Exhibit 10.14
PANOLAM HOLDINGS
CO.
STOCKHOLDERS
AGREEMENT
This
Stockholders Agreement (this “Agreement”) is made and
entered into by and among Panolam Holdings Co., a Delaware
corporation (the “Company”), the Persons who have
committed, subject to certain terms and conditions, to purchase
Common Shares (as defined below) on the Effective Date, whose names
appear on the signature pages of this Agreement under the caption
“Holders”, or who have executed, or who may in the
future execute, an Adoption Agreement in the form of Exhibit
“A” attached hereto (collectively, the
“Holders”) and, if applicable, the respective spouses
of the Holders.
1.
Introduction .
1.1 The
Company and the Holders believe that it is in their respective best
interests to restrict transfers of Shares. The Holders further
believe it is in their respective best interests (i) that for as
long as certain Holders hold a minimum amount of the Shares such
Holders shall be entitled to appoint members to the Board of
Directors of the Company as set forth herein, and (ii) to set forth
certain additional agreements relating to corporate governance
matters with respect to the Company.
1.2
Accordingly, in consideration of the mutual promises contained
herein, and subject to the terms and conditions herein set forth,
the parties hereto have entered into this Agreement.
2.
Certain Definitions . As used in this Agreement:
2.1 The
term “Acquisition Proposal” shall mean a bona fide
written proposal to a Holder for the acquisition of Shares by the
Person making such proposal.
2.2 The
term “Affiliate” as used herein, shall mean, with
respect to any Person, (i) any Person controlling, controlled by,
or under common control with such Person, and (ii) any stockholder,
partner, director or officer (and their respective Associates) of
such Person.
2.3 The
term “Approved Sale” shall mean (i) any Control
Disposition approved by the Required Two-Thirds Percentage in which
the transferee is an Independent Third Party or a Group of
Independent Third Parties or (ii) any transaction or a series of
related transactions, approved by the Required Two-Thirds
Percentage, involving transfer to an Independent Third Party or
Group of Independent Third Parties of all or substantially all of
the Company’s assets determined on a consolidated basis, and
pursuant to which, in either case, all Holders receive with respect
to their Shares (whether in such transaction or, with respect to an
asset sale, upon a subsequent liquidation) the same form and amount
of consideration per share of each class of Shares or, if any
Holders are given an option as to the form and amount of
consideration to be received, all Holders are given the same
option.
2.4 The
term “Associate” shall mean with respect to any
individual Holder, (i) any Other Permitted Transferee of such
individual Holder, (ii) any Estate Planning Entity of such
individual Holder and (iii) the legal representative or guardian of
such individual Holder or of any Other Permitted Transferee of such
individual Holder appointed during his or her lifetime and not as a
result of death.
2.5 The
term “Board” shall mean the Board of Directors of the
Company or, unless otherwise specifically stated, any duly
authorized committee thereof. All determinations required pursuant
to the terms of this Agreement to be made by the Board shall be
conclusive and binding on the Company and the Holders. In any case
where any action or determination of the Board is required with
respect to an Offer by a particular Offeror or a proposed
Disposition by a Holder, such action must be approved by a majority
of the members of the Board who are not Related Persons of such
Offeror or Holder, as the case may be.
2.6 The
term “Capital Stock” shall mean Common Shares and any
shares of preferred stock or other equity securities of the Company
now or hereafter authorized.
2.7 The
term “Cause” shall mean the commission of an act
involving the reckless disregard of one’s duties to the
Company, willful misconduct, fraud or the indictment for or
conviction of any felony under any applicable United States
federal, state or other statute.
2.8
[Intentionally omitted]
2.9 The
term “Code” shall mean Internal Revenue Code of 1986,
as amended, or any successor statute.
2.10 The term
“Common Shares” shall mean any shares (whether voting
or non voting) of any class of common stock of the Company now or
hereafter authorized.
2.11 The term
“control,” including the correlative terms
“controlling,” “controlled by,” and
“under common control with,” shall mean the possession,
directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person (whether
through ownership of securities or any partnership or other
ownership interest, by contract or otherwise).
2.12 The term
“Control Disposition” shall mean a proposed Disposition
or series of Related Dispositions that would have the effect of
transferring to any transferee or group (as defined for purposes of
Section 13d-3 of the Exchange Act) of Persons (a
“Group”) beneficial ownership (as defined in Rule 13d-3
of the Exchange Act) of a number of outstanding Common Shares that,
after giving effect to such proposed Disposition or series of
Related Dispositions would result in such transferee or Group
having beneficial ownership, directly or indirectly, of 50% or more
of the then outstanding Common Shares on a fully-diluted basis
(after giving effect to any then exercisable right to acquire
Common Shares).
2.13 The term
“Designated Director” shall mean a director of the
Company who has not been removed as a director of the Company for
Cause and is a designee of an Eligible Designated Holder Group as
provided in this Agreement.
2
2.14 The term
“Designated Holder Group” shall mean each of (i) the
Genstar Holders Group, so long as any Holder is included therein,
(ii) the Sterling Partners Holders Group, so long as any Holder is
included therein, and (iii) the Sterling Parallel Holders Group, so
long as any Holder is included therein.
2.15 The term
“Dispose,” including the correlative terms
“Disposed” and “Disposition,” shall mean
any direct or indirect transfer, assignment, sale, gift, pledge,
hypothecation or other encumbrance, or any other disposition of
Shares (or any interest therein) or of all or part of the voting
power (other than the granting of a revocable proxy) associated
with the Shares (or any interest therein) whatsoever, or any other
transfer of beneficial ownership of Shares whether voluntary or
involuntary, including, without limitation (i) as a part of any
liquidation of the Holder’s assets or (ii) as a part of any
reorganization of a Holder pursuant to the United States or other
bankruptcy law or other similar debtor relief laws.
2.16 The term
“Effective Date” shall mean the date of the closing of
the Panolam Acquisition.
2.17 The term
“Eligible Designated Holder Group” shall mean each of
(i) the Genstar Holders Group, so long as the Holders included in
the Genstar Holders Group own in the aggregate at least the Minimum
Ownership Percentage; (ii) the Sterling Partners Holders Group, so
long as the Holders included in the Sterling Partners Holders Group
own in the aggregate at least the Minimum Ownership Percentage and
(ii) the Sterling Parallel Holders Group, so long as the Holders
included in the Sterling Parallel Holders Group own in the
aggregate at least the Minimum Ownership Percentage.
2.18 The term
“Eligible Offerees” shall mean the Company and (i) for
the purposes of Section 3.1, the Holders included in a Designated
Holder Group other than the Offeror; (ii) for the purposes of
Section 3.2, the Holders included in a Designated Holder Group
other than the Divorced Holder; (iii) for the purposes of Section
3.3, the Holders included in a Designated Holder Group other than
the Surviving Holder; and (iv) for the purpose of Section 3.4, the
Holders included in a Designated Holder Group other than the Holder
required to make the Offer.
2.19 The term
“Engagement Letter” shall mean that certain Engagement
Letter dated as of the Effective Date among the Company and the
sponsors named therein, as amended from time to time in accordance
with the terms thereof and this Agreement.
2.20 The term
“Equivalent Value” shall mean substantially equivalent
value as determined by the Board acting with reasonable diligence
and in good faith; provided, however, that the Board, in its sole
and absolute discretion, may (but shall not be required to) cause
the Company to retain an independent investment banking firm,
consulting firm, accounting firm or other professionally capable
entity to determine the Equivalent Value as of a date specified by
the Board and the Equivalent Value as so determined shall be deemed
to be the Equivalent Value for purposes hereof.
2.21 The term
“Estate Planning Entity” with respect to any individual
Holder shall mean any intervivos trust, limited partnership,
corporation or limited liability company that, at the time of the
Disposition of Shares to such intervivos trust, limited
partnership, corporation or limited
3
liability company, is
entirely owned beneficially and of record by: (i) such individual
Holder, and/or (ii) such individual Holder’s Other Permitted
Transferees; and/or (iii) any one (1) or more intervivos trusts,
limited partnerships, corporations or limited liability companies
that is or are entirely owned beneficially and of record by such
individual Holder and/or any of such individual Holder’s
Other Permitted Transferees, or (iv) any one (1) or more Persons or
entities named in clauses (i), (ii) or (iii) above.
2.22 The term
“Exchange Act” shall mean the Securities Exchange Act
of 1934, as amended, and the rules and regulations
thereunder.
2.23 The term
“Genstar Holders Group” shall mean, at any particular
time, all of the following that are Holders at such time: (i)
Genstar Capital Partners IV, L.P., (ii) Stargen IV, L.P., (iii) any
Permitted Transferee of Genstar Capital Partners IV, L.P. or
Stargen IV, L.P. and (iv) any Permitted Transferee of a Holder then
included in the Genstar Holders Group; provided, however, that any
Permitted Transferee under Section 6.1 of this Agreement that is at
the time of such transfer then included in another Designated
Holder Group shall not be included in the Genstar Holders
Group.
2.24 The term
“Genstar Holders Voting Representative” shall mean
Jean-Pierre Conte or any successor to Mr. Conte approved as a
successor Genstar Holders Voting Representative by Majority
Approval of the Holders then included in the Genstar Holders Group
as designated in written notice by such Holders to the Company and
the other Voting Representatives.
2.25 The term
“Independent Third Party” shall mean any Person that,
immediately prior to the contemplated transaction, (i) does not own
in excess of 5% of the then-outstanding Common Shares, on an as-if
converted basis, and (ii) is not an Associate or Affiliate of any
such 5% owner of the then-outstanding Common Shares, on an as-if
converted basis.
2.26 The term
“Initial Public Offering” shall mean an underwritten
public offering of Common Shares pursuant to a registration
statement filed under the Securities Act after the Effective Date
wherein the aggregate net proceeds (after deducting all costs,
discounts, commissions and other expenses of the offering) to the
Company are at least $100 million; provided, however, that the term
“Initial Public Offering” shall not include any
registration statement or prospectus (i) relating to any capital
stock of the Company or options, warrants or other rights to
acquire any such capital stock issued or granted or to be issued or
granted primarily to directors, officers or employees of the
Company, (ii) filed pursuant to Rule 145 under the Securities Act
or any successor or similar provision, (iii) relating to any
employee benefit plan or interests therein, or (iv) relating solely
to any shares of preferred stock or debt securities of the
Company.
2.27 The term
“Majority Approval” shall mean the vote, consent or
approval of the Holders included in a Designated Holder Group then
holding a majority of the Shares held by all Holders included in
such Designated Holder Group.
2.28 The term
“Minimum Ownership Percentage”, as to the Holders
included in any Designated Holder Group at any particular time,
shall mean at least 50% of the number of Shares initially issued to
the Holders included in such Designated Holder Group as of the
Effective
4
Date as set forth on
the signature page(s) of this Agreement beside the caption
“Common Shares To Be Owned at Effective Date” beside
the name of such Designated Holder Group.
2.29 The term
“Offer” shall mean any Offer as defined in Sections
3.1, 3.2, 3.3 or 3.4.
2.30 The term
“Other Permitted Transferee” shall mean with respect to
any Holder who is an individual and not an entity:
(i)
any individual Person related by lineal consanguinity to such
Holder or to the spouse of such Holder;
(ii) the
spouse of such Holder or of any Person described in clause (i)
above; and
(iii) all
individual Persons related to those Persons described in clause (i)
or clause (ii) by lineal consanguinity.
For purposes of this
definition of Other Permitted Transferee (i) adopted individual
Persons shall be considered the natural born child of their
adoptive parents; and (ii) lineal consanguinity is that
relationship that exists between individual Persons of whom one is
descended (or ascended) in a direct line from the other, as between
son, father, grandfather, great-grandfather.
2.31 The term
“Panolam Acquisition” shall mean the Company’s
acquisition of Panolam Industries Holdings, Inc., a Delaware
corporation (“Panolam”), and its subsidiaries pursuant
to the terms, and subject to the conditions, of the Agreement and
Plan of Merger dated as of July 16, 2005 by and among the Company,
PIH Acquisition Co., a Delaware corporation, Panolam and TC Group,
L.L.C., a Delaware limited liability company (the “Merger
Agreement”).
2.32 The term
“Permitted Transferee” shall mean any Person to which
Shares may be transferred pursuant to Sections 6.1, 6.3, 6.4, 6.5,
6.6 or 6.9 of this Agreement.
2.33 The term
“Person” shall mean an individual, corporation, joint
venture, association, partnership, limited partnership, limited
liability partnership, limited liability company, trust, business
or charitable organization, governmental or quasi-governmental
authority or legal entity of any kind.
2.34 The term
“Purchase Price” shall mean (i) with respect to the
purchase of the Shares Subject to the Offer under Section 3.1, the
price per share set forth in the Acquisition Proposal, subject to
adjustment pursuant to Section 4.5; and (ii) with respect to the
purchase of Shares by a Divorced Holder from a Divorced Spouse
under Section 3.2, by a Surviving Holder from the estate or any
heir or legatee of a Deceased Spouse under Section 3.3, or by the
Company or any Eligible Offeree pursuant to any other provision of
this Agreement, the Fair Market Value (as defined below) of the
Shares as determined on a per share basis pursuant to this Section
2.34. For the purposes of this Section 2.34, “Fair Market
Value” shall be determined by the Board acting with
reasonable diligence and in good faith based on a sale of the
entire Company as a going concern negotiated at arm’s length
between a willing buyer and a willing seller, without taking into
account any discount or illiquidity or minority interests;
provided, however, that the Board may, in
5
its sole and absolute
discretion (but shall not be required to) cause the Company to
retain an independent investment banking firm, consulting firm,
accounting firm or other professionally capable entity to determine
the Fair Market Value as of a date specified by the Board after the
first anniversary of the Effective Date (the “Independent
Appraisal”) and the Fair Market Value as determined by
Independent Appraisal shall be deemed to be the Fair Market Value
for purposes hereof for the 12 months following the date as of
which such Fair Market Value was so determined. Neither the Company
nor any director, officer or employee thereof shall have any
liability with respect to the valuation of any Shares bought or
sold at the Purchase Price, as determined pursuant to this Section
2.34, even though the Fair Market Value and the Purchase Price as
so determined may be more or less than the actual fair market value
thereof.
2.35 The term
“Registration Rights Agreement” shall mean that certain
Registration Rights Agreement effective as of the Effective Date
among the Company and the other parties named therein, including
the Holders executing this Agreement, as amended from time to time
in accordance with such agreement.
2.36 The term
“Related Disposition” shall mean a Disposition or
series of Dispositions of Common Shares or rights to acquire Common
Shares by the Company and/or one (1) or more holders of Common
Shares to any Person or Group (i) within any 180-day period or (ii)
pursuant to a common agreement or plan of disposition among the
sellers, whether written or oral.
2.37 The term
“Related Person” shall mean, as to any Offeror or
Holder, any Person that (i) is such Offeror or Holder, (ii) is an
Affiliate of such Offeror or Holder, (iii) is an Associate of such
Offeror or any of its Affiliates, or (iv) has been designated
pursuant to Section 12.1 as a member of the Board by the Designated
Holder Group in which such Holder or any of its Associates,
Affiliates or Permitted Transferees is included under this
Agreement.
2.38 The term
“Required Two-Thirds Percentage” shall mean, at any
particular time, 66 2 /
3 % or more of the
Common Shares outstanding and subject to this Agreement at such
time. The Voting Representative for each Designated Holder Group
shall be exclusively authorized to act on behalf of and as directed
by each Holder included in such Designated Holder Group with
respect to any matter requiring the consent, vote or approval of
the Required Two-Thirds Percentage.
2.39 The term
“Securities Act” shall mean the Securities Act of 1933,
as amended.
2.40 The term
“Shares” shall mean (i) all Capital Stock owned
(beneficially or of record) by a Holder at the Effective Date after
giving effect to the closing of the Panolam Acquisition or at the
time a Holder adopts this Agreement pursuant to the terms hereof;
(ii) all Capital Stock hereafter issued by the Company to or
acquired by any Holder, whether beneficially or of record or in
connection with a purchase, issuance, grant, stock split, stock
dividend, reorganization, warrant, option, convertible security,
right to acquire or otherwise; and (iii) all securities of the
Company or any other corporation or entity which any Holder
acquires (whether beneficially or of record) in respect of his, her
or its Capital Stock in connection with any exchange, merger,
amalgamation, consolidation, recapitalization, reorganization or
other
6
transaction to which
the Company is a party. All references herein to the Shares owned
by a Holder include the community interest or similar marital
property interest, if any, of the spouse of such Holder in such
Shares.
2.41 The term
“Shares Subject to the Offer” shall mean (i) with
respect to an Offer under Section 3.1, all Shares subject to an
Acquisition Proposal, (ii) with respect to an Offer under Section
3.2, all Shares transferred to, retained by, or vested in the
Divorced Spouse (as defined therein) and not elected to be
purchased by the Divorced Holder (as defined therein) within the
time limits specified therein, (iii) with respect to an Offer under
Section 3.3, all Shares vesting in or transferable to any heir or
legatee of the Deceased Spouse (as defined therein) other than the
Surviving Holder (as defined therein) and not elected to be
purchased by the Surviving Holder within the time limits specified
therein, and (iv) with respect to an Offer under Section 3.4, all
Shares owned by the Holder making such Offer.
2.42 The term
“Sterling Partners Holders Group” shall mean, at any
particular time, all of the following that are Holders at such
time: (i) Sterling Group Partners II, L.P., (ii) any Permitted
Transferee of Sterling Group Partners II, L.P. and (iii) any
Permitted Transferee of a Holder then included in the Sterling
Partners Holders Group; provided, however, that any Permitted
Transferee under Section 6.1 of this Agreement that is at the time
of such transfer included in another Designated Holder Group shall
not be included in the Sterling Partners Holders Group.
2.43 The term
“Sterling Parallel Holders Group” shall mean, at any
particular time, all of the following that are Holders at such
time: (i) Sterling Group Partners II (Parallel), L.P., (ii) any
Permitted Transferee of Sterling Group Partners II (Parallel), L.P.
and (iii) any Permitted Transferee of a Holder then included in the
Sterling Parallel Holders Group; provided, however, that any
Permitted Transferee under Section 6.1 of this Agreement that is at
the time of such transfer included in another Designated Holder
Group shall not be included in the Sterling Parallel Holders
Group.
2.44 The term
“Sterling Partners Holders Voting Representative” shall
mean William C. Oehmig or any successor to William C. Oehmig
approved as a successor Sterling Partners Holders Voting
Representative by Majority Approval of the Holders then included in
the Sterling Partners Holders Group as designated by written notice
by such Holders to the Company and the other Voting
Representatives.
2.45 The term
“Sterling Parallel Holders Voting Representative” shall
mean William C. Oehmig or any successor to William C. Oehmig
approved as a successor Sterling Parallel Holders Voting
Representative by Majority Approval of the Holders then included in
the Sterling Parallel Holders Group as designated by written notice
by such Holders to the Company and the other Voting
Representatives.
2.46 The term
“Voting Representative” shall mean each of the Genstar
Holders Voting Representative, the Sterling Partners Holders Voting
Representative and the Sterling Parallel Holders Voting
Representative at the time designated as such hereunder.
7
3.
Transfer Restrictions . No Holder shall make any Disposition
of any Shares, directly or indirectly (regardless of the manner in
which Holder initially acquired Shares), without compliance with
the provisions of this Agreement.
3.1
Acquisition Proposal . If any Holder desires, and is
permitted under Section 8, to make a Disposition of any Shares
(except for Dispositions of Shares in accordance with Sections 3.2
through 3.4 or pursuant to the applicable provisions of Section 6),
such Disposition may be made only if an Acquisition Proposal is
received by such Holder with respect thereto, and then only in
compliance with this Agreement. Upon receipt of an Acquisition
Proposal that a Holder is permitted hereunder to accept and desires
to accept, such Holder (“Offeror”) shall (i) make an
offer (“Offer”), by giving written notice to the
Company, to sell the Shares Subject to the Offer to the Eligible
Offerees for the Purchase Price, and (ii) deliver a Disposition
Notice (as defined below) to all other Holders pursuant to Section
9. Offers under this Section 3.1 shall (i) be irrevocable for so
long as any Eligible Offeree has the right to purchase any Shares
Subject to the Offer, (ii) be sent by the Offeror to the Company,
which in turn shall deliver copies thereof to the Eligible Offerees
within 10 days after receipt thereof, (iii) state the consideration
for and the number of Shares Subject to the Offer, (iv) contain a
description of and a copy of the Acquisition Proposal and (v) be
subject to the terms and conditions of Section 4. In addition, the
Offeror shall provide to the Company all other information with
respect to the Acquisition Proposal and the proposed transferee
reasonably requested by the Company in order to enable it to
evaluate the Acquisition Proposal and verify the bona fide nature
thereof.
3.2
Divorce of Holder . If the marital relationship of a Holder
(“Divorced Holder”) with the Divorced Holder’s
spouse (“Divorced Spouse”) is terminated by divorce,
and pursuant to such divorce or any property settlement in
connection with such divorce, Shares previously registered in the
name of the Divorced Holder or any community property interest,
similar marital property interest or other interest therein is
transferred to, retained by or vested in the Divorced Spouse (such
Shares or interest therein so transferred to, retained by or vested
in the Divorced Spouse being referred as the “Divorced
Spouse’s Share Interest”), the Divorced Holder shall
promptly give written notice to the Company of such event
containing the name and address for purposes of notice of the
Divorced Spouse (“Divorce Notice”). Within 60 days
after receipt of the Divorce Notice by the Company, the Board shall
determine or cause to be determined the Fair Market Value of the
Divorced Spouse’s Share Interest for purposes of determining
the Purchase Price and deliver written notice thereof to the
Divorced Holder and the Divorced Spouse (“Divorce FMV
Notice”). The Divorced Holder shall have the option to
purchase all or any portion of the Divorced Spouse’s Share
Interest for the Purchase Price, and the Divorced Spouse shall be
obligated to sell such Divorced Spouse’s Share Interest to
the Divorced Holder for the Purchase Price. Such option must be
exercised, and the purchase consummated, within 30 days after the
later of (i) the entry by a court of a final order, judgment or
decree not subject to appeal awarding the ownership of the Divorced
Spouse’s Share Interest to the Divorced Spouse and divesting
the Divorced Holder of all right, title and claim thereto, or (ii)
delivery of the Divorce FMV Notice to the Divorced Holder and the
Divorced Spouse. The option shall be exercised by the giving of
written notice of exercise to the Divorced Spouse. The Divorced
Holder shall, within 5 days after the expiration of such option
period, deliver written notice to the Company as to whether the
Divorced Holder has purchased all of the Divorced Spouse’s
Share Interest. If such notice states that the Divorced Holder has
not purchased all of the Divorced Spouse’s Share Interest, or
no such notice is delivered to the Company within the time
required, the Divorced Spouse shall be deemed
8
to have made an
irrevocable offer (“Offer”) to sell all of the Divorced
Spouse’s Share Interest not purchased by the Divorced Holder
to the Eligible Offerees for the Purchase Price. The Company shall,
and is authorized by the Holders and their respective spouses to,
deliver, within 5 days after the Company’s receipt of such
notice (if such notice is delivered within the time required) or
evidence satisfactory to it that all such Divorced Spouse’s
Share Interest was not purchased by the Divorced Holder within such
option period (if such notice is not delivered within the time
required), written notice of the Offer to the Eligible Offerees
stating that all such Divorced Spouse’s Share Interest not
purchased by the Divorced Holder are Shares Subject to the Offer
pursuant to this Section 3.2. Offers under this Section 3.2 shall
(i) be irrevocable for so long as any Eligible Offeree has the
right to purchase any Shares Subject to the Offer and (ii) be
subject to the terms and conditions of Section 4.
3.3
Death of Spouse . If the spouse of a Holder dies (such
spouse, the “Deceased Spouse”), and all or any portion
of the Shares registered in such name of such Holder (the
“Surviving Holder”) or any interest therein vests in or
is transferable to any heir or legatee of the Deceased Spouse other
than the Surviving Holder (such Shares or interest therein vesting
in or transferable to any heir or legatee of the Deceased Spouse
other than the Surviving Holder being referred to herein as the
“Passing Share Interest”), the Surviving Holder shall
promptly give written notice to the Company of such event,
containing the name(s) and address(es) for purposes of notice of
the estate of the Deceased Spouse and each heir or legatee in or to
which any portion of the Passing Share Interest has vested or is
transferable (the “Passing Interest Notice”). Within 60
days after receipt of the Passing Interest Notice by the Company,
the Board shall determine or cause to be determined the Fair Market
Value of the Passing Share Interest for purposes of determining the
Purchase Price and deliver written notice thereof to the Surviving
Holder, the estate of the Deceased Spouse and the heirs and
legatees identified in the Passing Interest Notice (“Deceased
FMV Notice”). The Surviving Holder shall have the option to
purchase all or any portion of the Passing Share Interest for the
Purchase Price, and the estate of the Deceased Spouse shall be
obligated to sell the Passing Share Interest to the Surviving
Holder for the Purchase Price. Such option must be exercised by the
Surviving Holder, and the purchase consummated, within 30 days
after the last to occur of (i) the entry of an order of a probate
or similar court having jurisdiction over the estate of the
Deceased Spouse (a) admitting to probate the will of the Deceased
Spouse, and (b) determining the heirs of the Deceased Spouse if the
Deceased Spouse is determined to have died intestate, (ii) the
appointment of the executor, administrator or legal representative
of the estate of the Deceased Spouse, and (iii) the delivery of the
Deceased FMV Notice to the Surviving Holder and the estate of the
Deceased Spouse. The option shall be exercised by the giving of
written notice of exercise to the executor, administrator or legal
representative of the Deceased Spouse’s estate. The Surviving
Holder shall, within 5 days after the expiration of such 30-day
period, deliver written notice to the Company as to whether the
Surviving Holder has purchased all of the Passing Share Interest.
If such notice states that the Surviving Holder has not purchased
all such Passing Share Interest, or no such notice is delivered to
the Company within the time required, then the estate of the
Deceased Spouse and all such heirs and legatees shall be deemed to
have made an irrevocable offer (“Offer”) to sell all of
such Passing Share Interest not purchased by the Surviving Holder
to the Eligible Offerees for the Purchase Price. The Company shall,
and is authorized by the Holders and their respective spouses to,
deliver, within 5 days after the Company’s receipt of such
notice (if such notice is delivered within the time required) or
evidence satisfactory to it that all such Passing Share Interest
was not purchased by the Surviving Holder within such 30-day period
(if such notice is not delivered within the time required), written
notice
9
of the Offer to the
Eligible Offerees stating that all such Passing Share Interest not
purchased by the Surviving Holder are Shares Subject to the Offer
pursuant to this Section 3.3. Offers under this Section 3.3 shall
(i) be irrevocable for so long as any Eligible Offeree has the
right to purchase any Shares Subject to the Offer and (ii) be
subject to the terms and conditions of Section 4.
3.4
Bankruptcy . If any of the following occur:
(i)
any Holder (a) is adjudicated as bankrupt or insolvent, (b)
consents to or does not contest the appointment of a receiver or
trustee for such Holder or for all or any part of such
Holder’s property, (c) files a petition seeking relief under
the bankruptcy, rearrangement, reorganization or other debtor
relief laws of the United States or any state or other competent
jurisdiction, (d) makes a general assignment for the benefit of
such Holder’s creditors, or (e) becomes insolvent,
or
(ii) (a)(1)
if a petition is filed against a Holder seeking relief under the
bankruptcy, rearrangement, reorganization or other debtor relief
laws of the United States or any state or other competent
jurisdiction, or (2) a court of competent jurisdiction enters an
order, judgment or decree appointing a receiver or trustee for a
Holder, or for any part of such Holder’s property, and (b)
such petition, order, judgment or decree is not discharged or
stayed within a period of 60 days after its entry;
then any such event
shall be deemed an irrevocable “Offer” to sell all of
the Shares owned by such Holder to the Eligible Offerees at the
Purchase Price, and such Holder shall promptly notify the Company
of such event. The Company shall, and is authorized by the Holders
and their respective spouses to, deliver, within 60 days after the
Company’s receipt of such notice (if such notice is
delivered) or evidence satisfactory to it that any such event
occurred (if such notice is not delivered), written notice of the
Offer to the Eligible Offerees and such Holder stating that all
such Shares are Shares Subject to the Offer pursuant to this
Section 3.4 and containing a statement of Fair Market Value of such
Shares for purposes of determining the Purchase Price. Offers under
this Section 3.4 shall (i) be irrevocable for so long as any
Eligible Offeree has the right to purchase any Shares Subject to
the Offer and (ii) be subject to the terms and conditions of
Section 4.
4.
Procedures; Price .
4.1
Company . The Company shall have the first right, for 10
days after its receipt of an Offer made pursuant to Section 3.1,
3.2, 3.3 or 3.4, to accept the Offer for all or any portion of the
Shares Subject to the Offer.
4.2
Eligible Offerees . If the Company does not accept the Offer
with respect to all of the Shares Subject to the Offer within the
10-day period specified in Section 4.1, the Company shall give
written notice thereof not later than the end of such 10-day period
to the other Eligible Offerees. The other Eligible Offerees shall
have the right, for 10 days after the receipt of such notice from
the Company (the “Election Period”), to accept the
Offer for all or any portion of the Shares Subject to the Offer not
purchased by the Company (the “Available Shares”) in
such proportions as they mutually agree, or if they are unable to
agree, each of such Eligible Offerees shall have the right to
accept the Offer for a number of Available Shares equal to the
lesser of (i)
10
the number of the
Available Shares for which such Eligible Offeree elects to accept
the Offer or (ii) the number of Available Shares obtained by
multiplying the number of the Available Shares by a fraction (x)
the numerator of which is the number of Shares owned by such
Eligible Offeree and (y) the denominator of which is the number of
Shares owned by all such other Eligible Offerees (such fraction
being referred to herein as the “Proportionate Share”).
If any such Eligible Offeree does not elect to accept the Offer for
its Proportionate Share of the Available Shares, each other such
other Eligible Offeree which elects to accept the Offer for at
least its Proportionate Share shall then be allocated a portion of
the Available Shares equal to the lesser of (i) the excess of the
number of Available Shares for which such Eligible Offeree elected
to accept the Offer over the number theretofore allocated to such
Eligible Offeree and (ii) the number obtained by multiplying the
number of the Available Shares by a fraction (x) the numerator of
which is the number of Shares owned by such Eligible Offeree and
(y) the denominator of which is the number of Shares owned by all
such Eligible Offerees who have not theretofore been allocated the
maximum number of Available Shares as to which they have elected to
accept the Offer. Such allocation procedure shall be repeated
reiteratively until either each such other Eligible Offeree shall
have been allocated the maximum number of Available Shares as to
which it has elected to accept the Offer or all Available Shares
are allocated.
4.3
Certain Effects of Offers . If the Eligible Offerees do not
accept an Offer for all of the Shares Subject to the Offer, and
such Offer has been made under Section 3.1, the Offeror desiring to
make the Disposition pursuant to Section 3.1 shall be permitted,
subject to compliance with Sections 5, 8, and 9, at any time or
times within 60 days after the expiration of all rights of the
Eligible Offerees to accept such Offer or to include Shares in the
Disposition pursuant to Section 9, to make a Disposition of all
(but not less than all) of the Shares Subject to the Offer;
provided, however, that no such Disposition shall be made at a
lower price, on more favorable terms or to any Person other than as
specified in the Acquisition Proposal. All Shares transferred in
accordance with the terms of this Agreement to any third party or
to any Eligible Offeree (other than the Company), and all Shares
Subject to the Offer pursuant to Section 3.1 and remaining unsold
after such 60-day period, and all Shares Subject to the Offer under
Sections 3.2 through 3.4 (unless acquired by the Company) shall
remain subject to the terms of this Agreement. Any such third party
transferee shall execute and deliver to the Company an Adoption
Agreement as provided in Section 7.
4.4
Acceptance; Closing . Eligible Offerees who accept an Offer
as to all or any portion of the Shares Subject to the Offer shall
evidence their acceptance by delivering, within 10 days after
receipt of the notice pursuant to Section 4.2 from the Company, to
the Offeror or other transferor a written notice of intent to
purchase such Shares Subject to the Offer (“Acceptance
Notice”). The closing of the acquisitions of Shares Subject
to the Offer by Eligible Offerees shall be consummated within 30
days following the delivery of the Acceptance Notice. In the case
of all acquisitions of Shares Subject to the Offer by Eligible
Offerees, such acquisitions shall be consummated at a closing held
at the principal offices of the Company (unless otherwise mutually
agreed), at which time the Purchase Price (if cash, in the form of
a cashier’s check) shall be delivered to the transferor of
the Shares or the transferor’s representative and the
transferor or the transferor’s representative shall deliver
to the Eligible Offeree(s) purchasing such shares certificates
representing all of the Shares Subject to the Offer, duly endorsed
for transfer or accompanied by duly executed stock powers, evidence
of good title to the Shares Subject to the Offer and the absence of
liens, encumbrances and adverse claims with respect thereto and
such other matters as
11
are necessary for the
proper transfer of the Shares Subject to the Offer to the acquiring
Eligible Offeree(s) on the securities register of the
Company.
4.5 Form
of Payment . The Purchase Price of any Shares Subject to the
Offer purchased by Eligible Offerees pursuant to an Offer made
under Section 3.1 shall be on such terms as contemplated by the
Acquisition Proposal; provided, however, that if the party which
has made the Acquisition Proposal has proposed to acquire Shares
Subject to the Offer for consideration not wholly in cash, then any
Eligible Offeree who desires to consummate the acquisition(s) of
Shares Subject to the Offer (pursuant to the terms hereof) shall
consummate such acquisition wholly in cash. In such a case, the
Board shall determine the per share cash value of the Acquisition
Proposal, and such amount shall be the cash price per share to be
paid to the Offeror by any Eligible Offeree. The Purchase Price of
all Shares Subject to the Offer pursuant to an Offer made under
Sections 3.2 through 3.4 shall be paid in the form of a
cashier’s check or such other form as is mutually
acceptable.
5.
Material Agreements . Notwithstanding anything herein to the
contrary, no Holder shall make any Disposition of Shares (including
but not limited to a Disposition pursuant to Sections 3 or 6
hereof) which, in the Company’s reasonable judgment (as
evidenced by a resolution of the Board), would cause a material
breach, event of default, default or acceleration of payments or
which would require the Company to make any mandatory repurchase
offer, mandatory repurchase, mandatory redemption or mandatory
prepayment, under any loan agreement, note, indenture or other
agreement or instrument to which the Company or any of its direct
or indirect subsidiaries is a party and under which the
indebtedness or liability of the Company or any of its direct or
indirect subsidiaries exceeds $5 million (“Material
Agreement”); provided, however, that the Company has the sole
right to, and may in its discretion (as evidenced by a resolution
of the Board), waive the application and requirements of this
Section 5. Therefore, each Holder desiring or required to make a
Disposition shall, prior to attempting to effect any such
Disposition, (i) give written notice (which may be the Offer
required under Section 3.1, the Divorce Notice under Section 3.2,
the Passing Interest Notice under Section 3.3 or the notice by a
Holder to the Company under Section 3.4, if applicable)
(“Notice”) to the Company describing the proposed
Disposition and the proposed transferee in sufficient detail,
setting forth the number of Shares as to which such Holder desires
or is required to make a Disposition, and (ii) provide such other
information concerning the Disposition as the Company reasonably
requests. If, in the Company’s reasonable judgment (as
evidenced by a resolution of the Board), the proposed Disposition
would cause a material breach, event of default, default or
acceleration of payments or which would require the Company or any
of its direct or indirect subsidiaries to make any mandatory
repurchase offer, mandatory repurchase, mandatory redemption or
mandatory prepayment, under any Material Agreement and the
application of this Section 5 is not waived by the Company as
provided above, then the Company within 20 days after receipt of
the Notice, shall give written notice to such Holder of such
determination, the proposed Disposition may not be made, and any
attempt to make such Disposition shall be null and void; provided,
however, that any such determination by the Company shall not
prevent such Holder from making a subsequent Disposition to
Eligible Offerees or third parties upon compliance with all of the
terms and conditions of this Agreement with respect to such
Disposition, including the terms and conditions of this Section 5.
If the Company approves such Disposition and any Shares with
respect to which approval has been given are not actually
transferred within 60 days from the date of such approval, then all
of the
12
provisions of this
Agreement shall apply to any subsequent transaction affecting such
Shares or any interest therein.
6.
Permitted Dispositions . The following Dispositions shall be
permitted without compliance with the provisions of Sections 3, 4
and 9; however, Sections 5 and 8 shall apply to the following
Dispositions:
6.1 between
Holders;
6.2 by any
Holder to the Company;
6.3 by any
Holder which is a trust, partnership, limited partnership,
corporation or limited liability company to any entity that
controls, or is controlled by, or is under common control with such
Holder, or to any Holder from any entity that controls, or is
controlled by, or is under common control with such
Holder;
6.4 by any
individual Holder during such Holder’s lifetime to any of
such Holder’s Associates, provided that a Disposition to a
Holder’s spouse under this Section 6.4 must be made during
marriage and not incident to divorce; and provided further, that
any such transferee as granted the voting rights to the
transferring Holder required below;
6.5 to any
individual Holder during such Holder’s lifetime by any of
such Holder’s Associates; provided that a Disposition by a
Holder’s spouse to such Holder under this Section 6.5 must be
made during marriage and not incident to divorce;
6.6 upon
the death of any individual Holder, to the estate, beneficiaries,
heirs or legatees of such Holder;
6.7
by:
(i)
any Holder at the then current Purchase Price, to any individual
Person who becomes an employee of the Company or a direct or
indirect majority-owned subsidiary of the Company at the Effective
Date; provided that any such employee becomes a party to this
Agreement as provided below and is not included in a Designated
Holder Group;
(ii) any Holder at the then current Purchase
Price to any individual Person who becomes a non-employee director
of the Company or a direct or indirect majority-owned subsidiary of
the Company at the Effective Date; provided that such individual
Person becomes a party to this Agreement as provided below and is
not included in a Designated Holder Group;
6.8
[Intentionally omitted];
6.9 by any
Holder which is a trust, partnership, limited partnership,
corporation or limited liability company to the record owners of
such Holder, if any, or the beneficiaries of such Holder as a
distribution pursuant to law, the governing instrument or charter
of such Holder, or the dissolution of such Holder;
13
6.10 by any Holder in a
public sale or public distribution pursuant to such Holder’s
rights under any registration rights agreement to which the Company
is a party;
6.11 by any Holder to
any direct or indirect majority-owned subsidiary of the Company;
and
6.12 pursuant to
Sections 9 or 10;
provided, however, that
as a condition precedent to any such permitted Disposition (i)
(other than a Disposition pursuant to Sections 6.1, 6.2 or 6.11),
any Person (including any such individual Person’s spouse, if
any) intending to acquire the Shares to be Disposed of shall become
a party to this Agreement by executing an Adoption Agreement in the
form of Exhibit “A” attached hereto or in any other
form having substantially the same effect satisfactory to the
Company (an “Adoption Agreement”), whereupon such
Person shall be deemed a “Holder,” and shall have all
of the rights and obligations of a “Holder,” under this
Agreement, and such Shares shall be subject to the provisions of
this Agreement and (ii) with respect to a Disposition pursuant to
Sections 6.4, such Adoption Agreement shall include the voting
agreement provisions set forth in Section 5 of the form of Adoption
Agreement in the form of Exhibit “A” attached hereto;
provided, further, that notwithstanding the foregoing, a Holder may
not make a Disposition to any Person if such Disposition is made
with the intent and purpose of avoiding the restrictions on
dispositions
|
