EXHIBIT 10.15
SHAREHOLDERS' AGREEMENT
AND
IRREVOCABLE PROXY
dated as of
June 21, 1985
by
and
among
American Tool Companies, Inc.
Newell Co.
Allen D. Petersen
Kenneth L. Cheloha
Robert W. Brady
William L. Kiburz
Flemming Andresen and
Ane C. Patterson
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SHAREHOLDERS' AGREEMENT
AND
IRREVOCABLE PROXY
Agreement, dated as of June 21, 1985, by and among American
Tool Companies, Inc., a corporation incorporated under the laws of
Delaware (the "Corporation"), Newell Co., a corporation incorporated
under the laws of Delaware ("Newell"), Messrs. Allen D. Petersen
("ADP"), Kenneth L. Cheloha ("Cheloha"), Robert W. Brady ("Brady"),
William L. Kiburz ("Kiburz") and Flemming Andresen ("Andersen"), and
Ane C. Patterson ("Patterson"). Newell, ADP, Cheloha, Brady, Kiburz,
Andersen and Patterson are sometimes hereinafter referred to
individually as a "Shareholder" and collectively as the
"Shareholders". Shareholders excluding Newell are sometimes
hereinafter referred to individually as a "Management Shareholder" and
collectively as the "Management Shareholders".
W I T N E S S E T H:
WHEREAS, Newell and the Corporation have entered into a
Securities Purchase Agreement dated as of June 21, 1985 (the "Newell
Purchase Agreement"), pursuant to which Newell has purchased, and the
Corporation has allotted, issued and sold to Newell, on the terms and
subject to the conditions set forth therein, shares of Class A Common
Stock, par value $.1O per share, of the Corporation ("Class A Common
Stock"), shares of Class B Common Stock, par value $.10 per share, of
the Corporation ("Class B Common Stock") (Class A Common Stock and
Class B Common Stock are sometimes hereinafter referred to together as
"Common Stock"), shares of Convertible Preferred Stock, par value $100
per share, of the Corporation ("Preferred Stock") and warrants to
purchase additional shares of Class A and Class B Common Stock; and
WHEREAS, Newell has purchased a subordinated note from
Petersen Manufacturing Co., Inc. ("PMC") in the principal amount of
$14,000,000, on the terms and subject to the conditions set forth in
that certain Subordinated Loan Agreement dated as of June 21, 1985
between Newell and PMC (the "Subordinated Loan Agreement"); and
WHEREAS, the Management Shareholders and the Corporation
have entered into a Stock Purchase Agreement dated as of June 1, 1985
(the "Management Purchase Agreement"), pursuant to which each
Management Shareholder has purchased, and the Corporation has
allotted, issued and sold to each such Management Shareholder, on the
terms and subject to the conditions set forth therein, shares of Class
A and Class B Common Stock; and
WHEREAS, ADP and Newell have entered into a Put Agreement
and a Call Agreement, each dated as of June 21, 1985 (collectively,
the "Put and Call Agreements"), pursuant to which ADP has the right to
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put, and Newell has the right to call, shares of Class B Common Stock
on the terms and conditions set forth therein; and
WHEREAS, the Corporation and the Shareholders desire to
enter into certain agreements with respect to the management of the
Corporation, the voting and transfer of Common Stock and rights to
acquire such Common Stock now owned or hereafter acquired by each of
the Shareholders and certain other matters;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. PRIOR AGREEMENTS.
All prior agreements and understandings among any of the
parties hereto with respect to the issuance, purchase, sale or voting
of Common Stock or other securities of the Corporation, other than (i)
the Newell Purchase Agreement, (ii) the Management Purchase Agreement,
(iii) the Put and Call Agreements, (iv) the Subordinated Loan
Agreement and (v) the warrants, dated June 21, 1985, of the
Corporation issued to Newell (the "Warrants"), are hereby superseded
and terminated and shall have no further force or effect.
2. OWNERSHIP OF COMMON STOCK, PREFERRED STOCK AND
WARRANTS. On the date hereof, after taking into account the Common
Stock, Preferred Stock and Warrants purchased by Newell pursuant to
the Newell Purchase Agreement and the Common Stock purchased by the
Management Shareholders pursuant to the Management Purchase Agreement,
each Shareholder represents and warrants that it, he or she owns, free
and clear of any liens, pledges or encumbrances, except for the shares
subject to the Put and Call Agreements, the respective amounts of
Common Stock, Preferred Stock and Warrants or other rights to acquire
Common Stock, whether presently exercisable or exercisable at some
future time (the Preferred Stock, Warrants and other rights to acquire
Common Stock, whether presently exercisable or exercisable at some
future time, are sometimes hereinafter referred to as "Rights"), set
forth opposite such Shareholder's name below:
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Number of Number of Number of
Shares of Class Shares of Class Shares of Number of
A Common Stock B Common Stock Preferred Stock Warrant Units
Name Owned Owned Owned Owned
---- -------------- -------------- ----------- -----------
Newell 3,500 - 4,649(2) 3,500 (3)(4)
ADP 3,972 34,920 (1) - -
Patterson 484 3,034 - -
Cheloha 261 1,640 - -
Brady 261 1,640 - -
Kiburz 261 1,640 - -
Andersen 261 1,640 - -
(1) 10,014 shares of Class B Common Stock are subject to the Put and
Call Agreements entered into with Newell.
(2) 4,649 shares of Preferred Stock are convertible into 11,940
shares of Class B Common Stock.
(3) 1,000 shares of Class A Common Stock and 6,273 shares of Class B
Common Stock may be purchased at any time prior to June 21, 1990, upon
exercise of the Warrant for 1,000 units.
(4) Up to 2,500 shares of Class A Common Stock and 15,682 shares of
Class B Common Stock may be purchased, upon exercise of the Warrant
for 2,500 Units, following certain defaults, if any, by PMC under the
Subordinated Loan Agreement.
3. TERM OF AGREEMENT.
(a) Except as otherwise provided herein, this Agreement
shall commence on the date hereof and shall continue in full force and
effect until the earlier of ten years from the date hereof or the
occurrence of any of the following events, at which time this
Agreement shall automatically terminate:
(i) Upon the mutual Consent in writing of all of the
parties hereto;
(ii) upon the sale of all of the outstanding Common
Stock and Rights by all but one of the Shareholders; or
(iii) Upon the voluntary or involuntary dissolution of
the Corporation.
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(b) Except to the extent set forth in Section 6 hereof with
respect to Newell's right to purchase shares of Common Stock in the
event of the IPO (as defined hereinafter), the provisions of Sections
6, 7, 8, 9, 10 and 16 hereof shall be of no further force or effect
immediately upon the issuance by the Corporation of Common Stock in an
underwritten public offering pursuant to one or more effective
registration statements under the U.S. Securities Act of 1933, as
amended (the "Securities Act"); PROVIDED, HOWEVER, that, in all other
respects, the provisions of this Agreement shall remain in full force
and effect.
(c) In the event either ADP or Newell, together with any
transferees of either such Shareholder pursuant to Section 7(b)(i) or
7(b)(ii) hereof, shall cease to be the beneficial owner of ten percent
(10%) or more of the then issued and outstanding shares of Class A
Common Stock, such Shareholder (and/or any such transferee) shall
cease to be a party to (or a "Shareholder" as used in) this Agreement
and, subject to Section 3(d) hereof, this Agreement shall no longer be
binding upon or inure to the benefit of such Shareholder (and/or any
such transferee).
(d) Nothing contained in this Section 3 shall affect or
impair any rights or obligations arising prior to or at the time of,
or that may arise by an event causing, (i) the termination of this
Agreement pursuant to Section 3(a) hereof, (ii) the termination of the
specified provisions of this Agreement pursuant to Section 3(b) hereof
or (iii) the termination of the application of this Agreement to any
party resulting from the operation of Section 3(c) hereof.
4. IRREVOCABLE PROXY.
Each of Patterson, Cheloha, Brady, Kiburz and Andersen
hereby grants to, and is deemed to have executed in favor of, ADP an
irrevocable proxy to vote all of the shares of Class A Common Stock
owned by the grantor of the proxy, at all meetings of the stockholders
of the Corporation or to give written consents in lieu of voting such
shares, on all matters submitted to stockholders for vote, including
but not limited to the election of directors of the Corporation as
provided in Section 5 hereof. The proxy granted to ADP with respect
to any shares of Common Stock shall terminate and be of no further
force and effect with respect to such shares which are sold by the
grantor of the proxy in accordance with the provisions of Section
7(b)(iii) or 8 hereof, or in the event ADP shall cease to be a party
to this Agreement in accordance with Section 3(c) hereof or upon ADP's
death.
5. VOTING AGREEMENT; DESIGNATION OF NOMINEES.
(a) Subject to the application to certain Shareholders of
the provisions of Section 4 hereof, each Shareholder agrees that from
and after the date hereof, such Shareholder will vote (or cause to be
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voted) all Common Stock beneficially owned by such Shareholder so as
to elect as the entire Board of Directors of the Corporation (the
"Board"), and thereafter for the TERM OF THIS AGREEMENT to continue in
office, (i) four persons designated by ADP and (ii) three persons
designated by Newell, which designation will be made by each of ADP
and Newell by written notice to the other after prior consultation
with the other; PROVIDED, HOWEVER, in the event that ADP or Newell
shall cease to be a party to this Agreement in accordance with Section
3(c) hereof, no remaining party to this Agreement shall be under any
obligation to vote its, his or her Common Stock to elect to the Board
or continue in office such former party or its designees.
(b) Each of ADP and Newell may at any time Cause any of the
persons designated by him or it to serve as a member of the Board to
be removed as a member of the Board with or without cause and, upon
the written request of either ADP or Newell, each other Shareholder
agrees to vote, subject to Section 4 hereof, all of its, his or her
Common Stock, as and to the extent provided in Section 5(a) hereof, to
effect such removal. In the event that there is a vacancy in the
Board caused by the death, resignation or removal of a person
designated by ADP or Newell to serve as a member of the Board, each
other Shareholder agrees to vote, subject to Section 4 hereof, all of
its, his or her Common Stock, as and to the extent provided in Section
5(a) hereof, to elect to the Board, and thereafter to continue in
office, such substitute director as ADP or Newell, as the case may be,
designates after consultation with the Corporation.
(c) Subject to Section 4 hereof, each Shareholder agrees,
upon the request of ADP or Newell (and for so long as ADP or Newell is
a party hereto), to grant to ADP and Newell a proxy to vote, or to
give a written consent with respect to, all of the Common Stock
beneficially owned by the grantor of the proxy for the election to the
Board or the removal from the Board of the person or persons
designated by ADP and Newell pursuant to Section 5(a) or 5(b) hereof.
6. MAINTENANCE OF INTEREST OF NEWELL. The Corporation
hereby grants to Newell, as long as it owns any shares of Class A
Common Stock, the right to maintain its equity and voting interest in
the Corporation as follows:
(a) Except with respect to the issuance of Common Stock
(and/or options with respect thereto) to employees of the Corporation
and/or its subsidiaries pursuant to a stock purchase plan, stock
option plan, stock bonus plan or other similar arrangement or
combination thereof approved by the Board pursuant to which a number
of shares aggregating not more than five percent (5%) of the
outstanding shares of Class A Common Stock and a number of shares
aggregating not more than five percent (5%) of the outstanding shares
of Class B Common Stock, on the date hereof may be issued, the
Corporation shall, within thirty (30) days following any issuance
(whether or not for consideration) or sale by the Corporation of any
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Common Stock, notify Newell thereof in writing, which notice shall
specify the kind and amount of Common Stock that the Corporation has
issued or sold and contain a detailed description of the terms of such
issuance or sale (including the issuance or sale price, if any), and
shall offer to Newell, to the extent that no adjustment is made in the
Warrant Purchase Price under the Warrants, the opportunity to acquire,
at the "per share or equivalent price" described below, such number of
shares of such Common Stock as shall allow Newell, immediately
following the issuance or sale of all such Common Stock, to be the
owner, in the aggregate, of its Proportionate Equity Interest (as
hereinafter defined); PROVIDED, HOWEVER, that with respect to the
issuance and sale by the Corporation of Common Stock in an
underwritten initial public offering pursuant to an effective
registration statement under the Securities Act (the "IPO"), the
Corporation shall, not less than thirty (30) days prior to the filing
of the registration statement in respect thereof, notify Newell in
writing of the Corporation's intent to file such registration
statement, which notice shall contain the proposed terms of the IPO,
and Newell shall have a period of fifteen (15) days following the
Corporation's notice within which to notify the Corporation, by
written notice, of its irrevocable election to exercise its right to
acquire, in the event of such IPO, shares of Common Stock pursuant to
this Section 6(a). Following the receipt by the Corporation of such
notice, the Corporation shall have the right, in its sole discretion,
not to proceed with the IPO. For the purposes hereof, "Proportionate
Equity Interest" with respect to Newell shall mean the respective
percentages of issued and outstanding shares of Class A and Class B
Common Stock owned by Newell immediately prior to each such issuance
or sale. For the purpose of computing the Proportionate Equity
Interest of Newell the following shall be assumed: (1) the complete
conversion of all Rights that consist of securities convertible into
Common Stock; and (2) the exercise and/or purchase of all Common Stock
purchasable pursuant to all other Rights (excluding those purchasable
upon exercise of the Warrants following certain defaults, if any, by
PMC under the Subordinated Loan Agreement). The "per share or
equivalent price", if any, payable by Newell and all other terms and
conditions of the offer to Newell, shall be identical to that paid and
agreed to by the other parties in connection with such issuance or
sale; PROVIDED, HOWEVER, that if the purchase price was paid by other
parties in kind or is for any other reason of a type of consideration
which Newell cannot readily deliver, Newell shall nevertheless be
entitled to pay the purchase price in cash, such price to be an amount
equal to the monetary equivalent value to the Corporation of such
consideration in kind or other consideration which Newell cannot
readily deliver, as determined in good faith by the Board.
(b) Except as otherwise provided for in Section 6(a) in
respect of the issuance and sale by the Corporation of Common Stock in
the IPO, Newell shall have a period of thirty (30) days following the
Corporation's notice pursuant to Section 6(a) hereof within Which it
may elect, by written notice thereof, to purchase the Common Stock
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offered to it pursuant to Section 6(a) hereof. Newell's election to
purchase the Common Stock offered pursuant to Section 6(a) hereof may
be for all and not part of the Common Stock so offered. The closing
of the purchase by Newell of the Common Stock offered pursuant to
Section 6(a) hereof shall occur at the offices of the Corporation in
DeWitt, Nebraska, at such time as may be specified in the written
notice of election of Newell, which shall be no less than five (5) nor
more than thirty (30) days after the date of such notice of election
to purchase, except with respect to the purchase by Newell of Common
Stock following the issuance and sale of Common Stock pursuant to the
IPO, the closing shall occur not more than twenty (20) days after the
effective date of the registration statement filed in connection
therewith.
(c) Any and all Common Stock to be issued by the
Corporation to Newell pursuant to this Section 6 shall be duly
authorized and validly issued as fully paid and non-assessable.
7. RESTRICTIONS ON SALE OR OTHER DISPOSITION OF SHARES BY
SHAREHOLDERS.
(a) Subject to Section 3(b) hereof and except as provided
in Sections 8, 9 and 10 hereof and/or as otherwise permitted by this
Section 7 and except for any sales pursuant to the Put and Call
Agreements, during the period of time commencing on the date hereof
and continuing until the termination of this Agreement, no
Shareholder, either directly or indirectly, shall sell, assign,
mortgage, hypothecate, transfer, pledge, create a security interest in
or lien upon, encumber, give, place in trust, or otherwise voluntarily
or involuntarily dispose of any Common Stock or Rights now owned or
hereafter acquired by such Shareholder.
(b) Notwithstanding anything to the contrary contained in
Section 7(a) hereof, each Shareholder shall have the right to transfer
his, her or its Common Stock or Rights as follows:
(i) Each Management Shareholder shall have the right
to transfer any or all of the Common Stock and Rights, if
any, owned by him or her for no consideration or at a price
to be determined in the sole discretion of such Shareholder,
provided that (a) the transfer is to (I) his or her spouse,
his or her issue, and/or a trust or trusts for the benefit
of his or her spouse and/or issue, or (II) any other
Management Shareholder, and (b) whether the transfer is made
during his or her lifetime or by testamentary bequest in the
event of his or her death, each transferee agrees in
writing, at the time of the transfer, to be bound by all of
the provisions of this Agreement which would be applicable
to the transferring Shareholder if he or she continued to
own the Common Stock or Rights so transferred.
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(ii) Newell may at any time hereafter transfer any or
all of its Common Stock or Rights to any direct or indirect
wholly-owned subsidiary of Newell upon such terms as may be
agreed upon by Newell and its transferee; PROVIDED, HOWEVER,
that any such transferee shall acquire the Common Stock or
Rights so transferred subject to all the terms and
conditions of this Agreement; and FURTHER PROVIDED that if
at any time such transferee subsidiary shall cease to be a
direct or indirect wholly-owned subsidiary of Newell, all
such Common Stock and Rights, if any, so transferred shall
revert immediately to Newell.
(iii) Each Shareholder shall have the right, to
sell his, her or its Common Stock or Rights free and clear
of the terms, provisions and restrictions of this Agreement
in a bona fide public offering of securities pursuant to a
registration statement under the Securities Act.
In the event of any transfer in accordance with the provisions of this
Section 7(b), prompt written notice of the transfer shall be delivered
by the transferring Shareholder to the Corporation and each of the
other Shareholders, and, in the case of any transfer pursuant to
Section 7(b)(i) or (ii) hereof, references herein to "Shareholder" or
"Shareholders" shall include each such permitted transferee.
8. SALE BY NEWELL OR ADP.
(a) If at any time Newell proposes to sell all or any
portion of its Common Stock and Rights to a bona fide purchaser or
purchasers, Newell shall provide each Management Shareholder with not
less than thirty (30) days' prior written notice of such proposed
sale, which notice shall include all of the terms and conditions of
such proposed sale, and each Management Shareholder shall have the
option, exercisable by written notice to Newell within thirty (30)
days after the receipt of Newell's notice to such Shareholder, to
elect to require Newell to arrange for such bona fide purchaser or
purchasers to purchase all or the same proportionate part of such
Management Shareholder's Common Stock at the same time and upon the
same terms and conditions at which Newell sells its Common Stock and
Rights. For purposes of this Agreement, the proportionate part shall
be based on the assumption that Newell's ownership of Common Stock
includes shares of Common Stock exercisable upon exercise of Rights.
As to any Management Shareholder who shall so elect, Newell shall
either (i) arrange for the proposed purchaser or purchasers to
purchase all or the same proportional part of such Management
Shareholder's Common Stock at the same time and upon the same terms
and conditions at which Newell sells its Common Stock and Rights, or
(ii) not effect the proposed sale to such purchaser or purchasers.
(b) If at any time ADP proposes to sell all or any portion
of his Common Stock to a bona fide purchaser or purchasers, ADP shall
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provide Newell and each of the other Management Shareholders (each of
Newell and such other Management Shareholders are sometimes
individually referred to in this Section 8(b) as an "Offeree" and
collectively as the "Offerees") with not less than thirty (30) days'
prior written notice of such proposed sale or exchange, which notice
shall include all the material terms and conditions of such proposed
sale or exchange and shall identify the purchaser or purchasers. Each
Offeree shall have the option, exercisable by written notice to ADP
within thirty (30) days after the receipt of ADP's notice by such
Offeree, to require ADP to arrange for such bona fide purchaser or
purchasers to purchase all or the same proportionate part of such
Offeree's Common Stock at the same time and upon the same terms and
conditions at which ADP sells his Common Stock. If any Offeree shall
so elect, ADP shall either (i) arrange for the proposed purchaser or
purchasers to purchase all or the same proportionate part of such
Offeree's Common Stock at the same time as and upon the same terms and
conditions at which ADP sells his Common Stock, or (ii) not effect the
proposed sale to such purchaser or purchasers.
(c) In the event that any of the foregoing requires the
purchase price of Common Stock to be derived from a sale of Rights,
the price per share of Common Stock shall be $550 plus 1/1,000 of the
consideration for the sale of the Rights and if the sale price of the
Rights are to be determined from purchase of Common Stock, it shall be
the sale price per share of the Common Stock less $550, which sum
shall be multiplied by 1,000.
9. DEATH OR DISABILITY OF A MANAGEMENT SHAREHOLDER.
(a) In the event of the death or disability (as hereinafter
defined) of any of Cheloha, Brady, Kiburz or Andersen, or in the event
of the death of Patterson, his or her executor, administrator or
committee, as the case may be, shall, on the tenth (10th) day after
appointment of such executor, administrator, or committee by a court
of competent jurisdiction, be deemed to have offered for sale to ADP
all of the Common Stock owned by such deceased or disabled Shareholder
at the date of death or disability, at the price and upon the terms
and conditions hereinafter set forth in Sections 11 and 12 hereof, and
ADP shall have a period of thirty (30) days after the date of such
appointment in which to accept such offer, which acceptance may be for
all or part of the Common Stock so offered. If ADP elects to accept
all or part of the Common Stock so offered, he shall so signify within
such thirty (30) day period by written notice thereof to the personal
representative of such deceased or disabled Shareholder, the other
Management Shareholders and the Corporation.
As used herein, disability shall mean a physical or mental
illness or incapacity which prevents the disabled individual from
performing his customary business duties for a continuous period of
twelve (12) months.
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(b) If ADP, for any reason, fails to accept all o the
Common Stock offered pursuant to Section 9(a) above within such thirty
(30) day period, then a succeeding offer of the Common Stock not
accepted by ADP shall be deemed to have been made, immediately upon
the expiration of such thirty (30) day period, upon the terms and
conditions hereinafter set forth in Sections 11 and 12 hereof, to the
other Management Shareholders, provided that such Management
Shareholders are then owners of shares of Common Stock, in proportion
to each such other Management Shareholder's respective ownership of
Common Stock, or in such proportions as they shall otherwise agree,
and each such Management Shareholder shall have a further period of
twenty (20) days within which to accept such offer, which acceptance
may be for all or part of the Common Stock so offered. Any such
Management Shareholder electing to accept all or part of the Common
Stock so offered shall so signify by written notice to the personal
representative of the deceased or disabled Shareholder and the Corpo-
ration.
(c) In the event that one or more of such other Management
Shareholders fails or declines to accept the offer to purchase all of
the Common Stock offered pursuant to Section 9(b) above, then a
succeeding offer of such unaccepted shares of Common Stock shall,
immediately upon the expiration of the twenty (20) day period provided
for in Section 9(b) above, be deemed to have been made to the Corpo-
ration upon the terms and conditions hereinafter set forth in Sections
11 and 12 hereof, and the Corporation shall immediately be deemed to
have accepted all such shares of Common Stock so offered. The
Corporation shall have the right, at its sole discretion to assign to
any of its wholly-owned subsidiaries its rights and obligations under
this Section 9 and the performance by any such subsidiary shall
constitute performance by the Corporation for purposes of this Section
9.
(d) Notwithstanding anything to the contrary contained in
this Section 9, ADP, the other Management Shareholders and the
Corporation may, either during the thirty (30) day period referred to
in Section 9(a) above or the twenty (20) day period referred to in
Section 9(b) above, agree each to purchase shares from the deceased or
disabled Shareholder, in such proportions as they may agree, so long
as all of the Common Stock offered for sale are purchased by them, and
so long as they shall so signify within such thirty (30) or twenty
(20) day period by a joint notice to the representative of such
deceased or disabled Shareholder.
(e) No written notice of offer need be mailed by the
personal representative of such deceased or disabled Shareholder
except that written notice of the issuance of letters testamentary or
letters of administration shall be given to ADP, the other Management
Shareholders and the Corporation by the personal representative of
such deceased or disabled Shareholder.
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(f) In the event that at any time the Corporation's surplus
is insufficient to enable the Corporation, as a purchaser hereunder,
to purchase shares which it elects or agrees to purchase, the
Shareholders (for themselves and their respective heirs, successors,
personal representatives and assigns) agree that they shall forthwith
take appropriate steps to effect a sufficient reduction of the stated
capital of the Corporation to enable such purchase to be made Solely
for the purpose of effecting such reduction in stated capital, the
Shareholders grant to, and are hereby deemed to have executed in favor
of each other (and their respective heirs, successors, personal
representatives and assigns):
(a) An irrevocable proxy to vote all of the shares of
the Corporation owned by the grantor of the proxy in favor
of a reduction in stated capital at a meeting of the
Shareholders of the Corporation held to vote upon and
authorize such reduction in stated capital; and
(b) An irrevocable power of attorney to sign and file
any and all papers required to be signed and filed by the
grantor of the power of attorney in order to effect the
requisite reduction in stated capital.
10. TERMINATION OF EMPLOYMENT.
(a) In the event the employment of any of Cheloha, Brady,
Kiburz or Andersen with the Corporation and all of its subsidiaries
(direct or indirect) is terminated without Cause (as hereinafter
defined), or if any of Cheloha, Brady, Kiburz or Andersen shall
voluntarily terminate his employment with the Corporation and all of
its subsidiaries at any time following the fifth anniversary of the
date hereof, such Shareholder shall be deemed immediately to have
offered, in accordance with the provisions of Sections 9, 11 and 12
hereof, all of the Common Stock owned by such Shareholder at the time
of such termination for sale to ADP, the other Management Shareholders
and the Corporation.
(b) In the event any of Cheloha, Brady, Kiburz or Andersen
shall voluntarily terminate his employment with the Corporation and
all of its subsidiaries prior to the fifth anniversary of the date
hereof, or the Corporation shall cause or direct PMC to terminate such
Shareholder's employment for Cause, such Shareholder shall be deemed
immediately to have offered in accordance with the provisions of
Sections 9, 11 and 12 hereof, all of the Common Stock owned by him at
the time of such termination for sale to ADP, the other Management
Shareholders and the Corporation.
(c) For purposes of this Section 10, any of the following
acts shall constitute termination of employment for Cause:
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(i) the commitment of any material breach of any of
the provision or covenants of such Shareholder's
employment agreement;
(ii) any act of gross negligence in the performance of
such Shareholder's duties or obligations as an employed
of the Corporation or any of its direct or indirect
subsidiaries; or
(iii) any material act of misfeasance, malfeasance,
disloyalty, dishonesty or breach of trust against the
Corporation or any of its direct or indirect
subsidiaries.
11. PURCHASE PRICE.
(a) The purchase price of any Common Stock owned by a
Shareholder and offered for sale or sold pursuant to the provisions of
Section 9 or 10(a) of this Agreement shall be the greater of (i) an
amount equal to the amount such Shareholder would have received on the
date of such offer and sale, had he invested the subscription price of
such Common Stock on the Closing Date in an investment which yielded
10% per annum, compounded annually, but which investment and yield
remained unpaid until the date of such offer, or (ii) the fair market
value thereof and, if such Common Stock is not publicly traded, fair
market value for purposes hereof shall be deemed the "Book Value" (as
hereinafter defined) of such Common Stock as at the end of the last
preceding fiscal year.
(b) The purchase price of any Common Stock owned by a
Shareholder and offered for sale or sold pursuant to the provisions of
Section 10(b) of this Agreement shall be, if prior to the fifth
anniversary of the date hereof, the greater of (i) 70% of the
subscription price of such Common Stock as provided in the Management
Purchase Agreement or (ii) the "Book Value" (as hereinafter defined)
of such Common Stock, provided that in no event shall such purchase
price exceed the subscription price thereof provided in the Management
Purchase Agreement, and thereafter, the lesser of such subscription
price or "Book Value".
(c) For purposes of this Agreement, "Book Value" shall be
the common shareholders' equity per share as of the relevant date, as
determined by the certified public accountants regularly engaged by
the Corporation, in accordance with generally accepted accounting
principles and the regular methods and practices used by the
Corporation in keeping its books, applied on a consistent basis.
(d) The determination of Book Value by the regular
certified public accountants for the Corporation shall be final,
conclusive and binding upon all of the parties hereto, including the
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successors, assigns, heirs, and personal representatives of the
Shareholders.
12. PROCEDURE ON TRANSFER AND PAYMENT OF PURCHASE PRICE.
(a) The closing date for the sale of any Common Stock sold
pursuant to the provisions of Section 9 or 10 of this Agreement shall
be not later than ninety (90) days after an offer is accepted or
deemed accepted pursuant to Section 9 or 10 of this Agreement, or if
such ninetieth (90th) day shall be a Saturday, Sunday or legal
holiday, then the next business day thereafter. The closing shall
take place at the then offices of the Corporation, or at such other
place as may be agreed upon in writing by all interested parties.
(b) Payment in full of the purchase price for any Common
Stock sold pursuant to the provisions of Section 9 or 10 of this
Agreement shall be made in cash or by certified check delivered at the
closing and such payment shall be made against delivery of
certificates representing such Common Stock, endorsed in blank or
accompanied by appropriate stock powers endorsed in blank, with
signatures guaranteed, and further accompanied by any requisite stock
transfer tax stamps and in the case of purchase from a legal
representative, the certificates representing such Common Stock shall
also be accompanied by a certificate of the appointment of the
representative, a certified copy of the Will, if any, and an affidavit
to the effect that all legacies, debts, claims and taxes have been
paid or are amply provided for, and other applicable state tax waivers
and releases of tax liens.
(c) If for any reason any Common Stock being purchased is
not transferred and delivered as herein provided, the Corporation or
its then-President, Vice-President or Secretary, is hereby authorized
and empowered to make, execute and deliver any and all assignments,
transfers and powers of attorney, in writing, necessary or required
for the transfer of such Common Stock on the books of the Corporation
and to cause such Common Stock to be transferred and the certificates
therefor issued to be cancelled and new certificates issued to the
purchaser or purchasers thereof, as the case may be, and thereafter
the retiring Shareholder's rights or those of his personal
representatives, as the case may be, shall be limited to the right to
receive and collect the purchase price hereunder. Any Common Stock
delivered or transferred subject to the terms hereof shall thereafter
remain subject to the terms and conditions hereof.
13. REGISTRATION RIGHTS.
(a) DEMAND REGISTRATION RIGHTS. If, at any time and from
time to time after the Corporation has effected a bona fide public
offering of Common Stock pursuant to an effective registration
statement under the Securities Act, the Corporation shall receive
written notice from Newell, which notice states that Newell desires to
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transfer ten percent (10%) or more of the then issued and outstanding
shares of Class A or Class B Common Stock under circumstances that
would result in a public distribution (within the meaning of the
Securities Act) of such Common Stock and require the filing of a
registration statement under the Securities Act, then the Corporation
shall, at the request of Newell, cause to be prepared and filed an
appropriate registration statement under the Securities Act to allow
the sale of such shares as soon as practicable after the receipt of
such notice, and the Corporation will use its best efforts to cause
such registration to become effective; PROVIDED, HOWEVER, that, that
(i) the Corporation shall not have any obligation to effect more than
four registrations of Common Stock for Newell under this Section 9(a)
and (ii) the Corporation shall not have any obligation to cause a
registration statement to be prepared and filed under this Section
13(a) within ninety (90) days after any registration statement filed
pursuant to Section 13(b) hereof has become or been declared
effective.
(b) "PIGGYBACK" REGISTRATION RIGHTS. The Corporation
shall, at least thirty (30) days prior to the filing of a registration
statement under the Securities Act relating to the public offering of
any class of its equity securities, or any security of the Corporation
convertible into or exercisable for any class of its equity
securities, by the Corporation or any of its security holders, give
written notice of such proposed filing and of the proposed date
thereof to the Shareholders, and if, on or before the twentieth (20th)
day following the date on which such notice is given, the Corporation
shall receive a written request from any of such Shareholders
requesting that the Corporation include among the securities covered
by such registration statement or prospectus the Common Stock owned by
such Shareholder for offering for sale in a manner and on terms set
forth in such request, the Corporation shall include such shares in
such registration statement or prospectus, if filed, so as to permit
such shares to be sold or disposed of in the manner and on the terms
of the offering thereof set forth in such request.
(c) TERMS AND CONDITIONS OF REGISTRATION OR QUALIFICATION.
In connection with any registration statement filed pursuant to
Section 13(a) or 13(b) hereof the following provisions shall apply:
(i) Each Shareholder shall, if requested by the
managing underwriter, agree not to sell publicly any shares
of the Corporation held by such Shareholder (other than the
shares so registered) for a period of up to 120 days
following the effective date of the registration statement
or prospectus relating to such offering.
(ii) If such registration statement shall be filed
pursuant to Section 13(b) hereof and if the Corporation's
managing underwriter advises that the inclusion in such
registration or qualification of some or all of the shares
97
of the Shareholders sought to be registered by such
Shareholders creates a substantial risk that the proceeds or
price per share the Corporation will derive from such
registration or qualification will be reduced or that the
number of shares to be registered or qualified at the
instance of the Corporation plus the number of shares sought
to be registered or qualified by the Shareholders and any
other security holders of the Corporation is too large a
number to be reasonably sold, the number of shares sought to
be registered or qualified for each Shareholder and each
other security holder of the Corporation shall be reduced,
pro rata in proportion to the number of shares sought to be
registered or qualified by all such persons, to the extent
necessary to reduce the number of shares to be registered or
qualified to the number recommended by the managing
underwriter.
(iii) The Shareholders will promptly provide the
Corporation with such information as it shall reasonably
request in order to prepare such registration statement or
prospectus.
(iv) All expenses in connection with the preparation
of any registration statement or prospectus filed pursuant
to Section 13(a) or 13(b), including, without limitation,
any and all legal and accounting fees (but not including
fees and disbursements of counsel for, or other experts
retained by any Shareholder), shall be borne by the
Corporation, except that each Shareholder shall be required
to bear that portion of the additional SEC, NASD and Blue
Sky registration and filing fees attributable solely to the
inclusion of such Shareholder's shares of Common Stock.
(v) Following the filing date of such registration
statement, the Corporation shall, upon the request of the
Shareholders, forthwith supply such number of prospectuses
(including preliminary prospectuses and amendments and
supplements thereto) meeting the requirements of the
Securities Act as shall be requested by the Shareholders to
permit the Shareholders to make a public distribution of
their shares, provided that the Shareholders furnish the
Corporation with such appropriate information relating to
the Shareholders' intentions in connection therewith as the
Corporation shall reasonably request in writing.
(vi) The Corporation shall use its best efforts to
cause each registration statement filed pursuant to Section
13(a) or 13(b) hereof to become effective as expeditiously
as possible and shall prepare and file such amendments and
supplements to such registration statement and the
prospectus used in connection therewith as may be necessary
98
to keep such registration statement or prospectus effective
and to comply with the provisions of the Securities Act or
the securities laws of any state where the registration
statement or prospectus has been filed with respect to the
offer and sale or other disposition of the shares covered by
such registration statement or prospectus during the period
required for distribution of the shares, which period shall
not be in excess of nine (9) months from the effective date
of such registration statement or prospectus.
(vii) The Corporation shall select the underwriter or
underwriters, if any, who are to undertake any offering of
securities with respect to which the Shareholders may have
registration rights pursuant to Section 13(b) hereof and the
underwriter selected by Newell in a registration pursuant to
Section 13(a) shall be reasonably acceptable to the
Corporation.
(d) INDEMNIFICATION.
(i) In the event of the registration or qualification
of any shares of the Shareholders under the Securities Act
pursuant to the provisions of this Section 13, the
Corporation agrees to indemnify and hold harmless each
Shareholder thereby offering such shares for sale (a
"seller"), each underwriter, broker or dealer, if any, of
such shares, and each other person, if any, who controls any
such seller, underwriter, broker or dealer within the
meaning of the Securities Act, from and against any and all
losses, claims, damages or liabilities (or actions in
respect thereof), joint or several, to which such seller,
underwriter, broker or dealer or controlling person may
become subject under the Securities Act or the applicable
securities laws or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained
in any registration statement under which such shares were
registered or qualified under the Securities Act, any
preliminary prospectus or final prospectus relating to such
shares, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading,
or any violation by the Corporation of any rule or
regulation under the Securities Act applicable to the
Corporation or relating to any action or inaction required
by the Corporation in connection with any such registration
or qualification and will reimburse each such seller,
underwriter, broker or dealer and each such controlling
person for any legal or other expenses reasonably incurred
99
by such seller, underwriter, broker or dealer or controlling
person in connection with investigating or defending any
such loss, claim, damage, liability or action; PROVIDED,
HOWEVER, that the Corporation will not be liable in any such
case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission
made in a such registration statement, such preliminary pro-
spectus, such final prospectus or such amendment or
supplement thereto in reliance upon and in conformity with
written information furnished to the Corporation by such
seller, underwriter, broker, dealer or controlling person
specifically and expressly for use in the preparation
thereof.
(ii) In the event of the registration of any shares of
the Shareholders under the Securities Act for sale pursuant
to the provisions hereof, each seller and each other person,
if any, who controls any such seller, within the meaning of
the Securities Act, agrees severally, and not jointly, to
indemnify and hold harmless the Corporation, each person who
controls the Corporation within the meaning of the
Securities Act, and each officer and director of the
Corporation from and against any losses, claims, damages or
liabilities, joint or several, to which the Corporation,
such controlling person or any such officer or director may
become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under
which such shares were registered or qualified under the
Securities Act, any preliminary prospectus or final
prospectus relating to such shares, or any amendment or sup-
plement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, which untrue statement or
alleged untrue statement or omission or alleged omission was
made therein in reliance upon and in conformity with written
information furnished to the Corporation by such seller or
controlling person specifically for use in connection with
the preparation thereof or arise out of or are based upon
any violation by such seller or controlling person of any
rule or regulation under the Securities Act or any action or
inaction required by the Corporation in connection with such
registration or qualification, and will reimburse the
Corporation, such controlling person of the Corporation and
each such officer or director of the Corporation for any
legal or any other expenses reasonably incurred by them in
100
connection with investigating or defending any such loss,
claim, damage, liability, or action.
(iii) Promptly after receipt by a person entitled
to indemnification under this Section 13(d) (an "indemnified
party") of notice of the commencement of any action or claim
relating to any registration statement filed under Section
13(a) or 13(b) hereof or as to which indemnity may be sought
hereunder, such indemnified party will, if a claim for
indemnification hereunder in respect thereof is to be made
against any other party hereto (an "indemnifying party"),
give written notice to such indemnifying party of the
commencement of such action or claim, but the omission so to
notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party
otherwise than pursuant to the provisions of this Section
13(d) and shall also not relieve the indemnifying party of
its obligations under this Section 13(d) except to the
extent that the omission results in a failure of actual
timely notice to the indemnifying party or such indemnifying
party is damaged solely as a result of the failure to give
timely notice. In case any such action is brought against
an indemnified party, and it notifies an indemnifying party
of the commencement thereof, the indemnifying party will be
entitled (at its own expense) to participate in and, to the
extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense, with
counsel satisfactory to such indemnified party, of such
action and/or to settle such action and, after notice from
the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying
party will not be liable to such indemnified party for any
legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof,
other than the reasonable cost of investigation; PROVIDED,
HOWEVER, that no indemnifying party and no indemnified party
shall enter into any settlement agreement which would impose
any liability on such other party or parties without the
prior written consent of such other party, or parties,
unless such other party, or parties, are fully indemnified
to its or their satisfaction, as the case may be, against
any such liability.
14. ISSUANCE OF ADDITIONAL COMMON STOCK; AFTER ACQUIRED
COMMON STOCK.
(a) The Board may, from time to time, authorize the
issuance of additional Common Stock or Rights to the Shareholders or
to other persons for a purchase price to be determined by the Board;
PROVIDED, HOWEVER, that the Corporation, for a period of one (1) year
from the date hereof, shall not issue any additional Common Stock,
101
except pursuant to a stock purchase plan, stock option plan, stock
bonus plan or other similar arrangement approved by the Board.
(b) Except as provided in Section 3(b) hereof, all of the
provisions of this Agreement shall apply to all Common Stock or Rights
now owned or which may be issued or transferred to a Shareholder or to
his transferee in consequence of any additional issuance, purchase,
exchange or reclassification of Common Stock, corporate reorganization
or any other form of recapitalization, or stock split, stock dividend
or which are acquired by a Shareholder in any other manner.
15. REPRESENTATIONS OF THE SHAREHOLDERS AND THE
CORPORATION.
(a) Each Management Shareholder hereby represents that he
or she has the legal right and capacity to enter into this Agreement
and that he or she fully understands the terms of this Agreement.
(b) Each of Newell and the Corporation hereby represents
that it is authorized, and has all requisite power and authority, to
execute and deliver this Agreement and form the obligations created
hereby, and that this Agreement has been duly and validly executed by
it and constitutes its valid and binding obligation enforceable in
accordance with its terms.
16. RECORDS AND REPORTS. The Corporation hereby covenants
and agrees with Newell that the Corporation shall accurately and
fairly maintain its books of account in accordance with generally
accepted accounting principles; employ independent certified public
accountants approved by the Board to make annual audits of its
accounts in accordance with generally accepted auditing standards;
permit Newell and its representatives to have access to and to examine
its properties, books and records (and to copy and make extracts
therefrom) at such reasonable times and intervals as Newell may
request and to discuss its affairs, finances and accounts with its
officers and auditors, all to such reasonable extent and at such
reasonable times and intervals as Newell may request; and furnish to
Newell all of the financial reports described in Section 6.1 of the
Subordinated Loan Agreement. Newell hereby agrees that any information
received by it in its capacity as a Shareholder or through its
representation on the Board, or pursuant to this Section 16, including
information received by it pursuant to the Subordinated Loan
Agreement, shall be maintained in confidence; PROVIDED, HOWEVER, that
such obligation shall not apply to any information which becomes known
to the public through no fault of Newell; and PROVIDED, FURTHER, that
Newell, upon the written consent of the Corporation, which consent
shall not be unreasonably withheld, may reveal such information to
prospective transferees of Common Stock or Rights owned by it.
17. LEGEND. Each certificate representing Common Stock or
Rights owned by the Shareholders or by any persons subject to the
102
provisions of this Agreement shall (in addition to any other
legend(s)) have stamped, printed or typed thereon the following legend
(or a legend substantially similar thereto):
"This certificate and the shares (or the rights,
options or warrants to purchase shares)
represented hereby are subject to and shall be
transferable only in accordance with the
provisions of a certain Shareholders' Agreement,
dated as of June 21, 1985, among American Tool
Companies, Inc., Newell Co., Ane C. Patterson and
Messrs. Petersen, Cheloha, Brady, Kiburz and
Andresen, a copy of which is on file with the
Secretary of American Tool Companies, Inc."
18. AGREEMENT BY THE CORPORATION. No transfer of Common
Stock or Rights made in contravention of this Agreement shall be
recognized by the Corporation, and the Corporation will not at any
time permit any transfer to be made on its books or records of the
certificates representing the Common Stock or Rights of the
Shareholders or any other person subject to the provisions of this
Agreement, unless such transfer is made pursuant to and in accordance
with the terms and conditions of this Agreement.
19. SPECIFIC PERFORMANCE. The Shareholders agree that
inasmuch as the Common Stock is closely held and the market therefor
is limited, irreparable damage would result if this Agreement is not
specifically enforced. Therefore, each of the parties hereto hereby
consents that the restrictions on the transfer of Common Stock and
Rights and the obligations to offer for sale Common Stock and Rights
contained in Sections 7, 8, 9 and 10 hereof shall be enforceable in a
court of equity by a decree of specific performance, and that
injunctive relief may be granted to any party hereto in connection
therewith. Such remedies shall be cumulative and not exclusive and
shall be in addition to any other rights or remedies which any party
may have under this Agreement or otherwise.
20. COMPLETE AGREEMENT. Except as otherwise provided in
Section 1 hereof, this Agreement constitutes the complete
understanding among the parties with respect to its subject matter and
no alteration or modification of any of its provisions shall be valid
unless made in writing and signed by all of the parties hereto.
21. SECTION HEADINGS. The section headings contained in
this Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.
22. SUCCESSORS AND ASSIGNS. All of the terms of this
Agreement shall inure to the benefit of and shall be binding upon the
heirs, executors, administrators, personal representatives, successors
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and permitted assigns of the Shareholders and upon the successors and
assigns of the Corporation.
23. NOTICES. All notices, offers, acceptances and other
communications required or permitted hereunder shall be sufficiently
given if (a) in writing and personally delivered or (b) sent by
registered or certified mail, postage paid, return receipt requested,
as follows:
(a) If to the Corporation:
American Tool Companies, Inc.
P.O. 337
Dewitt, Nebraska 68541
Attn: President
(b) If to Newell:
Newell Co.
Newell Center
29 East Stephenson Street
Freeport, Illinois 61032
Attn: Vice President - Finance
(c) If to any of the other Shareholders, to the address set
forth below such party's name:
Allen D. Petersen Robert W. Brady
American Tool Companies, Inc. American Tool Companies, Inc.
DeWitt, Nebraska 68341 DeWitt, Nebraska 68341
Kenneth L. Cheloha William L. Kiburz
American Tool Companies, Inc. American Tool Companies, Inc.
DeWitt, Nebraska 68341 DeWitt, Nebraska 68341
Flemming Associates Ane C. Patterson
Petersen International 150 Haskill Basin Road
Corporation Whitefish, Montana 59937
2333 Waukegan Road
Bannockburn, Illinois 60015
Any party may change the address to which each such notice or
communication shall be sent by giving written notice to the other
parties of such new address in the manner provided herein for giving
notice.
24. GOVERNING LAW. This Agreement shall be governed by,
and construed and enforced in accordance with the laws of Nebraska
without giving effect to the provisions, policies or principles
thereof respecting conflict or choice of laws.
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25. COMMON STOCK. As used herein the term "Common Stock"
shall mean and include the shares of Class A and Class B common stock
of the Corporation authorized on the date hereof and shall also
include any shares of any class of the Corporation thereafter
authorized which shall not be limited to a fixed sum or percentage in
respect of the rights of the holders hereof to participate in
dividends and in the distribution of assets upon the voluntary or
involuntary liquidation, dissolution or winding up of the Corporation.
26. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all
of which taken together shall constitute one and the same agreement.
27. FURTHER ASSURANCES. Each of the Shareholders agrees to
vote its or his Common Stock and to execute and deliver such documents
and instruments as may be necessary or advisable in order to implement
the foregoing provisions of this Agreement.
28. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
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IN WITNESS WHEREOF, the parties have signed this Agreement
as of the date first set forth above.
AMERICAN TOOL COMPANIES, INC. NEWELL Co.
By: __________________________ By: __________________________
Name: Name:
Title: Title:
______________________________
ALLEN D. PETERSEN
______________________________
KENNETH L. CHELOHA
______________________________
ROBERT W. BRADY
______________________________
WILLIAM L. KIBURZ
______________________________
FLEMMING ANDRESEN
______________________________
ANE C. PATTERSON