EXHIBIT 10.7
EXECUTION VERSION
STOCKHOLDERS AGREEMENT
BY AND AMONG
CSA ACQUISITION CORP.
AND
THE STOCKHOLDERS NAMED HEREIN
DATED AS OF DECEMBER 23, 2004
TABLE OF CONTENTS
Page
----
RECITALS.......................................................................................
1
ARTICLE I
DEFINITIONS..........................................................................
2
SECTION 1.1. Defined
Terms.................................................................
2
SECTION 1.2. Other Definitional
Provisions................................................. 10
ARTICLE II CORPORATE
GOVERNANCE................................................................
11
SECTION 2.1. Board
Representation..........................................................
11
SECTION 2.2.
Committees....................................................................
12
SECTION 2.3. Consent
Rights................................................................
12
SECTION 2.4. Available Financial
Information............................................... 14
SECTION 2.5.
Access........................................................................
14
SECTION 2.6. Termination and Modification of
Rights........................................ 15
SECTION 2.7.
VCOC..........................................................................
16
ARTICLE III
TRANSFERS..........................................................................
16
SECTION 3.1. Rights and Obligations of
Transferees......................................... 16
SECTION 3.2. Transfer
Restrictions.........................................................
16
SECTION 3.3. Right of First Offer with Respect to Sponsor
Stockholders..................... 17
SECTION 3.4. Right of Co-Sale on Transfers by
Stockholders................................. 19
SECTION 3.5. Drag Along
Rights.............................................................
20
SECTION 3.6. Right of First Refusal With Respect to Management
Stockholders and Director
Stockholders...............................................................
21
SECTION 3.7. Management Call
Option........................................................
23
SECTION 3.8. Registration
Rights...........................................................
26
SECTION 3.9. Void
Transfers................................................................
26
ARTICLE IV EQUITY PURCHASE
RIGHTS..............................................................
26
SECTION 4.1. Equity Purchase
Rights........................................................
26
ARTICLE V
MISCELLANEOUS........................................................................
28
SECTION 5.1. Reimbursement of
Expenses..................................................... 28
SECTION 5.2. Fiduciary
Duties..............................................................
28
SECTION 5.3. No Inconsistent
Agreements....................................................
29
SECTION 5.4. Recapitalization, Exchanges,
etc.............................................. 29
SECTION 5.5. Employment by the
Company..................................................... 29
SECTION 5.6.
Taxes.........................................................................
29
SECTION 5.7. Term of
Agreement.............................................................
29
SECTION 5.8.
Inspection....................................................................
30
SECTION 5.9. Amendments and
Waivers........................................................
30
SECTION 5.10. Successors, Assigns and
Transferees........................................... 30
SECTION 5.11.
Legend........................................................................
30
SECTION 5.12.
Notices.......................................................................
31
SECTION 5.13. Further
Assurances............................................................
33
-i-
SECTION 5.14. Entire
Agreement..............................................................
33
SECTION 5.15.
Confidentiality...............................................................
33
SECTION 5.16. Optionholders to become
Parties............................................... 33
SECTION 5.17. Delays or
Omissions...........................................................
33
SECTION 5.18. GOVERNING LAW; JURISDICTION; WAIVER OF JURY
TRIAL............................. 34
SECTION 5.19. Effective
Date................................................................
34
SECTION 5.20.
Severability..................................................................
34
SECTION 5.21. Specific
Performance..........................................................
34
SECTION 5.22. Counterparts; Facsimile
Signatures............................................ 35
ANNEX I
ANNEX II
EXHIBITS
Exhibit A Form of Assignment and Assumption Agreement
-ii-
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT dated as of December 23, 2004
(this
"Agreement"), by and among CSA Acquisition Corp., a Delaware
corporation (the
"Company"), Cypress Merchant Banking Partners II L.P., a Delaware
limited
partnership ("Cypress Onshore"), Cypress Merchant B 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,
"Cypress"), GS
Capital Partners 2000, L.P. ("Goldman Onshore"), GS Capital
Partners 2000
Offshore, L.P. ("Goldman Offshore"), GS Capital Partners 2000 GmbH
& Co.
Beteiligungs KG ("Goldman KG"), GS Capital Partners 2000 Employee
Fund, L.P.
("Goldman Employee") and Goldman Sachs Direct Investment Fund 2000,
L.P.
("Goldman Direct" and, together with Goldman Onshore, Goldman
Offshore, Goldman
KG and Goldman Employee, "Goldman"; Goldman and Cypress are
referred to herein
as the "Sponsor Stockholders"), the persons listed on Annex I
hereto (the
"Management Stockholders") and on Annex II hereto (the "Director
Stockholders")
(the Sponsor Stockholders, Management Stockholders and Director
Stockholders,
collectively, the "Stockholders").
RECITALS
WHEREAS, the Company has entered into that certain Stock
Purchase
Agreement, dated as of September 16, 2004, as amended as of
December 3, 2004
(the "Purchase Agreement"), by and among Cooper Tire & Rubber
Company, a
Delaware corporation ("Cooper"), Cooper Tyre & Rubber Company
UK Limited, a
company organized under the laws of England and Wales (together
with Cooper, the
"Sellers") and the Company, pursuant to which the Company will
purchase equity
interests held by the Sellers in the Sold Companies (as defined in
the Purchase
Agreement);
WHEREAS, on September 16, 2004, the Company entered into
a letter
agreement with Cypress and Goldman, pursuant to which Cypress and
Goldman each
agreed to contribute $159,000,000, for a total of $318,000,000, in
consideration
for shares of the Common Stock of the Company;
WHEREAS, on September 16, 2004, Cypress and Goldman
entered into
letter agreements with the Management Stockholders, pursuant to
which each
Management Stockholder agreed to acquire shares of the Common Stock
of the
Company, subject to certain conditions; and
WHEREAS, each of the Stockholders desires to promote the
interests of
the Company and the mutual interests of Stockholders by
establishing herein
certain terms and conditions upon which the shares of Common Stock
owned by them
will be held, including provisions restricting the transfer of
shares of Common
Stock, and providing for certain other matters.
NOW, THEREFORE, in consideration of the foregoing
recitals and of the
mutual promises hereinafter set forth, the Company and the
Stockholders hereby
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Defined Terms. As used herein, the following
terms shall
have the following meanings:
"55th Street" has the meaning assigned to such term in
the Preamble.
"Acceptance Notice" has the meaning assigned to such term
in Section
3.3(b).
"Affiliate" means, with respect to any Person, (i) any
Person directly
or indirectly controlling, controlled by or under common control
with such
Person or (ii) any Person directly or indirectly owning or
controlling ten
percent (10%) or more of any class of outstanding equity securities
of such
Person.
"Agreement" has the meaning assigned to such term in the
Preamble.
"beneficial owner" or "beneficially own" has the meaning
given such
term in Rule 13d-3 under the Exchange Act and a Person's beneficial
ownership of
Common Stock or other Voting Securities of the Company shall be
calculated in
accordance with the provisions of such Rule; provided, however,
that for
purposes of determining beneficial ownership, (i) a Person shall be
deemed to be
the beneficial owner of any security which may be acquired by such
Person,
whether within sixty (60) days or thereafter, upon the conversion,
exchange or
exercise of any warrants, options, rights or other securities and
(ii) no Person
shall be deemed to beneficially own any security solely as a result
of such
Person's execution of this Agreement.
"Board" means the Board of Directors of the Company.
"Business Day" means any day that is not a Saturday, a
Sunday or other
day on which banks are required or authorized by law to be closed
in the City of
New York.
"Bylaws" means the Bylaws of the Company, as in effect on
the date
hereof and as the same may be amended, supplemented or otherwise
modified from
time to time in accordance with the terms thereof, the terms of the
Charter and
the terms of this Agreement.
"Cause" shall mean "Cause" as defined in any employment
agreement
between a Management Stockholder and the Company as in effect on
the date of the
applicable Termination Event, or, if there shall be no such
agreement or if such
term is not defined therein, (i) the Management Stockholder's
willful failure to
perform duties or directives which is not cured following written
notice, (ii)
the Management Stockholder's commission of a (A) felony or (B)
crime involving
moral turpitude, (iii) the Management Stockholder's willful
malfeasance or
misconduct which is demonstrably injurious to the Company, or (iv)
material
breach by the Management Stockholder of the restrictive covenants,
including,
without limitation, any non-compete, non-solicitation or
confidentiality
provisions to which executive is bound.
"CEO Designee" has the meaning assigned to such term in
Section
2.1(a)(ii).
2
"Change of Control" means the occurrence of any of the
following
events after the Effective Date: (i) the sale or disposition, in
one or a series
of related transactions, of all or substantially all of the assets
of the
Company to any "person" or "group" (as such terms are defined in
Sections
13(d)(3) and 14(d)(2) of the Exchange Act) other than the Permitted
Holders or
(ii) any person or group, other than the Permitted Holders, is or
becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act),
directly or indirectly, of greater than or equal to fifty percent
(50%) of the
total voting power of the Voting Securities of the Company,
including by way of
merger, consolidation or otherwise, except where the Sponsor
Stockholders or
their Affiliates, immediately following such merger, consolidation
or other
transaction, continue to have the ability to designate or elect a
majority of
the Board (or the board of directors of the resulting entity or its
parent
company).
"Charter" means the Amended and Restated Certificate of
Incorporation
of the Company, as in effect on the date hereof and as the same may
be amended,
supplemented or otherwise modified from time to time in accordance
with the
terms thereof and the terms of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and
as the context requires, the Treasury regulations promulgated
thereunder.
"Common Stock" means the common stock, par value $0.01
per share, of
the Company, whether first owned prior to, on or following the date
hereof
(including shares acquired upon exercise of options, warrants or
other rights to
acquire such shares), and any securities issued in respect thereof,
or in
substitution therefor, in connection with any stock split, dividend
or
combination, or any reclassification, recapitalization, merger,
consolidation,
exchange or other similar reorganization.
"Company" has the meaning assigned to such term in the
Preamble.
"Company Competitor" means any Person that is primarily
engaged,
directly or indirectly, in the design, manufacture and sale of
fluid handling
systems, body sealing systems and active and passive vibration
control systems
or otherwise directly or indirectly competes with the business of
the Company
and its Subsidiaries.
"Confidential Information" has the meaning assigned to
such term in
Section 5.15(c).
"control" (including the terms "controlled by" and "under
common
control with"), with respect to the relationship between or among
two or more
Persons, means the possession, directly or indirectly, of the power
to direct or
cause the direction of the affairs or management of a Person,
whether through
the ownership of voting securities, as trustee or executor, by
contract or
otherwise.
"Cooper" has the meaning assigned to such term in the
Recitals.
"Co-Sale Participant" has the meaning assigned to such
term in Section
3.4(a).
"Cypress" has the meaning assigned to such term in the
Preamble.
3
"Cypress Offshore" has the meaning assigned to such term
in the
Preamble.
"Cypress Onshore" has the meaning assigned to such term
in the
Preamble.
"Cypress Designee" has the meaning assigned to such term
in Section
2.1(a)(i).
"Cypress Member" means each of Cypress Onshore, Cypress
Offshore, 55th
Street and Side-by-Side and their Permitted Transferees.
"Delaware Law" means the Delaware General Corporation
Law, as amended
from time to time.
"Director" means any member of the Board.
"Director Stockholders" has the meaning assigned to such
term in the
Preamble.
"Drag Along Notice" has the meaning assigned to such term
in Section
3.5(d).
"Drag Securities" has the meaning assigned to such term
in Section
3.5(a).
"Drag Transaction" has the meaning assigned to such term
in Section
3.5(b).
"Effective Date" has the meaning assigned to such term in
Section
5.19.
"Eligible Shares" has the meaning assigned to such term
in Section
3.7(c).
"Equity Purchase Right" has the meaning assigned to such
term in
Section 4.1(a).
"Equity Purchase Shares" has the meaning assigned to such
term in
Section 4.1(a).
"Equity Securities" means any and all shares of Common
Stock or other
equity securities of the Company, securities of the Company
convertible into, or
exchangeable or exercisable for, such shares or other securities,
and options,
warrants or other rights to acquire such shares or other
securities.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended,
and the rules and regulations promulgated thereunder.
"Exercising Stockholder" has the meaning assigned to such
term in
Section 4.1(d).
"Fair Market Value" means (i) with respect to Common
Stock (a) if
there is a public market for the shares on such date, the average
of the high
and low closing bid prices of the shares of Common Stock as
reported on such
date on the Composite Tape of the principal national securities
exchange on
which such shares are listed or admitted to trading, or, if the
shares are not
listed or admitted on any national securities exchange, the
arithmetic mean of
the per share closing bid price and per share closing asked price
on such date
as quoted on the National Association of Securities Dealers
Automated Quotation
System (or such market in
4
which such prices are regularly quoted), or, if no sale of shares
shall have
been reported on the Composite Tape of any national securities
exchange or
quoted on the National Association of Securities Dealers Automated
Quotation
System (or such market in which such prices are regularly quoted)
on such date,
on the closest preceding date on which there were sales of shares
or (b) if
there is no public market for the shares on such date, the fair
market value of
the shares will be as determined in good faith by the Board and
(ii) with
respect to any other non-cash consideration, the fair market value
of such
non-cash consideration as determined in good faith by the Board.
"Family Group," with respect to any natural person, means
such natural
person's spouse and descendants (whether natural or adopted) and
any trust
solely for the benefit of such natural person and/or such natural
person's
spouse and/or descendants.
"Financing Default" means an event which would constitute
(or with
notice or lapse of time or both would constitute) an event of
default (which
event of default has not been cured) under or would otherwise
violate or breach
any financing arrangement of the Company or any of its Subsidiaries
in effect as
of the time of the aforementioned event, and any extensions,
renewals,
refinancings or refundings thereof in whole or in part.
"First Offer" has the meaning assigned to such term in
Section 3.3(b).
"First Offer Price" has the meaning assigned to such term
in Section
3.3(a).
"First Purchase Date" has the meaning assigned to such
term in Section
3.7(a).
"Goldman" has the meaning assigned to such term in the
Preamble.
"Goldman Direct" has the meaning assigned to such term in
the
Preamble.
"Goldman Designee" has the meaning assigned to such term
in Section
2.1(a)(i).
"Goldman Employee" has the meaning assigned to such term
in the
Preamble.
"Goldman KG" has the meaning assigned to such term in the
Preamble.
"Goldman Member" means Goldman Onshore, Goldman Offshore,
Goldman KG,
Goldman Employee and Goldman Direct and their Permitted
Transferees.
"Goldman Offshore" has the meaning assigned to such term
in the
Preamble.
"Goldman Onshore" has the meaning assigned to such term
in the
Preamble.
"Goldman Voting Securities" shall mean all shares of
Common Stock or
Voting Securities which are owned or held by Goldman or its
Permitted
Transferees.
"Governmental Body" means any government or governmental
or regulatory
body thereof, or political subdivision thereof, of any country or
subdivision
thereof, whether international, supranational, national, federal,
state or
local, or any agency or instrumentality
5
thereof, or any court or regulatory (including a stock exchange or
other
self-regulatory body) authority or agency.
"IPO" means the initial public offering of Common Stock
pursuant to an
effective registration statement under the Securities Act.
"Issuance Notice" has the meaning assigned to such term
in Section
4.1(b).
"Lapse Date" has the meaning assigned to such term in
Section
3.2(b)(i).
"Law" means any statute, law, regulation, ordinance,
rule, injunction,
order, decree, governmental approval, directive, requirement, or
other
governmental restriction or any similar form of decision of, or
determination
by, or any interpretation or administration of any of the foregoing
by, any
Governmental Body.
"Management Offer" has the meaning assigned to such term
in Section
3.6(a).
"Management Offer Notice" has the meaning assigned to
such term in
Section 3.6(a).
"Management Offeror" has the meaning assigned to such
term in Section
3.6(a).
"Management Stockholder" has the meaning set forth in the
Preamble.
"Non-Purchasing Stockholder" has the meaning assigned to
such term in
Section 4.1(d).
"Offer Notice" has the meaning assigned to such term in
Section
3.3(a).
"Offered Management Securities" has the meaning assigned
to such term
in Section 3.6(a).
"Offered Securities" has the meaning assigned to such
term in Section
3.3(a).
"Offering Holder" has the meaning assigned to such term
in Section
3.3(a).
"Optionholder" has the meaning assigned to such term in
Section 5.16.
"Original Shares" shall mean, when used in reference to
any
Stockholder, the shares of Common Stock sold to such Stockholder on
or prior to
the Effective Date or any shares or other securities which such
shares of Common
Stock may have been converted into or exchanged for in connection
with any
exchange, reclassification, dividend, distribution, stock split,
combination,
subdivision, merger, spin-off, recapitalization, reorganization or
similar
transaction.
"Original Subscription Agreements" is a collective
reference to the
Subscription Agreements to be entered into by the Company with each
of the
Stockholders on or before the Effective Date providing in each case
for the
purchase by, or issuance to, such Stockholder of shares of Common
Stock: (i) on
or prior to the Effective Date, in the case of the Sponsor
6
Stockholders; (ii) on or before the 20th day following receipt of
each related
Bonus Payment (as defined in the Original Subscription Agreements
for the
Management Stockholders), in the case of the Management
Stockholders, and in the
case of James S. McElya, on the Effective Date; and (iii) on or
before March 23,
2005, in the case of the Director Stockholders.
"Permitted Holder" means, as of the date of
determination, any and all
of (i) an employee benefit plan (or trust forming a part thereof)
maintained by
(a) the Company or (b) any corporation or other Person of which a
majority of
its voting power of its voting equity securities or equity interest
is owned,
directly or indirectly, by the Company and (ii) the Sponsor
Stockholders and any
of their respective Affiliates.
"Permitted Transferee" shall mean (i) in the case of a
natural person,
any individual who received a Stockholder's share of Common Stock
pursuant to
applicable Laws of descent and distribution or any individual who
is a member of
such Stockholder's Family Group; (ii) in the case of each Cypress
Member (A) any
other Cypress Member or any Affiliate (other than an individual) of
Cypress
Associates II LLC or any of its managing members; (B) any general
or limited
partner, member, director, officer or employee of such Cypress
Member (or other
entity referred to in clause (A)); (C) the heirs, executors,
administrators,
testamentary trustees, legatees or beneficiaries of any of the
individuals
referred to in clause (B); (D) for estate planning purposes, any
trust, the
beneficiaries of which include only (1) Permitted Transferees
referred to in
clauses (A), (B) and (C) and (2) parents, spouses and lineal
descendants of
Permitted Transferees referred to in clause (B); (E) 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
(A), (B), (C)
and (D); and (F) any bank or financial institution to which a bona
fide pledge
of shares of Common Stock is made, provided that immediately
following any
foreclosure upon such pledged shares of Common Stock, such bank or
financial
institution shall cease to be a Permitted Transferee for all
purposes of this
Agreement; and (iii) in the case of each Goldman Member (A) any
other Goldman
Member or any Affiliate (other than an individual) of The Goldman
Sachs Group,
Inc.; (B) any general or limited partner, member, director, officer
or employee
of such Goldman Member (or other entity referred to in clause (A));
(C) the
heirs, executors, administrators, testamentary trustees, legatees
or
beneficiaries of any of the individuals referred to in clause (B);
(D) for
estate planning purposes, any trust, the beneficiaries of which
include only (1)
Permitted Transferees referred to in clauses (A), (B) and (C) and
(2) parents,
spouses and lineal descendants of Permitted Transferees referred to
in clause
(B); (E) 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 (A), (B), (C) and (D); and (F) any bank or
financial
institution to which a bona fide pledge of shares of Common Stock
is made,
provided that immediately following any foreclosure upon such
pledged shares of
Common Stock, such bank or financial institution shall cease to be
a Permitted
Transferee for all purposes of this Agreement; provided, however,
that in all
cases such Transferee shall agree in a writing in the form attached
as Exhibit A
hereto to be bound by and to comply with all applicable provisions
of this
Agreement. For the sake of clarity, in instances where there is an
attempted
Transfer of Common Stock from one Permitted Transferee to another
Person, such
Person must be a Permitted Transferee of the original Stockholder
party from
which the shares of Common Stock were initially Transferred in
order for such
Person to qualify as a Permitted Transferee of the Transferring
Permitted
Transferee.
7
"Person" means any individual, corporation, limited
liability company,
limited or general partnership, joint venture, association,
joint-stock company,
trust, unincorporated organization, government or any agency or
political
subdivisions thereof or any group comprised of two or more of the
foregoing.
"Pro Rata Portion" means:
(i) for the purposes of Article IV, with respect to any
Stockholder,
on any issuance date for Equity Securities, the number or
amount of Equity
Securities equal to the product of (i) the total number or
amount of Equity
Securities to be issued by the Company on such date and (ii)
the fraction
determined by dividing (A) the number of shares of Common
Stock
beneficially owned by such Stockholder immediately prior to
such issuance
by (B) the total number of shares of Common Stock outstanding
on such date
immediately prior to such issuance;
(ii) for the purposes of Section 3.3, with respect to any
ROFO
Recipient, with respect to any proposed Transfer of Offered
Securities, the
number or amount of Offered Securities equal to the product of
(x) the
total number or amount of Offered Securities to be offered to
the ROFO
Recipients and (y) the fraction determined by dividing (A) the
number of
shares of Common Stock beneficially owned by such ROFO
Recipient by (B) the
total number of shares of Common Stock beneficially owned by
all of the
ROFO Recipients as of such date; provided, however, that for
the purpose of
determining the Pro Rata Portion of the Section 3.3
Non-Electing Shares
referred to in the third sentence of Section 3.3(c), (1) the
reference to
"Offered Securities" in clause (x) of this subsection shall be
a reference
to "Section 3.3 Non-Electing Shares" and (2) the total number
of shares of
Common Stock referred to in clause (B) of this subsection (ii)
shall not
include the Common Stock of the holder of the Section 3.3
Non-Electing
Shares;
(iii) for the purposes of Section 3.4, with respect to
any Co-Sale
Participant, with respect to any proposed Transfer of
Transferred
Securities, the number or amount of Transferred Securities
equal to the
product of (x) the total number or amount of Transferred
Securities to be
Transferred to the proposed Transferee and (y) the fraction
determined by
dividing (A) the number of shares of Common Stock beneficially
owned by
such Co-Sale Participant by (B) the total number of shares of
Common Stock
beneficially owned by all of the Stockholders as of such date;
and
(iv) for the purposes of Section 3.5, with respect to any
Selling
Stockholder, with respect to any proposed Transfer of Drag
Securities, the
number or amount of Drag Securities equal to the product of
(x) the total
number or amount of Drag Securities to be Transferred to the
proposed
Transferee and (y) the fraction determined by dividing (A) the
number of
shares of Common Stock beneficially owned by such Selling
Stockholder by
(B) the total number of shares of Common Stock beneficially
owned by all of
the Stockholders as of such date.
"Purchase Agreement" has the meaning assigned to such
term in the
Recitals.
8
"Qualified IPO" means an IPO (x) of at least 25% of the
then
outstanding shares of Common Stock or (y) that results in gross
proceeds to the
Company of at least $159 million.
"Registration Rights Agreement" means the Registration
Rights
Agreement, dated as of the date hereof, among the Company and each
of the
Stockholders, as it may be amended, supplemented or restated from
time to time.
"Required Sponsor Stockholder Consent" has the meaning
assigned to
such term in Section 2.3(a).
"Reserved Employee Shares" shall mean options to purchase
Common Stock
(and shares of Common Stock issuable upon the exercise thereof) or
restricted or
other shares of Common Stock or stock-based awards, in any case,
issued to
employees, officers, directors or consultants pursuant to any stock
option,
employee stock purchase or similar equity-based plans approved by
the Board
(including adjustments in respect thereof for any subsequent stock
dividends,
combinations, splits or the like), including the 2004 CSA
Acquisition Corp.
Stock Incentive Plan.
"ROFO Recipients" has the meaning assigned to such term
in Section
3.3(a).
"Section 3.3 Non-Electing Shares" has the meaning
assigned to such
term in Section 3.3(c).
"Section 3.5 Transferring Stockholder(s)" has the meaning
assigned to
such term in Section 3.5(a).
"Securities Act" means the Securities Act of 1933, as
amended, and the
rules and regulations promulgated thereunder.
"Sellers" has the meaning assigned to such term in the
Recitals.
"Selling Management Stockholder" has the meaning assigned
to such term
in Section 3.6(a).
"Selling Stockholder" has the meaning assigned to such
term in Section
3.5(a).
"Services" means (i) a Management Stockholder's
employment if the
Management Stockholder is an employee of the Company or any of its
Affiliates,
(ii) a Management Stockholder's services as a consultant, if the
Management
Stockholder is a consultant to the Company or any of its Affiliates
and (iii) a
Management Stockholder's services as a non-employee director, if
the Management
Stockholder is a non-employee member of the Board or the board of
directors of
an Affiliate; provided however that unless otherwise determined by
the Board or
the compensation committee of the Board, a change in a Management
Stockholder's
status from employee to non-employee (other than with respect to a
director of
the Company or an Affiliate) shall constitute a termination of
"Services"
hereunder.
"Shares Buyer" has the meaning assigned to such term in
Section
3.7(d).
9
"Side-by-Side" has the meaning assigned to such term in
the Preamble.
"Sponsor Stockholder" has the meaning assigned to such
term in the
Preamble.
"Sponsor Stockholder Designees" has the meaning assigned
to such term
in Section 2.1(a)(i).
"Stockholder" has the meaning set forth in the Preamble.
"Subsidiary" means (i) any corporation of which a
majority of the
securities entitled to vote generally in the election of directors
thereof, at
the time as of which any determination is being made, are owned by
another
entity, either directly or indirectly, and (ii) any joint venture,
general or
limited partnership, limited liability company or other legal
entity in which an
entity is the record or beneficial owner, directly or indirectly,
of a majority
of the voting interests or the general partner.
"Termination Event" has the meaning assigned to such term
in Section
3.7(a).
"Transfer" means, directly or indirectly, to sell,
transfer, assign,
pledge, encumber, hypothecate or similarly dispose of, either
voluntarily or
involuntarily, or to enter into any contract, option or other
arrangement or
understanding with respect to the sale, transfer, assignment,
pledge,
encumbrance, hypothecation or similar disposition of, any shares of
Common Stock
beneficially owned by a Person or any interest in any shares of
Common Stock
beneficially owned by a Person; provided however that a sale,
transfer,
assignment, pledge, encumbrance, hypothecation or similar
disposition (or
contract, option or other arrangement or understanding with respect
thereto) of
any equity interest in a Sponsor Stockholder entity that engages in
a business
or activity other than primarily owning Common Stock, shall not be
considered a
Transfer hereunder.
"Transferee" means any Person to whom any Stockholder or
any
Transferee thereof Transfers Common Stock in accordance with the
terms hereof.
"Transfer Notice" has the meaning assigned to such term
in Section
3.4(a).
"Transferred Securities" has the meaning assigned to such
term in
Section 3.4(a).
"Transferring Stockholder" has the meaning assigned to
such term in
Section 3.4(a).
"VCOC Funds" shall mean each Cypress Member and each
Goldman Member
which is intended to qualify as a "venture capital operating
company" within the
meaning of 29 C.F.R. Section 2510.3-101.
"Voting Securities" means, at any time, shares of any
class of capital
stock of the Company, which are then entitled to vote generally in
the election
of Directors.
SECTION 1.2. Other Definitional Provisions. (a) The words
"hereof,"
"herein" and "hereunder" and words of similar import when used in
this Agreement
shall refer to this
10
Agreement as a whole and not to any particular provision of this
Agreement, and
Article and Section references are to Articles and Sections,
respectively, of
this Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be
equally
applicable to both the singular and plural forms of such terms.
(c) Whenever the words "include," "includes" or
"including" are used
in this Agreement, they shall be deemed to be followed by the words
"without
limitation".
(d) 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.
ARTICLE II
CORPORATE GOVERNANCE
SECTION 2.1. Board Representation. Subject to Section
2.6, the Sponsor
Stockholders agree, as between themselves, as follows: (a) As of
the Effective
Date and, subject to the other provisions of this Article, for so
long as this
Section 2.1 remains in effect, the Board shall be comprised of (and
the Company
shall take all steps necessary so that the Board is comprised of)
up to eleven
(11) Directors of whom:
(i) three (3) members shall be designees of Cypress, one
(1) of which
shall be a designee of Cypress Onshore (such persons, the
"Cypress
Designees") and three (3) members shall be designees of
Goldman Onshore
(such persons, the "Goldman Designees" and, together with the
Cypress
Designees, the "Sponsor Stockholder Designees");
(ii) one (1) member shall be the Chief Executive Officer
of the
Company in office from time to time (the "CEO Designee"), who
shall
initially be James S. McElya; and
(iii) up to four (4) individuals mutually agreed upon by
Cypress and
Goldman.
(b) A designee of the Sponsor Stockholder holding
(together with its
Permitted Transferees) the greatest number of shares of Common
Stock (or, if
Cypress and Goldman hold an equal number of shares of Common Stock,
a designee
as shall be mutually agreed upon by Cypress and Goldman) shall be
designated as
the Chairman of the Board.
(c) In the event a Sponsor Stockholder shall cease to
have the right
to designate a Director in accordance with Section 2.6, such
Sponsor Stockholder
shall cause the designee of such Sponsor Stockholder to resign and
the Directors
remaining in office shall decrease the size of the Board to
eliminate such
vacancy and no consent under Section 2.3(a) shall be required in
connection with
such decrease.
11
(d) The Company shall reimburse each Sponsor Stockholder
Designee for
their reasonable out-of-pocket expenses incurred by them for the
purpose of
attending meetings of the Board or committees thereof.
(e) Each Sponsor Stockholder agrees that the board of
directors of
Cooper-Standard Automotive Inc. or its successor entity shall have
the same
number of directors and have the same representatives serving on
its board of
directors as the Board. The Company shall take all such actions
necessary as the
stockholder of Cooper-Standard Automotive Inc. or its successor
entity to cause
the board of directors of Cooper-Standard Automotive Inc. to
conform with the
requirements of this subclause (e).
(f) The rights of the Sponsor Stockholders pursuant to
this Section
2.1 are personal to the Sponsor Stockholders and shall not be
exercised by any
Transferee other than a Permitted Transferee of such Sponsor
Stockholder.
(g) The Sponsor Stockholders agree to vote all of their
Voting
Securities at any regular or special meeting of stockholders called
for the
purpose of filling positions on the Board, or in any written
consent executed in
lieu of such meeting, and agree to take all the actions necessary
to cause the
events described in clauses (a), (b) and (c) to occur.
SECTION 2.2. Committees. Subject to Section 2.6, so long
as a Sponsor
Stockholder has the right to designate at least one (1) Director
pursuant to
Section 2.1, the parties agree that (and the Company shall take all
steps
necessary so that) each executive committee, compensation
committee, audit
committee or other significant committee of the Board (including,
without
limitation, any committee performing the functions usually reserved
for the
committees described above) shall include at least one (1) of each
such Sponsor
Stockholder's designees; provided that the composition of each such
committee
shall reflect the relative number of Sponsor Stockholder Designees
for each
Sponsor Stockholder.
SECTION 2.3. Consent Rights. (a) In addition to any other
vote or
consent of the Board or the stockholders of the Company required by
law or the
Charter, subject to Section 2.6, the Company shall not take (or, to
the extent
applicable, permit any Subsidiary to take) any of the following
actions, or
enter into any arrangement or contract to do any of the following
actions,
without the consent in writing of each of Cypress and Goldman (such
consent
being the "Required Sponsor Stockholder Consent"), which shall be
necessary for
authorizing, effecting or validating such transactions:
(i) the selection, termination or removal of the Chief
Executive
Officer of the Company;
(ii) the incurrence by the Company or its Subsidiaries of
indebtedness
for borrowed money (including through capital leases, the
issuance of debt
securities or the guarantee of indebtedness of another Person)
other than
(A) the incurrence of trade payables arising in the ordinary
course of
operating the business, (B) borrowings under the Revolving
Credit Facility
of Cooper-Standard Automotive Inc. in effect as of the date
hereof (as
amended or refinanced from time to time) or (C) indebtedness
incurred
following the date hereof of up to $5,000,000 in the aggregate
(excluding
borrowings
12
referred in clause (B) herein and including debt securities
referred to in
clause (B) of Section 2.3(a)(iii));
(iii) any authorization or issuance of any securities of
the Company
(including in the IPO), other than (A) the issuance of
Reserved Employee
Shares, (B)(1) the issuance of any securities as consideration
in, or in
connection with, a transaction approved pursuant to Sections
2.3(a)(x),
(xiii) or (xv) or (2) debt securities permitted pursuant to
Section
2.3(a)(ii)(B) or (C) authorizations and issuances by
Subsidiaries to the
Company or wholly owned Subsidiaries of the Company;
(iv) any redemption, acquisition or other purchase of any
shares of
Common Stock other than from an employee in connection with
such employee's
termination of employment with the Company or any Subsidiary;
(v) any payment or declaration of any dividend on or
other
distribution in respect of any shares of Common Stock;
(vi) the creation of any non-wholly owned Subsidiaries,
or the
Transfer or any sale or other disposition of a Subsidiary's
securities to
any Person other than the Company or a wholly owned Subsidiary
of the
Company (other than any pledge of such Subsidiary's stock
pursuant to a
financing approved by the Board);
(vii) any transaction by the Company or any Subsidiary
with or
involving any Affiliate of the Company or any Affiliate of any
stockholder
of the Company that beneficially owns in excess of ten percent
(10%) of the
voting power of the Company other than any transaction between
the Company
or a wholly-owned Subsidiary of the Company, on the one hand,
and another
wholly-owned Subsidiary, on the other hand;
(viii) any amendment, repeal or alteration of the Charter
or the
Bylaws;
(ix) any increase or decrease in the size of the Board,
committees of
the Board, and boards and committees of Subsidiaries of the
Company (other
than increases or decreases in accordance with the other
provisions of this
Article II) and any creation of committees of the Board or of
the board of
directors of any Subsidiaries;
(x) any acquisition by the Company or any Subsidiary of a
substantial
portion of the stock, equity interests or assets of any Person
where the
value of the acquired assets is in excess of $5,000,000;
(xi) any change of the Company's auditor;
(xii) any compromise, settlement, waiver or release
relating to any
pending or threatened claim, action, suit, proceeding,
administrative
enforcement proceeding or arbitration proceeding before any
Governmental
Body or arbitrator (public or private) having a value in the
aggregate in
excess of $5,000,000 or that imposes non-monetary relief that
would be
materially adverse to the Company or any Subsidiary of the
Company;
13
(xiii) any (A) merger or consolidation of the Company
with or into any
other Person, (B) direct or indirect sale of all or
substantially all the
consolidated assets of the Company and its Subsidiaries or (C)
issuance of
shares of capital stock of the Company in a transaction or
series of
related transactions involving a Change of Control of the
Company;
(xiv) any disposition of assets of the Company or any
Subsidiary or
the capital stock or other equity interests of any Subsidiary
where the
value of the assets to be disposed (including liabilities to
be assumed or
transferred) is in excess of $5,000,000; and
(xv) any plan of liquidation, dissolution or the
commencement of
proceedings relating to bankruptcy, insolvency, reorganization
or relief of
debtors of the Company.
(b) In connection with any vote or action by written
consent of the
stockholders of the Company relating to any matter requiring
consent as
specified in Section 2.3(a), each Stockholder agrees, with respect
to any Voting
Securities beneficially owned by such Stockholder with respect to
which he or it
has the power to vote, to vote against (and not act by written
consent to
approve) such matter if such matter has not been approved by the
Required
Sponsor Stockholder Consent in accordance with Section 2.3(a).
SECTION 2.4. Available Financial Information. Subject to
Section 2.6,
until an IPO, the Company will furnish to each of the Sponsor
Stockholders
copies of the quarterly and annual "reports" containing financial
information,
in any case to the extent required, as of the Effective Date, to be
provided to
the holders of senior subordinated notes of Cooper-Standard
Automotive Inc.
under the indenture applicable to such notes (even if such notes
are no longer
outstanding), together with such other information as may be
requested by the
Sponsor Stockholders from time to time, it being understood and
agreed that the
public filing of such quarterly and annual "reports" with the
Securities and
Exchange Commission shall satisfy the foregoing requirements to
furnish such
information to each Sponsor Stockholder.
SECTION 2.5. Access. Subject to Section 2.6, the Company
shall, and
shall cause its Subsidiaries, and its and their respective
employees to provide
each Sponsor Stockholder (and, separately, each VCOC Fund), during
normal
business hours and upon reasonable notice reasonable access at
reasonable times
to its employees and facilities and to books and records. In
addition, with
respect to each VCOC Fund:
(a) Such VCOC Fund shall be entitled to routinely consult
with and
advise management of the Company with respect to operations of the
Company and
its direct and indirect Subsidiaries, including all the Company's
business and
financial matters and management's proposed annual operating plans,
and, if
requested by the VCOC Fund, management will meet periodically
during each year
with representatives of such VCOC Fund (the "Representatives") at
the Company's
facilities at mutually agreeable times for such consultation and
advice,
including to review progress in achieving such plans;
(b) Such VCOC Fund shall be entitled to receive from the
Company, as
soon as reasonably available after the end of each fiscal quarter,
consolidated
balance sheets of the
14
Company and its Subsidiaries as of the end of such period, and
consolidated
statements of income and cash flows of the Company and its
Subsidiaries for the
period then ended prepared in conformity with generally accepted
accounting
principles in the United States applied on a consistent basis,
except as
otherwise noted therein, and subject to the absence of footnotes
and to year-end
adjustments;
(c) During any period when such VCOC Fund does not have
the right to
appoint at least one member of the Board pursuant to Section 2.1,
to the extent
consistent with applicable law (and with respect to events which
require public
disclosure, only following the Company's public disclosure thereof
through
applicable securities law filings or otherwise), the right to be
informed by the
Company in advance with respect to any significant corporate
actions, including,
without limitation, extraordinary dividends, mergers, acquisitions
or
dispositions of assets, issuances of significant amounts of debt or
equity and
material amendments to the certificate of incorporation or bylaws
of the Company
and the right to consult with the Company with respect to such
actions; and
(d) Without limiting any of the other rights of a Sponsor
Stockholder
under this Agreement, the Company agrees to consider, in good
faith, the
recommendations of the VCOC Fund in connection with the matters on
which it is
consulted as described above.
SECTION 2.6. Termination and Modification of Rights. (a)
At such time
as any Sponsor Stockholder (together with its Permitted
Transferees) shall cease
to own a number of shares of Common Stock equal to (i) at least
twenty percent
(20%) of the issued and outstanding shares of Common Stock, the
Required Sponsor
Stockholder Consent of such Stockholder pursuant to Section 2.3(a)
(other than
with respect to clauses (vii), (xiii) and (xv)) shall not be
required and (ii)
at least fifteen percent (15%) of the issued and outstanding shares
of Common
Stock, the Required Sponsor Stockholder Consent of such Stockholder
pursuant to
Section 2.3(a)(vii), (xiii) and (xv) shall not be required;
(b) At such time as any Sponsor Stockholder (together
with its
Permitted Transferees) shall cease to own a number of shares of
Common Stock
equal to at least five percent (5%) of the issued and outstanding
shares of
Common Stock, such Stockholder shall cease to have the right to
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