
(i) in the case of a director designated pursuant to
Sections
4.2(a) or 4.2(c), the Cypress Members shall, as soon as
practicable
thereafter, designate a replacement director and, as soon
as
practicable thereafter, each of the Stockholders shall
take action,
including, if necessary, the voting of its Shares, to
elect or cause
the election by the Board of Directors of such
replacement director in
accordance with Section 4.2(a) or 4.2(c), as the case may
be;
(ii) in the case of a director designated pursuant
to Section
4.2(b), so long as the OMERS Members owns at least 50% in
the
aggregate of the number of Shares owned by them on the
date hereof (as
adjusted for stock splits, stock dividends,
consolidations,
recapitalizations and similar share capital
transactions), OMERS
shall, as soon as practicable thereafter, designate a
replacement
director and, as soon as practicable thereafter, each of
the
Stockholders shall take action, including, if necessary,
the voting of
its Shares, to elect or cause the election by the Board
of Directors
of such replacement director in accordance with Section
4.2(b)
(provided that, if the OMERS Members cease to own at
least 50% in the
aggregate of the number of Shares owned by them on the
date hereof (as
adjusted for stock splits, stock dividends,
consolidations,
recapitalizations and similar share capital
transactions), then no
replacement director shall be designated);
(iii) in the case of a director designated pursuant
to Section
4.2(d)(i), the Board of Directors shall, as soon as
practicable
thereafter and in accordance with Section 4.3(c),
designate a new
Chief Executive Officer of Parent and, as soon as
practicable
thereafter, each of the Stockholders shall take action,
including, if
necessary, the voting of its Shares, to elect such new
Chief Executive
Officer as a director in accordance with Section
4.2(d)(i);
15
(iv) in the case of a director designated pursuant
to Section
4.2(d)(ii), the Board of Directors may, in its sole
discretion,
instruct the Chief Executive Officer to recommend an
officer of Parent
as a nominee and, as soon as practicable thereafter, each
of the
Stockholders shall take action, including, if necessary,
the voting of
its Shares, to elect such nominee as a director in
accordance with
Section 4.2(d)(ii); and
(v) in the case of a director designated pursuant to
Section
4.2(e), the Nominating Committee of the Board of
Directors shall, as
soon as practicable thereafter, nominate a replacement
Independent
Director, and as soon as practicable thereafter, each of
the
Stockholders shall take action, including, if necessary,
the voting of
its Shares, to elect or cause the election by the Board
of Directors
or Stockholders of such replacement.
(b) If at any time a vacancy is created on the Board of
Directors by
reason of the death, removal or resignation of any director
designated
pursuant to Section 4.2(a), then the Board of Directors shall
not conduct
any business (other than business incident to the designation
and election
of a replacement director in accordance with this Section 4.3)
until a
replacement director has been designated by the Cypress
Members; provided
that the foregoing restriction on the transaction of business
shall
terminate 20 Business Days after the creation of such vacancy
if no such
replacement director has been designated.
(c) Board Approvals. Subject to Section 4.4, all Board of
Director
decisions will be made by majority vote, except that, subject
to Section
4.4, no decision may be approved unless at least one Cypress
Director
affirmatively votes in favor thereof.
4.4. Non-Cypress Director Approvals.
(a) In order to take any of the following actions, (x) a
majority of
the members of the Board of Directors (excluding the Cypress
Directors, who
must abstain from voting thereon) must approve such actions
and (y) a
majority of the Cypress Directors must approve such actions:
(i) making any change in the Line of Business of
Parent or its
subsidiaries, whether by acquisition of assets or
otherwise;
(ii) amending or restating the articles of
incorporation or
bylaws of Parent or its subsidiaries, other than to cure
any
ambiguity, omission, inconsistency or to correct or
supplement a
defective provision;
(iii) taking any action to commence the voluntary
dissolution of
Parent or its subsidiaries or voluntarily commence any
proceeding or
file any petition seeking relief under Title 11 of the
United States
Code as constituted on the date of this Agreement or
hereafter
amended, or any other federal, state or foreign
bankruptcy,
reorganization, insolvency or similar law;
(iv) approval of any employee stock option plan or
other equity
compensation plan of Parent or its subsidiaries that
could result in
the issuance of Shares or Convertible Securities in
excess of 20% of
the Fully Diluted Shares at any time; and
(v) approval of a New Subsidiary Issuance.
16
(b) In addition to the foregoing, the action described in
Section
4.4(a)(iv) shall require approval of the Investors' Director
(if there is
one at the time such action is to occur).
4.5. Committees of the Board of Directors.
(a) Subject to applicable law, the Board of Directors may
establish
such committees of the Board of Directors as the Board of
Directors shall
determine to be appropriate or convenient. Except as provided
in Section
4.5(b), each committee shall consist of at least three
members, with
Cypress Directors constituting a majority of each committee
and one
Independent Director selected by the Board of Directors
serving on each
committee.
(b) Notwithstanding the foregoing clause (a) of this
Section 4.5, the
Board of Directors shall promptly establish a Nominating
Committee.
(i) Subject to Section 4.5(b)(iii), the Nominating
Committee
shall have such powers as shall be determined by the
Board of
Directors from time to time;
(ii) The Nominating Committee shall be responsible
for (A)
identifying individuals believed to be qualified as
Independent
Director candidates to serve on the Board of Directors
and (B)
selecting the candidates for all directorships to be
filled pursuant
to Section 4.2(e); and
(iii) The Nominating Committee shall consist of one
Cypress
Director, one Investors' Director and one Independent
Director
(provided that, if there is no Investors' Director at any
time, the
Nominating Committee shall consist of one Cypress
Director and two
Independent Directors).
4.6. Boards of Directors of Subsidiaries. Parent shall, from
time to time,
cause the composition of the boards of directors of Affinia and
Affinia Group
Intermediate Holdings Inc. to be identical to that of the Board of
Directors so
long as these Persons are subsidiaries of Parent.
4.7. Expenses. Parent shall pay all reasonable travel expenses
and other
reasonable out-of-pocket expenses and disbursements incurred by any
director to
attend meetings of the Board of Directors and any committee such
director is
entitled to attend.
4.8. Stockholder Rights. Each Investor Group Stockholder and
each Cypress
Member shall have the right to (i) appoint one non-director
representative to
attend (including by way of telephone attendance) each meeting
(including each
telephonic meeting) of the Board of Directors and any committee
exercising any
powers of the Board of Directors and to participate in all
discussions during
each such meeting (but not to vote on any matter) and (ii) discuss
from time to
time with management personnel of Parent and its material
subsidiaries such
matters pertaining to the financial position, operations,
investments and
financings as may be of interest to such Stockholder (provided that
such
Stockholder may not exercise this right more than once during any
six-month
period and the Stockholders will use reasonable best efforts to
schedule
meetings as a single group); provided that the rights described in
this Section
4.8 shall immediately expire with respect to a particular
Stockholder if (x) in
the case of Stockwell, it and i
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