Exhibit 10.2
VOTING AGREEMENT
This Voting Agreement (this “
Agreement ”) is made as of October 13,
2005 by and among Peco II, Inc., an Ohio corporation (the “
Company ”), Delta Products Corporation, a
California corporation (“ Shareholder ”),
and each of the persons listed on Exhibit A-1 attached
hereto (each a “ Significant Holder ,”
and collectively the “ Significant Holders
”). The Shareholder and the Significant Holders are referred
to herein collectively as the “ Voting Parties
.” This Agreement shall become effective on the Closing Date
of the Asset Agreement (as defined below) (the “
Effective Date ”).
WHEREAS, concurrently herewith, the
Company and Shareholder are entering into an Asset Purchase
Agreement, dated as of October 13, 2005 (as such agreement may
hereafter be amended from time to time, the “ Asset
Agreement ”), a copy of which is attached hereto as
Exhibit B, pursuant to which the Company will purchase from
Shareholder the Business Assets and assume the Assumed Liabilities
(each as defined in the Asset Agreement) in exchange for the
issuance to Shareholder of a certain number of shares of the
Company’s common stock and a warrant to purchase additional
shares of the Company’s common stock.
WHEREAS, as an inducement and a
condition to entering into the Asset Agreement, the Company and the
Voting Parties have agreed to enter into this Agreement.
NOW, THEREFORE, in consideration of
the mutual promises and covenants herein contained, and other
consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions .
(a) Capitalized terms used but not
defined herein shall have the meanings ascribed to them in the
Asset Agreement.
(b) Other Definitions
.
(i) “ Vote
” shall include any exercise of voting rights whether at an
annual or special meeting or in any other manner permitted by
applicable law.
(ii) “ Company Charter
Documents ” shall mean the Company’s articles
of incorporation and code of regulations as shall be in
effect.
(iii) “ Class I
Director ” means those directors of the Company whose
term of office expires at the Company’s 2007 annual meeting
of shareholders.
(iv) “ Class II
Director ” means those directors of the Company whose
term of office expires at the Company’s 2008 annual meeting
of shareholders.
(v) “ Class III
Director ” means those directors of the Company whose
term of office expires at the Company’s 2006 annual meeting
of shareholders.
2. Company Shares .
Shareholder and each Selling Holder hereby severally agrees to vote
all shares of the Company’s voting securities now or
hereafter beneficially owned by such Person (the “
Company Shares ”) in accordance with the
provisions of this Agreement. For purposes of this Agreement, a
Person shall be deemed to “ beneficially own
” or to have acquired “ beneficial
ownership ” of a security if such Person directly or
indirectly, through any contract, arrangement, understanding
relationship or otherwise, has such ownership, control or power to
(i) vote or direct the voting with respect to such security,
or (ii) dispose or to direct the disposition of such security.
Company Shares beneficially owned by a Person shall include
securities beneficially owned by all other Persons with whom such
Person would constitute a “group” as within the meaning
of Section 13(d)(3) of
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the Exchange Act, other than parties to this
Agreement. In the event of a stock dividend or distribution, or any
change in the Company capital stock by reason of any stock
dividend, split-up, recapitalization, combination, exchange of
shares or the like, the term “ Company Shares
” shall be deemed to refer to and include the Company Shares
as well as all such stock dividends and distributions and any
shares into which or for which any or all of the Company Shares may
be changed or exchanged.
3. Company Covenants
.
(a) Effective as of the Closing
Date, the Company’s board of directors (the “
Board ”) shall, in compliance with applicable
Law and the Company Charter Documents, appoint the Shareholder
Designee to fill the existing Class II Director vacancy. The
Shareholder Designee shall be designated a Class II Director of the
Board.
(b) The Company shall use
commercially reasonable efforts to support the election of the
Shareholder Designee, and in any event efforts consistent with the
Company’s past and current practices regarding the support of
other persons standing for election as directors of the Company as
part of the Company’s management slate.
4. Election of Board of
Directors .
(a) Designation of Directors
. The nominees for election to the Company’s Board (each a
“ Designee ”) shall be selected as
follows:
(i) For so long as Shareholder, or
any of its affiliates (other than the Company), holds Company
Shares or the right to acquire Company Shares representing at least
5% of Company’s issued outstanding capital stock, one
Designee shall be chosen by the Shareholder, in its sole
discretion, provided the Designee shall be reasonably acceptable to
the Board (a “ Shareholder Designee ”),
and the Company shall name such individual for election to the
Company’s Board as part of the management slate and shall be
included in all Company proxy materials relating to the election of
directors of the Company.
(ii) The remaining Designees to the
Board shall be chosen by the Company’s Board (each a “
Company Designee ”), and shall be named for
election to the Company’s Board as part of the management
slate and shall be included in all Company proxy materials relating
to the election of directors of the Company.
(b) Current Designees .
Subject to Section 4(c) , as of the Effective Date, the
following individuals are the current Designees:
(i) George J. Dallas, Trygve A.
Ivesdal, R. Louis Schneeberger, and Eugene V. Smith are the Company
Designees serving as Class I Directors; John G. Heindel, E. Richard
Hottenroth and Thomas R. Thomsen are the Company Designees serving
as Class II Directors; and James L. Green, Mark R. McBride and
Matthew P. Smith are the Company Designees serving as Class III
Directors.
(ii) Lanford Liu is the Shareholder
Designee and shall serve as a Class II Director.
(c) Changes in Designees
.
(i) From time to time during the
term of this Agreement, the Company may, in its sole discretion
(x) notify Shareholder in writing of an intention to remove
from the Board any incumbent Company Designee; or (y) notify
Shareholder in writing of an intention to select a new Company
Designee to fill a vacancy in any such seat. Any vacancy in a board
seat allocated to a Company Designee shall be filled by the Board
in accordance with the Company Charter Documents. In the event of
such an initiation of a removal or selection of a new Company
Designee under this Section 4(c)(i) , Shareholder shall
vote its shares to cause (A) the removal from the Board of the
Company Designee(s) so designated for removal; and (B) the
election to the Board of any new Company Designee so
nominated.
(ii) From time to time during the
term of this Agreement, Shareholder may, in its sole discretion
(x) notify the Company in writing of an intention to remove
from the Board any incumbent Shareholder Designee; or
(y) notify the Company in writing of an intention to select a
new Shareholder Designee to fill a
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vacancy in any such seat. Any vacancy in a board
seat allocated to the Shareholder Designee shall be filled only by
the Shareholder, in its sole discretion, provided the Shareholder
Designee shall be reasonably acceptable to the Board. In the event
of such an initiation of a removal or selection of a Shareholder
Designee under this Section 4(c)(ii) , the Company
shall take such reasonable actions as are necessary to facilitate
such removals or elections, including, without limitation, calling
a special meeting of shareholders and soliciting the votes of the
appropriate shareholders, and each Significant Holder shall vote
its shares to cause (A) the removal from the Board of the
Shareholder Designee so designated for removal; and (B) the
election to the Board of any new Shareholder Designee so
nominated.
(iii) Shareholder agrees not to
bring any proposal before the Company’s shareholders, the
intent of which is to remove from the Board without cause a Company
Designee. The Company and each Significant Holder severally agrees
not to bring any proposal before the Company’s shareholders,
the intent of which is to remove from the Board without cause the
Shareholder Designee.
(d) Election of Directors
.
(i) Each Significant Holder
severally agrees to vote all Company Shares (x) at all annual
or special meetings of the Company’s shareholders, however
called (including any postponement or adjournment thereof), and
(y) by any consensual action of shareholders of the Company,
in each case, in such a manner as may be necessary to elect (and
maintain in office) as a member of the Company’s Board, the
Shareholder Designee.
(ii) Shareholder agrees to vote all
Company Shares (x) at all annual or special meetings of the
Company’s shareholders, however called (including any
postponement or adjournment thereof), and (y) by any
consensual action of shareholders of the Company, in each case, in
such a manner as may be necessary to elect (and maintain in office)
as members of the Company’s Board, the Company
Designees.
5. Board Observation Rights
.
(a) Board Observer . For so
long as Shareholder, or any of its affiliates (other than the
Company), continues to hold Company Shares or the right to acquire
Company Shares representing at least 5% of the Company’s
issued outstanding capital stock, Shareholder shall have the right
to designate a representative (the “ Board
Observer ”) to attend all meetings of the Board
(whether telephonic or otherwise) in a non-voting observer
capacity, and the Company shall give the Board Observer copies of
all notices, minutes, consents and other materials that it provides
to its Directors (the “ Materials ”);
provided, however , that the Board Observer and Shareholder
shall agree to hold in confidence and trust all Materials so
provided to the same extent as if they were members of the Board;
provided, further , that the Board Observer and Shareholder
agree to share information gathered from the Materials or to share
the Materials only with those directors, officers, employees,
agents or representatives of Shareholder on a need-to-know
basis.
(b) Initial Board Observer;
Change of Board Observer. Shareholder shall appoint Austin
Tseng as its initial Board Observer. Shareholder, in its sole
discretion, may from time to time change the Board Observer;
provided, however , that Shareholder agrees to use
commercially reasonable efforts to limit the number of times the
Board Observer is changed. Moreover, Shareholder agrees to provide
reasonable notice to the Company of a change of its Board Observer
prior to the next scheduled meeting of the Board.
(c) Company’s Right to
Exclude Board Observer . The Company shall have the right to
exclude the Board Observer from any meeting of the Board, or any
portion thereof, or to refuse to give the Board Observer access to
any Materials, (i) if in the judgment of the Board, the
matters to be discussed would impinge the attorney-client
privilege, or (iii) a majority of the members of the Board
vote to exclude such representative from a meeting, or any portion
thereof, or from receiving Materials, or any portion
thereof.
(d) Expenses . The Company
shall pay all expenses reasonably incurred by either the
Shareholder Designee or the Board Observer, but not both, in
connection with such Shareholder Designee’s or
Board
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Observer’s attendance at and participation
in any meeting of the Board, including, but not limited to travel
expenses, in accordance with the Company’s Human Resources
Policy—Business Travel, as may be in effect from time-to-time
with respect to members of the Board.
6. Representations, Warranties
and Other Covenants of Significant Holders . Each Significant
Holder hereby severally and not jointly represents and warrants to
the Company and to Shareholder as follows:
(a) Ownership of Company
Shares . As of the date hereof, each Significant Holder is the
beneficial owner of the number of Company Shares set forth opposite
such Significant Holder’s name on Exhibit A-1
hereto (representing all Company Shares beneficially owned by such
Significant Holder), which Company Shares are free and clear of any
liens, adverse claims, charges, security interests, pledges or
options, proxies, voting trusts or any other encumbrances. With
respect to each Significant Holder, Exhibit A-1 also sets
forth all options, warrants and other derivative securities
convertible into or exercisable for shares of Company capital stock
held by such Significant Holder as of the date hereof.
(b) Power; Binding Agreement
. Each Significant Holder has sole voting power regarding the
subject matters of this Agreement with respect to all of his or her
Company Shares—except in the cases of shared voting power
noted in Exhibit A-1 —with no limitations,
qualifications or restrictions on su
