Exhibit 10.3
FORM OF STOCK TRANSFER RESTRICTION
AGREEMENT
Stock Transfer Restriction
Agreement, dated this day
of ,
1998 by and among Roller Bearing Holding Company, Inc., a
Delaware corporation (“Holdings”),
(the “Initial Party”), Dr. Michael J. Hartnett
(“Hartnett”) and the Persons who by operation of
Section 2.5 hereof become a party hereto (collectively with
the Initial Party, the “Stockholders” and individually
a “Stockholder”).
WHEREAS, the Initial Party is the
owner of
[
shares (the “Shares”) of Class A Voting Common
Stock of Holdings, par value $.01 per share (“Class A
Common Stock” and collectively with any other common stock of
any class or series issued by Holdings, the “Common
Stock”) and warrants to purchase
shares of Class A Common Stock at $100.00 per share (the
“Warrants”)];
WHEREAS, Holdings, Hartnett and the
Stockholders desire to set forth their agreement regarding certain
matters relating to the Stockholders’ ownership of the
[Shares and the Warrants], as well as (i) any shares of
capital stock or Derivative Securities that may be issued by
Holdings and owned by any of the Stockholders and (ii) any
shares of Common Stock that may be issued by Holdings to any of the
Stockholders upon conversion, exchange or exercise of any [Warrants
or other] Derivative Securities, in each case whether currently
owned or hereinafter acquired, being collectively the
“Securities”).
NOW, THEREFORE, in consideration of
the premises and the mutual covenants and agreements hereinafter
set forth and other good and valuable consideration, the receipt
and
sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:
1.
DEFINITIONS
As used herein, the following terms
shall have the meanings indicated:
1.1
“Affiliate” shall mean a
Person controlled by, in control of, or under common control with,
another Person. For purposes of this definition,
“control” (including the correlative terms
“controlled by”, “in control of” and
“under common control with”), with respect to any
Person, shall mean possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or
by contract or otherwise.
1.2
“Derivative Securities”
shall mean options, warrants (including the Warrants) and other
rights to subscribe for, and securities convertible into or
exchangeable or exercisable for, shares of Common Stock.
1.3
“Fair Market Value”
shall mean as to any property on any date, the fair market value of
such property on such date (without regard to any liabilities to
which such property may be subject) as determined in good faith by
the Board of Directors of Holdings, which determination shall,
absent manifest error and except as otherwise set forth in
Section 2.3, be binding on the Stockholders.
1.4
“Initial Public
Offering” shall mean the first underwritten public offering
of equity securities of Holdings pursuant to an effective
registration statement under the Securities Act of 1933, as amended
(the “Act”), for which Holdings received not less than
$25
2
million in gross proceeds and
following which there is a public market for the securities so
offered.
1.5
“Outstanding Shares”
shall mean, at any given time, the sum of (i) all outstanding
shares of Common Stock and (ii) the aggregate number of shares
of Common Stock issuable upon the exercise, conversion or exchange,
as applicable, of outstanding Derivative Securities. Whenever in
this Agreement reference is made to ownership of Outstanding
Shares, such phrase shall mean ownership of the applicable
underlying Common Stock and Derivative Securities in respect
thereof.
1.6
“Permitted Transferee”
shall mean, with respect to any Person, (a) if such Person is
an individual, (i) a member of the Immediate Family of such
Person, or (ii) a trust or other similar legal entity for the
primary benefit of such Person and/or one or more members of his
Immediate Family, or (iii) a partnership, limited partnership,
limited liability company, corporation or other entity in which
such Person and members of his Immediate Family possess 100% of the
outstanding voting securities, (b) if such Person is a
partnership or limited liability company, the general partners,
limited partners or members thereof to whom securities of Holdings
are Transferred on a pro rata basis in accordance with the terms of
the underlying partnership agreement or limited liability company
agreement and (c) if such Person is a corporation, any wholly
owned subsidiary of such corporation or parent of such corporation
that wholly owns such corporation. For purposes of this definition,
“Immediate Family”, with respect to any individual,
shall mean his brothers, sisters, spouse, children (including
adopted children), parents, parents-in-law, grandchildren, great
grandchildren and other lineal descendants and spouses of any of
the foregoing.
3
1.7
“Person” shall mean any
natural person, corporation, organization, partnership,
association, joint-stock company, limited liability company, joint
venture, trust or government, or any agency or political
subdivision of any government.
1.8
“Transfer” shall mean
any direct or indirect, voluntary or involuntary, sale assignment,
gift, encumbrance or other direct or indirect transfer (whether
outright or conditional) of any Securities or any interest
therein.
1.9 Defined Terms
The following terms are defined
elsewhere in this Agreement in the Sections and on the
pages indicated:
|
Defined Term
|
|
Section
|
|
Page
|
|
|
|
|
|
|
|
Act
|
|
1.4
|
|
3
|
|
Affiliate
|
|
1.1
|
|
2
|
|
Board
|
|
2.3(c)(i)
|
|
9
|
|
Cause
|
|
2.3(b)(ii)
|
|
8
|
|
Class A Common Stock
|
|
Recitations
|
|
1
|
|
Common Stock
|
|
Recitations
|
|
1
|
|
Compelled Sale
|
|
2.4(a)
|
|
12
|
|
Compelled Sale Notice
|
|
2.4(b)
|
|
12
|
|
Compelled Sale Purchaser
|
|
2.4(a)
|
|
11
|
|
controlled by
|
|
1.1
|
|
2
|
|
Credit Restriction
|
|
2.3(c)(ii)
|
|
10
|
|
Derivative Securities
|
|
1.2
|
|
2
|
|
Fair Market Value
|
|
1.3
|
|
2
|
|
Hartnett
|
|
Introduction
|
|
1
|
|
Holdings
|
|
Introduction
|
|
1
|
|
Immediate Family
|
|
1.6(c)
|
|
4
|
|
in control of
|
|
1.1
|
|
2
|
|
Initial Party
|
|
Introduction
|
|
1
|
|
Initial Public Offering
|
|
1.4
|
|
3
|
|
Joinder Agreement
|
|
2.5(b)
|
|
14
|
|
Objecting Party
|
|
2.3(a)
|
|
6
|
|
Outstanding Shares
|
|
1.5
|
|
3
|
|
Permitted Transferee
|
|
1.6
|
|
3
|
|
Person
|
|
1.7
|
|
4
|
4
|
Defined Term
|
|
Section
|
|
Page
|
|
|
|
|
|
|
|
Proposed Transferors
|
|
2.4(a)
|
|
11
|
|
Repurchase Offer Notice
|
|
2.3(a)
|
|
6
|
|
Securities
|
|
Recitations
|
|
1
|
|
Shares
|
|
Recitations
|
|
1
|
|
Stockholder
|
|
Introduction
|
|
1
|
|
Stockholders
|
|
Introduction
|
|
1
|
|
Transfer
|
|
1.8
|
|
4
|
|
under common control with
|
|
1.1
|
|
2
|
|
Warrants
|
|
Recitations
|
|
1
|
2.
TRANSFER RESTRICTIONS
2.1
Legends. None of the Securities,
including shares of Common Stock underlying the Warrants, has been
(or will have been at the time of issuance) registered under the
Act. Certificates representing the Shares, the Warrants, and upon
exercise of the Warrants, the shares of Common Stock issuable at
such time, shall bear the following legend:
The securities represented by this
certificate have not been registered under the Securities Act of
1933, as amended (“Act”), and may not be offered or
sold except pursuant to (i) an effective registration
statement under the Act or (ii) an exemption from registration
under such Act (which, if requested by the issuer, shall be
accompanied by an opinion of counsel to such effect reasonably
satisfactory to the issuer).
2.2
Restrictions on Transfer of
Securities. Except as otherwise provided for in this
Article 2, no Stockholder shall Transfer any Securities
without the prior written consent of Holdings.
2.3
Purchase on Death or Termination of
Employment. Upon the death of the Initial Party or the termination
of the employment of the Initial Party by Holdings or any
subsidiary of Holdings (provided that the Initial Party is not,
following such employment termination, an employee of Holdings or
any subsidiary of Holdings) for any reason whatsoever, Holdings
shall have the right (but not the obligation), exercisable upon
notice given not more than one hundred and twenty (120) days
following the date of such death or
5
termination of employment, to
repurchase all, but not less than all, of the Securities (whether
owned by the Initial Party or any Permitted Transferee of the
Initial Party) at the Fair Market Value therefor as of the last day
of the fiscal quarter immediately preceding such date of
termination or death.
(a)
If Holdings elects to exercise its
rights to repurchase Securities under this Section 2.3, it
shall deliver to each Stockholder (or the administrator of the
estate of any deceased Stockholder) a notice of its election to so
exercise (the “Repurchase Offer Notice”), which notice
shall set forth Holdings’ determination of the Fair Market
Value of the Securities. If, within five (5) business days
following delivery of the Repurchase Offer Notice, the Initial
Party (or the administrator of the Initial Party’s estate,
the “Objecting Party”) delivers a notice to Holdings
disputing Holdings’ determination of Fair Market Value,
Holdings and the Objecting Party shall endeavor in good faith to
agree upon a mutually acceptable determination of Fair Market Value
of the Securities. Failure by the Objecting Party to object within
such five (5) business day period shall be deemed to be
acceptance of Holdings’ determination of Fair Market Value
and a waiver of any right to object thereto. If, within ten
(10) days following delivery of a notice disputing
Holdings’ determination of Fair Market Value, Holdings and
the Objecting Party are not able to agree upon the Fair Market
Value of the Securities, Holdings shall retain a nationally
recognized accounting, investment banking or other firm, reasonably
acceptable to the Objecting Party, experienced in the valuation of
assets similar to the Securities, to value the Securities. The
determination of such expert shall be binding upon Holdings and the
Stockholders and the expenses of retaining such expert shall be
borne equally by Holdings and the Objecting Party,
provided,
6
however, that, within ten
(10) days following delivery of the determination of such
expert to Holdings, Holdings shall have the right to withdraw its
offer to repurchase the Securities and elect not to exercise its
rights under this Section 2.3. If Holdings’ offer to
repurchase the Securities is not withdrawn as provided above, the
closing of the repurchase by Holdings of the Securities shall take
place on the date specified in the Repurchase Offer Notice, which
date shall not be earlier than ten (10), or later than ninety (90),
days following delivery of the Repurchase Offer Notice, provided,
however, that, if the Objecting Party shall have objected to
Holdings’ determination of Fair Market Value of the
Securities, the closing of the repurchase of the Securities shall
take place on a date specified by Holdings that shall be not less
than ten (10), nor more than sixty (60), days following the final
determination of such Fair Market Value, and provided further,
however, that, if the closing of the repurchase of Securities shall
be deferred by operation of Section 2.3(c) hereof, the
closing of the repurchase of Securities shall take place on a date
specified by Holdings that shall be not less than ten (10), nor
more than sixty (60), days following the date such deferral
terminates.
(b)
(i)
Payment for the Securities
repurchased by Holdings pursuant to this Section 2.3 shall be
as follows:
(A)
If the event giving rise to
Holdings’ right torepurchase under this Section 2.3
shall be a termination of the Initial Party’s employment for
Cause, payments shall be made in five equal annual payments on the
first through the fifth anniversaries of the date of the closing of
such repurchase (or such shorter period as Holdings may choose and
set forth in the Repurchase Offer Notice) with interest thereon as
set forth in Section 2.3(d) hereof; or
7
(B)
If the event giving rise to
Holdings’ right torepurchase under this Section 2.3
shall be anything other than a termination of the Initial
Party’s employment for Cause, payments shall be made in three
equal annual payments on the first, second and third anniversaries
of the date of the closing of such repurchase (or such shorter
period as Holdings may choose and setforth in the Repurchase Offer
Notice) with interest thereon as set forth in
Section 2.3(d) hereof;
provided, however, that Holdings
shall have the right to prepay any such amounts, in whole or in
part, at
