EXHIBIT 10(a)
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CARPENTER INDUSTRIES INC.
STOCKHOLDERS' AGREEMENT
JANUARY ___, 1997
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TABLE OF CONTENTS
Page
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE I
CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . .2
1.1 Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE II
RESTRICTIONS ON TRANSFERS . . . . . . . . . . . . . . . . . . . . . 14
2.1 Restrictions Generally; Securities Act . . . . . . . . . . . . 14
2.2 Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.3 Limitations on Repurchases, Dividends, Etc.. . . . . . . . . . 15
2.4 Transfer Restrictions. . . . . . . . . . . . . . . . . . . . . 15
2.5 Right of First Refusal . . . . . . . . . . . . . . . . . . . . 16
ARTICLE III
RIGHTS OF INCLUSION . . . . . . . . . . . . . . . . . . . . . . . . 18
3.1 Rights of Inclusion. . . . . . . . . . . . . . . . . . . . . . 18
3.2 Article III Sales. . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE IV
REPURCHASE OF SECURITIES; LOOK-BACK . . . . . . . . . . . . . . . . 20
4.1 Put Right. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.2 Look-Back. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.3 Selection of Independent Investment Bank . . . . . . . . . . . 22
ARTICLE V
CORPORATE GOVERNANCE. . . . . . . . . . . . . . . . . . . . . . . . 22
5.1 Board of Directors . . . . . . . . . . . . . . . . . . . . . . 22
5.2 Removal. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.3 Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.4 Board Voting . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.5 Special Approval Rights. . . . . . . . . . . . . . . . . . . . 24
5.6 Committees of the Board; Subsidiary Boards . . . . . . . . . . 25
5.7 Action by Written Consent of Stockholders. . . . . . . . . . . 25
ARTICLE VI
CERTAIN COVENANTS OF THE PARTIES. . . . . . . . . . . . . . . . . . 26
6.1 Registration . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.2 Additional Stockholders. . . . . . . . . . . . . . . . . . . . 26
6.3 Stockholder List; Certain Notices. . . . . . . . . . . . . . . 26
6.4 Rights Offering. . . . . . . . . . . . . . . . . . . . . . . . 27
6.5 Spartan Chassis. . . . . . . . . . . . . . . . . . . . . . . . 28
6.6 Certain Financial Information. . . . . . . . . . . . . . . . . 28
ARTICLE VII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.1 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 28
7.2 Entire Agreement; Amendments . . . . . . . . . . . . . . . . . 28
7.3 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.4 Certain Actions. . . . . . . . . . . . . . . . . . . . . . . . 29
7.5 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.6 Compliance with Regulations. . . . . . . . . . . . . . . . . . 30
7.7 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.8 Successors and Assigns . . . . . . . . . . . . . . . . . . . . 30
7.9 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.10 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . 32
7.11 Headings; Certain Conditions . . . . . . . . . . . . . . . . . 32
7.12 Further Assurances; Subsidiaries . . . . . . . . . . . . . . . 32
7.13 Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.14 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.15 Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.16 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.17 Consent to Jurisdiction and Service of Process . . . . . . . . 36
7.18 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . 37
Exhibit A-1 Form of Joinder Agreement for Permitted Transferees
Exhibit A-2 Form of Joinder Agreement for Additional Stockholders
Exhibit A-3 Form of Joinder Agreement for Transferees of Restricted
Securities pursuant to Section 2.5
Exhibit B Legends
Exhibit C Initial Members of Board of Directors
Schedule 2.5(e) List of Certain Competitors to whom Offered Securities
may not be Sold
STOCKHOLDERS' AGREEMENT dated as of January ___, 1997, among
CARPENTER INDUSTRIES INC., a Delaware corporation (the "COMPANY"), SPARTAN
MOTORS, INC., a Michigan corporation ("SPARTAN"), RECOVERY EQUITY
INVESTORS II, L.P., a Delaware limited partnership ("REI II"), and
CARPENTER INDUSTRIES LLC, an Indiana limited liability company.
Capitalized terms are used as defined in Article I hereto.
RECITALS
WHEREAS, the Company, Spartan, REI II, SerVaas, the Beurt SerVaas
Revocable Trust and The Curtis Publishing Company have entered into that
certain Investment Agreement dated as of December 23, 1996 (as the same may
be amended, supplemented or otherwise modified from time to time, the
"INVESTMENT AGREEMENT"), pursuant to which, among other things, each of
Spartan and REI II is acquiring 300 newly issued shares of the Company's
common stock, no par value per share (the "Common Stock");
WHEREAS, immediately following the consummation of the
transactions contemplated by the Investment Agreement, SerVaas shall own,
beneficially and of record, 300 shares of Common Stock; accordingly, at
such time, Spartan will own 33- % of the outstanding Common Stock, REI II
will own 33- % of the outstanding Common Stock and SerVaas will own 33- %
of the outstanding Common Stock;
WHEREAS, each of Spartan, REI II, SerVaas and the Company
desires to enter into this Agreement to regulate certain aspects of their
relationship and to provide for, among other things, restrictions on the
transfer or other disposition of certain securities of the Company and
matters relating to the corporate governance of the Company; and
WHEREAS, the Investment Agreement, among other things, provides
that the execution and delivery of a stockholders' agreement in
substantially the form hereof is a condition to the consummation of the
other transactions contemplated by the Investment Agreement.
NOW, THEREFORE, in connection with the Investment Agreement and
for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 DEFINED TERMS.
(a) The following defined terms, when used in this Agreement,
shall have the respective meanings set forth below (such definitions to be
equally applicable to both singular and plural forms of the terms defined):
"ACCEPTANCE DATE" has the meaning ascribed to it in Section
6.4(b).
"ADDITIONAL STOCKHOLDER" means any Person (other than the
Stockholders) to whom the Company issues Restricted Securities after
the date hereof other than pursuant to a public offering registered
under the Securities Act, in each case who has executed a Joinder
Agreement as an Additional Stockholder pursuant to Section 6.2, and
its direct and indirect Permitted Transferees, so long as any such
Person shall hold Restricted Securities.
"AFFILIATE" means, with respect to any Person, (a) any other
Person directly or indirectly controlling, controlled by or under
common control with, that Person, (b) any other Person that owns or
controls (i) 5% or more of any class of equity securities of that
Person or any of its Affiliates or (ii) 5% or more of any class of
equity securities (including any equity securities issuable upon the
exercise of any option, warrant, convertible security or similar
right) of that Person or any of its Affiliates, or (c) any director,
partner, officer, agent, employee or relative of that Person. For the
purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction
of the management and policies of that Person, whether through
ownership of voting securities or by contract or otherwise.
"APPRAISED VALUE" means, as of any date of determination, the
aggregate fair market value of the Common Stock as of such date
without any discount for illiquidity of the market for Common Stock
or minority status, as determined by an Independent Investment Bank.
"ARTICLE III OFFER" has the meaning ascribed to it in Section
3.1(a).
"ASSOCIATE" means, with respect to any Person, any corporation or
other business organization of which such Person is an officer or
partner or is the beneficial owner, directly or indirectly, of 10% or
more of any class of its equity securities, any trust or estate in
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which such Person has a substantial beneficial interest or as to which
such Person serves as a trustee or in a similar capacity and any
relative or spouse of such Person, or any relative of such spouse, who
has the same home as such Person.
"BOARD" means the Board of Directors of the Company.
"BUYER" has the meaning ascribed to it in Section 3.1(a).
"CERTIFICATE OF INCORPORATION" means the Certificate of
Incorporation of the Company, as the same may be amended or restated
from time to time.
"CHANGE OF CONTROL" means the occurrence in one or more
transactions or events or series of transactions or events of any of
the following: (i) the sale or transfer of all or substantially all
of the assets of the Company; (ii) any merger, consolidation,
recapitalization, reorganization or similar event to which the Company
is a party, other than any such transaction immediately after which
(A) the Spartan Stockholders, the SerVaas Stockholders and their
respective direct and indirect Permitted Transferees shall continue to
beneficially own, and have the economic interest in, securities
representing in the aggregate the same percentage of the Total Voting
Power of the Company and the same percentage of the equity interest in
the Company, in each case calculated on a Fully Diluted Basis, as was
owned by them in the aggregate immediately prior to such transaction,
and (B) each of the Spartan Stockholders, the SerVaas Stockholders and
its Permitted Transferees continues to have beneficial ownership and
economic interest in the Company's securities in the same proportion
in relation to the other Stockholders as a group as immediately before
such transaction; (iii) the dissolution or liquidation of the Company;
(iv) the Spartan Stockholders, the SerVaas Stockholders and their
respective Permitted Transferees cease to beneficially own, and have
the economic interest in, more than 40% of the Common Stock calculated
on a Fully Diluted Basis; (v) the Spartan Stockholders, the SerVaas
Stockholders and their respective Permitted Transferees shall cease to
have more than 40% of the Total Voting Power of the Company,
calculated on a Fully Diluted Basis; or (vi) any Person or "group" (as
defined in Rule 13D under the Exchange Act) other than the Spartan
Stockholders, the SerVaas Stockholders and their respective Permitted
Transferees shall own, beneficially or of record, more than 40% of the
Common Stock, calculated on a Fully Diluted Basis, or shall have more
than 40% of the Total Voting Power, calculated on a Fully Diluted
Basis.
"CLOSING" has the meaning ascribed to it in the Investment
Agreement.
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"CLOSING DATE" has the meaning ascribed to it in the Investment
Agreement.
"COMMISSION" means the Securities and Exchange Commission and any
other similar or successor agency of the federal government
administering the Securities Act or the Exchange Act.
"COMMON STOCK" has the meaning ascribed to it in the recitals
hereto.
"COMPANY" has the meaning ascribed to it in the introductory
paragraph of this Agreement.
"COMPANY DESIGNEE" has the meaning assigned to it in Section
4.1(a).
"COMPANY NOTICE" has the meaning ascribed to it in Section
2.5(b).
"CONTRACT" has the meaning ascribed to it in the Investment
Agreement.
"DEFAULT RATE" means the lesser of (i) the Prime Rate plus 5% per
annum and (ii) the maximum permitted interest rate under applicable
law. Each change in the Prime Rate shall result in a corresponding
change in the Default Rate effective at the time of such change in the
Prime Rate.
"DR. SERVAAS" means Dr. Beurt R. SerVaas.
"EBT" means for the Company for any fiscal period, the
consolidated net income (loss) of the Company and its consolidated
Subsidiaries for such fiscal period, determined in accordance with
generally accepted accounting principles and in a manner consistent
with that used in the preparation of the Company's consolidated
financial statements for periods commencing after the Closing Date,
PLUS (a) the sum of the following amounts of the Company and its
consolidated Subsidiaries for such fiscal year, in each case
determined on a consolidated basis in accordance with generally
accepted accounting principles and used in the manner described above,
to the extent included in the determination of such net income (loss):
(i) federal, state and local income tax expense, (ii) extraordinary
losses and (iii) expenses attributable to any management stock bonus,
cash bonus, stock option or similar incentive plan, including any
bonuses payable pursuant to employment agreements; LESS (b) the
extraordinary gains of the Company and its consolidated Subsidiaries
for such fiscal period, determined on a consolidated basis in
accordance with generally accepted accounting principles used in the
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manner described above, to the extent included in the determination of
such net income (loss); PROVIDED, HOWEVER, that the determination of
EBT shall exclude the effects of any adjustments resulting from the
application of Accounting Principles Board Opinion Numbers 16 and 17
in connection with transactions or events occurring after the Closing.
"EBT VALUE" means, as of any date of determination, an amount
equal to the product of (i)10 MULTIPLIED BY (ii) the Company's EBT
for the twelve-fiscal month period ending on the last day of the last
full fiscal month immediately preceding the date of determination.
"EQUITY EQUIVALENTS" means securities which, by their terms, are
or may be exercisable, convertible or exchangeable for or into Common
Stock at the election of the holder thereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations of the
Commission thereunder.
"FREELY TRADEABLE" means, with respect to any securities, that
there exists an active public trading market for such securities, that
such securities are either listed on the New York Stock Exchange or
the American Stock Exchange or quoted on the NASDAQ National Market
System and that no restrictions on trading such securities exist,
including any restrictions of the kind contemplated under Rule 144
under the Securities Act with respect to "restricted securities" (as
such term is defined in such Rule) except to the extent such
restrictions under Rule 144 would not have a reasonable likelihood of
restricting the public resale of such securities by the holder thereof
for a period in excess of six months.
"FULLY-DILUTED BASIS" means, with respect to the calculation of
the number of shares of Common Stock, (i) all shares of Common Stock
outstanding at the time of determination and (ii) all shares of Common
Stock issuable upon the exercise, conversion or exchange of any Equity
Equivalents outstanding at the time of determination.
"INCLUSION NOTICE" shall have the meaning ascribed to it in
Section 3.1(a).
"INCLUSION RIGHT" shall have the meaning ascribed to it in
Section 3.1(b).
"INDEPENDENT INVESTMENT BANK" means any nationally recognized
investment bank or valuation firm chosen by the Company and consented
to by the holders of a majority of the Restricted Securities then held
by each of the Spartan Stockholders, the REI Stockholders and the
SerVaas Stockholders, which consent in each case shall not be
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unreasonably withheld or delayed; PROVIDED, HOWEVER, that if any such
consent is withheld or delayed, the Independent Investment Bank shall
be selected as provided in Section 4.3.
"INVESTMENT AGREEMENT" shall have the meaning ascribed to it in
the recitals hereto.
"JOINDER AGREEMENT" means a Joinder Agreement substantially in
the form attached hereto as Exhibit A-1, A-2 or A-3.
"LIEN" means any lien, claim, option, charge, encumbrance,
security interest or other adverse claim of any kind.
"LOOK-BACK CONSIDERATION" means, with respect to any Look-Back
Event, (i) the aggregate consideration directly or indirectly received
or to be received by the Company, its stockholders and their
respective Subsidiaries and Affiliates in connection with such Look-
Back Event, including all cash, securities, obligations, notes,
bonuses, consulting, non-competition and similar payments and other
property received or receivable by any of the Company, its
stockholders and their respective Subsidiaries and Affiliates, PLUS
(ii) the aggregate amount of all indebtedness of the Company, its
stockholders and their respective Subsidiaries and Affiliates assumed
in connection with such Look-Back Event by the counterparty or
counterparties thereto PLUS (iii) without duplication of amounts
included in clauses (i) and (ii) above, any dividends or other
distributions declared or paid by the any of Company, its Subsidiaries
and their respective Affiliates in contemplation of, immediately prior
to or contemporaneously with, such Look-Back Event the consummation
thereof. For the purposes of this definition, the value of any
consideration other than cash shall be determined as follows: (x) if
the consideration consists of securities that are traded on a national
securities exchange, the value thereof (on a per share basis) shall
equal the last closing price per share prior to the consummation of
such Look-Back Event, (y) if the consideration consists of securities
that are traded on an over-the-counter market, the value thereof (on a
per share basis) shall equal the mean of the last closing bid and ask
prices per share prior to the consummation of the Look-Back Event and
(z) if the consideration is of any other type, the value thereof shall
equal its fair market value (without any discount for illiquidity of
the market therefor or minority status, in the case of securities) as
determined by an Independent Investment Bank.
"LOOK-BACK EVENT" means the occurrence of any of the following
events (or any series of events giving rise to any of the following
events) during the period beginning on the date of the Put Notice and
ending on the first anniversary of the date of the purchase and sale
of the Put Option Securities: (i) a Change of Control; (ii) a public
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offering of Common Stock; or (iii) the entering into of any agreement,
arrangement or understanding (whether written or oral) by any of the
Company, its Subsidiaries, the Stockholders and their respective
Affiliates with respect to any event specified in clause (i) or (ii)
above.
"LOOK-BACK PAYMENT" has the meaning ascribed to it in Section
4.2(a).
"MATERIAL CONTRACT" means, as applied to any Contract to which
the Company or any of its Subsidiaries is a party or by which any of
them is bound:
(i) any Contract containing any provision or covenant
prohibiting or limiting the ability of the Company or any Subsidiary
thereof to engage in any business activity or compete with any Person;
(ii) any partnership, limited liability company, joint venture,
stockholders' or other similar Contract;
(iii) any Contract (A) with one or more of its independent
contractors, distributors, dealers, manufacturers' representatives,
sales agencies or franchisees, (B) with one or more of its
aggregators, manufacturers or equipment vendors, or (C) with respect
to the sale of services, products or both to customers; in each case
involving payments to or from the Company or any Subsidiary of the
Company in excess of $100,000 in any fiscal year;
(iv) any Contract between or among the Company or any Subsidiary
thereof, on the one hand, and any current or former officer, director,
Stockholder, Affiliate or Associate of the Company or any Subsidiary
thereof or any Associate of any such officer, director, Stockholder,
Affiliate or Associate (other than the Company or any Subsidiary
thereof), on the other hand, including any such Contract entered into
pursuant to Section 6.5;
(v) any collective bargaining or similar labor Contract;
(vi) any Contract that (A) limits or contains restrictions on the
ability of the Company or any Subsidiary thereof (x) to declare or
pay dividends on, to make any other distribution in respect of, or to
issue or purchase, redeem or otherwise acquire, its equity capital or
capital stock, as the case may be, or (y) to change the lines of
business in which it participates or engages or (B) requires the
Company or any Subsidiary thereof to maintain specified financial
ratios or levels of net worth or other indicia of financial condition;
and
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(vii) any other Contract involving payments to or from the
Company or any Subsidiary of the Company in excess of $100,000, in any
fiscal year.
"NEW COMMON STOCK" means any Common Stock or Equity Equivalent,
other than any:
(i) Common Stock and Equity Equivalents issued in
connection with any stock split, stock dividend or
reclassification of any Restricted Securities or Equity
Equivalents;
(ii) Common Stock and Equity Equivalents issuable in a
public offering registered under the Securities Act;
(iii) Common Stock and Equity Equivalents issued to
financial institution(s) on arm's-length terms in connection with
(and ancillary to) an extension of credit by such financial
institution(s); and
(iv) Common Stock and Equity Equivalents issued to an
unaffiliated seller or sellers of another company or business in
connection with an arm's-length acquisition by the Company or one
or more of its Subsidiaries of such company or business.
"NEW COMMON STOCK NOTICE" has the meaning ascribed to it in
Section 6.4.
"NEW COMMON STOCK OFFER" has the meaning ascribed to it in
Section 6.4.
"NOTICE OF INTENTION" has the meaning ascribed to it in Section
2.5(a).
"OFFERED SECURITIES" has the meaning ascribed to it in Section
2.5(a).
"OFFEREES" has the meaning ascribed to it in Section 3.1(a).
"OFFER PRICE" has the meaning ascribed to it in Section 2.5(a).
"ORIGINAL OWNERSHIP LEVEL" means, with respect to any
Stockholder, the number of shares of Common Stock, on a Fully Diluted
Basis, as adjusted for any stock splits, stock dividends or
reclassifications or other similar events, held by such Stockholder on
the Closing Date immediately after the Closing.
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"PERMITTED TRANSFEREE" means:
(i) with respect to any Stockholder who is a natural
person, the spouse or any lineal descendant (including by
adoption and stepchildren) of such Stockholder, any son-in-law or
daughter-in-law of such Stockholder, or any trust of which such
Stockholder is the trustee and which is established solely for
the benefit of any of the foregoing individuals and whose terms
are not inconsistent with the terms of this Agreement;
(ii) with respect to any Stockholder who is not a natural
person, (A) any Affiliate of such Stockholder and any trustee,
officer, director or employee of such Stockholder or any such
Affiliate, (B) any spouse, lineal descendant (including by
adoption and stepchildren), son-in-law or daughter-in-law of the
trustees, officers, directors and employees referred to in clause
(A) above, and any trust where a majority in interest of the
beneficiaries thereof are one or more of the persons described in
this clause (B) and the trustees, officers, directors and
employees described in clause (A) above and whose terms are not
inconsistent with the terms of this Agreement;
(iii) as to any REI Stockholder, (w) any other REI
Stockholders, (x) any general partner or limited partner of REI
II, (y) any partner, officer or employee of any such general
partner or limited partner, (z) any Affiliate of any such general
partner or limited partner, (ww) any director, officer, employee,
investment advisor or partner of any such Affiliate or general
partner or limited partner (and any subsequent transferee of such
partner), and (xx) any liquidating trust or similar entity
established by REI II or any of the foregoing entities for the
benefit of its partners or interest holders and their Permitted
Transferees for the purpose of holding Restricted Securities; and
(iv) as to any SerVaas Stockholder, (w) any other SerVaas
Stockholder, and (x) any liquidating trust or similar entity
established by or on behalf of a SerVaas Stockholder and its
Permitted Transferees for the purpose of holding Restricted
Securities;
PROVIDED, HOWEVER, that notwithstanding anything in paragraphs (i) through
(iv) above to the contrary, (x) the "Permitted Transferees" of the Spartan
Stockholders at any time of determination shall not include any person who
is then an REI Stockholder, a SerVaas Stockholder or a Permitted Transferee
of an REI Stockholder or a SerVaas Stockholder, (y) the "Permitted
Transferees" of the REI Stockholders at any time of determination shall not
include any person who is then a Spartan Stockholder, a SerVaas Stockholder
or a Permitted Transferee of a Spartan Stockholder or a SerVaas Stockholder
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and (z) the "Permitted Transferees" of the SerVaas Stockholders at any time
of determination shall not include any person who is then an REI
Stockholder, a Spartan Stockholder or a Permitted Transferee of an REI
Stockholder or a Spartan Stockholder.
"PERSON" or "PERSON" means an individual, partnership,
corporation, trust, unincorporated organization, limited liability
company, joint venture, government (or any agency or political
subdivision thereof) or any other entity of any kind.
"PRIME RATE" means, for any applicable day, the rate of interest
publicly announced by Wells Fargo Bank N.A. at its principal office
located in San Francisco, California as its prime commercial lending
rate for such day.
"PRO RATA" means, with respect to one or more Stockholders, in
proportion to the number of shares of Common Stock on a Fully-Diluted
Basis owned by such Stockholder or Stockholders or which may be
acquired by any such Stockholder or Stockholders upon exercising any
rights under any Equity Equivalent owned by such Stockholder or
Stockholders.
"PROSPECTIVE BUYER" has the meaning ascribed to it in Section
2.5(a).
"PROSPECTIVE BUYER NOTICE" has the meaning ascribed to it in
Section 2.5(c).
"PUT NOTICE" has the meaning ascribed to it in Section 4.1(a).
"PUT OBLIGATION" has the meaning ascribed to it in Section
4.1(a).
"PUT OPTION SECURITIES" has the meaning ascribed to it in Section
4.1(a).
"PUT PRICE" has the meaning ascribed to it in Section 4.1(a).
"QUALIFYING OFFERING" means a widespread underwritten primary or
secondary public offering of Common Stock pursuant to an effective
registration statement under the Securities Act covering the offer and
sale of Common Stock (i) that raises at least $30,000,000 of gross
proceeds to the Company, (ii) as a result of which at least 33-1/3%
(on a Fully-Diluted Basis) of the Common Stock is publicly held upon
the consummation of such offering and (iii) that results in the shares
of Common Stock so offered and sold being either (A) listed on the New
York Stock Exchange or (B) quoted on the NASDAQ National Market
System.
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"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the date hereof, among the Company, Spartan,
REI II and SerVaas, as the same may be amended, supplemented or
otherwise modified from time to time.
"REI DIRECTOR" has the meaning ascribed to it in Section 5.1(a).
"REI II" has the meaning ascribed to it in the introductory
paragraph of this Agreement.
"REI STOCKHOLDERS" means REI II and its direct and indirect
Permitted Transferees, so long as any such Person shall hold
Restricted Securities.
"RESTRICTED SECURITIES" means the Common Stock, any Equity
Equivalents and any securities issued with respect thereto as a result
of any stock dividend, stock split, reclassification,
recapitalization, reorganization, merger, consolidation or similar
event or upon the conversion, exchange or exercise thereof.
"RULE 144 TRANSACTION" means a transfer of Common Stock (A)
complying with Rule 144 under the Securities Act as such Rule is in
effect on the date of such transfer (but not including a sale other
than pursuant to a "brokers transaction" as defined in clauses (1) and
(2) of paragraph (g) of such Rule as in effect on the date hereof) and
(B) occurring at a time when shares of Common Stock are registered
pursuant to Section 12 of the Exchange Act (or any successor to such
Section).
"SALE OF THE COMPANY" means the sale of the Company (whether by
merger, consolidation, recapitalization, reorganization, sale of
securities of the Company or sale of all or substantially all the
assets of the Company), for consideration consisting exclusively of
cash and Freely Tradeable Securities, to one or more Persons (other
than the Spartan Stockholders, the REI Stockholders and the SerVaas
Stockholders) who acquire (i) securities representing 50% or more of
the Total Voting Power of and equity interest in the Company, in each
case on a Fully Diluted Basis, or (ii) all or substantially all of the
assets of the Company.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time, and the rules and regulations of the Commission
thereunder.
"SELLING STOCKHOLDER" has the meaning ascribed to it in Section
2.5(a).
"SERVAAS" has the meaning ascribed to it in the introductory
paragraph of this Agreement.
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"SERVAAS DIRECTOR" has the meaning ascribed to it in Section
5.1(a).
"SERVAAS STOCKHOLDERS" means SerVaas and its direct and indirect
Permitted Transferees, so long as any such Person shall hold
Restricted Securities.
"SIGNIFICANT TRANSACTION" means:
(i) any merger, consolidation or other business combination
with respect to the Company or any Subsidiary thereof, or any
sale or other disposition of all or substantially all of the
Company's or any such Subsidiary's assets, or any acquisition by
the Company or any such Subsidiary of any material business or
assets, or the liquidation or dissolution of the Company or any
Subsidiary or the adoption of any plan with respect to any such
liquidation or dissolution;
(ii) any conveyance, sale, lease, transfer or other
disposition of any significant amount of assets of the Company or
any Subsidiary thereof, other than the sale of inventory in the
ordinary course of business;
(iii) the incurrence of any Lien on any assets of the
Company or any Subsidiary thereof, other than purchase money
liens on items the purchase of which is not otherwise subject to
Board approval under Section 5.5;
(iv) any issuance by the Company or any Subsidiary of any
Common Stock, equity securities or Equity Equivalents;
(v) the incurrence, issuance, assumption or guaranty by the
Company or any Subsidiary thereof of any indebtedness for
borrowed money or any note, bond, debenture or similar
instrument;
(vi) the entering into or termination of any Material
Contract or any amendment to, or waiver or termination of, any
material provision of any Material Contract;
(vii) the adoption or amendment of the Company's (or any of
its Subsidiaries') business or financial plan or operating and
capital expenditure budget;
(viii) any capital expenditure during any fiscal year in
excess of the capital budget approved by the Board for such year;
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(ix) the commencement of any lawsuit, proceeding or other
action by or on behalf of the Company or any Subsidiary thereof
(other than (A) collection actions commenced by the Company in
the ordinary course of its business and (B) cross-claims and
counterclaims the commencement and resolution of which would not
reasonably be expected to have a material effect on the business
or financial condition of the Company and its Subsidiaries, taken
as a whole);
(x) the payment, or undertaking of any obligation to pay,
compensation to any employees or officers in excess of amounts
authorized by the Board from time to time;
(xi) the adoption of any pension plans, profit sharing plans
or other benefit plans for any employees or officers of the
Company or any Subsidiary thereof;
(xii) the selection or change of the Company's or any of its
Subsidiaries; independent accountants or legal counsel;
(xiii) the hiring or discharge of senior management
personnel of the Company or any Subsidiary thereof;
(xiv) the entry by the Company or any Subsidiary thereof
into any line of business not included in the Board-approved
business plan (including any such entry into a new line of
business pursuant to the provisions of Section 5.9(b) of the
Investment Agreement), or the exit by the Company or any such
Subsidiary from any line of business included in such plan; or
(xv) any amendment to or modification or repeal of any
provision of the certificate or articles of incorporation, by-
laws or other constitutive documents of the Company or any
Subsidiary thereof.
"SPARTAN" has the meaning ascribed to it in the introductory
paragraph of this Agreement.
"SPARTAN DIRECTOR" has the meaning ascribed to it in Section
5.1(a).
"SPARTAN STOCKHOLDERS" means Spartan and its direct and indirect
Permitted Transferees, so long as any such Person shall hold
Restricted Securities.
"STOCKHOLDERS" means each of the Spartan Stockholders, each of
the REI Stockholders, each of the SerVaas Stockholders and any other
Person who executes a Joinder Agreement and thereby becomes a party to
this Agreement.
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"SUBSIDIARY" means, with respect to any Person at any time of
determination, any corporation, partnership, limited liability
company, association or other business entity of which (i) if a
corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof is at such
time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination
thereof, or (ii) if a partnership, limited liability company,
association or other business entity, a majority of the partnership or
other similar ownership interests therein are at such time owned or
controlled, directly or indirectly, by that Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes
hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a partnership, association, limited liability
company, or other business entity if such Person or Persons shall be
allocated a majority of partnership, limited liability company,
association or other business entity gains or losses or shall be or
control the managing director, general partner or manager of such
partnership, limited liability company, association or other business
entity.
"THIRD PARTY" has the meaning ascribed to it in Section 2.5(e).
"TOTAL VOTING POWER" means, with respect to any Person, (i) the
total number of votes which holders of securities having the ordinary
power to vote, without regard to the occurrence of any contingency,
are entitled to cast in the election of directors of such Person and
(ii) in the event holders of one or more classes or series of
securities are entitled to vote separately as a class or series,
without regard to the occurrence of any contingency, in such election,
the total number of votes which the holders of such class or series
are entitled to cast in such election.
"TRANSFER" means any direct or indirect sale, transfer,
assignment, grant of a participation in, gift, hypothecation, pledge
or other disposition of any securities or any interests therein or, as
the context may require, to sell, transfer, assign, grant a
participation in, give as a gift, hypothecate, pledge or otherwise
dispose of, directly or indirectly, any securities or any interests
therein; PROVIDED, HOWEVER, that the exercise of any conversion or
exchangeability right provided for in the terms of any Equity
Equivalent shall not be deemed a "Transfer."
"TRANSFEROR" has the meaning ascribed to it in Section 3.1(a).
"TRANSFEROR SHARES" has the meaning ascribed to it in Section
3.1(a).
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(b) Unless otherwise provided herein, all accounting terms used
in this Agreement shall be interpreted in accordance with generally
accepted accounting principles as in effect from time to time, applied on a
consistent basis.
ARTICLE II
RESTRICTIONS ON TRANSFERS
2.1 RESTRICTIONS GENERALLY; SECURITIES ACT.
(a) Each Stockholder agrees that it will not, directly or
indirectly, Transfer any Restricted Securities except in accordance with
the terms of this Agreement. Any attempt to Transfer or any purported
Transfer of any Restricted Securities not in accordance with the terms of
this Agreement shall be null and void and neither the Company nor any
transfer agent of such securities shall give any effect to such attempted
Transfer in its stock records.
(b) Each Stockholder agrees that, in addition to the other
requirements set forth herein and in the Investment Agreement and the
Registration Rights Agreement, it will not Transfer any Restricted
Securities except (i) pursuant to an effective registration statement under
the Securities Act, or (ii) unless such requirement is waived by the
Company, upon receipt by the Company of (A) an opinion of counsel to such
Stockholder (which opinion and counsel are reasonably satisfactory to the
Company) or in connection with such Transfer an opinion of counsel to the
Company, or a no-action letter from the Commission addressed to the Company
or such Stockholder, in each case to the effect that no registration
statement is required in connection with such Transfer because of the
availability of an exemption from registration under the Securities Act.
2.2 LEGEND.
(a) Each certificate representing Restricted Securities shall be
endorsed with the legends set forth in Exhibit B hereto and such other
legends as may be required by applicable state securities laws.
(b) Any certificate issued at any time in exchange or
substitution for any certificate bearing such legends (except a new
certificate issued upon the completion of a Transfer pursuant to a
registered public offering under the Securities Act and made in accordance
with the Securities Act) shall also bear such legends, unless the
Restricted Securities represented thereby are no longer subject to the
provisions of this Agreement or, in the opinion of the Company (with advice
from counsel to the Company, as the Company may deem appropriate), the
restrictions imposed under the Securities Act or any state securities law,
in which case the applicable legend (or legends) may be removed.
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2.3 LIMITATIONS ON REPURCHASES, DIVIDENDS, ETC.
Each Stockholder acknowledges that the Company will enter into or
has entered into certain financing agreements that will or do contain
prohibitions of and restrictions and limitations on, among other things,
the ability of the Company to purchase any Restricted Securities (whether
pursuant to this Agreement or otherwise), to pay dividends and to waive,
modify or discharge any rights or obligations under this Agreement.
2.4 TRANSFER RESTRICTIONS.
Each of the Stockholders agrees that it will not Transfer any
Restricted Securities, other than (i) to a Permitted Transferee who shall
have executed a Joinder Agreement substantially in the form of Exhibit A-1,
and thereby become a party to this Agreement; (ii) pursuant to Section 2.5
(Right of First Refusal); (iii) in accordance with Article III (Rights of
Inclusion); (iv) pursuant to Article IV (Repurchase of Securities); (v) in
a Qualifying Public Offering or (vi) in a Demand Registration or a
Piggyback Registration (as such terms are defined in the Registration
Rights Agreement). For purposes of this Section 2.4, each of the following
events shall be deemed to constitute a Transfer by any SerVaas Stockholder
that is not a natural person of all the Restricted Securities then held by
such SerVaas Stockholder: (a) any merger, consolidation or similar
business combination between such SerVaas Stockholder and any other person,
other than any such transaction that is solely between such SerVaas
Stockholder and a Permitted Transferee thereof; (b) any other event as a
result of which Dr. SerVaas and his Permitted Transferees (determined after
giving effect to such event) cease to own at least 75% of the equity
interests in such SerVaas Stockholder; (c) any other event as a result of
which Dr. SerVaas and his Permitted Transferees (determined after giving
effect to such event) cease to own and vote securities representing at
least 75% of the voting power of such SerVaas Stockholder or otherwise
cease to exercise exclusive control over such SerVaas Stockholder with
respect to any matter involving this Agreement.
2.5 RIGHT OF FIRST REFUSAL.
(a) Except for any Transfer of Restricted Securities permitted
pursuant to clause (i), (iii), (iv), (v) or (vi) of Section 2.4, if
pursuant to a bona fide third party offer a Stockholder desires to Transfer
any Restricted Securities (such Transferring Stockholder, a "SELLING
STOCKHOLDER" and the Restricted Securities proposed to be Transferred, the
"OFFERED SECURITIES"), prior to any Transfer thereof it shall give written
notice of the proposed Transfer (the "NOTICE OF INTENTION") to the Company
and the other Stockholders (such parties other than the Company to whom
such Notice of Intention is given, but excluding the Selling Stockholder,
the "PROSPECTIVE BUYERS"), specifying the type and number of Offered
Securities which such Selling Stockholder wishes to Transfer, the proposed
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purchase price (the "OFFER PRICE") therefor and all other material terms
and conditions of the proposed Transfer, including the identity of the
third party offeror.
(b) For a period of 30 days following its receipt of the Notice
of Intention, the Company shall have the right to purchase all or any
portion of the Offered Securities at the Offer Price and on the other terms
specified in the Notice of Intention, exercisable by delivery of an
irrevocable notice (the "COMPANY NOTICE") to the Selling Stockholder, with
a copy to each of the Prospective Buyers, specifying the number of Offered
Securities with respect to which the Company is exercising such right to
purchase.
(c) For a period of 30 days following its receipt of the Company
Notice or, if no Company Notice is so received, for a period of 60 days
following its receipt of the Notice of Intention, each of the Prospective
Buyers shall have the right to purchase, at the Offer Price and on the
other terms specified in the Notice of Intention, all or any portion of the
Offered Securities which the Company has elected not to purchase up to such
Prospective Buyer's Pro Rata portion thereof as determined by reference to
all Prospective Buyers; PROVIDED, HOWEVER, that in the event that any
Prospective Buyer does not purchase any or all of its Pro Rata portion of
the Offered Securities, the other Prospective Buyers shall have the right
to purchase such portion, on a Pro Rata basis as among themselves, until
all of such Offered Securities are purchased or until such other
Prospective Buyers do not desire to purchase any more Offered Securities.
The right of the Prospective Buyers pursuant to this Section 2.5(c) shall
be exercisable by delivery of a notice (the "PROSPECTIVE BUYER NOTICE"),
setting forth the maximum number of Offered Securities that such
Prospective Buyer wishes to purchase, to the Selling Stockholder, the
Company and the other Prospective Buyers and shall expire if unexercised
within such 30-day or 60-day period, as applicable.
(d) Notwithstanding the foregoing provisions of this Section
2.5, unless the Selling Stockholder shall have consented to the purchase of
less than all of the Offered Securities, neither the Company nor any
Prospective Buyer may purchase any Offered Securities pursuant to such
foregoing provisions unless all of the Offered Securities are to be so
purchased (whether by the Company, the Prospective Buyers, or any
combination thereof).
(e) If all notices required to be given pursuant to the
foregoing provisions of this Section 2.5 have been duly given, and the
Company and the Prospective Buyers determine not to exercise their
respective rights to purchase the Offered Securities at the Offer Price and
on the other terms specified in the Notice of Intention or determine, with
the consent of the Selling Stockholder, to exercise such rights to purchase
less than all of the Offered Securities, then the Selling Stockholder shall
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have the right, for a period of 180 days from the earlier of (i) the
expiration of the last applicable exercise period pursuant to Section
2.5(c) with respect to the proposed Transfer or (ii) the date on which such
Selling Stockholder receives notice from the Company and the Prospective
Buyers that none of them will exercise in whole or in part the purchase
rights granted pursuant to this Section 2.5, to sell to a third party (a
"THIRD PARTY"), other than the persons identified in Schedule 2.5(e), the
Offered Securities remaining unsold under this Section 2.5 at a price not
less than the Offer Price and on other terms which shall not be materially
more favorable to the Third Party in the aggregate than those terms set
forth in the Notice of Intention; PROVIDED, HOWEVER, that prior to any such
Transfer to a Third Party, such Third Party shall have executed and
delivered to the Company a Joinder Agreement substantially in the form of
Exhibit A-3, and thereby become a party to this Agreement.
(f) The closing of any purchase by and sale to the Company or
any Prospective Buyer pursuant to this Section 2.5 shall take place on such
date, not later than 15 business days after the delivery to the Selling
Stockholder of the Company Notice or, if the Company elects to purchase
less than all of the Offered Securities, the Prospective Buyer Notice, as
the parties to such purchase and sale shall select; PROVIDED, HOWEVER, that
if no Prospective Buyer Notice is delivered, such closing shall take place
not later than 15 days after the earlier of (i) the 60th day after the
Company's receipt of the Notice of Intention with respect to the proposed
Transfer and (ii) the date on which the Selling Stockholder receives notice
from the Prospective Buyers that none of them will exercise in whole or in
part the purchase rights granted pursuant to this Section 2.5. At the
closing of such purchase and sale, the Selling Stockholder shall deliver
certificates evidencing the Offered Securities being sold duly endorsed, or
accompanied by written instruments of Transfer in form satisfactory to the
purchaser thereof, duly executed by the Selling Stockholder, free and clear
of any Liens, against delivery of the Offer Price therefor.
(g) Any Transfer by a Selling Stockholder which is subject to
the requirements of this Section 2.5 (whether such Transfer is made to the
Company, to a Prospective Buyer or to a Third Party) shall also be subject
to each other Stockholder's rights of inclusion (if any) under Article III.
Prior to any such Transfer, the Selling Stockholder shall deliver to the
other Stockholders in accordance with Section 3.1(a) any Inclusion Notice
required to be delivered under Section 3.1(a) in connection with such
Transfer.
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ARTICLE III
RIGHTS OF INCLUSION
3.1 RIGHTS OF INCLUSION.
(a) Except for any Transfer of Restricted Securities pursuant to
clause (i), (iv), (v) or (vi) of Section 2.4, if:
(i) the Spartan Stockholders propose to transfer, in one
transaction or a series of related transactions, Restricted Securities
representing more than 5% of the Restricted Securities on a Fully-
Diluted Basis;
(ii) the REI Stockholders propose to Transfer, in one
transaction or a series of related transactions, Restricted
Securities representing more than 5% of the Restricted Securities on a
Fully-Diluted Basis; or
(iii) the SerVaas Stockholders propose to Transfer, in one
transaction or a series of related transactions, Restricted Securities
representing more than 5% of the Restricted Securities on a Fully-
Diluted Basis;
in each case to any Person (the "BUYER") (the transferor under clause (i),
(ii) or (iii) the "TRANSFEROR" and the securities proposed to be so
Transferred, the "TRANSFEROR SHARES"), then, as a condition to such
Transfer, the Transferor shall cause the Buyer to include an offer (the
"ARTICLE III OFFER") to each of the Stockholders holding shares of the same
class (and series) as the Transferor Shares who are not Transferors
(collectively, the "OFFEREES"), to sell to the Buyer, at the option of each
Offeree, that number of shares of the same class (and series) of Restricted
Securities as the Transferor, determined in accordance with Section 3.1(b),
on the same terms and conditions as are applicable to the Transferor
Shares. The Transferor shall provide a written notice (the "INCLUSION
NOTICE") of the Article III Offer to each Offeree, which may accept the
Article III Offer by providing a written notice of acceptance of the
Article III Offer to the Transferor within 30 days of delivery of the
Inclusion Notice.
(b) Each Offeree shall have the right (an "INCLUSION RIGHT") to
sell pursuant to the Article III Offer a Pro Rata number of its shares of
Restricted Securities, determined by reference to the number of shares of
Restricted Securities being sold by the Transferor to the Buyer. Any
Offeree who owns Equity Equivalents may sell pursuant to the Article III
Offer, in lieu of shares of Common Stock, Equity Equivalents representing
that number of shares of Common Stock which it could sell pursuant to its
Inclusion Right, and the purchase price for such Equity Equivalents shall
equal the aggregate price that would be paid for the shares of Common Stock
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issuable upon the exercise, exchange or conversion thereof minus the
aggregate exercise, exchange or conversion price under such Equity
Equivalents for such shares of Common Stock.
3.2 ARTICLE III SALES.
(a) Upon its exercise of an Inclusion Right, each Offeree
shall, within a reasonable period prior to the closing of the purchase and
sale of the Restricted Securities covered by the Article III Offer, deliver
to the Transferor a certificate or certificates representing the Restricted
Securities to be Transferred pursuant to the Article III Offer by such
Offeree, free and clear of all Liens, and a limited power-of-attorney
authorizing the Transferor to sell or otherwise dispose of such Restricted
Securities pursuant to the terms of the Article III Offer; PROVIDED,
HOWEVER, that in the event that the purchase and sale of Restricted
Securities contemplated by the Article III Offer is not completed, such
certificate(s) shall be returned to the Offeree in accordance with Section
3.2(b).
The Transferor shall have 120 days, commencing on the
expiration of the 30-day period referred to in Section 3.1(a), in which to
Transfer to the Buyer, on behalf of itself and the Offerees, up to that
number of shares of Restricted Securities equal to the sum of (i) the
number of Restricted Securities covered by the Article III Offer PLUS (ii)
(and the number of Transferor Shares). If all such shares are not sold to
the Buyer, the Transferor, at its option, may elect to sell on behalf of
itself and the Offerees such number of shares as the Buyer will purchase,
allocated Pro Rata (as nearly as practicable) among the Transferor and the
Offerees. The material terms of any Transfer referred to in the two
immediately preceding sentences, including price and form of consideration,
shall be as set forth in the Inclusion Notice. If at the end of such 120-
day period the Transferor has not completed Transfer of all the Transferor
Shares and all the Offerees' Restricted Securities (if any) proposed to be
sold, the Transferor shall return to each of the Offerees its respective
certificates, if any, representing the Restricted Securities which such
Offeree delivered for Transfer pursuant to this Article III and which were
not sold pursuant to the Article III Offer, and the provisions of this
Article III shall continue to be in effect.
(b) Promptly after the Transfer of the Transferor Shares and
Restricted Securities (if any) of the Offerees to the Buyer pursuant to
this Article III, the Transferor shall notify the Offerees thereof, and the
Buyer shall pay to the Transferor and each of the Offerees their respective
portions of the sales price of the Restricted Securities so Transferred and
shall furnish such other evidence of the completion of such Transfer and
the terms thereof as may be reasonably requested by any Offeree.
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(c) Notwithstanding anything to the contrary contained in this
Article III, (i) except for the Transferor's obligation to return to each
Offeree any certificates representing the Offerees' Restricted Securities,
there shall be no liability on the part of the Transferor to any
Stockholder in the event that any proposed Transfer pursuant to this
Article III is not consummated for any reason, and (ii) whether or not any
sale of Restricted Securities is effected pursuant to this Article III
shall be in the sole and absolute discretion of the Transferor.
ARTICLE IV
REPURCHASE OF SECURITIES; LOOK-BACK
4.1 PUT RIGHT.
(a) In the event that there shall not have previously occurred
(i) a Qualifying Offering or (ii) a Sale of the Company, commencing on the
fifth anniversary of the Closing Date the REI Stockholders shall have the
right (the "PUT RIGHT") to sell to the Company, in one transaction, all
Restricted Securities (the "PUT OPTION SECURITIES") then owned by the REI
Stockholders, and the Company shall be obligated to purchase (the "PUT
OBLIGATION") from the REI Stockholders all of the Put Option Securities.
The price per share to be paid by the Company for the Put Option Securities
pursuant to this Article IV (the "PUT PRICE") shall equal (x) the greater
of (A) the Appraised Value and (B) the EBT Value, in each case determined
as of the date on which the Put Right is exercised, DIVIDED by (y) the
aggregate number of shares of Common Stock then outstanding. In order to
exercise the Put Right, the REI Stockholders shall notify the Company in
writing (a "PUT NOTICE") of their exercise thereof at any time at which the
Put right may be exercised hereunder; PROVIDED, HOWEVER, that the Put Right
may not be exercised following the tenth anniversary of the Closing Date.
Once delivered, the Put Notice shall be irrevocable, except in the case of
a breach by the Company of any of its obligations under paragraph (b)
below. After the exercise of the Put Right, the Company or, at the option
of the Company, any designee of the Company (a "COMPANY DESIGNEE") shall
purchase all, but not less than all, of the Put Option Securities by paying
the aggregate Put Price of all Put Option Securities to the REI
Stockholders in cash within 30 days after the determination of the Put
Price.
(b) The closing of the purchase and sale of the Put Option
Securities shall take place on such date within the 45-day period specified
in Section 4.1(a), and at such place, as the Company and the REI
Stockholders shall agree. At such closing, the REI Stockholders shall
Transfer full right, title and interest in and to the Put Option Securities
to the Company, free and clear of all Liens, and shall deliver to the
Company a certificate or certificates representing the Put Option
Securities, in each case duly endorsed for transfer or accompanied by
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appropriate transfer powers duly endorsed for transfer. At such closing,
the Company shall pay to the REI Stockholders, by wire transfer of
immediately available funds, an amount equal to the aggregate Put Price of
all Put Option Securities.
(c) In the event that the Company shall not fully satisfy its
obligation to pay the aggregate Put Price of all Put Option Securities in
accordance with the terms hereof, such unsatisfied Put Obligation shall
thereafter accrue interest at the Default Rate until the date that such Put
Obligation and any accrued interest thereon have been satisfied in full.
All amounts paid by the Company with respect to any outstanding Put
Obligation shall be applied first to any accrued but unpaid interest
thereon.
4.2 LOOK-BACK.
(a) Upon the occurrence of any Look-Back Event, the REI
Stockholders shall be entitled to receive from the Company and the other
Stockholders, and the Company (or, to the extent that the Company for any
reason fails to pay any portion of the Look-Back Payment when due, the
other Stockholders) shall pay to the REI Stockholders, an amount in
immediately available funds (the "Look-Back Payment") equal to the excess,
if any, of (i) the fair market value (as determined by an Independent
Investment Bank) of the REI Stockholders' aggregate Pro Rata share of the
Look-Back Consideration, determined as if the REI Stockholders had not sold
their Restricted Securities pursuant to Section 4.1, over (ii) the
aggregate Put Price of all Put Option Securities paid or payable to the REI
Stockholders pursuant to Section 4.1. Such Look-Back Payment shall be made
in the same manner and at the same time as the payment of the Look-Back
Consideration which gives rise to such Look-Back Payment.
(b) In the event that the Company shall not fully satisfy its
obligation to make any Look-Back Payment in accordance with the terms
hereof, such unsatisfied Look-Back Payment shall thereafter accrue interest
at the Default Rate until such Look-Back Payment and any accrued interest
thereon have been paid in full. All amounts paid by the Company with
respect to any unsatisfied Look-Back Payment shall be applied first to any
accrued but unpaid interest thereon.
4.3 SELECTION OF INDEPENDENT INVESTMENT BANK.
In the event that an investment bank or valuation firm chosen by
the Company to act as the Independent Investment Bank for the purpose of
making any determination contemplated by this Article IV has not been
consented to by the requisite Spartan Stockholders, REI Stockholders and
SerVaas Stockholders within 15 days after the Company notifies the
Stockholders of its choice, then the Independent Investment Bank shall be
selected as follows: Within 15 days after the expiration of such 15-day
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period, (a) the REI Stockholders shall select a nationally recognized
investment bank or valuation firm and (b) the holders of a majority of the
Restricted Securities then held in the aggregate by the Spartan
Stockholders and the SerVaas Stockholders shall select a nationally
recognized investment bank or valuation firm. Thereafter, the two
investment banks or valuation firms so selected shall, within 10 days
following their selection, select a third nationally recognized investment
bank or valuation firm, which third investment bank or valuation firm shall
be the Independent Investment Bank for the purpose of making such
determination.
ARTICLE V
CORPORATE GOVERNANCE
5.1 BOARD OF DIRECTORS.
(a) From and after the date hereof, each of the Stockholders
shall vote or cause to be voted all of its shares of Common Stock, at any
regular or special meeting of stockholders called for the purpose of
filling positions on the Board, or to execute a written consent in lieu of
such a meeting of stockholders for the purpose of filling positions on the
Board, and shall take all other actions necessary, to ensure that the Board
and the boards of directors of all Subsidiaries of the Company each
consists of six members as follows:
(i) the REI Stockholders and the SerVaas Stockholders shall
vote all of their shares of Common Stock so as to elect two
individuals (individually, a "SPARTAN DIRECTOR" and, collectively, the
"SPARTAN DIRECTORS") to be designated by the Spartan Stockholders
until the time that the Spartan Stockholders shall have Transferred,
in one or more transactions, other than to Permitted Transferees, 50%
of the shares of Common Stock comprising the Spartan Stockholders'
Original Ownership Level;
(ii) the Spartan Stockholders and the SerVaas Stockholders
shall vote all of their shares of Common Stock so as to elect two
individuals (individually, an "REI DIRECTOR" and, collectively, the
"REI DIRECTORS") to be designated by the REI Stockholders until the
time that the REI Stockholders shall have Transferred, in one or more
transactions, other than to Permitted Transferees, 50% of the shares
of Common Stock comprising the REI Stockholders' Original Ownership
Level;
(iii) the Spartan Stockholders and the REI Stockholders
shall vote all of their shares of Common Stock so as to elect two
individuals (individually, a "SERVAAS DIRECTOR" and, collectively, the
"SERVAAS DIRECTORS") to be designated by the SerVaas Stockholders,
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until the time that the SerVaas Stockholders shall have Transferred,
in one or more transactions, other than to Permitted Transferees, 50%
of the shares of Common Stock comprising the SerVaas Stockholders'
Original Ownership Level;
PROVIDED, HOWEVER, that (x) effective at the Closing, the Board shall
consist of the six individuals identified in Exhibit C and (y) the
Stockholders shall cause the Spartan Directors, the REI Directors and the
SerVaas Directors identified in Exhibit C to be designated and elected as
directors effective at the Closing.
(b) If, prior to his election to the Board pursuant to Section
5.1(a), any person shall be unable or unwilling to serve as a director of
the Company, the group of Stockholders who designated such person shall be
entitled to designate his replacement.
(c) If at any time any Person designated as a Spartan Director,
an REI Director or a SerVaas Director is not then serving as a director of
the Company, upon the written request of the Spartan Stockholders, the REI
Stockholders or the SerVaas Stockholders, as the case may be, the
Stockholders shall promptly take all action necessary or appropriate to
elect an individual designated by the Spartan Stockholders (in the case of
any Spartan Director), by the REI Stockholders (in the case of any REI
Director) or by the SerVaas Stockholders (in the case of any SerVaas
Director) to serve as a director in lieu of such Person from and after the
time of such request.
5.2 REMOVAL.
If: (i) the Spartan Stockholders request that a Spartan Director
elected as a director be removed (with or without cause), by written notice
to the other Stockholders; (ii) the REI Stockholders request that an REI
Director elected as a director be removed (with or without cause), by
written notice to the other Stockholders; or (iii) the SerVaas Stockholders
request that a SerVaas Director elected as a director be removed (with or
without cause) by written notice to the Stockholders; then, in each such
case, such director shall be removed and each Stockholder agrees, upon such
request, to vote all shares of Common Stock owned by such Stockholder and
other securities over which such Stockholder has voting control to effect
such removal or to consent in writing to effect such removal.
5.3 VACANCIES.
In the event that a vacancy is created on the Board at any time
by the death, disability, retirement, resignation or removal (with or
without cause) of a director, each Stockholder agrees to vote, in the
manner specified in Section 5.1, all shares of Common Stock owned by such
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Stockholder and other securities over which such Stockholder has voting
control for the individual designated to fill such vacancy by the group of
Stockholders who designated the director whose death, disability,
retirement, resignation or removal created such vacancy on the Board;
PROVIDED, HOWEVER, that such other individual so designated may not
previously have been a director of the Company who was removed for cause
from the Board.
5.4 BOARD VOTING.
Subject to Section 5.5 hereof, all actions taken by the Board
shall require the affirmative vote of not less than four of the members of
the Board.
5.5 SPECIAL APPROVAL RIGHTS.
In addition to any other action requiring Board approval, so long
as the Spartan Stockholders, the REI Stockholders or the SerVaas
Stockholders have the right to designate directors under Section 5.1(a),
the entering into (or agreeing or committing to enter into) by Company or
any of its Subsidiaries of any Significant Transaction shall require the
affirmative vote of not less than four of the members of the Board;
PROVIDED, HOWEVER, that the affirmative vote of at least five members of
the Board shall be required in connection with any Significant Transaction
referred to in clause (i), (ii), (iv) or (xv) of the definition thereof.
Notwithstanding anything in this Section 5.5 or in Section 5.4 to the
contrary, (i) the affirmative vote requirement with respect to any
Significant Transaction constituting the entry into a new line of business
pursuant to Section 5.9(b) of the Investment Agreement shall be satisfied
only by the affirmative vote of not less than three of the SerVaas
Directors and the REI Directors and (ii) the affirmative vote requirement
with respect to any Significant Transaction referred to in clause (vi) or
(ix) of the definition thereof involving a Material Contract to which any
Spartan Stockholder, any REI Stockholder or any SerVaas Stockholder (or, in
each case, any of its Affiliates) is a party shall be satisfied only by the
affirmative vote of not less than three of the Board members designated by
the other Stockholder groups pursuant to Section 5.1(a).
5.6 COMMITTEES OF THE BOARD; SUBSIDIARY BOARDS.
So long as the Spartan Stockholders, the REI Stockholders and the
SerVaas Stockholders, respectively, shall have the right to designate any
directors under Section 5.1(a), unless otherwise agreed to in writing by
the Spartan Stockholders, the REI Stockholders and the SerVaas
Stockholders, the Stockholders shall take all action necessary or
appropriate to cause the Company to have an audit committee and a
compensation committee of the Board, each consisting of one Spartan
Director, one REI Director and one SerVaas Director. The Stockholders
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shall take all action necessary or appropriate to cause each additional
committee of the Board to have the same number of directors and the same
composition as such audit committee and compensation committee. For so
long as the Spartan Stockholders, the REI Stockholders and the SerVaas
Stockholders, respectively, shall have the right to designate any directors
under Section 5.1(a), the Stockholders shall take all action necessary or
appropriate to cause one director designated by each of the Spartan
Stockholders, the REI Stockholders and the SerVaas Stockholders,
respectively, to be elected to the board of directors of each Subsidiary of
the Company. The Stockholders agree that they shall take all actions
necessary or appropriate to cause (i) such persons so designated to be
directors on each such Subsidiary's board of directors and (ii) at the
direction of the parties so designating each such director, the removal or
replacement of such director from any such board. The composition of the
boards of directors of Subsidiaries of the Company shall otherwise be as
determined by the Board.
5.7 ACTION BY WRITTEN CONSENT OF STOCKHOLDERS.
The parties hereto agree that whenever any action is proposed to
be taken by Stockholders without a meeting, the Stockholders proposing to
act by such consent shall, or shall cause the Company to, give the Spartan
Stockholders, the REI Stockholders and the SerVaas Stockholders at least
seven days' prior written notice (or such shorter notice period as is
agreed to in writing) of such proposed action specifying the action to be
taken and the purpose thereof (it being understood that such notice
requirement shall be deemed satisfied by execution of such consent (i) in
the case of the Spartan Stockholders, by Spartan Stockholders which then
hold in the aggregate more than 50% of the aggregate shares of Common Stock
on a Fully-Diluted Basis then held by all Spartan Stockholders, (ii) in the
case of the REI Stockholders by REI Stockholders which then hold in the
aggregate more than 50% of the aggregate shares of Common Stock on a
Fully-Diluted Basis then held by all REI Stockholders and (iii) in the case of
the SerVaas Stockholders, by SerVaas Stockholders which then hold in the
aggregate more than 50% of the aggregate shares of Common Stock on a
Fully-Diluted Basis then held by all SerVaas Stockholders).
ARTICLE VI
CERTAIN COVENANTS OF THE PARTIES
6.1 REGISTRATION.
In the event of, and in order to facilitate, a registration by
the Company of Common Stock under the Securities Act which will constitute
a Qualifying Offering, each Stockholder shall, at a meeting convened for
the purpose of amending the Certificate of Incorporation and the By-laws of
the Company, vote (in each case as recommended by the Board):
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(i) to increase the number of authorized shares of the
Common Stock and if necessary or desirable, to change the par value of
the Common Stock or to change the number of issued and outstanding
shares of Common Stock whether by stock split, stock dividend,
reclassification, combination or the like; and
(ii) to amend, modify or repeal provisions of the
Certificate of Incorporation and By-laws of the Company to the extent
such amendments, modifications or repeals are customary and reasonably
necessary in order to facilitate a Qualifying Offering and would be
effective upon the closing of such Qualifying Offering.
6.2 ADDITIONAL STOCKHOLDERS.
The parties hereto agree that as a condition precedent to the
issuance by the Company of shares of Common Stock or of securities
convertible, exchangeable or exercisable for or into shares of Common Stock
(i) to any employee of the Company or its Subsidiaries or (ii) to any
Person other than any such employee, any Spartan Stockholder, any REI
Stockholder or any SerVaas Stockholder, the Company shall require such
employee or other Person to execute a Joinder Agreement substantially in
the form of Exhibit A-2, and thereby enter into and become a party to this
Agreement. From and after such time, the term "Additional Stockholder"
shall be deemed to include such employee or other Person.
6.3 STOCKHOLDER LIST; CERTAIN NOTICES.
Upon the request of any Spartan Stockholder, REI Stockholder or
SerVaas Stockholder, the Company shall deliver promptly to such Spartan
Stockholder, REI Stockholder or SerVaas Stockholder a list setting forth
the names of all Stockholders and the number of shares of Common Stock and
Equity Equivalents owned by each Stockholder. In addition, the Company
shall give each of the Spartan Stockholders, the REI Stockholders and the
SerVaas Stockholders prior written notice of (a) the proposed conversion of
any shares of Common Stock or Equity Equivalents and (b) any proposed
record transfer of Restricted Securities setting forth the name of the
transferee and the number and type of Restricted Securities being so
transferred.
6.4 RIGHTS OFFERING.
(a) Prior to issuing any New Common Stock after the Closing (x)
before the occurrence of an underwritten public offering of Common Stock
registered under the Securities Act, to any Person or (y) after the
occurrence of such an offering, to any Stockholder, the Company shall offer
(the "NEW COMMON STOCK OFFER") each of the Spartan Stockholders, the REI
Stockholders and the SerVaas Stockholders an opportunity to purchase in
cash any or all of its Pro Rata portion (determined as among all
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Stockholders of the Company before giving effect to the issuance of such
New Common Stock) of such New Common Stock on the same terms and conditions
as the New Common Stock being offered and, if such New Common Stock is to
be issued as a part of a unit of securities, the Company shall offer each
of the Spartan Stockholders, the REI Stockholders and the SerVaas
Stockholders an opportunity to purchase any or all of its Pro Rata portion
(determined as provided above) of such unit of securities (together with
the New Common Stock, the "NEW COMMON STOCK UNITS") on the same terms and
conditions as the New Common Stock Units being offered. The Company shall
make such New Common Stock Offer by providing each of the Spartan
Stockholders, the REI Stockholders and the SerVaas Stockholders with a
notice (the "NEW COMMON STOCK NOTICE") setting forth (i) each of the
Spartan Stockholders', the REI Stockholders' and the SerVaas Stockholders'
Pro Rata portion of such New Common Stock or such New Common Stock Units,
as the case may be, (ii) the cash consideration to be paid for each share
of New Common Stock or each New Common Stock Unit, as the case may be, and
(iii) all other material terms of such New Common Stock Offer.
(b) In order for any of the Spartan Stockholders, REI
Stockholders or SerVaas Stockholders to accept the New Common Stock Offer,
such Spartan Stockholder, REI Stockholder or SerVaas Stockholder shall give
a notice of acceptance to the Company not later than 20 days after its
receipt of the New Common Stock Notice (the last day of such 20-day period
being referred to herein as the "ACCEPTANCE DATE").
(c) Within 120 days following the Acceptance Date, the Company
(i) shall issue, upon its receipt of the requisite consideration therefor,
New Common Stock or New Common Stock Units, as the case may be, to each
Spartan Stockholder, REI Stockholder, or SerVaas Stockholder who timely
accepted such New Common Stock Offer upon the terms specified in such New
Common Stock Offer and (ii) may issue New Common Stock or New Common Stock
Units, as the case may be, to any other Person or Persons in an amount not
to exceed the aggregate amount thereof offered pursuant to the New Common
Stock Offer (less the aggregate amount of shares of New Common Stock or New
Common Stock Units, as the case may be, issued to the Spartan Stockholders,
the REI Stockholders and the SerVaas Stockholders pursuant to the foregoing
clause (i)) and for a price which equals or exceeds the price per share of
New Common Stock or per unit of New Common Stock Units, as the case may be,
specified in the New Common Stock Offer.
6.5 SPARTAN CHASSIS. For so long as Spartan owns at least 20% of the
Common Stock on a Fully-Diluted Basis:
(a) the Company shall use all commercially reasonable efforts to
purchase on a priority basis from Spartan the Company's inventory
requirements for chassis applicable to and compatible with any vehicle
produced by the Company; PROVIDED HOWEVER, that the foregoing obligation
shall apply only if (i) Spartan shall be competitive with other chassis
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suppliers in terms of price, quality, timeliness of delivery and other
factors deemed relevant by the Company, in its sole discretion, and (ii)
the Company's customer shall not have specified or directed that the
Company utilize chassis manufactured by a Person other than Spartan; and
(b) To the extent the Company shall so request, Spartan shall
supply to the Company all of the Company's requirements for chassis
applicable to and compatible with any vehicle produced by the Company, in
each case at Spartan's usual and customary terms.
6.6 CERTAIN FINANCIAL INFORMATION. Not later than the first business
day of each month commencing prior to the second anniversary of the Closing
Date, the Company shall furnish to each Stockholder reasonably detailed
projections setting forth management's estimate of the Company's cash flows
for such month. Not later than the first business day of each week
commencing prior to the first anniversary of the Closing Date, the Company
will furnish to each Stockholder a reasonably detailed statement of the
Company's cash flows for the immediately preceding week.
ARTICLE VII
MISCELLANEOUS
7.1 GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CHOICE OF
LAW OR CONFLICT OF LAW PROVISION OR RULE THAT WOULD CAUSE THE APPLICATION
OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK, EXCEPT TO
THE EXTENT THAT THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
APPLIES AS A RESULT OF THE COMPANY BEING INCORPORATED IN THE STATE OF
DELAWARE, IN WHICH CASE SUCH GENERAL CORPORATION LAW SHALL APPLY.
7.2 ENTIRE AGREEMENT; AMENDMENTS.
This Agreement constitutes the entire agreement of the parties
hereto with respect to the subject matter hereof and this Agreement may be
amended, modified or supplemented only by a written instrument duly
executed by (a) the Company, (b) Spartan Stockholders which then hold in
the aggregate more than 50% of the aggregate shares of Common Stock on a
Fully-Diluted Basis then held by all Spartan Stockholders, (c) REI
Stockholders which then hold in the aggregate more than 50% of the
aggregate shares of Common Stock on a Fully-Diluted Basis then held by all
REI Stockholders and (d) SerVaas Stockholders which then hold in the
aggregate more than 50% of the aggregate shares of Common Stock then held
by all SerVaas Stockholders. In the event of an amendment, modification or
supplement of this Agreement in accordance with its terms, the Stockholders
shall take all action necessary or appropriate, within 30 calendar days
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following such amendment, modification or supplement, or as soon thereafter
as is practicable, to cause the adoption of any amendment to the
Certificate of Incorporation or By-Laws of the Company that may be required
as a result of such amendment, modification or supplement to this
Agreement. The Stockholders hereby agree to vote their shares of
Restricted Securities to approve each such amendment to the Certificate of
Incorporation or By-Laws of the Company.
7.3 TERM.
Except for the provisions of Article IV and this Article VII,
this Agreement shall automatically and without further action terminate
upon the earliest to occur of (i) a Qualifying Offering, (ii) a Sale of the
Company and (iii) the written agreement of (x) Spartan Stockholders which
then hold in the aggregate more than 50% of the aggregate shares of Common
Stock on a Fully-Diluted Basis then held by all Spartan Stockholders, (y)
REI Stockholders which then hold in the aggregate more than 50% of the
aggregate shares of Common Stock on a Fully-Diluted Basis then held by all
REI Stockholders and (z) SerVaas Stockholders which then hold in the
aggregate more than 50% of the aggregate shares of Common Stock on a
Fully-Diluted Basis then held by all the SerVaas Stockholders.
7.4 CERTAIN ACTIONS.
Unless otherwise expressly provided herein, whenever any action
is required under this Agreement by:
(a) the Spartan Stockholders (as a group, as opposed to the
exercise by a Spartan Stockholder of its individual rights
hereunder), it shall be by the affirmative vote of the holders of
Common Stock representing more than 50% of the Common Stock on a
Fully-Diluted Basis then held by the Spartan Stockholders as a group,
or as otherwise agreed in writing by the Spartan Stockholders as a
group (a copy of such writing to be supplied to the REI Stockholders
and the SerVaas Stockholders by the Company or the Spartan
Stockholders);
(b) the REI Stockholders (as a group, as opposed to the exercise
by an REI Stockholder of its individual rights hereunder), it shall be
by the affirmative vote of the holders of Common Stock representing
more than 50% of the Common Stock on a Fully-Diluted Basis then held
by the REI Stockholders as a group, or as otherwise agreed in writing
by the REI Stockholders as a group (a copy of such writing to be
supplied to the Spartan Stockholders and the SerVaas Stockholders by
the Company or the REI Stockholders); or
(c) the SerVaas Stockholders (as a group, as opposed to the
exercise by a SerVaas Stockholder of its individual rights hereunder),
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it shall be by the affirmative vote of the holders of Common Stock
representing more than 50% of the Common Stock on a Fully-Diluted
Basis then held by the SerVaas Stockholders as a group (a copy of such
writing to be supplied to the Spartan Stockholders and the REI
Stockholders by the Company or the SerVaas Stockholders).
7.5 INSPECTION.
For so long as this Agreement shall remain in effect, this
Agreement shall be made available for inspection by any Stockholder at the
principal executive offices of the Company.
7.6 COMPLIANCE WITH REGULATIONS.
Whenever a Stockholder is entitled to purchase Restricted
Securities pursuant to the provisions of this Agreement, any closing time
period specified in such provision shall be tolled until any necessary
governmental approval is received, including without limitation approval
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
provided that such tolling period shall not exceed 60 days.
7.7 WAIVER.
No waiver by any party hereto of any term or condition of this
Agreement, in one or more instances, shall be valid unless in writing, and
no such waiver shall be deemed to be construed as a waiver of any
subsequent breach or default of the same or any other term or condition
hereof.
7.8 SUCCESSORS AND ASSIGNS.
Except as otherwise expressly provided herein, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns (including without
limitation transferees of Restricted Securities); PROVIDED, HOWEVER, that:
(a) nothing contained herein shall be construed as granting any
Stockholder the right to Transfer any of its Restricted Securities
except in accordance with this Agreement;
(b) unless otherwise provided in the terms of the Transfer, none
of the provisions of this Agreement, other than those set forth in
Sections 2.1 and 2.2 to the extent those Sections require compliance
with the Securities Act, delivery of opinions of counsel and placement
of Securities Act (or state securities laws) legends, shall apply to
any Transfer of Restricted Securities (or to the transferee thereof)
subsequent to a Transfer of those securities pursuant to Article III;
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(c) notwithstanding any Transfer of Restricted Securities by any
Spartan Stockholder to an REI Stockholder or a SerVaas Stockholder,
only the provisions of this Agreement which are expressly applicable
to REI Stockholders or SerVaas Stockholders (as the case may be) shall
be applicable to such Restricted Securities in the hands of such REI
Stockholder or SerVaas Stockholder (as the case may be) and to such
Restricted Securities in the hands of such REI Stockholder or SerVaas
Stockholder (as the case may be);
(d) notwithstanding any Transfer of Restricted Securities by any
SerVaas Stockholder to a Spartan Stockholder or an REI Stockholder,
only the provisions of this Agreement which are expressly applicable
to Spartan Stockholders or REI Stockholders (as the case may be) shall
be applicable to such Spartan Stockholder or REI Stockholder (as the
case may be) and to such Restricted Securities in the hands of such
Spartan Stockholder or REI Stockholder (as the case may be); and
(e) notwithstanding any Transfer of Restricted Securities by any
REI Stockholder to a Spartan Stockholder or a SerVaas Stockholder,
only the provisions of this Agreement which are expressly applicable
to Spartan Stockholders or SerVaas Stockholders (as the case may be)
shall be applicable to such Spartan Stockholder or SerVaas Stockholder
(as the case may be) and to such Restricted Securities in the hands of
such SerVaas Stockholder (as the case may be).
7.9 REMEDIES.
In the event of a breach by any party to this Agreement of its
obligations under this Agreement, any party hereto injured by such breach,
in addition to being entitled to exercise all rights granted by law,
including recovery of damages and costs (including reasonable attorneys'
fees), will be entitled to specific performance of its rights under this
Agreement. The parties hereto agree that the provisions of this Agreement
shall be specifically enforceable, it being agreed by the parties hereto
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
in any action for specific performance that a remedy at law would be
adequate is waived. Such equitable remedies and all other remedies are
cumulative and not exclusive and shall be in addition to any remedies which
any party hereto may have under this Agreement or otherwise.
7.10 INVALID PROVISIONS.
If any provision of this Agreement is held to be illegal, invalid
or unenforceable under any present or future law, and if the rights or
obligations of any party hereto under this Agreement will not be materially
and adversely affected thereby, (a) such provision will be fully severable,
(b) this Agreement will be construed and enforced as if such illegal,
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invalid or unenforceable provision had never comprised a part hereof, (c)
the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (d) in lieu of such illegal,
invalid or unenforceable provision, there will be added automatically as a
part of this Agreement a legal, valid and enforceable provision as similar
in terms to such illegal, invalid or unenforceable provision as may be
possible.
7.11 HEADINGS; CERTAIN CONDITIONS.
The headings of the various Articles and Sections of this
Agreement are for convenience of reference only and shall not define, limit
or otherwise affect any of the terms or provisions hereof. Unless the
context otherwise expressly requires, all references herein to Articles,
Sections and Exhibits, are to Article and Sections of, and Exhibits to,
this Agreement. The words "herein," "hereunder" and "hereof" and words of
similar import refer to this Agreement as a whole and not to any particular
Section or provision. The words "include," "includes" and "including"
shall be deemed to be followed by the phrase "without limitation".
7.12 FURTHER ASSURANCES; SUBSIDIARIES.
Each party hereto shall cooperate and shall take such further
action and shall execute and deliver such further documents as may be
reasonably requested by any other party hereto in order to carry out the
provisions and purposes of this Agreement. Any provision hereof that by
its terms requires a Subsidiary of the Company to take any action or
refrain from taking any action shall be interpreted to require the Company
to cause such Subsidiary to take such action or to refrain from taking such
action, respectively, to the fullest extent permitted by law.
7.13 GENDER.
Whenever the pronouns "he" or "his" are used herein they shall
also be deemed to mean "she" or "hers" or "it" or "its" whenever
applicable. Words in the singular shall be read and construed as though in
the plural and words in the plural shall be construed as though in the
singular in all cases where they would so apply.
7.14 COUNTERPARTS.
This Agreement may be executed in any number of counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
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7.15 PAYMENT.
All payments hereunder shall be made in cash or by wire transfer
of immediately available funds.
7.16 NOTICES.
(a) All notices, requests and other communications hereunder must
be in writing and will be deemed to have been duly given only if delivered
personally against written receipt or by facsimile transmission or mailed
(by registered or certified mail, postage prepaid, return receipt
requested) or delivered by reputable overnight courier, fee prepaid, to the
parties hereto at the following addresses or facsimile numbers:
If to any Spartan Stockholder, to:
Spartan Motors, Inc.
1000 Reynolds Road
Charlotte, Michigan 48813
Facsimile No.: (517) 543-7729
Attn: George Sztykiel
with a copy to:
Foster, Swift, Collins & Smith
313 South Washington Square
Lansing, MI 48933
Facsimile No.: (517) 371-8200
Attn: James B. Jensen, Jr., Esq.
If to any REI Stockholder, to:
Recovery Equity Investors II, L.P.
901 Mariner's Island Boulevard
Suite 465
San Mateo, CA 94404
Facsimile No.: (415) 578-9842
Attn: Joseph J. Finn-Egan
Jeffrey A. Lipkin
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Facsimile No.: 212-309-6273
Attn: Philip H. Werner, Esq.
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If to any SerVaas Stockholder, to:
The Curtis Publishing Company
1000 Waterway Boulevard
Indianapolis, IN 46202
Facsimile No.: (317) 633-8813
Attn: Dr. Beurt SerVaas
with a copy to:
Leeuw, Plopper & Beeman
135 North Pennsylvania Street
2000 First Indiana Plaza
Indianapolis, IN 46204
Facsimile No.: (317) 264-5420
Attn: Stephen E. Plopper, Esq.
If to the Company, to:
Carpenter Industries Inc.
1100 Industries Road
Richmond, IN 47374
Facsimile No.: (317) 965-4100
Attn: Timothy S. Durham
with a copy to:
Leeuw, Plopper & Beeman
135 North Pennsylvania Street
2000 First Indiana Plaza
Indianapolis, IN 46204
Facsimile No.: (317) 264-5420
Attn: Stephen E. Plopper, Esq.
(b) All such notices, requests and other communications will be
deemed delivered upon receipt. Any party hereto may from time to time
change its address, facsimile number or other information for the purpose
of notices to such party by giving notice specifying such change to the
other parties hereto in accordance with Section 7.16(a).
7.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
EACH OF THE PARTIES HERETO CONSENTS TO THE JURISDICTION OF ANY
STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW YORK, STATE OF NEW
YORK AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS RELATING TO
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THIS AGREEMENT MAY BE LITIGATED IN SUCH COURTS. EACH OF THE PARTIES HERETO
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.
EACH OF THE PARTIES HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO THE PARTY AT THE ADDRESS SPECIFIED IN THIS
AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE 15 DAYS AFTER SUCH MAILING.
NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF ANY PARTY
HERETO TO SERVE ANY SUCH LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS IN
ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER
OR TO BRING ACTIONS, SUITS OR PROCEEDINGS AGAINST ANY OF THE OTHER PARTIES
HERETO IN SUCH OTHER JURISDICTIONS, AND IN SUCH MANNER, AS MAY BE PERMITTED
BY ANY APPLICABLE LAW.
7.18 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS AGREEMENT. EACH OF THE PARTIES HERETO ALSO WAIVES ANY BOND OR SURETY
OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF
SUCH PARTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF
ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE
SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. EACH OF THE PARTIES HERETO FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND
THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT
IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED
AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
CARPENTER INDUSTRIES INC.
By: ____________________________________
Name:
Title:
SPARTAN MOTORS, INC.
By: ____________________________________
Name:
Title:
RECOVERY EQUITY INVESTORS II, L.P.,
By Recovery Equity Partners II, L.P.,
its general partner
By: ____________________________________
Name: Joseph J. Finn-Egan
Title: General Partner
By: ____________________________________
Name: Jeffrey A. Lipkin
Title: General Partner
CARPENTER INDUSTRIES LLC
By: ____________________________________
Name:
Title:
[Signature page to Stockholders' Agreement]
Exhibit A-1
FORM OF JOINDER AGREEMENT
FOR PERMITTED TRANSFEREES
CARPENTER INDUSTRIES INC.
SPARTAN MOTORS, INC.
RECOVERY EQUITY INVESTORS II, L.P.
[SERVAAS ENTITY]
Ladies & Gentlemen:
In consideration of the transfer to the undersigned of [DESCRIBE
SECURITY BEING TRANSFERRED] of CARPENTER INDUSTRIES INC., a Delaware
corporation (the "COMPANY"), the undersigned represents that [HE] [SHE]
[IT] is a Permitted Transferee of [INSERT NAME OF TRANSFEROR] and agrees
that, as of the date written below, [HE] [SHE] [IT] shall become a party to
and a Permitted Transferee as defined in that certain Stockholders'
Agreement, dated as of __________, 199_, as such agreement may have been
amended, supplemented or modified from time to time, the "AGREEMENT"),
among the Company and the persons named therein, and as a Permitted
Transferee shall be fully bound by, and subject to, all of the covenants,
terms and conditions of the Agreement that are applicable to the
undersigned's transferor, as though an original party thereto and shall be
deemed a [SPARTAN STOCKHOLDER] [REI STOCKHOLDER] [SERVAAS STOCKHOLDER] for
all purposes thereof.
Executed as of the day of , .
SIGNATORY:
Address: ______________________________
______________________________
ACKNOWLEDGED AND ACCEPTED:
CARPENTER INDUSTRIES INC.
By:__________________________________________
Name:
Title:
SPARTAN MOTORS, INC.
By:_____________________________________
Name:
Title:
RECOVERY EQUITY INVESTORS II, L.P.
By Recovery Equity Partners II, L.P.,
its general partner
By:_____________________________________
Name: Joseph J. Finn-Egan
Title: General Partner
By:_____________________________________
Name: Jeffrey A. Lipkin
Title: General Partner
CARPENTER INDUSTRIES LLC
By:_____________________________________
Name:
Title:
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Exhibit A-2
FORM OF JOINDER AGREEMENT
FOR ADDITIONAL STOCKHOLDERS
CARPENTER INDUSTRIES INC.
SPARTAN MOTORS, INC.
RECOVERY EQUITY INVESTORS II, L.P.
[SERVAAS ENTITY]
Ladies & Gentlemen:
In consideration of the issuance to the undersigned of [DESCRIBE
SECURITY BEING ISSUED] of CARPENTER INDUSTRIES INC., a Delaware corporation
(the "COMPANY), the undersigned agrees that, as of the date written below,
[HE] [SHE] [IT] shall become a party to that certain Stockholders'
Agreement, dated as of __________, 199_ (as such agreement may have been
amended, supplemented or modified from time to time, the "AGREEMENT"),
among the Company and the persons named therein, and shall be fully bound
by and subject to, all of the covenants, terms and conditions of the
Agreement, as though an original party thereto.
Executed as of the Day of , .
SIGNATORY:___________________________________
Address: ___________________________________
___________________________________
ACKNOWLEDGED AND ACCEPTED:
CARPENTER INDUSTRIES INC.
By:__________________________________________
Name:
Title:
SPARTAN MOTORS, INC.
By:__________________________________________
Name:
Title:
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RECOVERY EQUITY INVESTORS II, L.P.
By Recovery Equity Partners II, L.P.,
its general partner
By:__________________________________________
Name: Joseph J. Finn-Egan
Title: General Partner
By:__________________________________________
Name: Jeffrey A. Lipkin
Title: General Partner
CARPENTER INDUSTRIES, LLC
By:__________________________________________
Name:
Title:
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Exhibit A-3
FORM OF JOINDER AGREEMENT
FOR TRANSFEREES OF RESTRICTED SECURITIES PURSUANT TO SECTION 2.5
CARPENTER INDUSTRIES INC.
SPARTAN MOTORS, INC.
RECOVERY EQUITY INVESTORS II, L.P.
[SERVAAS ENTITY]
Ladies & Gentlemen:
In consideration of the transfer to the undersigned of [DESCRIBE
SECURITY BEING ISSUED] of CARPENTER INDUSTRIES INC., a Delaware corporation
(the "COMPANY), the undersigned agrees that, as of the date written below,
[HE] [SHE] [IT] shall become a party to that certain Stockholders'
Agreement, dated as of __________, 199_ (as such agreement may have been
amended, supplemented or modified from time to time, the "AGREEMENT"),
among the Company and the persons named therein, and shall be fully bound
by and subject to all of the covenants, terms and conditions of the
Agreement, as provided under Section 7.8 of the Agreement as though an
original party thereto, and to the extent [HE] [SHE] [IT] is bound by the
Agreement [HE] [SHE] [IT] shall be deemed a [SPARTAN STOCKHOLDER] [REI
STOCKHOLDER] [SERVAAS STOCKHOLDER] for all purposes thereof.
Executed as of the Day of , .
SIGNATORY:___________________________________
Address: ___________________________________
___________________________________
ACKNOWLEDGED AND ACCEPTED:
CARPENTER INDUSTRIES INC.
By:__________________________________________
Name:
Title:
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SPARTAN MOTORS, INC.
By:__________________________________________
Name:
Title:
RECOVERY EQUITY INVESTORS II, L.P.
By Recovery Equity Partners II, L.P.,
its general partner
By:__________________________________________
Name: Joseph J. Finn-Egan
Title: General Partner
By:__________________________________________
Name: Jeffrey A. Lipkin
Title: General Partner
CARPENTER INDUSTRIES LLC
By:__________________________________________
Name:
Title:
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Exhibit B
LEGENDS
Shares of Restricted Securities shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
STOCKHOLDERS' AGREEMENT DATED AS OF __________ __, 1997 AMONG CARPENTER
INDUSTRIES INC. (THE "COMPANY") AND ITS STOCKHOLDERS AS MAY BE AMENDED FROM
TIME TO TIME, AND MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF (A "TRANSFER") EXCEPT IN ACCORDANCE
WITH THE PROVISIONS THEREOF AND ANY TRANSFEREE OF THESE SECURITIES SHALL BE
SUBJECT TO THE TERMS OF SUCH AGREEMENT. COPIES OF THE STOCKHOLDERS'
AGREEMENT, AS AMENDED, ARE MAINTAINED WITH THE CORPORATE RECORDS OF THE
COMPANY AND ARE AVAILABLE FOR INSPECTION AT THE PRINCIPAL EXECUTIVE OFFICES
OF THE COMPANY.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
STATE SECURITIES LAWS, AND NO TRANSFER OF THESE SECURITIES MAY BE MADE
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
(B) PURSUANT TO AN EXEMPTION THEREFROM WITH RESPECT TO WHICH THE COMPANY
MAY REQUIRE AN OPINION OF COUNSEL FOR THE HOLDER THAT SUCH TRANSFER IS
EXEMPT FROM THE REQUIREMENTS OF THE ACT, AS PROVIDED BY THE TERMS OF THE
STOCKHOLDERS' AGREEMENT DESCRIBED ABOVE.
THE POWERS, DESIGNATIONS, PREFERENCES, AND RELATIVE PARTICIPATING,
OPTIONAL OR OTHER SPECIAL RIGHTS, AND THE QUALIFICATIONS, LIMITATIONS, OR
RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS OF EACH CLASS OR SERIES OF
CAPITAL STOCK OF THE COMPANY ARE SET FORTH IN THE CERTIFICATE OF
INCORPORATION. THE CORPORATION WILL FURNISH A COPY OF THE CERTIFICATE OF
INCORPORATION TO THE HOLDER OF THIS CERTIFICATE WITHOUT CHARGE UPON
REQUEST.
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EXHIBIT C
Initial Members of Board of Directors
SPARTAN DIRECTORS
George Sztykiel
Anthony G. Sommer
REI DIRECTORS
Joseph J. Finn-Egan
Jeffrey A. Lipkin
SERVAAS DIRECTORS
Dr. Beurt R. SerVaas
Timothy S. Durham
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Schedule 2.5(a)
LIST OF CERTAIN COMPETITORS TO WHOM
OFFERED SECURITIES MAY NOT BE SOLD
1. Bluebird
2. Thomas
3. American Transportation
4. Navistar
5. Utilimaster
6. Union City Body
7. Grumman's Olson business
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