SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: March 23, 1995
CHAMPION PARTS, INC.
(Exact name of Registrant as specified in its Charter)
Illinois 1-7807 36-2088911
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
2525 22nd Street, Oak Brook, Illinois 60521
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (708) 573-6600
INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. Other Events.
On March 23, 1995, the Registrant entered into a Preferred
Stock Purchase Agreement (the "Agreement") with RGP Holdings,
Inc. ("RGP"), an affiliate of Mr. Raymond G. Perelman, a
director, the Chairman of the Board of Directors and the
beneficial owner of 18.1% of the outstanding Common Shares of
the Registrant, pursuant to which Agreement RGP will purchase
1,666,667 shares of the Registrant's newly authorized Series A
Redeemable Cumulative Convertible Voting 9% Preferred Shares
(the "Preferred Shares"). The transaction with RGP was approved
by a Special Committee of the Board of Directors of the
Registrant, composed of all members of the Board of Directors
except for management members and Messrs. Perelman and Katz,
which was formed on January 17, 1995 to consider Mr. Perelman's
proposed investment and other alternatives (the "Special
Committee"), and has been approved by the Board of Directors of
the Registrant. The terms of the Agreement and the proposed
Statement of Resolution establishing and designating the
Preferred Shares provide in part as follows:
1. RGP will purchase 1,666,667 Preferred Shares (the "RGP
Shares") at a purchase price of $3.00 per share, or an aggregate
purchase price of $5,000,001. The sale of the RGP Shares is
subject to closing of the transactions contemplated by the
Agreement by April 30, 1995.
2. Within 10 days after the closing, the Special Committee will
elect (the "Election Date") either (a) for the Registrant to
offer to all holders of the Registrant's Common Shares, par
value $.10 per share (the "Common Shares"), the right to
purchase an aggregate of 2,500,000 Common Shares at a purchase
price of $3.00 per Common Share pursuant to a registration
statement to be filed with the SEC (the "Rights Offering") or
(b) for the Registrant to convert all of the RGP Shares into
1,666,667 Common Shares at a conversion price of $3.00 per share
(the "Conversion Price").
3. If the Rights Offering is conducted, each holder of the
Registrant's Common Shares will receive one purchase right for
each Common Share held, which will entitle that holder to
purchase 68/100ths of a Common Share. RGP has committed to
subscribe for its pro rata portion of Common Shares offered to
it in the Rights Offering, based on the number of Common Shares
owned by RGP at the time of the Rights Offering. In addition,
RGP has agreed to subscribe for such additional Common Shares as
may be necessary (in the absence of sufficient subscriptions
from other holders) for the total number of Common Shares
subscribed for to equal up to 2,500,000 shares, provided that
the total number of Common Shares for which RGP is obligated or
permitted to subscribe will not exceed 1,666,667 shares. RGP
will pay the subscription price for all Common Shares subscribed
for, including its subscription for its pro rata share of the
Rights Offering, by tendering to the Registrant all or a portion
of the RGP Shares, which will be valued for this purpose at
$3.00 per share.
4. If the Rights Offering is held, immediately upon completion
of the Rights Offering, the Registrant will use the net proceeds
therefrom to redeem all of the remaining RGP Shares not tendered
for Common Shares, at a per share price equal to $3.00 plus, if
the redemption occurs more than 140 days from the Election Date,
accrued and unpaid dividends to the date of redemption. If the
Rights Offering is not effectuated notwithstanding the
Registrant's efforts, the Special Committee may cause the
conversion of all of the RGP Shares into Common Shares at the
Conversion Price, on or before October 31, 1995.
5. The proposed Statement of Resolution provides that dividends
on the Preferred Shares will be paid in Preferred Shares. If
the Rights Offering is not consummated and the RGP Shares are
not converted, then the RGP Shares will remain outstanding and
will be convertible at any time into Common Shares at the
Conversion Price, as adjusted by anti-dilution provisions
contained in the proposed Statement of Resolution, at the option
of the holder. If the Registrant breaches certain of its
material agreements in the Agreement, or if the proposed
Statement of Resolution is breached by the Registrant, or if the
Executive Committee referred to below is disbanded or its
members removed without the prior consent of a majority of the
Executive Committee before RGP's nominees constitute a majority
of the Registrant's directors (in each case, other than as a
result of actions taken or omitted by Mr. Perelman, his business
associate Barry Katz or RGP), then the dividend rate will
increase to 12% per annum and RGP will have the option to cause
the Registrant to redeem the RGP Shares at a redemption price
equal to the stated value of $3.00 per share plus accrued and
unpaid dividends.
6. In connection with the transaction described above, the
Registrant has agreed to certain actions with respect to
governance of the Registrant. Effective upon the closing, Mr.
Donald Santucci shall resign as President, Chief Executive
Officer and director of the Registrant; Mr. Thomas Blashill
shall resign as director of the Registrant; Mr. Perelman will be
appointed Chief Executive Officer of the Registrant; and an
Executive Committee of the Board will be constituted with the
maximum authority permitted by law, subject to certain
exceptions for transactions in which RGP or Mr. Perelman has an
interest. The three members of the Executive Committee will be
Mr. Perelman, his business associate Mr. Barry Katz and a member
of the Special Committee designated by Mr. Perelman. The
Agreement provides that for a period of three years after the
closing, RGP has the right to designate a majority of the
Registrant's nominees for election to the Board of Directors,
subject to certain qualifications, and the remaining directors
shall have the right, subject to certain conditions, to nominate
persons for the remaining positions on the Board. The holders
of the Registrant's Common Shares retain the right to vote
cumulatively in the election of directors.
7. During the three-year period following the closing,
transactions with the Registrant in which RGP or an affiliate of
RGP has an interest of $30,000 or more must be approved in
advance by a majority of the directors of a newly-created
Interested Transaction Committee, consisting in the first year
of all non-RGP nominee directors and in the next year of all of
the non-RGP nominee directors and an independent director
nominated by RGP. Until such time as RGP's nominees constitute
a majority of the Registrant's directors, the Agreement requires
RGP's advance consent to most of the Registrant's significant
business transactions, including sales or leases of material
assets, entering new lines of business, assuming or incurring
material amounts of indebtedness, encumbering any material
assets, and hiring or firing management employees. In addition,
the proposed Statement of Resolution requires the advance
consent of a majority of the holders of the Preferred Shares for
those actions of the Registrant requiring the consent of RGP
under the Agreement, as well as to other significant events such
as amending the Registrant's Articles of Incorporation or
By-laws, effecting a merger or consolidation involving the
Registrant, acquiring capital shares of the Registrant, and
issuing securities of the Registrant.
Consummation of the transaction summarized above is subject to
customary closing conditions and to certain additional
conditions precedent, including but not limited to the
following: the granting of an exception from shareholder
approval requirements by the National Association of Securities
Dealers, Inc.; the consent of the Registrant's lender; the
extension of the Registrant's loan agreements for a period of
not less than ninety days from April 1, 1995; and the execution
of a Registration Rights Agreement between the Registrant and
RGP. The form of Registration Rights Agreement grants to RGP
the right under certain circumstances to have the Common Shares
acquired upon conversion registered for sale under federal and
state securities laws. It is also a condition to the
consummation of the transaction that the Registrant receive at
the closing an opinion from Mesirow Financial, Inc. that the
transaction is fair to the Registrant and its shareholders from
a financial point of view.
The above summary of the transaction and the terms of the
Preferred Stock Purchase Agreement and the proposed Statement of
Resolution is necessarily incomplete, and is qualified in its
entirety by the Preferred Stock Purchase Agreement, the proposed
Statement of Resolution Establishing and Designating the
Preferred Shares, and the form of Registration Rights Agreement,
which are attached hereto as Exhibits 10(a), 4(a) and 10(b),
respectively, and are incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
Exhibits:
4(a) Proposed Statement of Resolution Establishing and
Designating the Rights of Series A Redeemable Cumulative
Convertible Voting 9% Preferred Shares of Champion Parts, Inc.
10(a) Preferred Stock Purchase Agreement dated March 23, 1995
between the Registrant and RGP Holdings, Inc.
10(b) Form of Registration Rights Agreement to be entered into
by the Registrant and RGP Holdings, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
CHAMPION PARTS, INC.
Date: March 27, 1995 By: /s/ Donald G. Santucci
Donald G. Santucci
President and Chief Executive Officer
EXHIBIT INDEX
Exhibit No. Description of Exhibit Page
4(a) Proposed Statement of Resolution Establishing and
Designating the Rights of Series A Redeemable Cumulative
Convertible Voting 9% Preferred Shares of Champion Parts, Inc.
10(a) Preferred Stock Purchase Agreement dated March 23, 1995
between the Registrant and RGP Holdings, Inc.
10(b) Form of Registration Rights Agreement to be entered into
by the Registrant and RGP Holdings, Inc.
Exhibit 1.1
STATEMENT OF RESOLUTION ESTABLISHING AND DESIGNATING
THE RIGHTS OF SERIES A REDEEMABLE CUMULATIVE CONVERTIBLE
VOTING 9% PREFERRED SHARES OF CHAMPION PARTS, INC.
CHAMPION PARTS, INC., an Illinois corporation (the
"Corporation"), DOES HEREBY CERTIFY THAT:
A. Pursuant to authority conferred upon the Board of Directors
by the Articles of Incorporation of the Corporation (the
"Articles of Incorporation") and pursuant to the provisions of e
6.10 of the Illinois Business Corporation Act of 1983, as
amended, the Board of Directors adopted the following resolution
providing for the creation of a series of Preferred Shares to be
designated the Series A Redeemable Cumulative Convertible Voting
9% Preferred Shares, and fixing the designations, preferences
and special relative, participating, optional and other rights,
and the qualifications, limitations and restrictions thereof:
WHEREAS, the Articles of Incorporation of the Corporation
provide for two classes of shares known as Common Shares, $.10
par value per share (the "Common Stock"), and Preferred Shares,
no par value per share (the "Preferred Stock"); and
WHEREAS, the Board of Directors of the Corporation is
authorized by the Articles of Incorporation to provide for the
issuance of the Preferred Stock in one or more series, and by
filing a statement pursuant to the applicable law of the State
of Illinois to establish from time to time the number of shares
to be included in any particular series and to fix the
designations and relative rights and preferences of the shares
of each such series and the qualifications, limitations and
restrictions thereof;
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors
deems it advisable to, and hereby does, establish a series of
Preferred Stock designated as Series A Redeemable Cumulative
Convertible Voting 9% Preferred Shares and fixes and determines
the rights, preferences, qualifications, limitations and
restrictions relating to the Series A Redeemable Cumulative
Convertible Voting 9% Preferred Shares as follows:
1. Designation. The shares of such series of Preferred Stock
shall be designated "Series A Redeemable Cumulative Convertible
Voting 9% Preferred Shares" (referred to herein as the "9%
Preferred Stock").
2. Authorized Number; Stated Value. The number of shares
constituting the 9% Preferred Stock shall be 2,000,000. The
stated value of the 9% Preferred Stock shall be $3.00 per share.
3. Rank. The 9% Preferred Stock shall, with respect to
dividend rights and rights on liquidation, winding up and
dissolution, rank prior to all classes of the Common Stock of
the Corporation. (All equity securities of the Corporation to
which the 9% Preferred Stock ranks prior, whether with respect
to dividends or upon liquidation, dissolution, winding up or
otherwise, including the Common Stock, are collectively referred
to herein as "Junior Securities"; all equity securities of the
Corporation with which the 9% Preferred Stock ranks on a
parity, whether with respect to dividends or upon liquidation,
dissolution, winding up or otherwise, are collectively referred
to herein as "Parity Securities"; and all equity securities of
the Corporation to which 9% Preferred Stock ranks junior,
whether with respect to dividends or upon liquidation,
dissolution, winding up or otherwise, are collectively referred
to herein as "Senior Securities".)
4. Dividends. The holders of shares of 9% Preferred Stock
shall be entitled to receive, when and as declared by the Board
of Directors of the Corporation (the "Board of Directors"), out
of assets legally available for such purpose, dividends at the
rate of 9% per share (expressed as a percentage of the per share
stated value) per annum (subject to adjustment under certain
circumstances as provided herein) payable semi-annually in
arrears in authorized but unissued, fully paid and nonassessable
shares of 9% Preferred Stock based on the stated value per share
thereof. Such dividends shall accrue on a daily basis (based on
a year comprised of 365 days) and shall be payable semi-annually
on August 15 and February 15 of each year (each of such dates
being a "dividend payment date"), commencing August 15, 1995.
Such dividends shall be paid to the holders of record at the
close of business on the date specified by the Board of
Directors at the time such dividend is declared; provided,
however, that such record date shall not be more than sixty (60)
days nor less than ten (10) days prior to the applicable
dividend payment date. Each of such semi-annual dividends shall
be fully cumulative (whether or not declared), without interest,
from the first day of the semi-annual period in which such
dividend may be payable as herein provided; except that with
respect to the first semi-annual dividend on each share of 9%
Preferred Stock, such dividend shall accrue from the date that
the 9% Preferred Stock is initially issued and full payment is
received by the Corporation therefor (the "Issuance Date"). If
any shares of 9% Preferred Stock are issued on a date which does
not coincide with a dividend payment date, then the initial
dividend accrual period applicable to such shares shall be the
period from the date of issuance thereof through the last day of
the semi-annual period in which such shares are issued. If the
date fixed for payment of a final liquidating distribution on
any shares of 9% Preferred Stock, or the date on which any
shares of 9% Preferred Stock are redeemed or converted into
Common Stock does not coincide with a dividend payment date,
then subject to the provisions hereof relating to such
conversion or redemption, the final dividend accrual period
applicable to such shares shall be the period from the later to
occur of the Issuance Date or the first day of the semi-annual
period during which such conversion or redemption occurs through
the effective date of such conversion or redemption. The Board
of Directors shall at all times reserve a sufficient number of
authorized but unissued shares of 9% Preferred Stock to be
issued in satisfaction of the dividend rights of the holders of
9% Preferred Stock.
The amount and form of all dividends paid with respect to
shares of the 9% Preferred Stock pursuant to Section 4 shall be
paid pro rata to the holders entitled thereto.
Holders of shares of 9% Preferred Stock shall be entitled to
receive the dividends provided for in Section 4 hereof in
preference to and in priority over any dividends upon any of the
Junior Securities. So long as any shares of 9% Preferred Stock
are outstanding, the Corporation shall not declare, pay or set
apart for payment, any dividend on any of the Junior Securities
or make any payment on account of, or set apart for payment,
money for a sinking or other similar fund for, the purchase,
redemption or other retirement of, any of the Junior Securities
or Parity Securities or any warrants, rights, calls or options
exercisable or exchangeable for or convertible into any of the
Junior Securities or Parity Securities, or make any distribution
in respect thereof, either directly or indirectly, and whether
in cash, obligations or shares of the Corporation or other
property (other than distributions or dividends in Junior
Securities to the holders of Junior Securities), and shall not
permit any corporation or other entity directly or indirectly
controlled by the Corporation to purchase, redeem or retire any
of the Junior Securities or Parity Securities or any rights,
warrants, calls or options exercisable or exchangeable for or
convertible into any of the Junior Securities or Parity
Securities, unless prior to, or concurrently with, such
declaration, payment, setting apart for payment, purchase,
redemption or distribution, as the case may be, all accrued and
unpaid dividends on shares of the 9% Preferred Stock not
theretofore paid on the dates provided for in Section 4 hereof
shall have been paid in full. When dividends are not paid in
full upon the shares of 9% Preferred Stock and Parity
Securities, all dividends declared upon shares of 9% Preferred
Stock and any Parity Securities shall be declared pro rata so
that the amount of dividends declared per share on 9% Preferred
Stock and such other shares shall in all cases bear to each
other the same ratio, at the time of such declaration, that
accrued and unpaid dividends per share on the shares of 9%
Preferred Stock and such other shares bear to each other.
The Corporation shall not be required to issue fractional
shares of 9% Preferred Stock. If any fraction of a share of 9%
Preferred Stock would be issuable in payment of a dividend or
otherwise, the Corporation shall round such fraction to the
nearest whole share (up or down), with half shares being rounded
down, and will deliver the additional share if rounded up.
In the event that (i) the Corporation breaches any of the
material terms and conditions set forth in Sections 6.3, 6.4 or
6.5 of the Preferred Stock Purchase Agreement pursuant to which
the 9% Preferred Stock was sold by the Corporation (the
"Preferred Stock Purchase Agreement") or breaches any of the
other terms and conditions of the Preferred Stock Purchase
Agreement and such breach has a material adverse effect on
either (x) the business, condition (financial or otherwise),
properties or results of operations of the Corporation and its
subsidiaries taken as a whole or (y) the benefits contemplated
to be conferred upon the Purchaser (as defined in the Stock
Purchase Agreement) pursuant to the Preferred Stock Purchase
Agreement and this Statement of Resolution, or breaches any
material provision of this Statement of Resolution, and provided
in each case that such breaches are not primarily the result of
acts or omissions of the Purchaser (as defined in the Preferred
Stock Purchase Agreement), Mr. Raymond G. Perelman or Mr. Barry
Katz, or (ii) during the Specified Period (as defined in the
Preferred Stock Purchase Agreement), the Executive Committee of
the Board of Directors created as contemplated by the Preferred
Stock Purchase Agreement (the "Executive Committee") is
disbanded, or the members thereof are removed, in either case
without the prior consent of a majority of the members of the
Executive Committee, and provided that such removal or
disbandment was not directed or consented to by the Purchaser or
Messrs. Perelman or Katz, (any of the events referred to in
clauses (i) or (ii), if such breaches are not cured or are not
curable by the Corporation within 20 days after the earlier of
(x) the Corporation becomes aware of such breaches or (y)
receiving written notice of the same from any holder of the 9%
Preferred Stock, being referred to as an "Event of Default"),
then, commencing upon the occurrence of an Event of Default, the
annual dividend rate on the 9% Preferred Stock will be increased
to 12% (expressed as a percentage of the per share stated value)
per share.
5. Liquidation.
(a) Upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of
the shares of 9% Preferred Stock shall be entitled, before any
distribution or payment is made upon any Junior Securities, to
be paid an amount equal to the stated value of the 9% Preferred
Stock (the "Liquidation Preference") plus all accrued and unpaid
dividends to the date fixed for such liquidation, dissolution or
winding-up (collectively, the "Liquidation Payments"). If the
assets of the Corporation are not sufficient to pay in full the
Liquidation Payments payable to the holders of outstanding
shares of 9% Preferred Stock and any Parity Securities, then the
holders of all such shares shall share ratably in such
distribution of assets in accordance with the amount which would
be payable on such distribution if the amounts to which the
holders of outstanding shares of 9% Preferred Stock and the
holders of outstanding shares of such Parity Securities are
entitled were paid in full.
The Liquidation Payment with respect to each outstanding share
of 9% Preferred Stock shall be equal to a ratably proportionate
amount of the Liquidation Payment with respect to each
outstanding share of 9% Preferred Stock.
(b) Upon any liquidation, dissolution or winding up of the
Corporation, after the holders of 9% Preferred Stock shall have
been paid in full the Liquidation Payments, the remaining assets
of the Corporation shall be distributed ratably per share in
order of preference to the holders of Junior Securities.
(c) Written notice of a liquidation, dissolution or winding
up stating a payment date, the amount of the Liquidation Payments
and the place where said Liquidation Payments shall be payable,
shall be given by mail, postage prepaid, not less than 10 days
prior to the payment date stated therein, to each holder of
record of 9% Preferred Stock at its post office address as shown
by the records of the Corporation.
6. Conversion.
The holders of the 9% Preferred Stock shall have the following
conversion rights:
(a) Mandatory Conversion. (i) Each share of 9% Preferred
Stock automatically shall be converted into fully paid and
nonassessable shares of Common Stock based on the per share
stated value of the 9% Preferred Stock at the conversion price
of $3.00 per share of Common Stock, as such price may be
adjusted pursuant to Section 8 hereof (the "Conversion Price")
at the election of the Special Committee of the Board of
Directors appointed by resolutions adopted by the Board of
Directors of the Corporation on January 17, 1995 (the "Special
Committee"), by a majority vote of the members thereof at a duly
convened meeting of such Committee or by the unanimous written
consent of the members of such Committee, within 30 days of the
Issuance Date. If such election is made, or if the Special
Committee affirmatively determines to go forward with the Rights
Offering (as defined in the Preferred Stock Purchase Agreement),
the date that the Special Committee makes such election or
determines to proceed with the Rights Offering is referred to
herein as the "Election Date."
(ii) In addition, provided that there has not occurred any
Event of Default, the Special Committee shall have the further
right to cause the conversion of all, but not less than all,
shares of 9% Preferred Stock then outstanding on or prior to
October 31, 1995 provided that the Corporation has used all
reasonable efforts to effectuate the Rights Offering (as defined
in the Preferred Stock Purchase Agreement) and was unable to do
so.
(b) Optional Conversion. In the event of the occurrence of
an Event of Default, then each share of 9% Preferred Stock shall
be convertible at any time or from time to time, in whole or in
part, at the option of the holder of record thereof, into fully
paid and nonassessable shares of Common Stock based on the per
share stated value of the 9% Preferred Stock at the Conversion
Price then in effect upon surrender to the Corporation or its
transfer agent of the certificate or certificates representing
the 9% Preferred Stock to be converted, as provided below, or if
the holder notifies the Corporation or its transfer agent that
such certificate or certificates have been lost, stolen or
destroyed, upon the execution and delivery of an agreement
reasonably satisfactory to the Corporation to indemnify the
Corporation from any losses incurred by it in connection
therewith.
(c) Basis For Conversion; Converted Stock. Shares of 9%
Preferred Stock convertible into Common Stock pursuant to this
Section 6 shall be converted at the Conversion Price then in
effect. If any fractional interest in a share of Common Stock
would be deliverable upon conversion of the 9% Preferred Stock,
such number of shares shall be deliverable to the holder after
rounding the number of shares to be delivered up or down to the
nearest whole number of shares of Common Stock. Any shares of
9% Preferred Stock which have been converted shall be cancelled
and all dividends on converted shares shall cease to accrue and
the certificates representing shares of 9% Preferred Stock so
converted shall represent the right to receive (i) in the case
of a conversion under Section 6(a)(i) or (ii) which occurs on or
prior to 140 days of the Election Date, such number of shares of
Common Stock into which such shares of 9% Preferred Stock are
convertible, but no accrued or unpaid dividends thereon and (ii)
in the case of a conversion under Section 6(a)(i) or (ii) which
occurs more than 140 days after the Election Date or under
Section 6(b), such number of shares of Common Stock into which
such shares of 9% Preferred Stock are convertible and in
addition thereto such number of shares of Common Stock into
which the number of shares of Preferred Stock representing
accrued and unpaid dividends thereon are convertible. The Board
of Directors shall at all times reserve a sufficient number of
authorized but unissued shares of Common Stock to be issued in
satisfaction of the conversion rights and privileges aforesaid.
Holders of shares of 9% Preferred Stock which are converted into
shares of Common Stock will be treated for all purposes,
including the determination of shareholders entitled to receive
dividends on shares of 9% Preferred Stock and to receive notice
of and to vote at any meeting of shareholders, as holders of
record of Common Stock as of the date of conversion. All shares
of Common Stock which may be issued upon conversion of the
shares of 9% Preferred Stock shall be validly issued, fully paid
and non-assessable.
(d) Mechanics of Conversion. For any holder of 9% Preferred
Stock to optionally convert the same into shares of Common Stock
pursuant to paragraph 6(b) above, he shall surrender the
certificate or certificates therefor, duly endorsed, at the
principle executive office of the Corporation or to its transfer
agent for the 9% Preferred Stock, and shall give written notice
to the Corporation of the election to convert the same,
including shares of 9% Preferred Stock representing accrued and
unpaid dividends relating to such shares, and shall state
therein the name or names in which the certificate of
certificates for shares of Common Stock are to be issued if
different from the holder thereof. The Corporation shall, as
soon as practicable thereafter, issue and deliver to such holder
of 9% Preferred Stock, or to the nominee or nominees of such
holder, a certificate or certificates for the number of shares
of Common Stock to which such holder shall be entitled as
aforesaid. A certificate or certificates will be issued for the
remaining shares of 9% Preferred Stock in any case in which
fewer than all of the shares of 9% Preferred Stock represented
by a certificate are converted. Notwithstanding the foregoing,
with respect to a conversion pursuant to Section 6(a)(i) or (ii)
above, the 9% Preferred Stock will be deemed to have been
converted, and the holder thereof shall be deemed a holder of
record of Common Stock, on the Election Date (if the Special
Committee elects to convert such shares on such date) or the
date the Special Committee elects to convert such shares under
Section 6(a)(ii), as the case may be.
(e) Issue Taxes. The Corporation shall pay all issue taxes,
if any, incurred in respect of the issue of shares of Common
Stock on conversion. If a holder of shares surrendered for
conversion specifies that the shares of Common Stock to be
issued on conversion are to be issued in a name or names other
than the name or names in which such surrendered shares stand,
the Corporation shall not be required to pay any transfer or
other taxes incurred by reason of the issuance of such shares of
Common Stock to the name of another, and if the appropriate
transfer taxes shall not have been paid to the Corporation or
the transfer agent for the 9% Preferred Stock at the time of
surrender of the shares involved, the shares of Common Stock
issued upon conversion thereof may be registered in the name or
names in which the surrendered shares were registered, despite
the instructions to the contrary.
7. Redemption.
(a) Mandatory Redemption. In the event of, and immediately
following the consummation of, the Rights Offering, if it is
completed, and the issuance of shares of Common Stock as a
result of a Share Deficiency (as defined in the Preferred Stock
Purchase Agreement), and provided that the shares of 9%
Preferred Stock have not been converted pursuant to Sections
6(a) or 6(b) above, the Corporation will redeem all shares of 9%
Preferred Stock not converted to shares of Common Stock at a per
share redemption price equal to the stated value, plus, if the
redemption occurs more than 140 days after the Election Date,
accrued and unpaid dividends to the date of redemption.
(b) Optional Redemption. In the event of the occurrence of
an Event of Default, the holders of a majority of the then
outstanding shares of 9% Preferred Stock may elect to have the
Corporation redeem all (but not less than all) of the
outstanding shares of 9% Preferred Stock at a per share
redemption price equal to the stated value plus accrued and
unpaid dividends to the date of redemption. The election to
cause the Corporation to redeem shares of 9% Preferred Stock
under this paragraph (b) shall be made by delivering written
notice thereof to the Corporation.
(c) Mechanics of Redemption. (i) The Corporation, if
electing to redeem the shares of Preferred Stock as set forth in Section
7(a) above, shall give written notice to each holder of 9%
Preferred Stock, notifying such holder of the anticipated date
on which the Corporation shall redeem all (but not less than
all) shares of 9% Preferred Stock then outstanding or (ii) if
the holders of 9% Preferred Stock elect to cause the Corporation
to redeem all (but not less than all) of the 9% Preferred Stock
as set forth in Section 7(b) above, such holders shall give
written notice to the Corporation, notifying the Corporation
that the shares of Preferred Stock are to be redeemed pursuant
to Section 7(b) above. On or after the Redemption Date (which
for purposes hereof shall mean with respect to a redemption to
be effected pursuant to (x) Section 7(a) above, the date the
Rights Offering, if made, is consummated and shares of Common
Stock are issued as a result of a Share Deficiency or (y)
Section 7(b) above, the date which is twenty (20) days after the
date of the notice referred to in Section 7(c)(ii) above), each
holder of shares of 9% Preferred Stock which are to be redeemed
shall surrender to the Corporation the certificate or
certificates representing such shares at the principal executive
office of the Corporation or to its transfer agent for the 9%
Preferred Stock, against delivery of the redemption price.
8. Adjustment of Conversion Price.
The Conversion Price shall be subject to adjustment as follows:
(i) In case the Corporation shall (a) pay a dividend
or make a distribution on Common Stock in shares of Common Stock, (b)
subdivide or reclassify its outstanding shares of Common Stock
into a greater number of shares, or (c) combine or reclassify
its outstanding shares of Common Stock into a smaller number of
shares, the Conversion Price in effect immediately prior thereto
shall be adjusted so that the Conversion Price shall equal the
price determined by multiplying the Conversion Price at which
shares of 9% Preferred Stock were theretofore convertible by a
fraction, the numerator of which shall be the number of shares
of Common Stock outstanding immediately prior to such action and
the denominator of which shall be the number of shares of Common
Stock outstanding upon giving effect to such action. Such
adjustment shall be made whenever any event listed above shall
occur and shall become effective immediately after the record
date in the case of a shares dividend or distribution and shall
become effective immediately after the effective date in the
case of a subdivision, combination or reclassification. No
adjustment need be made for a change in the par value or from
par value to no par value of the Common Stock.
(ii) In case the Corporation shall issue rights, except in
the case of the Rights Offering, options or warrants to all holders
of its Common Stock entitling them to subscribe for or purchase
shares of Common Stock (or securities convertible into or
exchangeable for Common Stock) at a price per share less (taking
into account any consideration paid for such rights, options or
warrants) than the current market price per share of Common
Stock (as determined in accordance with the provisions of
paragraph (iv) of this Section 8 at the record date therefor),
the Conversion Price in effect immediately prior thereto shall
be adjusted so that the Conversion Price therefor shall be equal
to the price determined by multiplying the Conversion Price at
which shares of 9% Preferred Stock were theretofore convertible
by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding on the date of issuance of
such rights, options or warrants plus the number of additional
shares of Common Stock which the aggregate offering price of the
number of shares of Common Stock so offered would purchase at
the current market price per share of Common Stock (as
determined in accordance with the provisions of paragraph (iv)
of this Section 8) and of which the denominator shall be the
number of shares of Common Stock outstanding on the date of
issuance of such rights, options or warrants plus the number of
additional shares of Common Stock offered for subscription or
purchase. Such adjustment shall be made whenever such rights,
options or warrants are issued, and shall become effective
immediately after the record date for the determination of
shareholders entitled to receive such rights, options or
warrants. However, upon the expiration of any right, option or
warrant to purchase Common Stock the issuance of which resulted
in an adjustment in the Conversion Price pursuant to this
subparagraph (ii), if any such right or warrant shall expire and
shall not have been exercised, the Conversion Price shall
immediately upon such expiration be recomputed and effective
immediately upon such expiration be increased to the price it
would have been (but reflecting any other adjustments to the
Conversion Price made pursuant to the provisions of this Section
8 after the issuance of such rights, options or warrants) had
the adjustment of the Conversion Price made upon the issuance of
such rights, options or warrants been made on the basis of
offering for subscription or purchase only that number of shares
of Common Stock actually purchased upon the exercise of such
rights or warrants actually exercised.
(iii) In case the Corporation shall fix a record date for the
making of a distribution to all holders of its Common Stock
(including any such distribution made in connection with a
consolidation or merger in which the Corporation is the
continuing corporation) of capital shares (excluding cash
dividends and the distributions referred to in Section 8(i)
above) or rights, options or warrants to subscribe for capital
shares (excluding those referred to in subparagraph (ii) of this
Section 8), then in each such case, the Conversion Price shall
be adjusted so that after such record date, the Conversion Price
shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the close of business on
such record date by a fraction of which the numerator shall be
the current market price per share of Common Stock (as
determined in accordance with the provisions of paragraph (iv)
of this Section 8) on the date of such distribution less the
fair market value (as determined by the Board of Directors,
whose determination shall be conclusive) of the portion of the
capital shares, rights, warrants, evidences of indebtedness or
assets so distributed with respect to each share of Common Stock
(but not equal to or less than zero) and the denominator of
which shall be the current market price per share of Common
Stock. Such adjustment shall be made whenever any such
distribution is made, and shall become effective immediately
after the record date for the determination of shareholders
entitled to receive such distribution.
(iv) For the purpose of any computation under paragraphs (ii)
and (iii) of this Section 8, the current market price per share
of Common Stock at any date shall be deemed to be the Fair
Market Value, as defined below. For purposes of this section,
Fair Market Value shall mean the average reported closing sales
price for the 20 trading days immediately preceding the day in
question, or, in the event no closing sales take place during
such period, the average of the closing bid and asked prices for
such period, in each case on the principal national securities
exchange or on the National Market System ("NMS") of the
National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ") on which the shares of Common Stock
are listed or admitted to trading or quoted, as the case may be,
or, if not listed or admitted to trading or quoted on NMS, the
average of the highest reported bid and lowest reported asked
prices as furnished by NASDAQ, or a similar organization if
NASDAQ is no longer reporting such information. In the absence
of one or more such quotations, the Board of Directors of the
Corporation shall determine in good faith the Fair Market Value
of the Common Stock, which determination shall be set forth in a
certificate by the Secretary of the Corporation.
(v) No adjustment in the conversion price shall be required
unless such adjustment would require an increase or decrease of
at least one percent (1%) in the price then in effect; provided,
however, that any adjustments which by reason of this paragraph
(v) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
calculations under this Section 8 shall be made to the nearest
cent.
(vi) In the event that, at any time as a result of an
adjustment made pursuant to this Section 8, the holder of any
shares of 9% Preferred Stock thereafter surrendered for
conversion shall become entitled to receive any shares of the
Corporation other than shares of the Common Stock, thereafter
the number of such other shares so receivable upon conversion of
any share of 9% Preferred Stock shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions with respect to the Common
Stock contained in paragraphs (i) through (v) of this Section 8,
and the other provisions of this Section 8 with respect to the
Common Stock shall apply on like terms to any such other shares.
(vii) Whenever the Conversion Price is adjusted, as herein
provided, an appropriate officer of the Corporation shall
execute a certificate setting forth the Conversion Price after
such adjustment and setting forth a brief statement of the facts
requiring such adjustment and a computation thereof. The
Corporation shall promptly cause a notice of the adjusted
Conversion Price to be mailed to each registered holder of
shares of 9% Preferred Stock.
9. Notices of Record Dates and Effective Dates. In case: (a)
the Corporation shall declare a dividend (or any other
distribution) on the Common Stock payable otherwise than in
shares of Common Stock; or (b) the Corporation shall authorize
the granting to the holders of Common Stock of rights, other
than by way of the Rights Offering, to subscribe for or purchase
any capital shares of any class or any other rights, other than
by way of the Rights Offering; or (c) of any reorganization,
share exchange or reclassification of the capital shares of the
Corporation (other than a subdivision or combination of
outstanding shares of Common Stock or change in par value from
par to no par), or of any consolidation or merger to which the
Corporation is party or of the sale, lease or exchange of all or
substantially all of the property of the Corporation; or (d) of
the voluntary or involuntary dissolution, liquidation or winding
up of the Corporation, then the Corporation shall cause to be
mailed to the recordholders of the 9% Preferred Stock not more
than 60 and not less than 10 days prior to the applicable record
date or effective date hereinafter specified, a notice stating
(i) the date on which a record is to be taken for the purpose of
such dividend, distribution or rights, or, if a record is not to
be taken, the date as of which the holders of record of Common
Stock to be entitled to such dividend, distribution or rights
are to be determined or (ii) the date on which such
reclassification, reorganization, share exchange, consolidation,
merger, sale, lease, exchange, dissolution, liquidation or
winding up is expected to become effective, and the date as of
which it is expected that holders of record of Common Stock
shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such
reclassification, reorganization, share exchange, consolidation,
liquidation, merger, sale, lease, exchange, dissolution,
liquidation or winding up.
10. Voting Rights.
(a) Holders of 9% Preferred Stock shall be entitled to
notice of all shareholders' meetings. Except as otherwise required by
law, at any annual or special meeting of the Corporation's
shareholders, or in connection with any written consent in lieu
of any such meeting, each outstanding share of 9% Preferred
Stock shall be entitled to one vote per share. Except as
otherwise required by law or this Statement of Resolution, the
9% Preferred Stock and the Common Stock shall vote together on
each matter submitted to the shareholders, and not by separate
class or series.
(b) In addition to any other vote or consent of shareholders
provided by law or in the Articles of Incorporation of the
Corporation, during the Specified Period (as defined in the
Stock Purchase Agreement) the Corporation shall not take (or
allow to be taken) any of the following actions without the
affirmative vote or written consent of the holders of a majority
of the shares of 9% Preferred Stock (unless such holders do not
act within 20 days of receipt of written notice to the Purchaser
by the Company or any member of the Special Committee (as
defined in the Preferred Stock Purchase Agreement) of any of the
matters set forth below, which notice shall set forth in
reasonable detail the action proposed to be taken or not taken):
(i) sell, lease or otherwise convey or dispose of any material
assets or group of assets of the Corporation or any of its
subsidiaries, (ii) engage in any line of business not similar to
the businesses in which the Corporation is currently engaged,
(iii) effect a merger or consolidation involving the Corporation
or any subsidiary, (iv) assume or incur any material amount of
indebtedness, (v) subject any material assets of the Corporation
or any of its subsidiaries to any material lien, claim or
encumbrance, (vi) accelerate the collection of any material
amount of accounts receivable of the Corporation or any of its
subsidiaries, (vii) discharge, other than for cause, any
management employee or hire any new management employee or
appoint any officers of the Corporation or any of its
subsidiaries, (viii) pay (other than regularly scheduled
compensation to its employees and non-employee directors at
levels no greater than those in effect immediately prior to the
date hereof subject to clause (xi) below), loan or advance any
amount to, transfer or lease any properties or assets (real,
personal or mixed, tangible or intangible) to or from, or enter
into any agreement or arrangement of any kind with, any of its
employees (other than customary employment arrangements with
non-management employees and normal travel advances and expense
reimbursements), officers, directors, consultants, shareholders
or any Affiliate or Associate (as defined in Rule 12b-2 of the
Securities Exchange act of 1934, as amended) of any of the
foregoing, (ix) make any material capital expenditures other
than in the ordinary course of business consistent with past
practice, (x) void or take any action or fail to take any action
which would result, with the giving of notice or the passage of
time or both, in the voiding of any material agreement, or
exercise any option to renew, or extend, any material agreement
or renew any material agreement for any period of time, (xi)
increase the compensation (by way of salary, bonus or otherwise)
of any officer, director, employee (other than increases for
non-management employees in the ordinary course of business and
which will not be material to the Corporation's consolidated
condition (financial or otherwise)) or consultant of the
Corporation, (xii) amend the Articles of Incorporation or
By-Laws of the Corporation, (xiii) acquire, directly or
indirectly, by redemption or otherwise (other than redemption of
the 9% Preferred Stock as provided herein), any capital shares
of the Corporation, declare or pay any dividends thereon in
cash, securities or other property (other than dividends on the
9% Preferred Stock, dividends on Junior Securities paid in
Junior Securities and the distribution of the Rights (as defined
in the Preferred Stock Purchase Agreement)) or make any other
distribution with respect thereto, (xiv) sell, grant or
otherwise issue any capital shares or any other securities or
any instruments convertible into or exchangeable or exercisable
for, any securities of the Corporation or any of its
subsidiaries (other than the issuance of Common Stock pursuant
to the proper exercise of currently outstanding employee stock
options, pursuant to the Rights Offering and upon conversion of
the Preferred Stock and dividends on the Preferred Stock), (xv)
dissolve, liquidate or wind-up the Corporation or any material
subsidiary thereof, or (xvi) enter into any agreement,
commitment or understanding with respect to any of the foregoing;
(c) (1) If and whenever accrued dividends on the shares of
9% Preferred Stock shall not have been paid in an aggregate amount
equal to or greater than four semi-annual dividends on shares of
9% Preferred Stock at the time outstanding (whether or not
consecutive), then the number of directors of the Corporation
shall be increased by three (or by the greater number described
below) and the holders of shares of 9% Preferred Stock and the
holders of shares of Parity Securities (if so provided by the
terms of such Parity Securities) voting together as a single
class (with each class or series having a number of votes
proportionate to the aggregate liquidation preference of its
outstanding shares), shall be entitled to elect a number of
directors equal to the greater of three or such number that
would result in such holders electing at least one-third
(rounded to the nearest whole number) of the members of the
Board of Directors at any special meeting called in the manner
provided below and at any subsequent meeting of shareholders of
the Corporation at which directors are to be elected during the
period such dividends remain in arrears. Each class or series
of shares entitled to vote for the additional directors shall
have a number of votes proportionate to the aggregate
liquidation preference of its outstanding shares. Such right to
vote as a single class to elect such number of Directors shall,
when vested, continue until all dividends in arrears on the
shares of 9% Preferred Stock and such Parity Securities, as the
case may be, shall have been paid in full and, when so paid,
such right to elect such number of directors separately as a
class shall cease and the term of office of all directors so
elected shall expire, subject, always, to the same provisions
for the vesting of such right to elect such number of directors
separately as a class in the case of future dividend defaults in
an aggregate amount equal or greater than four semi-annual
dividends. At any time when such right to elect directors
separately as a class shall have so vested, a special meeting
for the election of such directors may be called by the Chairman
of the Board or the President of the Corporation or, if not
called within 20 days after the vesting of such right, by the
written request of holders of at least 10% of the shares of 9%
Preferred Stock entitled to vote at such meeting, which meeting
shall be held not more than 60 days after it is called at the
place and upon the notice provided by law and in the By-laws of
the Corporation, as amended from time to time (the "By-laws"),
provided that no such special meeting shall be called if the
request therefor is received by the Corporation within 60 days
before the date fixed for the next ensuing annual meeting of
holders of Common Stock, at which meeting such directors may be
elected by the holders of the shares of 9% Preferred Stock and
such Parity Securities.
(2) So long as any shares of 9% Preferred Stock are
outstanding, the Corporation shall take such action as may be
necessary so that its By-laws shall contain provisions ensuring
that the number of directors of the Corporation shall at all
times be such that the exercise, by the holders of shares of 9%
Preferred Stock and the holders of shares of Parity Securities,
of the right to elect directors under the circumstances provided
in paragraph (1) of this subclause (c) will not contravene any
provisions of the Corporation's Articles of Incorporation or
By-laws.
(3) Directors elected pursuant to paragraph (1) of this
subclause (c) shall serve until the earlier of (a) the next
annual meeting of the shareholders of the Corporation and the
election (by the holders of shares of 9% Preferred Stock and the
holders of Parity Securities) and qualification of their
respective successors or (b) the date upon which all dividends
in arrears on the shares of 9% Preferred Stock and such Parity
Securities shall have been paid in full. If, prior to the end
of the term of any director elected as aforesaid, a vacancy in
the office of such director shall occur during the continuance
of a default in dividends on the shares of 9% Preferred Stock or
such Parity Securities by reason of death, resignation or
disability, such vacancy (subject to the requirements of
applicable law) shall be filled for the unexpired term by the
appointment by the remaining director(s) elected as aforesaid of
a new director for the unexpired term of such former director.
(4) If a Statement of Resolution with respect to a class of
Senior Securities shall provide that the holders of shares of
such series shall vote as a class with the holders of shares of
9% Preferred Stock and Parity Securities, then all references in
this subclause (c) to Parity Securities shall be deemed to
include such Senior Securities.
(5) The special voting rights provided for in this Section
10(c) shall be in addition to any other voting rights conferred
upon the holders of the 9% Preferred Stock by this Statement of
Resolution. Notwithstanding anything to the contrary contained
herein, to the extent that any of the provisions of this Section
10 are determined to be in violation of applicable law, then
such offending provisions shall be modified in such manner as
will (i) to the maximum extent possible provide to the holders
of the 9% Preferred Stock the benefits intended to be conferred
upon the holders of the 9% Preferred Stock pursuant to this
Section 10 and (ii) comply with applicable law.
B. The recitals and resolutions contained herein have not been
modified, altered or amended and are presently in full force and
effect.
IN WITNESS WHEREOF, the undersigned has executed this
Statement this _____ day of ________, 1995.
CHAMPION PARTS, INC.
By:
President
Attest:
_____________________________
Secretary
PREFERRED STOCK PURCHASE AGREEMENT
This Agreement, dated as of March 23, 1995, is executed by and
between Champion Parts, Inc., an Illinois corporation (the
"Company"), and RGP Holdings, Inc., a Pennsylvania corporation
("RGP" or the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Company desires to sell, and the Purchaser desires
to purchase, an aggregate of $5,000,001 of the Company's Series
A Redeemable Cumulative Convertible Voting 9% Preferred Shares;
and
WHEREAS, the Company and the Purchaser desire to set forth
certain agreements and certain terms and conditions regarding
the sale and purchase of the Series A Redeemable Cumulative
Convertible Voting 9% Preferred Shares;
NOW, THEREFORE, in consideration of the foregoing premises and
the representations, warranties, covenants and agreements herein
contained, the parties hereto agree as follows:
ARTICLE 1
Sale and Purchase of Preferred Stock
1.1 Authorization of Stock. In accordance with Article 5 of
the Company's Articles of Incorporation (the "Articles of
Incorporation"), the Board of Directors of the Company (the
"Board") has adopted and prior to the Closing Date (as defined
herein) the Company will file with the Secretary of State of the
State of Illinois (the "Illinois Secretary") a statement of
resolution in the form of Exhibit 1.1 hereto (the "Statement of
Resolution") authorizing the issuance, and designating the
relative rights, preferences, qualifications, limitations,
restrictions and the special or relative rights of the Series A
Redeemable Cumulative Convertible Voting 9% Preferred Shares, no
par value per share, 2,000,000 shares of which shall be
authorized.
1.2 Purchase of Preferred Stock. In reliance upon the
representations, warranties, covenants and agreements contained
in this Agreement, the Purchaser agrees to purchase from the
Company and the Company agrees to issue and sell to the
Purchaser 1,666,667 shares of Series A Redeemable Cumulative
Convertible Voting 9% Preferred Shares (the "Preferred Stock"),
for the aggregate purchase price of $5,000,001 (the "Purchase
Price"). At the Closing (as defined below), the Company shall
deliver to the Purchaser, certificates representing the
Preferred Stock purchased by the Purchaser,registered in the
name of such Purchaser, or such nominees as the Purchaser shall
specify, against the payment of the Purchase Price by wire
transfer of immediately available funds.
1.3 Conversion of Preferred Stock, Liquidation and
Redemption. As more fully set forth in the Statement of Resolution and the
provisions of Paragraph 6.5 hereof, the Preferred Stock will be
convertible into Common Shares, $.10 par value per share (the
"Common Stock"), of the Company at an initial conversion price
of $3.00 per share of Common Stock (the "Conversion Price") or
will be redeemable at a per share redemption price equal to the
stated value plus (in certain circumstances) accrued and unpaid
dividends to the date of redemption. The liquidation preference
of the Preferred Stock will be equal to its per share stated
value plus accrued and unpaid dividends to the date of
liquidation.
1.4 Closing. Subject to the fulfillment or waiver of the
conditions precedent set forth in Articles 4 and 5, the closing
of the transactions contemplated hereby (the "Closing") shall
take place at 10:00 a.m., New York time, on the tenth day after
the mailing (not including the day of mailing) of the NASD
Notice (as defined herein) at the offices of Shereff, Friedman,
Hoffman & Goodman, LLP, 919 Third Avenue, New York, New York
10022, or at such other time and place as the parties may
mutually agree; provided, however that if the Closing does not
occur by April 30, 1995 this Agreement shall terminate unless
the parties mutually agree to extend the Agreement. The date
upon which the Closing occurs is referred to herein as the
"Closing Date."
ARTICLE 2
Representations and Warranties of the Company
The Company represents and warrants to and covenants and agrees
with the Purchaser as follows:
2.1 Organization and Good Standing. The Company is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Illinois. The Company
has all requisite corporate power and authority to own its
properties and assets and carry on its business as now
conducted, and is duly qualified and in good standing as a
foreign corporation in each jurisdiction in which the location
or nature of its property or the character of its business makes
such qualification necessary, except where the failure to be so
qualified would not materially adversely affect the business,
condition, properties or results of operations of the Company
and its subsidiaries (the "Subsidiaries") taken as a whole (a
"Material Adverse Effect"). Annexed hereto as Schedule 2.1A and
Schedule 2.1B, respectively, are true and complete copies of the
Articles of Incorporation and by-laws of the Company (the
"By-laws"), as in effect on the date hereof.
2.2 Corporate Power; Authorization; Binding Agreements. The
Company has the full corporate power and authority to execute
and deliver this Agreement and to perform fully its obligations
hereunder. The execution, delivery and performance of this
Agreement, the adoption and filing of the Statement of
Resolution with the Illinois Secretary and the issuance of the
Preferred Stock hereunder have been duly authorized by all
necessary action of the Company (subject to receipt of the NASD
Approval, as hereinafter defined). This Agreement and the other
agreements required to consummate the transactions contemplated
hereunder have been (or will be on or prior to the Closing Date)
duly executed and delivered by and constitute valid and binding
obligations of the Company enforceable against the Company in
accordance with their respective terms except as enforceability
may be limited by bankruptcy, insolvency, moratorium, fraudulent
conveyance and other rights affecting creditors rights generally
or by general equitable principles (regardless of whether such
enforceability is considered in a proceeding at law or equity)
or public policy or, to the extent to which they limit or
eliminate cumulative voting rights, the provisions of the
Constitution of the State of Illinois.
2.3 Post-Financing Capitalization. The authorized capital
stock of the Company consists of 50,000,000 shares of Common
Stock, of which (i) 3,655,266 shares are issued and outstanding
on the date hereof, (ii) 4,500 shares are issuable pursuant to
employee options to purchase or acquire shares of Common Stock
(whether or not currently exercisable) and (iii) no shares are
issuable pursuant to outstanding securities convertible into or
exercisable or exchangeable for shares of Common Stock (whether
or not currently convertible, exercisable or exchangeable); and
10,000,000 Preferred Shares, of which 2,000,000 shares, upon the
filing of the Statement of Resolution with the Illinois
Secretary, will be designated as the Preferred Stock, and of
which no shares are issued and outstanding on the date hereof.
All of the presently outstanding shares of Common Stock have
been duly and validly authorized and issued and are fully paid
and non-assessable with no personal liability attaching to the
ownership thereof. The Preferred Stock to be issued hereunder
has been duly and validly authorized and, when delivered and
paid for pursuant to this Agreement, will be validly issued,
fully paid and non-assessable with no personal liability
attaching to the ownership thereof. The relative rights,
preferences, qualifications, limitations, restrictions and other
matters relating to the Common Stock and the Preferred Stock are
as reflected in the Articles of Incorporation and the Statement
of Resolution. Except as set forth above, there are no
outstanding subscriptions, warrants, options, calls, commitments
or other rights to purchase or acquire, or securities
convertible into or exercisable or exchangeable for, any capital
stock of the Company. There are no preemptive rights with
respect to the issuance or sale of the Company's capital stock.
Since January 1, 1994, the Company has not declared or paid any
dividends or other distribution with respect to its Common
Stock. The Common Stock issuable upon conversion of the
Preferred Stock has been duly and validly reserved and, upon
issuance upon conversion of the Preferred Stock, will be duly
and validly issued, fully paid and non-assessable with no
personal liability attaching to the ownership thereof. Upon the
issuance of the Preferred Stock and the Common Stock issuable
upon the conversion thereof, the Purchaser will receive good
title to the Preferred Stock and such shares of Common Stock,
respectively, free and clear of all liens, claims, encumbrances
or adverse interests created by the Company. On the Closing
Date, all stock transfer or other taxes and charges (other than
income taxes) which are required to be paid in connection with
the issue, sale and transfer of the Preferred Stock to the
Purchaser hereunder will have been fully paid by the Company and
all laws imposing such taxes or charges will have been fully
complied with in respect of the Preferred Stock by the Company.
On or prior to the Closing Date, the Statement of Resolution
will have been duly filed with the Illinois Secretary and the
terms of the Preferred Stock set forth therein and in the
Articles of Incorporation and the Statement of Resolution will
be effective under Illinois law, except to the extent to which
Section 10(c) thereof limits or eliminates cumulative voting
rights, if any, in all or specified circumstances in violation
of the provisions of the constitution of the State of Illinois.
2.4 Absence of Certain Developments. Raymond G. Perelman
has been the non-executive chairman of the Board of Directors since
December 1992 and a director of the Company since 1988, and his
business associate Barry Katz has been a director of the Company
and a member of its Audit Committee since December 1993. They
have participated in Board and committee meetings and in
connection therewith and in connection with a due diligence
investigation of the Company have reviewed documents and
information relating to the affairs of the Company and its
financial condition provided by the Company and have had several
conversations with Company employees regarding inventory and
other issues. Messrs. Perelman and Katz have been critical of
the Company's financial reporting and with the Company's
policies relating to inventories and write-offs. Management of
the Company has defended such policies and stated that such
policies were appropriate. In addition, the Company's financial
results have deteriorated and it is possible that the Company's
independent accountants will render their report on the
Company's financial statements for the 1994 fiscal year subject
to a going concern qualification. The Company is in precarious
financial condition and is in default under the Bank Loan
Agreement, as hereinafter defined (which expires on March 31,
1995), and as a consequence of these and other factors, various
customers, suppliers and employees of the Company have raised
concerns over the Company's financial condition and their
willingness to do business with, or work for, the Company, any
of which concerns could result in a Material Adverse Effect and
which concerns have been fully disclosed to the Purchaser.
Subject to the foregoing and the effect of general economic
conditions, to the knowledge of the Company, there are no facts
or circumstances which could reasonably be expected to have a
Material Adverse Effect, except those known to Messrs. Perelman
and Katz.
2.5 Income Taxes. The Company and the Subsidiaries have
filed all federal, state, county, local and foreign income tax returns
required to be filed by them through the date hereof and have
paid or adequately accrued for all taxes reflected as due
thereon. Except as set forth on Schedule 2.5, there is no
material pending dispute with any taxing authority, and the
Company has no knowledge of a proposed material liability for
any income tax to be imposed upon the Company's properties or
assets for which (for the period through the end of the 1994
fiscal year) there is not an adequate reserve reflected in the
balance sheet included in the Company's Quarterly Report on Form
10-Q for the quarterly period ended October 2, 1994 (the
"October Balance Sheet").
2.6 Compliance with Other Instruments. Except as disclosed
in the reports filed with the Securities and Exchange Commission
(the "Commission") described in Section 2.9 hereof or in
Schedule 2.6 hereof, neither the Company nor any of the
Subsidiaries is in violation or default of any provision of (i)
its Articles of Incorporation or By-laws, or (ii) any contract,
agreement, obligation, commitment, license, indenture, mortgage,
deed of trust, loan or credit agreement (except the Company is
in default under the Bank Loan Agreement, as hereinafter
defined, and under the Reimbursement Agreement entered into in
connection with its Industrial Revenue Bond issue) or any other
agreement or instrument to which the Company or any Subsidiary
is a party or any of their assets are bound, except for
violations with respect to this clause (ii) that would not have
a Material Adverse Effect. Except as set forth in Schedule 2.6
hereto, the execution, delivery and performance of this
Agreement and the other agreements contemplated hereunder will
not materially conflict with or, with or without the serving
and/or receipt of notice or the passage of time or both, result
in any material default or in any material modification of (i)
any provision of the Articles of Incorporation or By-laws of the
Company or any Subsidiary or (ii) the terms of any material
contract, agreement, obligation, commitment, license, indenture,
mortgage, deed of trust, loan or credit agreement or any other
material agreement or instrument to which the Company or any
Subsidiary is a party or any of its material assets are bound
(except that the Bank Waiver and Consent, as hereinafter
defined, is required under the Bank Loan Agreement and the NASD
Application, as hereinafter defined, must be filed with, and
approved by, the National Association of Securities Dealers,
Inc. (the "NASD") and the Notice to Shareholders, as hereinafter
defined, must be given to implement this Agreement without
shareholder approval), or the creation of any lien, charge or
encumbrance of any nature upon any of the properties or assets
of the Company which is material to the Company and its
Subsidiaries taken as a whole or result in the revocation or
modification of any permits, approvals, licenses, franchises,
authorizations and approvals issued or granted to the Company or
the Subsidiaries by the United States, any state or local
government or any department, agency, board, commission, bureau
or instrumentality of any of the foregoing, and any pending
applications therefor, the revocation or modification of which
would have a Material Adverse Effect. To the knowledge of the
Company, the execution, delivery and performance of this
Agreement by the Company will not violate any judgment, decree,
order, statute, rule or regulation of any federal, state or
local government or agency having jurisdiction over the Company,
the Subsidiaries or their assets.
2.7 Proceedings; Litigation; Arbitration. To the knowledge
of the Company, no action, suit, claim, investigation, inquiry or
other proceeding by any governmental body or other person or
legal or administrative proceeding has been instituted or to the
Company's knowledge threatened which questions the validity or
legality of the transactions contemplated hereby (except for the
NASD Application and except for the letter from the Vice
President and General Counsel of Echlin, Inc. addressed to the
Chairman of the Special Committee (as hereinafter defined)).
Except as set forth on Schedule 2.7, to the knowledge of the
Company, there are no actions, suits, claims, proceedings,
investigations pending or threatened against the Company or any
of the Subsidiaries, singly or in the aggregate, except for
actions, suits, claims, investigations, inquiries or proceedings
that would not, if decided adversely to the Company, result in a
Material Adverse Effect.
2.8 Consents, etc. Except for the Bank Waiver and Consent,
the filing of the Statement of Resolution, the NASD Application,
the Notice to Shareholders and any filings with the Commission,
no consent, approval, waiver or authorization of or designation,
declaration or filing with any governmental or regulatory
authority or any other person is required in connection with the
valid execution and delivery of this Agreement and the other
agreements contemplated hereunder, or the offer, sale, issuance
or conversion of the Preferred Stock.
2.9 Securities Exchange Act Reports. True and complete
copies of the following documents (herein collectively called
the "SEC Reports"), have been separately delivered and
identified by the Company to the Purchaser:
(i) The Company's Annual Report on Form 10-K for the
fiscal year ended January 2, 1994, as amended by an amendment to the
Annual Report on Form 10-K on Form 10-K/A dated April 29, 1994;
(ii) The Company's Quarterly Reports on Form 10-Q for
the quarterly periods ended April 3, 1994, July 3, 1994 and October
2, 1994, respectively;
(iii) The Company's definitive proxy statement
relating to the Company's 1994 annual meeting of shareholders; and
(iv) The Company's Current Reports on Form 8-K, dated
February 21, 1995, January 17, 1995 and March 7, 1994.
2.10 Transactions with Affiliates; Severance Agreements.
Except for the six month severance arrangements with Donald
Santucci and Thomas Blashill, and the severance agreements with
Roger Wilson, Mark Smetana, Robert Mikaloshek and Charles P.
Schwartz, Jr., true and complete copies of which are annexed
hereto as Schedule 2.10, the Company has no material severance
obligations or liabilities under severance agreements or
otherwise to any current or former member of management or
employee of the Company or any Subsidiary.
2.11 Registration Rights. Except for registration rights to
the extent granted to Echlin, Inc. ("Echlin") pursuant to a
Stock Purchase Agreement dated March 18, 1987 (the "Echlin
Agreement") between the Company and Echlin, no holder of any
securities of the Company has demand registration rights with
respect to such securities or any other registration rights.
2.12 Securities Exemption. Assuming the representations and
warranties of the Purchaser are true, the offer and sale of the
Preferred Stock pursuant to this Agreement (and in respect of
dividends payable on the Preferred Stock) and the issuance of
the Common Stock to the Purchaser upon the conversion of the
Preferred Stock are exempt from the registration requirements of
the Securities Act of 1933, as amended (the "Act"), and the
Company has not and will not take any actions which would cause
the offers and sales contemplated hereunder to be ineligible for
such exemption.
2.13 Certain Events. Except as set forth in Schedule 2.13,
since February 21, 1995, neither the Company nor any Subsidiary
has (a) declared or paid any dividend or other distribution with
respect to its shares of Common Stock; (b) amended its Articles
of Incorporation or By-laws (except as provided herein); (c)
issued or sold or agreed to issue or sell any of its securities
or options, warrants or other rights to purchase such securities
except for shares issued upon exercise of options and warrants
currently outstanding and except for the transactions
contemplated by this Agreement; (d) increased the compensation
of any of its directors, officers or employees or entered into
any employment, consulting or other service agreements, except
in the ordinary course of business consistent with prior
practice (except for the six month severance arrangements with
Donald Santucci and Thomas Blashill approved by the Board and
the six month severance agreement with Robert Mikaloshek); and
(e) entered into any agreement (written or oral) or transaction
(i) not in the ordinary course of business; (ii) involving
consideration in excess of $50,000 (other than inventory
acquisitions and dispositions in the ordinary course); or (iii)
for the sale or acquisition or lease of any material assets
other than the sale or acquisition of inventory in the ordinary
course of business and the disposition of obsolete assets.
2.14 No-Solicitation. Neither the Company nor any of its
Subsidiaries or affiliates shall (and the Company shall use its
best efforts to cause its officers, directors, employees,
representatives and agents, including, but not limited to,
investment bankers, attorneys and accountants, not to), directly
or indirectly, encourage, solicit, or initiate any inquiries or
the making of any proposal or offer by any corporation,
partnership, person or other entity or group (other than the
Purchaser) concerning any merger, tender offer, exchange offer,
sale of material assets, sale of shares of capital stock or debt
securities or similar transactions involving the Company or any
Subsidiary, division or operation or principal business unit of
the Company (an "Acquisition Proposal") or, except to the extent
required (in the opinion of counsel) for the discharge by the
Board of Directors and/or the Special Committee of its fiduciary
duties, will engage in any negotiations concerning, or provide
any confidential information or data to, or have any discussion
with, any person relating to an Acquisition Proposal. Except as
set forth in Schedule 2.14, since February 21, 1995 the Company
has not explored any other Acquisition Proposal. The Company
further represents that it will immediately cease any other
existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the
foregoing, subject to, with respect to the recommencement of any
such activities in the future, in the opinion of its counsel,
the discharge by the Board of Directors and/or the Special
Committee, as hereinafter defined, of its fiduciary duties.
Nothing contained in this paragraph 2.14 shall prohibit the
Company or its Board of Directors and/or the Special Committee
from taking and disclosing to the Company's shareholders a
position with respect to a tender offer by a third party
pursuant to Rules 14d-9 and 14e-2(a) promulgated under the
Securities Exchange Act of 1934, as amended, or from making such
disclosure to the Company's shareholders which, in the judgment
of the Board of Directors and/or the Special Committee with the
advice of Morgan, Lewis & Bockius, may be required under
applicable law. The Company will promptly (and in any event
within 24 hours of the receipt thereof) notify the Purchaser of
any such proposal, or notify the Purchaser that an inquiry has
been made, and will keep the Purchaser fully apprised of all
developments with respect to any such Acquisition Proposal.
2.15 Customers and Suppliers. Except as previously disclosed
to Purchaser, to the knowledge of the Company, none of the
Company's ten largest customers in terms of sales or ten largest
suppliers in terms of purchases, in each case with respect to
the fiscal year ending January 2, 1995, has ceased doing
business with the Company and, to the knowledge of the Company,
none of such customers or suppliers intends to cease doing
business with the Company or to materially and adversely change
its relationship with the Company.
2.16 Knowledge of the Company. For purposes of this Article
2, the phrase "knowledge of the Company" or "to the Company's
knowledge" shall mean the actual knowledge of any of Donald G.
Santucci, Thomas W. Blashill, Roger Wilson and Mark Smetana, and
the knowledge of no other officer, director, employee or agent
of the Company shall be imputed to them.
2.17 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article 2, the
Registration Rights Agreement (as hereinafter defined) and the
Officer's Certificate referred to in Section 4.3 hereof, neither
the Company nor any other person makes any representations or
warranties, expressed or implied, with respect to the Company
and its business or operations and this Agreement and the
transactions contemplated hereby.
ARTICLE 3
Representations and Warranties of the Purchaser
The Purchaser, represents and warrants to, and covenants and
agrees with, the Company as follows:
3.1 Organization and Good Standing. The Purchaser is a
corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation, and
has all requisite corporate power and authority to carry on its
business as now conducted.
3.2 Corporate Power. The execution, delivery and
performance of this Agreement have been duly authorized by all necessary
corporate action of the Purchaser. The Purchaser has the full
right, power and authority to enter into this Agreement. This
Agreement constitutes the valid and binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with
its terms, except as the same may be limited by bankruptcy,
insolvency, moratorium, fraudulent conveyance and other rights
affecting creditors' rights generally or by general equitable
principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) or public
policy. The address and principal place of business of the
Purchaser is 225 City Line Avenue, Bala Cynwyd, Pennsylvania
19103.
3.3 Purchase for Investment. The Purchaser is purchasing
the Preferred Stock (as well as the Common Stock issuable upon
conversion of the Preferred Stock and any Preferred Stock issued
as a dividend on shares of Preferred Stock) for its own account,
for investment purposes and not with a view to, or for resale in
connection with, any distribution or public offering thereof
within the meaning of the Act.
3.4 Unregistered Securities; Legend. The Purchaser
understands that the Preferred Stock to be issued pursuant to
this Agreement, and pursuant to the Statement of Resolution (and
the Common Stock issuable upon conversion of the Preferred Stock
and any Preferred Stock issued as a dividend on shares of
Preferred Stock), has not been registered under the Act and will
be issued in reliance upon an exemption from the registration
requirements thereof based in part on Purchaser's
representations herein. The Purchaser acknowledges that the
certificates representing the Preferred Stock (issued at Closing
and as dividends) and the Common Stock issuable upon conversion
thereof shall each bear a restrictive legend substantially as
follows:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or any
applicable state securities laws and may not be offered for
sale, sold, transferred or conveyed without registration or an
opinion of counsel in form and substance satisfactory to the
Company to the effect that such registration is not required."
3.5 Access to Data; Experience; Investment Decision.
(a) The Purchaser has had an opportunity to discuss
the Company's business plan with the management of the Company, and
to ask questions of officers of the Company. The Purchaser has
substantial experience in evaluating and investing in a
nonliquid investments such as the Preferred Stock and is capable
of evaluating the merits and risks of its investment in the
Company. The Purchaser is able to (x) bear the economic risk of
the investment in the Preferred Stock, (y) afford a complete
loss of such investment, and (z) hold the Preferred Stock
(issued at Closing and as dividends) and the Common Stock
issuable upon conversion thereof for an indefinite period.
(b) The Purchaser acknowledges that it has had an
opportunity to evaluate all information regarding the Company as it has
deemed necessary in connection with the transactions
contemplated by this Agreement and has independently evaluated
the transactions contemplated by this Agreement and reached its
own decision to enter into this Agreement.
3.6 Furnishing the Company with Information. The Purchaser
will furnish to the Company such information as is required in
accordance with the Act for inclusion in a registration
statement to be filed by the Company in connection with the
Rights Offering (as hereinafter defined) and such information as
is required in accordance with the Securities Exchange Act of
1934, as amended, and the proxy rules promulgated thereunder for
inclusion in the Proxy Statement to be used by the Company in
soliciting proxies for the election of directors pursuant to
Section 6.3 hereof.
3.7 Breach of Representations and Warranties. If, as of the
Closing Date, there is a breach of any of the representations or
warranties made by the Company in this Agreement, then (i) if
the Purchaser or Messrs. Perelman or Katz had actual knowledge
of such breach (and the knowledge of no other officer, director,
employee or agent of the Company shall be imputed to them) prior
to the execution of this Agreement, the Purchaser must proceed
with the Closing (if all other conditions to Closing are
satisfied) and waives any rights it may have against the Company
under this Agreement solely with respect to the specific facts
and circumstances of which the Purchaser had such knowledge
which resulted in the breach of such representation and
warranty, provided, however, that, subject to the provisions of
clause (ii), if there occurs a further or additional breach by
the Company of the same or any other representation and warranty
after the execution of this Agreement and on or before the
Closing, then the Purchaser may exercise any rights it may have
against the Company as a result of such further or additional
breach(es); or (ii) if the Company fully and accurately
discloses to the Purchaser on or prior to the Closing, or if the
Purchaser or Messrs. Perelman or Katz have actual knowledge of,
all of the facts and circumstances relating to the breach of any
representation or warranty of the Company, whether such breach
occurred after the date of this Agreement and on or before the
Closing or whether the breach existed as of the date of this
Agreement (provided that the Company had no knowledge of such
breach as of the date of this Agreement) and the Purchaser
decides either to proceed or not to proceed with the Closing,
then, whether the Purchaser decides to proceed or not to proceed
with the Closing, the Purchaser shall be deemed to have waived
any rights it may have against the Company under this Agreement,
and, with respect to a decision to proceed with, and upon the
occurrence of, the Closing, shall be deemed to have waived all
other rights it may have against the Company with respect to the
breach of any representation and warranty which occurred after
the date of this Agreement and on or before the Closing, in each
case solely with respect to the specific facts and circumstances
so disclosed by the Company to the Purchaser, or actually known
by the Purchaser or Messrs. Perelman or Katz, which resulted in
the breach of the representation and warranty.
ARTICLE 4
Conditions Precedent to Obligations of the Purchaser
Notwithstanding any other provisions of this Agreement, the
obligation of the Purchaser to consummate the transactions
contemplated hereby shall be subject to the fulfillment, prior
to or at the Closing, of each of the following conditions
precedent, any of which may be waived by the Purchaser:
4.1 Accuracy of Representations and Warranties. Subject to
Section 3.7 hereof, the representations and warranties of the
Company contained in this Agreement shall, when made and at and
as of the Closing, be true and correct in all material respects.
4.2 Performance by the Company. The Company shall have duly
performed and complied in all material respects with all terms,
agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing.
4.3 Officer's Certificate. The Company shall have delivered
to the Purchaser a certificate, dated the Closing Date, to the
effect that the Company has duly performed and complied with the
conditions set forth in Sections 4.1 and 4.2 hereof.
4.4 Opinions of Counsel. The Purchaser shall have received
from Lord, Bissell & Brook, counsel to the Company, an opinion,
dated the Closing Date, addressed to the Purchaser in form and
substance acceptable to the Purchaser.
4.5 Legal Proceedings. There shall not be any actual or
threatened action or proceeding by or before any court,
administrative agency or other governmental body which (i) seeks
to restrain, prohibit or invalidate any of the parties hereto
from entering into, or the performance of the transactions
contemplated by, this Agreement, or imposes limitations on the
ability of the Purchaser to exercise full rights of ownership or
to receive the full benefits of this Agreement and the Preferred
Stock and (ii) in the opinion of counsel for the Purchaser has a
reasonable probability of success on the merits.
4.6 Material Adverse Change. Since the date of this
Agreement and subject to Section 3.7 hereof, no facts, events or
circumstances shall have occurred which could, in the judgment
of the Purchaser, have a Material Adverse Effect.
4.7 NASD Compliance. The Company shall have applied for
(the "NASD Application") and received an exception (the "NASD
Consent") to the shareholder approval requirements contained in
Section 6(i) of Schedule D to the By-laws of the NASD in
accordance with Section 6(i)(1)(e) of such By-laws and a period
of ten days shall have elapsed from the date of the mailing (not
including the day of mailing) of the notice referred to in
Section 6(i)(1)(e) (the "Notice to Shareholders").
4.8 Registration Rights Agreement. The Company shall have
entered into a Registration Rights Agreement with the Purchaser
in the form of Exhibit 4.8 hereto (the "Registration Rights
Agreement").
4.9 Resignations. Donald Santucci shall have tendered his
resignation as the President and Chief Executive Officer of the
Company effective upon the Closing and the Company shall have
accepted such resignation; and Donald G. Santucci and Thomas W.
Blashill shall have tendered their resignations as directors of
the Company effective upon the Closing and the Company shall
have accepted such resignations.
4.10 Waiver, Consent and Extension from Banks. The Company
shall have received from LaSalle National Bank, Harris Trust and
Savings Bank and NBD Bank, N.A. (the "Banks") a waiver, consent
and extension (the "Bank Waiver and Consent") whereby the Banks
(x) waive certain non-compliance under the Amended and Restated
Credit Agreement (the "Bank Loan Agreement") between the Banks
and the Company dated March 31, 1993, as amended, (y) consent to
the transactions contemplated hereby and (z) agree to extend the
Bank Loan Agreement for a period of not less than 90 days from
March 31, 1995, in each case on terms reasonably acceptable to
the Purchaser.
4.11 Executive Committee. The By-laws shall provide for an
Executive Committee of the Board which shall be vested with the
maximum authority permitted by law (subject to the requirements
of Article III, Section 14 of the By-laws and Sections 6.3C,
6.3D and 6.3G of this Agreement), and the Board shall (x) have
appointed Raymond Perelman, Barry Katz and a member of the
Special Committee to be designated by the Purchaser as the sole
members of the Executive Committee and (y) have amended the
By-laws to fix the size of the Board of Directors at nine (9)
members.
4.12 Raymond G. Perelman shall have been appointed the Chief
Executive Officer of the Company and Barry Katz shall have been
appointed President and Chief Operating Officer of the Company
to hold such offices until the next meeting of shareholders at
which directors are elected and until their successors are duly
elected and/or appointed.
4.13 The Board shall have amended the By-laws to adopt by-law
provisions set forth on Exhibit 4.13 hereto.
4.14 The Board shall have amended the By-laws to amend
Article III, Sections 3 and 4 thereof, which, as so amended,
shall read as follows in their respective entirety:
"SECTION 3. REGULAR MEETINGS. A regular meeting of the board
of directors shall be held without other notice than this
By-law, immediately after the annual meeting of shareholders.
The board of directors may provide, by resolution, the time and
place for the holding of additional regular meetings without
other notice than such resolution; provided, however, that at
least one regular meeting of the Board of Directors shall be
held each calendar quarter; provided, further, that if, during
the period (the "Initial Period") commencing on the Closing Date
(as defined in the Preferred Stock Purchase Agreement (the
"Agreement") dated March 23, 1995 by and between the corporation
and RGP Holdings, Inc.) and ending upon the completion of the
first meeting of shareholders of the Company after the Closing
Date at which directors of the Company are elected, a regular
meeting has not been called prior to the 15th day of the last
month of any calendar quarter, such meeting shall take place at
the offices of the Company, at 10:00 a.m. on the last Wednesday
of such last month of the calendar quarter; provided that such
date falls within the Initial Period.
SECTION 4. SPECIAL MEETINGS. Special meetings of the board of
directors may be called by or at the request of the chairman of
the board, president or any two directors; provided, however,
that
(i) if during the Specified Period the Purchaser Nominees (as
both such terms are defined in the Agreement) do not constitute
a majority of the board, and
(ii) so long as the Purchaser Group (as defined in Section 6.3
of the Agreement) beneficially owns forty-five percent (45%) or
more of the number of common shares of the corporation
beneficially owned by the Purchaser Group upon consummation of
the Rights Offering (as defined in the Agreement), and if the
Rights Offering is not consummated, then based on 2,328,267 (as
such number may be adjusted as described below) shares of Common
Stock, consisting of 661,600 shares beneficially owned by the
Purchaser Group on March 23, 1995 and the 1,666,667 (as such
number may be adjusted pursuant to the Statement of Resolution
authorizing such shares) additional shares that would be
beneficially owned by the Purchaser Group upon conversion of all
Preferred Stock (as defined in the Agreement),
then special meetings of the board of directors may be called
only by or at the request of the chairman of the board or
president. The person or persons authorized to call special
meetings of the board of directors may fix any place in the
United States as the place for holding any special meeting of
the board of directors called by them."
Notwithstanding any other provision of this Agreement, and in
addition to the conditions set forth above, the obligation of
the Purchaser to consummate the transactions contemplated hereby
shall be subject to the receipt by the Company of the Fairness
Opinion (as defined herein) not later than ten days after the
mailing of the Notice to Shareholders and the receipt of the
NASD Consent, which in turn shall occur not later than five days
after the execution of this Agreement.
4.15 Shareholders Meeting. The Board shall have set a date
within one hundred twenty (120) days after the Closing for a
meeting of the shareholders of the Company for the purpose of
electing directors of the Company, and shall have selected a
slate of nominees for election to the Board which includes five
Purchaser Nominees (as defined in Section 6.3 hereof and four
Minority Nominees (as defined in Section 6.3 hereof)); provided,
however, that no such date shall be set without the prior
approval of the Purchaser, which approval shall not be
unreasonably withheld in light of the statutory and NASD
requirements that the Company hold such a meeting.
ARTICLE 5
Conditions Precedent to Obligations of the Company
Notwithstanding any other provision of this Agreement, the
obligations of the Company to consummate the transactions
contemplated hereby shall be subject to the fulfillment, prior
to or at the Closing, of each of the following conditions
precedent, any of which may be waived by the Company:
5.1 Accuracy of Representations and Warranties. The
representations and warranties of the Purchaser contained in
this Agreement shall, when made and at and as of the Closing, be
true and correct in all material respects.
5.2 Performance by the Purchaser. The Purchaser shall have
duly performed and complied in all material respects with all
terms, agreements and conditions required by this Agreement to
be performed or complied with by it prior to or at the Closing.
5.3 Officer's Certificate. The Purchaser shall have
delivered to the Company a certificate, dated the Closing Date, to the
effect that the Purchaser has duly performed and complied with
the conditions set forth in Section 5.1 and 5.2 hereof.
5.4 Legal Proceedings. There shall not be any actual or
threatened action or proceeding by or before any court,
administrative agency or other governmental body which (i) seeks
to restrain, prohibit or invalidate any of the parties hereto
from entering into, or the performance of the transactions
contemplated by, this Agreement, and (ii) in the opinion of
counsel for the Company, has a reasonable probability of success
on the merits.
5.5 Opinion of Counsel. The Company shall have received
from Michael Conley, Esq., Secretary and Associate Counsel of the
Purchaser, an opinion as to the matters covered by Sections 3.1
and 3.2 hereof.
5.6 Waiver and Consent from Banks. The Company shall have
received the Bank Waiver and Consent on terms reasonably
acceptable to the Company.
5.7 Fairness Opinion. The Company shall have received a
fairness opinion from Mesirow Financial, Inc. (the "Fairness
Opinion") in form and substance reasonably acceptable to the
Special Committee of the Board of Directors of the Company
established by resolution of the Board of Directors on January
17, 1995 (the "Special Committee").
5.8 NASD Compliance. The Company shall have made the NASD
Application and received the NASD Consent and a period of ten
days shall have elapsed from the date of the mailing (not
including the date of mailing) of the Notice to Shareholders.
ARTICLE 6
Affirmative Covenants
The parties hereto further covenant and agree as follows:
6.1 Fulfillment of Obligations; Notice of Breach. Subject
to the receipt of the NASD Consent, contemporaneously with the
execution of this Agreement (or as soon thereafter as the NASD
Consent is obtained), the Company will mail to its shareholders
the Notice to Shareholders and shall take all actions as may be
reasonably necessary or desirable to avail itself of the
exception referred to therein.
The Company will promptly give notice to the Purchaser of the
occurrence of any event or the failure of any event to occur
that results, or is reasonably likely to result, in a material
breach of any representation or warranty hereunder by the
Company or a failure by the Company to comply with any material
covenant, condition or agreement contained herein. If at any
time prior to the Closing Date a new event or condition exists
which would have been required to be disclosed in this Agreement
or in the Exhibits or Schedules hereto had it existed on the
date hereof, then the Company shall promptly disclose such event
or condition to the Purchaser in writing.
6.2 Accounts and Reports. The Company will maintain a
standard system of accounts in accordance with generally
accepted accounting principles consistently applied (except
changes approved by the Board and the Company's independent
accountants) and will keep proper financial records.
6.3 Corporate Governance.
A. At the Closing, and for a period of three years thereafter
(the "Covered Period"), the Purchaser shall have the right to
designate a majority (rounded up to the nearest whole number) of
the Company's nominees for election to the Board; provided, that
such nominees are "Suitable Directors." The nominees designated
by the Purchaser are herein referred to as the "Purchaser
Nominees." The Purchaser agrees that during the first year of
the Covered Period, three of the Purchaser Nominees will be
Independent Directors (as defined in Exhibit 4.13), and during
the second two years of the Covered Period, at least one of the
Purchaser Nominees will be an Independent Director. In
furtherance of the foregoing, the Company, acting through its
Board and in accordance with its Articles of Incorporation,
By-laws and applicable law, shall recommend in the proxy
statement for each annual or special meeting of shareholders at
which directors shall be elected, and shall recommend at each
such shareholders meeting, as part of the management or Board
slate for election to the Board, the Purchaser Nominees. All
shares for which the Company's management or Board holds proxies
(including undesignated proxies) shall be voted in favor of the
election of such Purchaser Nominees, except as may otherwise be
provided by shareholders submitting such proxies. In the event
that any Purchaser Nominee shall cease to serve as a director
for any reason, the Company shall cause (subject to the
provisions of applicable law) the vacancy resulting thereby to
be filled as promptly as practicable by a Suitable Director
selected by the Purchaser. The Purchaser shall cause the
Purchaser Nominees to provide the Company with such information
as the Company may reasonably request for inclusion in the
Company's proxy statement for each meeting at which their
election is to be acted upon. "Suitable Directors" shall mean
(x) persons of appropriate experience who possess the same level
of general business experience as the present non-employee
members of the Board, and (y) persons with respect to whom no
disclosure would be required in compliance with the requirements
of Item 401(f) of the Commission's Regulation S-K. The parties
hereto agree that the determination of "appropriate experience,"
as such term is used in the preceding sentence, shall be made in
good faith and subject to their fiduciary obligations by a
majority of the Company's Independent Directors (as defined in
Exhibit 4.13). If a nominee designated by the Purchaser is
determined not to be a Suitable Director, the directors who made
such determination shall set forth, in reasonable detail, their
reasons for such determination in a written statement to be
delivered to the Purchaser promptly after such determination.
The Purchaser agrees that Mr. Raymond F. Gross, who has a
consulting agreement with the Company until December 31, 1995,
is an Independent Director within the definition set forth in
Exhibit 4.13.
During the Covered Period, the directors, other than those
directors who are Purchaser Nominees (the "Other Incumbent
Directors"), will be entitled to designate four nominees for
election to the Board (the "Minority Nominees"); provided,
however, that the Other Incumbent Directors' right to designate
nominees shall be subject to, and the Minority Nominees shall
include the persons designated pursuant to, the Echlin
Agreement, if any. During the Covered Period, at least two of
the Minority Nominees will be Independent Directors. In
furtherance of the foregoing, the Company, acting through its
Board and in accordance with its Articles of Incorporation,
By-laws and applicable law, shall recommend in the proxy
statement for each annual or special meeting of shareholders at
which directors shall be elected, and shall recommend at each
such shareholders meeting, as part of the management or Board
slate for election to the Board, the Minority Nominees. Subject
to the directors fiduciary obligations and their good faith
determination that nominees are Suitable Directors, the
Purchaser and the Company each agrees to use its best efforts to
effectuate the provisions of the preceding sentence. If a
nominee designated by the Other Incumbent Directors is
determined not to be a Suitable Director, the directors who made
such determination shall set forth, in reasonable detail, their
reasons for such determination in a written statement to be
delivered to the Other Incumbent Directors promptly after such
determination.
In furtherance of the foregoing, the Company's Management or
Board, as the case may be, subject to their fiduciary
obligations, shall cumulate all votes with respect to shares for
which they held proxies in such a manner so as to use the fewest
votes necessary to assure the election of all of the Purchaser
Nominees and to cumulate all remaining votes to elect as many of
the Minority Nominees as possible in the order selected by the
Minority Nominees. The Purchaser and the Company will each use
its best efforts to effectuate the provisions of this Section
6.3.
In addition, during the Covered Period, the Purchaser and the
Company shall use their respective best efforts to cause the
Purchaser Nominees to appoint an Other Incumbent Director to
each committee of the Board of Directors; provided, however,
that it is agreed that the members of the Special Committee, who
are required to make certain determinations under the provisions
of the Agreement and the Statement of Resolution, shall not
include any Purchaser Nominees; provided, further that at the
time of each such determination there are at least three members
of the Special Committee.
Notwithstanding anything to the contrary contained herein, if
at any time during the Covered Period, there cease to be any
Other Incumbent Directors other than by reason of a breach by
the Purchaser, the Company or any of the Purchaser Nominees of
this Section 6.3, then the provisions contained in this Section
6.3 which accord rights to, or require performance of any
obligations by, the Other Incumbent Directors shall be of no
further force or effect; and, provided further, that if there
are Other Incumbent Directors, but such directors are unable or
unwilling (whether as a result of death, disability or other
reason) to exercise any rights accorded to or any
responsibilities imposed upon them pursuant to this Agreement
within a reasonable time, then to the extent of such
non-performance and with respect solely to the matter(s) to
which such non-performance relates, the approval of the Other
Incumbent Directors shall not be required.
During the Covered Period, the Board will consist of nine
members.
B. Consent Rights. During the Specified Period (as defined
herein), the Company shall not take (or allow to be taken by any
Subsidiary) any of the following actions without the affirmative
vote or written consent of the Purchaser (unless the Purchaser
does not act within 20 days of receipt of written notice to the
Purchaser by the Company or any member of the Special Committee
of the action proposed to be taken or not taken by the Company,
such notice to include a reasonably detailed description of the
proposed action or inaction):
(i) sell, lease or otherwise convey or dispose of
any material asset or group of assets of the Company or any of its
Subsidiaries,
(ii) engage in any line of business not similar to
the businesses in which the Company is currently engaged,
(iii) assume or incur any material amount of
indebtedness,
(iv) subject any material assets of the Company or
any of its Subsidiaries to any material lien, claim or encumbrance,
(v) accelerate the collection of any material amount
of accounts receivable of the Company or any of its Subsidiaries,
(vi) effect any non-scheduled reduction in a material
amount of debt of the Company or any of its Subsidiaries,
(vii) discharge, other than for cause, any management
employee or hire any new management employee or appoint any
officers of the Company or any of its Subsidiaries,
(viii) pay (other than regularly scheduled compensation
to its employees and non-employee directors at levels no greater
than those in effect immediately prior to the date hereof,
subject to clause (xiii) below), loan or advance any amount to,
transfer or lease any properties or assets (real, personal or
mixed, tangible or intangible) to or from, or enter into any
agreement or arrangement of any kind with, any of its employees
(other than customary employment arrangements with
non-management employees and normal travel advances and expense
reimbursements), officers, directors, consultants, shareholders
or any Affiliate or Associate (as defined in Rule 12b-2 of the
Securities Exchange act of 1934, as amended) of any of the
foregoing,
(ix) make any material capital expenditures other
than in the ordinary course of business consistent with past practice,
(x) void or take any action or fail to take any
action which would result, with the giving of notice or the passage of time
or both, in the voiding of any material agreement, or exercise
any option to renew, or extend, any material agreement or renew
any material agreement for any period of time,
(xi) acquire, directly or indirectly, by redemption
or otherwise, any shares of capital stock of the Company, declare
or pay any dividends thereon in cash, securities or other
property or make any other distribution with respect thereto
(other than with respect to the Rights Offering and dividends on
the Preferred Stock or redemption of the Preferred Stock
pursuant to the provisions of the Statement of Resolution),
(xii) sell, grant or otherwise issue any shares of
capital stock or any other securities or any instruments convertible
into or exchangeable or exercisable for, any securities of the
Company or any of its Subsidiaries (other than issuances of
Common Stock pursuant to the proper exercise of currently
outstanding employee stock options, pursuant to the Rights
Offering or upon conversion of the Preferred Stock, and
dividends on the Preferred Stock) ,
(xiii) increase the compensation (by way of salary,
bonus or otherwise) of any officer, director, employee (other than
increases for non-management employees in the ordinary course of
business and which will not be material to the Company's
consolidated condition (financial or otherwise)) or consultant
of the Company;
(xiv) dissolve, liquidate or wind-up the Company or
any of its Subsidiaries; or
(xv) enter into any agreement, commitment or
understanding with respect to any of the foregoing.
The term "Specified Period" shall mean the period from the
Closing Date to the first date upon which the Purchaser Nominees
are elected to, and constitute a majority of, the Board and all
other times during the Covered Period in which, for any reason
whatsoever, the provisions of Section 6.3 of this Agreement or
for as long as the Preferred Stock is outstanding the provisions
of Section 10(b) of the Statement of Resolution are not in full
force and effect and binding and enforceable against the Company.
C. In addition to the requirements of Article III, Sections
14 and 15 of the By-Laws, during the Covered Period, any
transaction between the Company and the Purchaser (or any
Affiliates or Associates thereof) in which such person (and its
Affiliates or Associates) have a financial interest of $30,000
or more (other than a proportionate interest as a 5% or less
shareholder of any public company) must be approved by a
majority of the Interested Transaction Committee (as defined
below); provided, however, that a relocation of the Company's
offices shall not require such approval if the lease with
respect to any such relocated office is a fair market lease;
provided, however that the Other Incumbent Directors shall
determine whether such lease is a fair market lease. For the
purposes of this Section 6.3, the Interested Transaction
Committee (x) for the first year after the Closing, shall be
comprised of all of the Other Incumbent Directors and (y) for
the other two years of the Covered Period shall be comprised of
all of the Other Incumbent Directors and one Independent
Director designated by the Purchaser who is a Purchaser Nominee.
D. The Purchaser agrees that, during the Covered Period,
without the consent of a majority of the Interested Transaction
Committee, it will not sell all or substantially all of its
shares of Preferred Stock or Common Stock as a block to a single
purchaser or group of related purchasers (other than
underwriters of a public offering) unless the other shareholders
of the Company are given the opportunity to participate in the
transaction on economically equivalent terms.
E. The provisions of Sections 6.3A, B, C and D, shall
terminate, and be of no further force or effect, and the By-laws
in effect on the date hereof shall be reinstated on the first
date upon which the Purchaser Group (as defined below)
beneficially own less than forty-five percent (45%) of the
number of shares of Common Stock beneficially owned by the
Purchaser Group upon the consummation of the Rights Offering,
and if the Rights offering is not consummated, then based on
2,328,267 (as such number may be adjusted as described below)
shares of Common stock, consisting of 661,600 shares presently
beneficially owned by Purchaser and the 1,666,667 (as such
number may be adjusted pursuant to the Statement of Resolution)
additional shares that would be beneficially owned by the
Purchaser upon conversion of all shares of the Preferred Stock.
The term "Purchaser Group" shall mean (i) the Purchaser, (ii)
Raymond Perelman, (iii) any Affiliate of Raymond Perelman, (iv)
the spouse or any lineal ancestor or descendent of Raymond
Perelman or his spouse or (v) any trust, the beneficiaries of
which are the persons referred to in the foregoing clauses (ii)
or (iv).
F. If the condition to Closing set forth in Section 4.15
hereof is not satisfied and the Purchaser nevertheless proceeds
with the Closing hereunder, the Board thereafter shall set the
earliest practicable date within one hundred twenty days after
the Closing Date, for a meeting of the shareholders of the
Company for the purpose of electing directors of the Company and
shall take, or cause to be taken, all actions reasonably
necessary or desirable to cause such meeting to be held at such
earliest practicable date; provided, however, that no such date
shall be set without the prior approval of the Purchaser, which
approval shall not be unreasonably withheld in light of the
statutory and NASD requirements that the Company hold such a
meeting.
G. The Special Committee (whose membership shall consist of
those directors serving on such committee on the date hereof or
Other Incumbent Directors and shall in no event have as a member
any persons affiliated with or nominated by the Purchaser or Mr.
Perelman or Mr. Katz) shall have the full and sole power and
authority to control, and to make all decisions with respect to,
the Rights Offering (as hereinafter defined) and those other
matters in this Agreement and in the Statement of Resolution
which are within the province of the Special Committee;
provided, however, that it is understood and agreed that the
Special Committee will consult with, and receive input from, all
directors of the Company who are not members of the Special
Committee and the Purchaser with respect to the disclosure to be
included in the Rights Offering Materials (as hereinafter
defined); and provided, further that all disclosure to be
included in the Rights Offering Materials shall be reasonably
acceptable to the Purchaser; and provided, further, that in the
event that the Purchaser objects to any disclosure to be
included in the Rights Offering Materials and the issue is not
resolved by the Purchaser and the Special Committee within a
reasonable period of time, the issue shall be resolved by the
reasonable opinion of legal counsel to the Special Committee
that the statements in the Rights Offering Materials to which
the Purchaser objects are required to be included in the Rights
Offering Materials by applicable law.
6.4 Fees and Expenses. All of the parties hereto will bear
their own expenses, including but not limited to accounting and
legal expenses, incurred in connection with the transactions
contemplated hereby. Notwithstanding the foregoing, the Company
shall be responsible for and shall promptly pay the Purchaser's
reasonable out-of-pocket legal and accounting costs and expenses
incurred in connection with the preparation, execution and
delivery of this Agreement (and the agreements which have been,
and/or will be, executed and delivered pursuant to or in
connection with this Agreement) or to be incurred in connection
with the transactions contemplated hereby (including, without
limitation, all reasonable costs and expenses incurred in
connection with the letter of intent dated February 21, 1995
between the Company and RGP (the "Letter of Intent")), whether
or not the Closing occurs (such costs and expenses being
referred to herein as the "Purchaser Costs"), upon the
submission of reasonably detailed invoices therefor, provided
such costs and expenses shall not exceed the Company's legal and
accounting costs and expenses.
6.5 Conversion of Preferred Stock/Rights Offering.
(a) The Special Committee will, within 10 days of the
Closing, elect to either (x) cause all, but not less than all,
of the Preferred Stock to be converted into Common Stock at the
Conversion Price or (y) cause the Company to conduct an offering
of Common Stock purchase rights as described below (the "Rights
Offering"). The date upon which the Special Committee makes the
foregoing election is referred to herein as the "Election Date."
(b) If the Company elects to conduct the Rights Offering,
then as soon as practicable after such election, and in any
event within 120 days of the Election Date, the Company shall
offer each of the shareholders of the Company (including the
Purchaser and all the beneficiaries of the Company's Employee
Stock Ownership Plan (the "ESOP") who have stock allocated to
their accounts) the non-transferable right (except as set forth
below with respect to the ESOP) (the "Rights") to subscribe for
sixty-eight one-hundredths (.68) of a share of Common Stock with
respect to each share of Common Stock owned by such shareholders
at a subscription price per share of Common Stock equal to the
Conversion Price. Subscriptions for fractional shares will not
be accepted, but will be rounded down to the nearest whole
number.
Pursuant to the Rights Offering, each shareholder of the
Company will receive one Right for each share of Common Stock
held by him. The Purchaser will commit to subscribe for its pro
rata portion of shares of Common Stock offered pursuant to the
Rights issued to it based on the number of shares of Common
Stock owned by the Purchaser at the time of the Rights Offering.
If the shareholders of the Company (including the Purchaser and
all the beneficiaries of the ESOP who have stock allocated to
their accounts) subscribe for less than 2,500,000 shares of
Common Stock (representing an aggregate subscription price of
approximately $7.5 million) (such number of shares less than
2,500,000 being referred to herein as the "Share Deficiency"),
then the Purchaser will subscribe for that number of additional
shares of Common Stock as is equal to the Share Deficiency, and
shall pay the subscription price for such additional shares of
Common Stock (and for the Common Stock for which it subscribes
directly) by tendering to the Company Preferred Stock valued at
the Conversion Price. Notwithstanding the foregoing, in no
event shall the Purchaser be required or permitted to acquire
more than 1,666,667 shares of Common Stock (including its pro
rata subscription for Common Stock in the Rights Offering).
Immediately upon the completion of the Rights Offering, the
Company will use the net proceeds from the Rights Offering to
redeem all of the Preferred Stock not tendered to the Company as
payment for shares of Common Stock as the result of a Share
Deficiency at a per share redemption price equal to the stated
value of the Preferred Stock plus, if the redemption occurs more
than 140 days from the Election Date, accrued and unpaid
dividends to the date of redemption. The Company will use all
reasonable efforts to file a registration statement with respect
to the Rights Offering with the Commission within 50 days of the
Election Date, and to have such registration statement declared
effective by the Commission within 110 days of the Election
Date, and to consummate such rights offering within 140 days of
the Election Date. The Registration Statement, the prospectus
included therein, and the other materials used in connection
with the Rights Offering are referred to herein as the "Rights
Offering Materials."
In connection with the Rights Offering, the Company will (i)
prepare and file and use its reasonable efforts to have declared
effective a registration statement under the Act related
thereto; (ii) prepare and file with the Commission such
amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary
to keep such registration statement effective for the period of
the offering and to comply with the provisions of the Act; (iii)
use all reasonable efforts to register or qualify all Rights, to
the extent necessary, and the shares of Common Stock issuable
upon the exercise of the Rights and to the Purchaser as a result
of a Share Deficiency under any applicable securities or blue
sky laws; and (iv) to do any and all other things reasonably
necessary or advisable to consummate the distribution of the
Rights and the consummation of the Rights Offering in compliance
with the Act and all applicable state securities and blue sky
laws; provided, however, that the Company shall not be required
to (x) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for the
Rights Offering, (y) subject itself to taxation in any such
jurisdiction or (z) consent to general services of process in
any such jurisdiction..
(c) Notwithstanding anything to the contrary contained
herein, in the event that (i) the Company elects to but does not
consummate the Rights Offering, (ii) the Company used all
reasonable efforts to effectuate the Rights Offering in
accordance with this Section 6.5 and (iii) the Company has not
breached any of its obligations under this Agreement or the
Statement of Resolution, the Company shall have the right,
exercisable prior to October 31, 1995, to convert all, but not
less than all, of the Preferred Stock to Common Stock at the
Conversion Price.
6.6 Additional Resignations. As soon as practicable after
the Closing, the Company will accept the resignations of, and
appoint successors acceptable to the Purchaser for, Donald
Santucci in his capacities as an officer and/or director of
subsidiaries of the Company and as a plan administrator and/or
trustee of any employment benefit plans or programs maintained
by the Company or any of its subsidiaries.
ARTICLE 7
Miscellaneous
7.1 Survival of Representations. The representations,
warranties, covenants and agreements made herein shall survive
the execution and delivery hereof and the issuance of the
Preferred Stock for a period of eighteen months following the
date hereof; provided, however, that the representations,
warranties, covenants and agreements contained in Sections 2.1,
2.2 and 2.3 shall survive indefinitely; provided, further, that
with respect to any covenant, term or provision to be performed
hereunder or in any of the documents or agreements delivered in
connection with the transactions contemplated hereby, the rights
of indemnification under this Article 7 shall survive until such
covenant, term or provision has been fully paid, performed
and/or discharged, as appropriate.
7.2 Indemnification.
(a) The Company agrees to indemnify and hold the
Purchaser and its respective partners, officers and directors harmless
against and in respect of any and all damages, losses,
liabilities, obligations, costs and expenses (including
reasonable attorneys' fees) that the Purchaser and such other
indemnitees may suffer or incur as a result of, relating to, or
in connection with or which arise out of or are based upon (i)
any breach of any of the representations, warranties, covenants
or agreements by the Company set forth herein, in the
Registration Rights Agreement and in the Officer's Certificate
referred to in Section 4.3 hereof or (ii) any untrue statement
or alleged untrue statement of any material fact contained in or
omission or alleged omission to state in any of the Rights
Offering Materials a material fact required to be stated therein
or necessary to make the statements therein not misleading in
light of the circumstances in which they were made except
insofar as the untrue statement, alleged untrue statement,
omission or alleged omission is based upon information furnished
in writing to the Company by the Purchaser expressly for use in
the Rights Offering Materials (notwithstanding with respect to
clauses (i) and (ii) above any investigations or verifications
made by or on behalf of the Purchaser, but in any event subject
to Section 3.7 hereof). Notwithstanding anything herein to the
contrary, the Company shall in no event be liable to the
Purchaser or the other indemnitees under this Section 7.2(a)
with respect to the breach of any covenant or agreement
contained herein or in the Registration Rights Agreement to the
extent that such breach primarily was the result of acts or
omissions of the Purchaser, Mr. Perelman or Mr. Katz (or any
Affiliates or Associates of Mr. Perelman).
(b) The Purchaser agrees to indemnify and hold the
Company and its directors, officers and shareholders harmless against
and in respect of any and all damages, losses, liabilities,
obligations, costs and expenses (including reasonable attorneys'
fees) that the Company and such other indemnitees may suffer or
incur as a result of, relating to, or in connection with or
which arise out of or are based upon (i) any breach of any of
the representations, warranties, covenants or agreements by the
Purchaser set forth herein or in the Officers Certificate
referred to in Section 5.3 hereof, or (ii) any untrue statement
or alleged untrue statement of any material fact contained in or
omission or alleged omission to state in any of the Rights
Offering Materials a material fact required to be stated therein
or necessary to make the statements therein not misleading in
light of the circumstances in which they were made if and only
to the extent that such untrue statement, alleged untrue
statement, omission or alleged omission is based upon
information furnished to the Company in writing by the Purchaser
expressly for use in the Rights Offering Materials
(notwithstanding with respect to clauses (i) and (ii) above any
investigations or verifications made by or on behalf of the
Company).
(c) Notwithstanding anything herein to the contrary,
the Purchaser and the other indemnitees referred to in Section
7.2(a) above shall in no event be entitled to receive in the
aggregate an amount in excess of the sum of (x) the Purchase
Price and (y) the Purchaser Costs (not previously reimbursed) by
reason of any and all damages, losses, liabilities, obligations,
costs and expenses (including reasonable attorney's fees) that
arise out of a breach of the Company's representation contained
in Section 2.6(ii) of this Agreement, except any breach that was
caused by the willful failure of the Company (defined to be
those officers set forth in Section 2.16 hereof) to disclose
matters of which they were aware.
7.3 Incorporation by Reference. All Exhibits and Schedules
referred to this Agreement are herein incorporated by reference
and made a part hereof. Disclosure included in any Schedule
shall be disclosure for purposes of all Schedules. The
inclusion of any matter in any Schedule shall not be deemed to
constitute an admission by the Company, or otherwise imply, that
any such matter is material for the purposes of this Agreement.
7.4 Parties in Interest. All covenants, agreements,
representations, warranties and undertakings contained in this
Agreement by and on behalf of either of the parties hereto shall
bind and inure to the benefit of the respective successors and
assigns of the parties hereto, whether so expressed or not.
This Agreement is not assignable by either party hereto without
the prior written consent of the other party, except that the
Purchaser shall have the unrestricted right to assign this
Agreement and to delegate all or any of its obligations
hereunder to any entity controlling, controlled by or under
common control with the Purchaser, without releasing the
Purchaser from its obligations hereunder.
7.5 Entire Agreement; Amendments and Waivers. This
Agreement (including the Exhibits and Schedules) and the other agreements
executed in connection with the consummation of the transactions
contemplated herein contain the entire agreement between the
parties with respect to the transactions contemplated hereby,
and supersede all prior agreements, written or oral, with
respect thereto, including, without limitation the Letter of
Intent. This Agreement may be amended, superseded, cancelled,
renewed or extended, and the terms hereof may be waived, only by
a written instrument signed by both of the parties hereto or, in
the case of a waiver, by the party waiving compliance. No delay
on the part of either party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any party of any such right, power or
privilege, nor any single or partial exercise of any such right,
power or privilege, preclude any further exercise thereof or the
exercise of any other right, power or privilege.
7.6 Governing Law. This Agreement and the rights and
obligations of the parties hereunder are to be governed and
construed in accordance with the internal laws of the State of
Illinois, without regard to the conflicts of law principles
thereof.
7.7 Advice of Counsel. Each of the parties has had the
benefit of the advice of counsel of its own choice in the
negotiating, drafting and execution of this Agreement, and the
language in all parts of this Agreement is the product of the
efforts of all counsel. Accordingly, neither the entire
Agreement nor any provision in it shall be (a) deemed to have
been proposed or drafted by any party, or (b) construed against
any party.
7.8 Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered
personally against written receipt, telegraphed, telexed, sent
by facsimile transmission or sent by certified, registered or
express mail, postage prepaid. Any such notice shall be deemed
given when so delivered personally against written receipt,
telegraphed, telexed or sent by facsimile transmission or, if
mailed, three (3) days after the date of deposit in the United
States mails, as follows:
(i) if to the Purchaser, to:
RGP Holdings, Inc.
225 City Line Avenue
Bala Cynwyd, Pennsylvania 19103
Telephone: (610) 660-8806
Telecopy: (610) 660-8817
with a copy to:
Martin Nussbaum, Esq.
Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, New York 10022
Telephone: (212) 758-9500
Telecopy: (212) 758-9526
(ii) if to the Company, to:
Champion Parts, Inc.
2525 22nd Street
Oak Brook, Illinois 60521
Attention: President
Telephone: (708) 573-6600
Telecopy: (708) 574-3128
with copies to:
Louis E. Rosen, Esq.
Lord, Bissell & Brook
115 South Lasalle Street
Chicago, Illinois 60603
Telephone: (312) 443-0700
Telecopy: (312) 443-0336
and
Samuel B. Fortenbaugh, III, Esq.
Morgan, Lewis & Bockius
101 Park Avenue
New York, New York 10178
Telephone: (212) 309-6000
Telecopy: (212) 309-6273
and
Calvin A. Campbell, Jr.
Chairman of the Special Committee
c/o Goodman Equipment Corp.
5430 West 70th Place
Bedford Park, Illinois 60638
Telephone: (708) 496-1188
Telecopy: (708) 496-3939
Any party may by notice given in accordance with this section to
the other party designate another address or person for receipt
of notices hereunder.
7.9 Counterparts. This Agreement may be executed in
multiple counterparts, each of which when so executed and delivered shall
be an original, but all of such counterparts shall together
constitute one and the same instrument.
7.10 Effect of Headings. The section and paragraph headings
herein are for convenience only and shall not affect the
construction hereof.
7.11 Severability. This Agreement shall be deemed severable,
and the invalidity or unenforceability of any term or provision
hereof shall not affect the validity or enforceability of this
Agreement or of any other term or provisions hereof so long as
the essential substance of the transactions between the parties
has been maintained. Furthermore, in lieu of any such invalid
or unenforceable term or provision, the parties hereto intend
that there shall be added as a part of this Agreement a
provision as similar in terms to such invalid or unenforceable
provisions as may be possible and be valid and enforceable.
7.12 Remedy For Breach. The Company hereby acknowledges that
in the event of any breach or threatened breach by the Company
of any of the provisions of this Agreement, the Purchaser would
have no adequate remedy at law and could suffer substantial and
irreparable damage. Accordingly, the Company hereby agrees
that, in such event, the Purchaser shall be entitled, without
the necessity of proving damages or posting bond, and
notwithstanding any election by the Purchaser to claim damages,
to obtain a temporary and/or permanent injunction (without
proving a breach therefor) to restrain any such breach or
threatened breach or to obtain specific performance of any such
provisions, all without prejudice to any and all other remedies
which the Purchaser may have at law or in equity.
IN WITNESS WHEREOF, this Agreement has been executed by the
parties hereto as of the date first set forth above.
CHAMPION PARTS, INC.
By: _________________________________
Chairman of the Special Committee
of the Board of Directors and
Designated Agent
RGP HOLDINGS, INC.
By: _________________________________
EXHIBIT 4.13
ARTICLE III SECTIONS 14 AND 15
SECTION 14. AFFILIATED TRANSACTIONS
So long as the Purchaser Group (as defined in Section 6.3 of
the Preferred Stock Purchase Agreement ("Agreement") dated March
23, 1995 by and between Champion Parts, Inc. (the "Corporation")
and RGP Holdings, Inc.) beneficially owns forty-five percent or
more (45%) of the number of common shares beneficially owned by
the Purchaser Group upon consummation of the Rights Offering (as
defined in the Agreement), and if the Rights Offering is not
consummated, then based on 2,328,267 (as such number may be
adjusted as described below) shares of Common Stock (as defined
in the Agreement), consisting of 661,600 shares beneficially
owned by the Purchaser Group on March 23, 1995 and the 1,666,667
(as such number may be adjusted pursuant to the Statement of
Resolution authorizing such shares) additional shares that would
be beneficially owned by the Purchaser Group upon conversion of
all Preferred Stock (as defined in the Agreement), no officer,
director, beneficial owner of more than 10% (other than Echlin,
Inc.) of the Corporation's issued and outstanding Voting
Securities (as defined below) or any Affiliates or Associates
(as defined in Rule 12b-2 under the Securities Exchange Act of
1934, as amended) (other than Echlin, Inc.) of any of the
foregoing shall engage in any transaction with the Corporation
that is (i) described in or contemplated by the definition of
"business combination" contained in the Illinois Business
Corporation Act of 1983 or (ii) in which such person and/or any
such Affiliate and Associate (other than Echlin, Inc.) have a
financialinterest of $30,000 or more, other than a proportionate
interest as a 5% or less shareholder of any other public
company, unless in each case such transaction shall have been
previously approved by the affirmative vote of a majority or
more of those members of the board of directors (rounded up to
the nearest whole number) who are Independent Directors. For
purposes hereof, a person shall be deemed to be an "Independent
Director" if he or she (a) is not an executive officer or an
employee of the Corporation, or any subsidiary or affiliate of
the Corporation, (b) has not served as an executive officer of
the Corporation at any time during the two years preceding his
or her election as a director of the Corporation, (c) is not a
family member (i.e., parent, sibling, grandparent,
mother-in-law, father-in-law, spouse, former spouse, child,
stepchild, grandchild or any other blood or legal relative) of
any executive officer or employee described in clauses (a) or
(b) of this Section 14, and (d) is not a person, and is not a
family member of or an Affiliate or Associate of any person (a
"Related Person"), who beneficially owns 10% or more (other than
Echlin, Inc.) of the securities of the Corporation then entitled
to vote in the election of directors ("Voting Securities").
SECTION 15. MODIFICATION OF BY-LAWS
On or prior to March 22, 1998, Sections 2, 14 and 15 and,
during the Initial Period (as defined in Section 3 of Article
III of the By-laws), Section 3 of this Article III of the
By-laws may be altered, amended or repealed only by a vote of
seventy-five percent (75%) of the total number of the members of
the Board of Directors of the Corporation then in office who are
Independent Directors, as defined above, or by the vote of the
holders of a majority of the outstanding Voting Securities, as
defined above, entitled to vote thereon. If any provision of
this Article III Section 15 is inconsistent with any of the
other provisions of these By-laws, the provisions of this
Article III Section 15 shall prevail and such other inconsistent
provisions of these By-laws shall be deemed amended, modified or
superseded to the extent necessary to eliminate such
inconsistency.
Exhibit 4.8
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of
March ____, 1995 by and between RGP Holdings, Inc., a
Pennsylvania corporation (the "Purchaser") and Champion Parts,
Inc., an Illinois corporation (the "Company").
WHEREAS the Purchaser and the Company have entered into a
Preferred Stock Purchase Agreement (the "Stock Purchase
Agreement") dated March __, 1995 pursuant to which the Purchaser
has purchased $5,000,001 of the Company's Series A Cumulative
Redeemable Convertible Voting 9% Preferred Stock, no par value
per share (the "Preferred Stock");
NOW, THEREFORE, in consideration on the foregoing premises and
for other good and valuable consideration, the adequacy and
receipt of which are hereby acknowledge, the parties hereto
hereby agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1. Definitions. The following terms shall have the
meanings ascribed to them below:
"Commission" means the United States Securities and Exchange
Commission, or any other federal agency at the time
administering the Securities Act.
"Common Stock" means the Common Shares, par value $.10 per
share, of Champion Parts, Inc., as it may exist from time to
time.
"Demand Registration" means a Demand Registration as defined
in Section 2.1.
"Holder" means any person who now holds or shall hereafter
acquire and hold (x) Preferred Stock convertible into not less
than 175,000 shares of Common Stock and/or (y) not less than
175,000 shares of Registrable Securities.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or government or other agency or political
subdivision thereof.
"Piggy-Back Registration" means a Piggy-Back Registration as
defined in Section 2.2.
"Preferred Stock" means the Company's Series A Cumulative
Redeemable Convertible Voting 9% Preferred Stock, no par value
per share.
"Prospectus" means the prospectus included in any Registration
Statement (including without limitation, a prospectus that
discloses information previously omitted from a prospectus filed
as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of the securities covered
by such Registration Statement, and all other amendments and
supplements to the prospectus, including post-effective
amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such prospectus.
"Registrable Securities" means the shares of Common Stock
issued or issuable upon conversion of the Preferred Stock until
(i) a Registration Statement covering such shares of Common
Stock has been declared effective by the Commission and such
shares of Common Stock have been disposed of pursuant to such
effective Registration Statement, or (ii) such shares of Common
Stock are sold under circumstances in which all of the
applicable conditions of Rule 144 (or any similar provisions
then in force) under the Securities Act are met, or (iii) such
shares of Common Stock have been otherwise transferred and the
Company has delivered a new certificate or other evidence of
ownership for such Common Stock not bearing the legend required
pursuant to the Stock Purchase Agreement (or other legend of
similar import) and not subject to any stop order and such
Common Stock may be resold by the person receiving such
certificate without complying with the registration requirements
of the Securities Act.
"Registration Statement" means any registration statement of
the Company which covers any of the Registrable Securities
pursuant to the provisions of this Agreement, including the
Prospectus, amendments and supplements to such Registration
Statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such Registration
Statement.
"Securities Act" means the Securities Act of 1933 or any
similar Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the
time.
"Selling Holder" means a Holder who is selling Registrable
Securities pursuant to a Registration Statement under the
Securities Act.
"Underwriter" means a securities dealer who purchases any
Registrable Securities as principal in an underwritten offering
and not as part of such dealer's market-making activities.
ARTICLE II.
REGISTRATION RIGHTS
SECTION 2.1. Demand Registration. (a) Request for
Registration. At any time and from time to time after October
31, 1995, any Holder or Holders may make written requests
(individually, a "Request") on the Company for the registration
of the offer and sale of the Registrable Securities under the
Securities Act (such registration being hereinafter referred to
as a "Demand Registration"). Subject to the penultimate
sentence of Section 2.1(b), the Company shall have no obligation
to effect more than three Demand Registrations; provided,
however, that the Company shall not be required to effect more
than one Demand Registration on a Registration Statement on Form
S-1 or S-2 (or any substitute form that may be adopted by the
Commission); provided, further, however that if at the time that
a Request for a Demand Registration is made (x) the Company has
previously effected a Demand Registration on a Registration
Statement on Form S-1 or S-2 (or any substitute form that may be
adopted by the Commission) and (y) the Company is not eligible
to effect the Demand Registration on a Registration Statement on
Form S-3 (or any substitute form that may be adopted by the
Commission), then the Company shall be required to effect one
additional Demand Registration on a Registration Statement on
Form S-1 or S-2 (or any substitute form that may be adopted by
the Commission). Any Request will specify the number of
Registrable Securities proposed to be sold and the intended
method(s) of disposition thereof and shall also state the firm
intent of the Holder to offer Registrable Securities for sale.
The Company shall not be required to effect a Demand
Registration pursuant to this Section 2.1 unless (i) such Demand
Registration covers the lesser of (x) an aggregate of at least
175,000 shares of Registrable Securities and (y) the total
number of Registrable Securities held by all Holders and (ii)
the date that the Company anticipates, in good faith, that the
Commission would declare the Registration Statement relating to
such Demand Registration effective is at least 180 days after
the completion of the sale of Registrable Securities pursuant to
any other Demand Registration effected pursuant to this Section
2.1. The Company shall give written notice of such Request
within 10 days after the receipt thereof to all other Holders.
Within 20 days after receipt of such notice by any such Holder,
such Holder may request in writing that all or any portion of
its Registrable Securities be included in such Registration
Statement and the Company shall include in the Registration
Statement for such Demand Registration the Registrable
Securities of all Holders that requested to be so included.
Each such request by such other Holders shall specify the number
of Registrable Securities proposed to be sold and the intended
method(s) of disposition thereof and shall also state the firm
intent of the Holder to offer Registrable Securities for sale.
The registration rights of the Holders under this Article II
shall be subject to the rights, if any, of Echlin, Inc.
contained in that certain Stock Purchase Agreement dated March
10, 1987 between Echlin, Inc. and the Company.
(b) Effective Registration. A registration will not be
deemed to have been effected as a Demand Registration unless the
Registration Statement relating thereto has been declared
effective by the Commission and the Company has complied in all
material respects with its obligations under this Agreement with
respect thereto; provided that if, after the Registration
Statement has become effective, the offering and/or sale of
Registrable Securities pursuant to such Registration Statement
is or becomes the subject of any stop order, injunction or other
order or requirement of the Commission or any other governmental
or administrative agency, or if any court prevents or otherwise
limits the offer and/or sale of the Registrable Securities
pursuant to the Registration Statement, other than in each case
primarily as a result of acts or omissions of the Holder or any
agent thereof, such registration will be deemed not to have been
effected. If (i) a registration requested pursuant to this
Section 2.1 is deemed not to have been effected or (ii) the
Registration Statement relating to a Demand Registration
requested pursuant to this Section 2.1 does not remain effective
for a period of at least 120 days beyond the effective date
thereof or, with respect to an underwritten offering of
Registrable Securities, until 45 days after the commencement of
the distribution by the Holders of the Registrable Securities
included in such Registration Statement, then the Company shall
continue to be obligated to effect such Registration pursuant to
this Section 2.1. The Holders shall be permitted to withdraw
all or any part of the Registrable Securities from a
Registration Statement at any time prior to the effective date
of such Demand Registration Statement; provided that in the
event of such withdrawal, such Holders shall be responsible for
the fees and expenses referred to in Section 3.2(viii) hereof
incurred by such Holders with respect to such Demand
Registration prior to such withdrawal.
(c) Selection of Underwriter. If the Holders of a majority
of the Registrable Securities participating in a Demand
Registration so elect, the offering of such Registrable
Securities pursuant to such Demand Registration shall be in the
form of an underwritten offering. The Holders making such
Demand Registration shall select one or more nationally
recognized firms of investment bankers to act as the lead
managing Underwriter or Underwriters in connection with such
offering and shall select any additional investment bankers and
managers to be used in connection with the offering; provided
that such Underwriter or Underwriters are reasonably acceptable
to the Company.
SECTION 2.2. Piggy-Back Registration. If at any time the
Company proposes to file a Registration Statement under the
Securities Act with respect to an offering by the Company for
its own account or for the account of any of its respective
security holders (other than (x) a Registration Statement on
Form S-4 or S-8 (or any substitute form that may be adopted by
the Commission), (y) a Registration Statement pursuant to a
Demand Registration pursuant to Section 2.1 or (z) the
Registration Statement relating to the Rights Offering (as
defined in the Stock Purchase Agreement)), then the Company
shall give written notice of such proposed filing to the Holders
as soon as practicable (but in no event less than 30 days before
the anticipated filing date), and such notice shall offer such
Holders the opportunity to register such number of Registrable
Securities as each such Holder may request (which request shall
specify the Registrable Securities intended to be disposed of by
such Holder and the intended method(s) of distribution thereof
and shall also state the firm intent of the Holder to offer
Registrable Securities for sale) (a "Piggy-Back Registration").
The Company shall use all reasonable efforts to cause the
managing Underwriter or Underwriters of a proposed underwritten
offering to permit the Registrable Securities requested to be
included in a Piggy-Back Registration to be included on the same
terms and conditions as any similar securities of the Company or
any other security holder included therein and to permit the
sale or other disposition of such Registrable Securities in
accordance with the intended method of distribution thereof.
Any Holder shall have the right to withdraw its request for
inclusion of its Registrable Securities in any Registration
Statement pursuant to this Section 2.2 by giving written notice
to the Company of its request to withdraw, provided that in the
event of such withdrawal (other than pursuant to Section 2.3(c)
hereof), such Holder shall be responsible for the fees and
expenses referred to in Section 3.2(viii) hereof incurred by
such Holder prior to such withdrawal relating to such
Registration Statement. The Company may withdraw a Piggy-Back
Registration at any time prior to the time it becomes effective.
No registration effected under this Section 2.2, and no
failure to effect a registration under this Section 2.2, shall
relieve the Company of its obligation to effect a registration
upon the request of Holders pursuant to Section 2.1, and no
failure to effect a registration under this Section 2.2 and to
complete the sale of Registrable Securities in connection
therewith shall relieve the Company of any other obligation
under this Agreement (including, without limitation, the
Company's obligations under Sections 3.2 and 4.1).
SECTION 2.3. Reduction of Offering. (a) Demand Registration.
The Company may include in a Demand Registration pursuant to
Section 2.1 securities of the same class as the Registrable
Securities for the account of the Company and any other Persons
who hold securities of the same class as the Registrable
Securities on the same terms and conditions as the Registrable
Securities to be included therein; provided, however, that (i)
if the managing Underwriter or Underwriters of any underwritten
offering described in Section 2.1 have informed the Company in
writing that it is their opinion that the total number of
Registrable Securities, and securities of the same class as the
Registrable Securities which Holders, the Company and any other
Persons desiring to participate in such registration intend to
include in such offering is such as to materially and adversely
affect the success of such offering, then the number of shares
to be offered for the account of the Company and for the account
of all such other Persons (other than the Holders) participating
in such registration shall be reduced or limited pro rata in
proportion to the respective number of shares requested to be
registered to the extent necessary to reduce the total number of
shares requested to be included in such offering to the number
of shares, if any, recommended by such managing Underwriter or
Underwriters, and (ii) if the offering is not underwritten, no
other Person, including the Company, shall be permitted to offer
securities under any such Demand Registration unless the Holders
of a majority of the Registrable Securities participating in the
offering consent to the inclusion of such shares therein.
(b) Piggy-Back Registration. (i) Notwithstanding anything
contained herein, if the managing Underwriter or Underwriters of
any underwritten offering described in Section 2.2 have
informed, in writing, the Holders requesting inclusion in such
offering that it is their opinion that the total number of
shares which the Company, Holders and any other Persons holding
securities of the same class as the Registrable Securities
desiring to participate in such registration intend to include
in such offering is such as to materially and adversely affect
the success of such offering, then, the number of shares to be
offered shall be reduced or limited in the following order of
priority: first, the number of shares to be offered by all
other holders of securities of the same class as the Registrable
Securities other than the Holders or other holders who demanded
such registration ("Demand Holders") to the extent necessary to
reduce the total number of shares as recommended by such
managing Underwriter or Underwriters; and second, if further
reduction or limitation is required, the number of shares to be
offered for the account of the Holders shall be reduced or
limited on a pro rata basis in proportion to the relative number
of Registrable Securities of the Holders participating in such
registration, provided, however, that if the registration is
pursuant to a demand made by Demand Holders, then the number of
Registrable Securities to be included in such registration shall
be excluded before any shares held by Demand Holders are
excluded to reduce the total number of shares requested to be
included in such offering to the number of shares recommended by
such managing Underwriter or Underwriters.
(ii) If the managing Underwriter or Underwriters of
any underwritten offering described in Section 2.2 notify the
Holders requesting inclusion in such offering that the kind of
securities that the Holders, the Company and any other Persons
desiring to participate in such registration intend to include
in such offering is such as to materially and adversely affect
the success of such offering, (x) the Registrable Securities to
be included in such offering shall be reduced as described in
clause (i) above or (y) if such reduction would, in the judgment
of the managing Underwriter or Underwriters, be insufficient to
substantially eliminate the adverse effect that inclusion of the
Registrable Securities requested to be included would have on
such offering, such Registrable Securities will be excluded from
such offering.
(c) If, as a result of the proration provisions of this
Section 2.3, any Holder shall not be entitled to include all
Registrable Securities in a Demand Registration or Piggy-Back
Registration that such Holder has requested to be included, such
Holder may elect to withdraw his request to include Registrable
Securities in such registration (a "Withdrawal Election");
provided, however, that a Withdrawal Election shall be
irrevocable and, after making a Withdrawal Election, a Holder
shall no longer have any right to include Registrable Securities
in the registration as to which such Withdrawal Election was
made.
ARTICLE III.
REGISTRATION PROCEDURES
SECTION 3.1. Filings; Information. Whenever the Company is
required to effect or cause the registration of the offer and
sale of Registrable Securities pursuant to Section 2.1 or 2.2
hereof, the Company will use its best efforts to effect the
registration of the offer and the sale of such Registrable
Securities in accordance with the intended method(s) of
disposition thereof as quickly as practicable, and in connection
with any such request:
(a) The Company promptly will prepare and file with the
Commission a Registration Statement with respect to the offer
and sale of such securities and use its best efforts to cause
such Registration Statement to become and remain effective until
the completion of the distribution contemplated thereby;
provided, however, the Company shall not be required to keep
such Registration Statement effective for more than 120 days (or
such shorter period which will terminate when all Registrable
Securities covered by such Registration Statement have been
sold, but not prior to the expiration of the applicable period
referred to in Section 4(3) of the Securities Act and Rule 174
thereunder, if applicable);
(b) The Company promptly will prepare and file with the
Commission such amendments and post-effective amendments to the
Registration Statement as may be necessary to keep such
Registration Statement effective for as long as such
registration is required to remain effective pursuant to the
terms hereof; cause the Prospectus to be supplemented by any
required Prospectus supplement, and, as so supplemented, to be
filed pursuant to Rule 424 under the Securities Act; and comply
with the provisions of the Securities Act applicable to it with
respect to the disposition of all Registrable Securities covered
by such Registration Statement during the applicable period in
accordance with the intended methods of disposition by the
Selling Holders set forth in such Registration Statement or
supplement to the Prospectus.
(c) The Company, at least ten (10) days prior to filing a
Registration Statement or at least five (5) days prior to filing
a Prospectus or any amendment or supplement to such Registration
Statement or Prospectus, will furnish to (i) each Selling
Holder, (ii) not more than one counsel representing all Selling
Holders, to be selected by a majority-in-interest of such
Selling Holders, and (iii) each Underwriter, if any, of the
Registrable Securities covered by such Registration Statement
copies of such Registration Statement as proposed to be filed,
together with exhibits thereto, which documents will be subject
to review and approval by each of the foregoing within five (5)
days after delivery (except that such review and approval of any
Prospectus or any amendment or supplement to such Registration
Statement or Prospectus must be within three (3) days after
delivery), and thereafter, furnish to such Selling Holders,
counsel and Underwriters, if any, for their review and comment
such number of copies of such Registration Statement, each
amendment and supplement thereto (in each case including all
exhibits thereto and documents incorporated by reference
therein), the Prospectus included in such Registration Statement
(including each preliminary Prospectus) and such other documents
or information as such Selling Holders, counsel or Underwriters
may reasonably request in order to facilitate the disposition of
the Registrable Securities; provided, however, that
notwithstanding the foregoing, if the Company intends to file
any Prospectus, Prospectus supplement or Prospectus sticker
which does not make any material changes in the documents
already filed (including, without limitation, any Prospectus
under Rule 430A or 424(b)), then the counsel for the Selling
Holders will be afforded such opportunity to review such
documents prior to filing consistent with the time constraints
involved in filing such document, but in any event no less than
one day.
(d) The Company promptly will notify each Selling Holder of
(and in any event within 24 hours of the receipt of) any stop
order issued or threatened by the Commission and take all
reasonable actions required to prevent the entry of such stop
order or to remove it at the earliest possible moment if entered.
(e) On or prior to the date on which the Registration
Statement is declared effective by the Commission, the Company
will use all reasonable efforts to (i) register or qualify the
Registrable Securities under such other securities or blue sky
laws of such jurisdictions in the United States as any Selling
Holder reasonably (in light of such Selling Holder's intended
plan of distribution) requests, and (ii) file documents required
to register such Registrable Securities with or approved by such
other governmental agencies or authorities in the United States
as may be necessary by virtue of the business and operations of
the Company and do any and all other acts and things that may be
reasonably necessary or advisable to enable such Selling Holder
to consummate the disposition of the Registrable Securities
owned by such Selling Holder; provided that the Company will not
be required to (A) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify
but for this paragraph (e), (B) subject itself to taxation in
any such jurisdiction or (C) consent to general service of
process in any such jurisdiction.
(f) The Company will notify each Selling Holder, Selling
Holders' counsel and any Underwriter promptly (and in any event
within 24 hours) and (if requested by any such Person) confirm
such notice in writing, (i) when a Prospectus or any Prospectus
supplement or post-effective amendment has been filed and, with
respect to a Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of any
request by the Commission or any other federal or state
governmental authority for amendments or supplements to a
Registration Statement or Prospectus or for additional
information to be included in any Registration Statement or
Prospectus or otherwise, (iii) of the issuance by the Commission
of any stop order suspending the effectiveness of a Registration
Statement or the initiation or threatening of any proceedings
for that purpose, (iv) of the issuance by any state securities
commission or other regulatory authority of any order suspending
the qualification or exemption from qualification of any of the
Registrable Securities under state securities or "blue sky" laws
or the initiation of any proceedings for that purpose, and (v)
of the happening of any event which makes any statement made in
a Registration Statement or related Prospectus or any document
incorporated or deemed to be incorporated by reference therein
untrue or which requires the making of any changes in such
Registration Statement, Prospectus or documents so that they
will not contain any untrue statement or a material fact or omit
to state any material fact required to be stated therein or
necessary to make the statements in the Registration Statement
and Prospectus not misleading in light of the circumstances in
which they were made; and, as promptly as practicable
thereafter, prepare and file with the Commission and furnish a
supplement or amendment to such Prospectus so that, as
thereafter deliverable to the purchasers of such Registrable
Securities, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(g) The Company will make generally available an earnings
statement satisfying the provisions of Section 11(a) of the
Securities Act no later than 90 days after the end of the
12-month period beginning with the first day of the Company's
first fiscal quarter commencing after the effective date of a
Registration Statement, which earnings statement shall cover
said 12-month period, and which requirement will be deemed to be
satisfied if the Company timely files complete and accurate
information on Forms 10-Q, 10-K and 8-K under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and
otherwise complies with Rule 158 under the Securities Act.
(h) If requested by the managing Underwriter or
Underwriters, Selling Holders' counsel, or any Selling Holder, the Company
will, unless otherwise advised by counsel, promptly incorporate
in a Prospectus supplement or post-effective amendment such
information as the managing Underwriter or Underwriters
requests, or Selling Holders' counsel requests, to be included
therein, including, without limitation, with respect to the
Registrable Securities being sold by such Selling Holder to such
Underwriter or Underwriters, the purchase price being paid
therefor by such Underwriter or Underwriters and with respect to
any other terms of the underwritten offering of the Registrable
Securities to be sold in such offering, and promptly make all
required filings of such Prospectus supplement or post-effective
amendment.
(i) The Company will enter into customary agreements
reasonably satisfactory to the Company (including, if
applicable, an underwriting agreement in customary form and
which is reasonably satisfactory to the Company) and take such
other actions as are reasonably required in order to expedite or
facilitate the disposition of such Registrable Securities (the
Selling Holders may, at their option, require that any or all of
the representations, warranties and covenants of the Company or
to or for the benefit of such Underwriters also be made to and
for the benefit of such Selling Holders).
(j) The Company will make available to each Selling Holder
(and will deliver to their counsel) and each Underwriter, if
any, subject to restrictions imposed by the United States
federal government or any agency or instrumentality thereof,
copies of all correspondence between the Commission and the
Company, its counsel or auditors and will also make available
for inspection at reasonable times at the Company's offices by
any Selling Holder of such Registrable Securities, any
Underwriter participating in any disposition pursuant to such
Registration Statement and any attorney, accountant or other
professional retained by any such Selling Holder or Underwriter
(collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of the
Company as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the
Company's officers and employees to supply all information
reasonably requested by any Inspectors in connection with such
registration statement.
(k) In connection with an underwritten offering, the Company
will participate, to the extent reasonably requested by the
managing Underwriter or Underwriters for the offering or the
Selling Holders, in customary efforts to sell the securities
under the offering, including, without limitation, participating
in "road shows"; provided that the Company shall not be
obligated to participate in more than one such offering in any
12-month period.
(l) The Company, during the period when the Prospectus is
required to be delivered under the Securities Act, promptly will
file all documents required to be filed with Commission pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act.
(m) The Company will use all reasonable efforts to obtain a
cold comfort letter from the Company's independent public
accountants in customary form and covering such matters of the
type customarily covered by cold comfort letters, as the Selling
Holders may request.
The Company may require each Selling Holder to promptly
furnish in writing to the Company such information regarding the
distribution of the Registrable Securities as the Company may
from time to time reasonably request and such other information
as may be legally required in connection with such registration
including, without limitation, all such information as may be
requested by the Commission or the National Association of
Securities Dealers, Inc. The Company may exclude from such
Registration Statement any Holder who fails to provide such
information.
Each Selling Holder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind
described in Section 3.1(f) hereof, such Selling Holder will
forthwith discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable
Securities until such Selling Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section
3.1(f) hereof, and, if so directed by the Company, such Selling
Holder will deliver to the Company all copies, other than
permanent file copies then in such Selling Holder's possession,
of the most recent prospectus covering such Registrable
Securities at the time of receipt of such notice. In the event
the Company shall give such notice, the Company shall extend the
period during which such Registration Statement shall be
maintained effective (including the period referred to in
Section 3.1(a) hereof) by the number of days during the period
from and including the date of the giving of notice pursuant to
Section 3.1(f) hereof to the date when the Company shall make
available to the Selling Holders covered by such Registration
Statement a Prospectus supplemented or amended to conform with
the requirements of Section 3.1(f) hereof.
SECTION 3.2. Registration Expenses. The Company shall pay
all reasonable expenses incident to the Company's performance of or
compliance with this Agreement including, without limitation:
(i) all registration and filing fees, (ii) the fees and expenses
of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with
blue sky qualifications of the Registrable Securities), (iii)
all printing, messenger and delivery expenses, (iv) the
Company's internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing
legal or accounting duties), (v) the fees and expenses incurred
in connection with the listing or quotation, as appropriate, of
the Registrable Securities, (vi) the reasonable fees and
disbursements of counsel for the Company and the fees and
expenses for independent certified public accountants retained
by the Company (including the expenses of any special audit or
cold comfort letters), (vii) the reasonable fees and expenses of
any special experts retained by the Company in connection with
such registration, and (viii) the reasonable fees and expenses
of one firm of counsel for the Selling Holders. The Company
shall have no obligation to pay any underwriting fees, discounts
or commissions attributable to the sale of Registrable
Securities and any of the expenses incurred by Selling Holders
which are not payable by the Company, such costs to be borne by
the Selling Holder or Selling Holders.
ARTICLE IV.
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1. Indemnification by the Company. The Company
agrees to indemnify and hold harmless, to the fullest extent
permitted by law, each Selling Holder, its partners, officers,
directors, employees and agents, and each Person, if any, who
controls such Selling Holder within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act, together
with the partners, officers, directors, employees and agents of
such controlling Person (collectively, the "Controlling
Persons"), from and against any loss, claim, damage, liability,
reasonable attorneys' fees, cost or expense and reasonable costs
and expenses of investigating and defending any such claim
(collectively, the "Damages") and any action in respect thereof
to which such Selling Holder, its partners, officers, directors,
employees and agents, and any such Controlling Person may become
subject under the Securities Act or otherwise, insofar as such
Damages (or proceedings in respect thereof) arise out of, or are
based upon, any untrue statement or alleged untrue statement of
a material fact contained in any Registration Statement or
Prospectus or any preliminary Prospectus, or arises out of, or
are based upon, any omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light
of the circumstances in which they were made, except insofar as
the same are based upon information furnished in writing to the
Company by a Selling Holder expressly for use therein, and shall
reimburse each Selling Holder, its partners, officers,
directors, employees and agents, and each such Controlling
Person for any legal and other expenses reasonably incurred by
that Selling Holder, its partners, officers, directors,
employees and agents, or any such Controlling Person in
investigating or defending or preparing to defend against any
such Damages or proceedings; provided, however, that the Company
shall not be liable to any Holder or other indemnitee to the
extent that any such Damages arise out of or are based upon an
untrue statement or omission made in any preliminary prospectus
if (i) such Holder failed to send or deliver a copy of the final
Prospectus with or prior to the delivery of written confirmation
of the sale by such Holder to the Person asserting the claim
from which such Damages arise, and (ii) the final prospectus
would have corrected such untrue statement or such omission; and
provided further, however, that the Company shall not be liable
in any such case to the extent that any such Damages arise out
of or are based upon an untrue statement or omission in any
Prospectus if (x) such untrue statement or omission is corrected
in an amendment or supplement to such Prospectus, (y) having
previously been furnished by or on behalf of the Company with
copies of such Prospectus as so amended or supplemented, and (z)
after being notified by the Company pursuant to Section 3.1(f)
hereof of the happening of any event which would make any
statement in the Registration Statement or related Prospectus
or any document incorporated or deemed to be incorporated by
reference therein untrue or misleading, the Holder continues to
offer for sale the Registrable Securities pursuant to the
Registration Statement or Prospectus which is the subject of
such notice, such Holder thereafter fails to deliver such
Prospectus as so amended or supplemented prior to or
concurrently with the sale of a Registrable Security to the
Person asserting the claim from which such Damages arise;
provided further, that the Company shall not be liable in any
case to the extent that any such Damages arise out of or are
based upon an untrue statement or omission in any Prospectus,
even if an amended and corrected Prospectus is not furnished to
the Holder, but only to the extent that the Holder, after being
notified by the Company pursuant to Section 3.1(f) hereof,
continues to use such Prospectus and in such case and to the
extent of, and with respect to, Damages which arise after the
Holder receives the Section 3.1(f) notice. The Company also
agrees to indemnify any Underwriters of the Registrable
Securities, their officers and directors and each Person who
controls such Underwriters on substantially the same basis as
that of the indemnification of the Selling Holders provided in
this Section 4.1.
SECTION 4.2. Indemnification by Selling Holders. Each
Selling Holder agrees, severally but not jointly, to indemnify and hold
harmless the Company, its officers, directors, employees and
agents and each Person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, together with the partners, officers,
directors, employees and agents of such controlling Person, to
the same extent as the foregoing indemnity from the Company to
such Selling Holder, but only with reference to information
related to such Selling Holder, or its plan of distribution,
furnished in writing by such Selling Holder expressly for use in
any Registration Statement or Prospectus, or any amendment or
supplement thereto, or any preliminary Prospectus. In case any
action or proceeding shall be brought against the Company or its
officers, directors, employees or agents or any such controlling
Person or its officers, directors, employees or agents, in
respect of which indemnity may be sought against such Selling
Holder, such Selling Holder shall have the rights and duties
given to the Company, and the Company or its officers,
directors, employees or agents, or such controlling Person, or
its officers, directors, employees or agents, shall have the
rights and duties given to such Selling Holder, by the preceding
paragraph. Each Selling Holder also agrees to indemnify and
hold harmless any Underwriters of the Registrable Securities,
their officers and directors and each Person who controls such
Underwriters on substantially the same basis as that of the
indemnification of the Company provided in this Section 4.2.
SECTION 4.3. Conduct of Indemnification Proceedings.
Promptly after receipt by any person in respect of which indemnity may be
sought pursuant to Section 4.1 or 4.2 (an "Indemnified Party")
of notice of any claim or the commencement of any action, the
Indemnified Party shall, if a claim in respect thereof is to be
made against the Person against whom such indemnity may be
sought (an "Indemnifying Party"), notify the Indemnifying Party
in writing of the claim or the commencement of such action;
provided that the failure to notify the Indemnifying Party shall
not relieve it from any liability which it may have to an
Indemnified Party otherwise than under Section 4.1 or 4.2 and
except to the extent of any actual prejudice resulting
therefrom. If any such claim or action shall be brought against
an Indemnified Party, and it shall notify the Indemnifying Party
thereof, the Indemnifying Party shall be entitled to participate
therein, and, to the extent that it wishes, jointly with any
other similarly notified Indemnifying Party, to assume the
defense thereof with counsel reasonably satisfactory to the
Indemnified Party. After notice from the Indemnifying Party to
the Indemnified Party of its election to assume the defense of
such claim or action, the Indemnifying Party shall not be liable
to the Indemnified Party for any legal or other expenses
subsequently incurred by the Indemnified Party in connection
with the defense thereof other than reasonable costs of
investigation; provided that the Indemnified Party shall have
the right to employ separate counsel to represent the
Indemnified Party and its controlling Persons who may be subject
to liability arising out of any claim in respect of which
indemnity may be sought by the Indemnified Party against the
Indemnifying Party, but the fees and expenses of such counsel
shall be for the account of such Indemnified Party unless (i)
the Indemnifying Party and the Indemnified Party shall have
mutually agreed to the retention of such counsel or (ii) in the
opinion of counsel to such Indemnified Party, representation of
both parties by the same counsel would be inappropriate due to
actual or potential conflicts of interest between them, it being
understood, however, that the Indemnifying Party shall not, in
connection with any one such claim or action or separate but
substantially similar or related claims or actions in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (together with appropriate local
counsel) at any time for all Indemnified Parties. No
Indemnifying Party shall, without the prior written consent of
the Indemnified Party, effect any settlement of any claim or
pending or threatened proceeding in respect of which the
Indemnified Party is or could have been a party and indemnity
could have been sought hereunder by such Indemnified Party,
unless such settlement includes an unconditional release of such
Indemnified Party from all liability arising out of such claim
or proceeding. Whether or not the defense of any claim or
action is assumed by the Indemnifying Party, such Indemnifying
Party will not be subject to any liability for any settlement
made without its consent, which consent will not be unreasonably
withheld.
SECTION 4.4. Contribution. If the indemnification provided
for in this Article 4 is unavailable to the Indemnified Parties
in respect of any Damages referred to herein, then each
Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Damages in such proportion
as is appropriate to reflect the relative benefits received by
the Company on the one hand and the Selling Holders on the other
from the offering of the Registrable Securities, or if such
allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative
benefits but also the relative fault of the Company on the one
hand and the Selling Holders on the other in connection with the
statements or omissions which resulted in such Damages, as well
as any other relevant equitable considerations. The relative
fault of the Company on the one hand and of each Selling Holder
on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a
material fact relates to information supplied by such party, and
the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company and the Selling Holders agree that it would not be
just and equitable if contribution pursuant to this Section 4.4
were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable
considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party
as a result of the Damages referred to in the immediately
preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 4.4, no Selling
Holder shall be required to contribute any amount in excess of
the amount by which the total price at which the Registrable
Securities of such Selling Holder were offered to the public
exceeds the amount of any damages which such Selling Holder has
otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No
Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation. Each Selling Holder's
obligations to contribute pursuant to this Section 4.4 is
several in the proportion that the proceeds of the offering
received by such Selling Holder bears to the total proceeds of
the offering received by all the Selling Holders and not joint.
ARTICLE V.
MISCELLANEOUS
SECTION 5.1. Participation in Underwritten Registrations. No
Person may participate in any underwritten registration
hereunder unless such Person (a) agrees to sell such Person's
securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to
approve such arrangements, and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the
terms of such underwriting arrangements and these registration
rights.
SECTION 5.2. Rule 144. The Company agrees and will use its
best efforts to file any reports required to be filed by it
under the Securities Act and the Exchange Act and that it will
take such further action as any Holder may reasonably request,
all to the extent required from time to time to enable Holders
to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided
by (a) Rule 144 under the Securities Act, as such Rules may be
amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the Commission. Upon the request of any
Holder, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements.
SECTION 5.3. Deferral. Notwithstanding the provisions of
Section 3.1(a), the Company's obligations to file a Registration
Statement, or cause such Registration Statement to become and
remain effective, shall be suspended for a period not to exceed
90 consecutive days if there exists at the time material
non-public information relating to the Company that, in the
reasonable opinion of the Company, should not be disclosed.
SECTION 5.4. Amendment and Modification. Any provision of
this Agreement may be waived, provided that such waiver is set
forth in a writing executed by the party against whom the
enforcement of such waiver is sought. This Agreement may not be
amended, modified or supplemented other than by a written
instrument signed by Holders of a majority of the Registrable
Securities; provided, however, that without the consent of all
the Holders, no amendment or modification which materially and
adversely affects the ability of such Holders to have the offer
and sale of securities registered hereunder may be effected. No
course of dealing between or among any Persons having any
interest in this Agreement will be deemed effective to modify,
amend or discharge any part of this Agreement or any rights or
obligations of any Person under or by reason of this Agreement.
SECTION 5.5. Successors and Assigns; Third Party
Beneficiaries; Entire Agreement. Subject to the provisions of
Section 1.1 with respect to the definition of "Holder," this
Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their
respective successors and assigns and executors, administrators
and heirs. Holders are intended third party beneficiaries of
this Agreement and this Agreement may be enforced by such
Holders. This Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter
hereof and merges and supersedes all prior discussions,
agreements and understandings of any and every nature among them.
SECTION 5.6. Separability. In the event that any provision
of this Agreement or the application of any provision hereof is
declared to be illegal, invalid or otherwise unenforceable by a
court of competent jurisdiction, the remainder of this Agreement
shall not be affected except to the extent necessary to delete
such illegal, invalid or unenforceable provision unless that
provision held invalid shall substantially impair the benefits
of the remaining portions of this Agreement.
SECTION 5.7. Notices. All notices, demands, requests,
consents or approvals (collectively, "Notices") required or
permitted to be given hereunder or which are given with respect
to this Agreement shall be in writing and shall be personally
served against written receipt or mailed, registered or
certified, return receipt requested, postage prepaid (or by a
substantially similar method), or delivered by a reputable
overnight courier service with charges prepaid, or transmitted
by hand delivery against written receipt, telegram, telex or
facsimile, addressed as set forth below, or such other address
as such party shall have specified most recently by written
notice:
(i) If to the Company:
Champion Parts, Inc.
2525 22nd Street
Oak Brook, Illinois 60521
Attention: President
Facsimile No.: (312) 443-0336
with copies (which shall not constitute notice) to:
Lou Rosen, Esq.
Lord, Bissell & Brook
115 South LaSalle Street
Chicago, Illinois 60603
Facsimile No.: (312) 443-9336
Samuel B. Fortenbaugh, III, Esq.
Morgan, Lewis & Bockius
101 Park Avenue
New York, New York 10178
Facsimile: (212) 309-6273
(ii) If to the Holder, at the most current address, and with
a copy to be sent to each additional address, given by such Holder
to the Company in writing, and copies (which should not
constitute notice) sent to:
Martin Nussbaum, Esq.
Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, NY 10022
Facsimile No.: (212) 308-4519
Notice shall be deemed given or delivered on the date of service
or transmission if personally served or transmitted by telegram,
telex or facsimile. Notice otherwise sent as provided herein
shall be deemed given or delivered on the third business day
following the date mailed or on the next business day following
delivery of such notice to a reputable overnight courier service.
SECTION 5.8. Governing Law. This Agreement shall be
governed by and construed in accordance with the internal law of the
state of Illinois, without giving effect to principles of
conflicts of law.
SECTION 5.9. Headings; Construction. The headings in this
Agreement are for convenience of reference only and shall not
constitute a part of this Agreement, nor shall they affect their
meaning, construction or effect. Each of the parties has had
the benefit of the advice of counsel of their own choice in the
negotiating, drafting and execution of this Agreement, and the
language in all parts of this Agreement is the product of the
efforts of all counsel. Accordingly, neither the entire
Agreement nor any provision in it shall be (a) deemed to have
been proposed or drafted by any party, or (b) construed against
any party.
SECTION 5.10. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be
an original instrument and all of which together shall
constitute one and the same instrument.
SECTION 5.11. Further Assurances. Each party shall cooperate
and take such action as may be reasonably requested by another
party in order to carry out the provisions and purposes of this
Agreement and the transactions contemplated hereby.
SECTION 5.12. Remedies. In the event of a breach or a
threatened breach by any party to this Agreement of its
obligations under this Agreement, any party injured or to be
injured by such breach will be entitled to specific performance
of its rights under this Agreement or to injunctive relief, in
addition to being entitled to exercise all rights provided in
this Agreement and granted by law. The parties agree that the
provisions of this Agreement shall be specifically enforceable,
it being agreed by the parties that the remedy at law, including
monetary damages, for breach of any such provision will be
inadequate compensation for any loss and that any defense or
objection in any action for specific performance or injunctive
relief that a remedy at law would be adequate is waived.
SECTION 5.13. Pronouns. Whenever the context may require, any
pronouns used herein shall be deemed also to include the
corresponding neuter, masculine or feminine forms.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
CHAMPION PARTS, INC.
By:
Name:
Title:
RGP HOLDINGS, INC.
By:
Name:
Title: