EXHIBIT 10.14
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STOCKHOLDERS' AGREEMENT
DATED AS OF APRIL 7, 2004
AMONG
AC SAFETY HOLDING CORP.
AND
THE HOLDERS THAT ARE PARTIES HERETO
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TABLE OF CONTENTS
PAGE
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SECTION 1. DEFINITIONS................................................. 1
SECTION 2. CERTAIN DISPOSITIONS AND ISSUANCES BY THE COMPANY........... 10
SECTION 3. TRANSFERS; ADDITIONAL PARTIES............................... 15
3.1 Restrictions; Permitted Dispositions............................ 15
3.2 Additional Parties.............................................. 16
3.3 Securities Restrictions; Legends................................ 17
SECTION 4. REGISTRATION RIGHTS......................................... 18
SECTION 5. REPURCHASE RIGHTS........................................... 30
SECTION 6. BOARD OF DIRECTORS.......................................... 32
SECTION 7. FINANCIAL STATEMENTS; ACCESS; CONFIDENTIALITY............... 34
SECTION 8. TRANSACTIONS WITH AFFILIATES................................ 35
SECTION 9. PREFERRED STOCK CERTIFICATE OF DESIGNATIONS................. 36
SECTION 10. VOTING AGREEMENT............................................ 36
SECTION 11. NOTICES..................................................... 37
SECTION 12. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............... 37
SECTION 13. REPRESENTATIONS AND WARRANTIES OF THE HOLDERS............... 38
SECTION 14. MISCELLANEOUS PROVISIONS.................................... 40
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EXECUTION COPY
STOCKHOLDERS' AGREEMENT dated as of April 7, 2004 (this "Agreement") among AC
SAFETY HOLDING CORP., a Delaware corporation (the "Company"), and the HOLDERS
that are parties hereto.
WHEREAS, each Holder deems it to be in the best interest of the
Company and the Holders that provision be made for the continuity and stability
of the business and policies of the Company and, to that end, the Company and
the Holders hereby set forth herein their agreement with respect to the Common
Stock, Preferred Stock, Restricted Stock and Options owned by them.
NOW, THEREFORE, in consideration of the premises and of the mutual
consents and obligations hereinafter set forth, the parties hereto hereby agree
as follows:
Section 1. Definitions.
As used in this Agreement:
"Aearo" means Aearo Corporation, a Delaware corporation.
"Aearo Company" means Aearo Company I, a Delaware corporation and
wholly owned subsidiary of Aearo.
"Affiliate of the Company or the Bear Group" means any Person that,
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Company or the Bear Group,
as applicable. As used in this definition, the term "control," including the
correlative terms "controlling," "controlled by" and "under common control with"
means possession, directly or indirectly, of the power to direct or cause the
direction of management or policies (whether through ownership of securities or
any partnership or other ownership interest, by contract or otherwise) of a
Person.
"Affiliate of a Holder" means for any Holder who is not a member of
the Bear Group: (i) an individual Holder's siblings and children (including
those by adoption), the lineal descendants of such siblings and children, and in
any such case, any trust whose primary beneficiary is such individual Holder or
such Holder's siblings, children and/or lineal descendants; (ii) the legal
representative or guardian of such individual Holder or of any such immediate
family members in the event such individual Holder or any such immediate family
members becomes mentally incompetent; and (iii) for any Holder that is not a
natural person, any Person that, directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such Holder. As used in this definition, the term "control," including the
correlative terms "controlling," "controlled by" and "under common control with"
means possession, directly or indirectly, of the power to direct or cause the
direction of management or policies (whether through ownership of securities or
any partnership or other ownership interest, by contract or otherwise) of a
Person.
"Bear Group" means, collectively, Bear Stearns Merchant Banking
Partners II, L.P., Bear Stearns Merchant Banking Investors II, L.P., Bear
Stearns MB-PSERS II, L.P., The BSC Employee Fund V, L.P. and The BSC Employee
Fund VI, L.P. and each of their respective Affiliates, including, without
limitation, any investment funds managed or controlled by Bear Stearns Merchant
Capital II, L.P.
"Bear Group Directors" shall have the meaning ascribed to such term in
Section 6(a).
"Board" means the board of directors of the Company and any duly
authorized committee thereof. All determinations by the Board required pursuant
to the terms of this Agreement to be made by the Board shall be made in good
faith and should be binding and conclusive.
"Bylaws" means the bylaws of the Company, as may be amended,
supplemented or restated from time to time in accordance with the terms thereof
and hereof.
"Capital Stock" means any and all shares, interests, participation or
other equivalents (however designated) of corporate stock of a Person and, in
the case of the Company, shall include all Common Stock and Preferred Stock.
"Cause" means, with respect to the termination of employment of any
Management Holder by the Company or any Subsidiary thereof (each, an
"Employer"): (i) if such Management Holder is at the time of termination a party
to an employment or retention agreement with an Employer thereof which defines
such term, the meaning given therein, and (ii) in all other cases, that in the
Board's determination such termination is based on such Management Holder's: (A)
continuing failure, for more than 10 days after the Employer's notice to such
Management Holder thereof, by such Management Holder to perform such duties as
are reasonably requested by the Employer as documented in writing to such
Management Holder; (B) failure to observe material policies generally applicable
to directors, employees and/or consultants of an Employer unless such failure is
capable of being cured and is cured within 10 days of such Management Holder
receiving notice of such failure; (C) commission of any act of fraud, theft or
financial dishonesty with respect to an Employer or any criminal act involving
moral turpitude or any felony; (D) violation of the provisions of any
employment, consulting, non-competition or confidentiality agreement with an
Employer or any of its Affiliates unless such violation is capable of being
cured and is cured within 10 days of such Management Holder receiving notice of
such violation; (E) chronic absenteeism; or (F) abuse of alcohol or another
controlled substance.
"CEO Director" shall have the meaning ascribed to such term in Section
6(a)(i).
"Class A Common Stock" means the Company's Class A Common Stock, par
value $.01 per share.
"Class A Common Stock Director" shall have the meaning ascribed to
such term in Section 6(d).
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"Co-Investment Rights Agreement" means the Co-Investment Rights
Agreement dated as of the date hereof between Vestar Capital Partners IV, L.P.
and Bear Stearns Merchant Manager II, LLC.
"Come Along Option" shall have the meaning ascribed to such term in
Section 2(b).
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Common Stock" means the common stock of the Company, par value $.01
per share. For the avoidance of doubt, for purposes of this Agreement, "Common
Stock" shall not include Class A Common Stock.
"Confidential Information" shall have the meaning ascribed to such
term in Section 7(c).
"Deemed Held Shares" shall have the meaning ascribed to such term in
Section 2(a)(ii).
"Demand Notice" shall have the meaning ascribed to such term in
Section 4(a)(i).
"Demand Registration" means the Bear Group's rights to demand
registration of all or part of their shares of Common Stock or Preferred Stock
pursuant to Section 4(a).
"DGCL" means the Delaware General Corporation Law.
"Disposition" means any direct or indirect assignment, sale, transfer,
gift, pledge, hypothecation or other encumbrance, or any other disposition, of
Common Stock or Preferred Stock (or any interest therein or right thereto) or of
all or part of the voting power (other than the granting of a revocable proxy)
associated with the Common Stock or Preferred Stock (or any interest therein)
whatsoever, or any other transfer of beneficial ownership of Common Stock or
Preferred Stock whether voluntary or involuntary, including, without limitation
(i) as a part of any liquidation of a Holder's assets or (ii) as a part of any
reorganization of a Holder pursuant to the United States or other bankruptcy law
or other similar debtor relief laws.
"Employer" shall have the meaning ascribed to such term in the
definition of "Cause".
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Excluded Securities" means: (A) securities issued in a Qualified
Public Offering; (B) securities issuable upon the exercise, exchange or
conversion of Common Stock, Preferred Stock or convertible securities and shares
of Common Stock issuable upon the conversion of the Preferred Stock; (C)
securities issued in connection with any Board-approved merger, acquisition or
other business combination; (D) securities issued by the Company to give effect
to any stock dividend or distribution, stock split, reverse stock split,
subdivision or combination or other similar pro rata recapitalization event
affecting any class or series of the
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Company's Capital Stock; and (E) securities issued in connection with the
transactions contemplated by the Co-Investment Rights Agreement.
"Executive Management Holder" means (i) each Management Holder who
entered into an employment agreement with the Company or a Subsidiary thereof on
or prior to the date hereof or (ii) any other Management Holder who enters into
an employment agreement with the Company or a Subsidiary thereof following the
date hereof and who is designated by the Board (or the compensation committee
thereof) as an "Executive Management Holder."
"Exercising Offerees" shall have the meaning ascribed to such term in
Section 2(a)(i).
"Fair Market Value" means:
(a) the per share fair market value of a share of Common Stock or a
share of Preferred Stock, as the case may be, as such fair market value was
last determined in good faith by the Board (or the compensation committee
thereof) in consultation with the Chief Executive Officer of the Company
prior to the date of determination or, if the Board (or the compensation
committee thereof) determines in good faith that such fair market value has
materially changed from the amounts as last determined by the Board (or the
compensation committee thereof) prior to the date of determination, the
fair market value as determined in good faith by the Board (or the
compensation committee) in consultation with the Chief Executive Officer of
the Company as of the most recent practicable date prior to the date of
determination; and
(b) notwithstanding the preceding paragraph (a), in the case of an
Executive Management Holder whose employment with the applicable Employer
is terminated other than for Cause or who has resigned for Good Reason:
(i) the per share fair market value of a share of Common Stock or
a share of Preferred Stock, as the case may be, as such fair market
value is agreed to in writing by the selling Executive Management
Holder and the Board (or the compensation committee thereof);
(ii) if the selling Executive Management Holder and the Board (or
the compensation committee thereof) cannot so agree, the per share
fair market value as agreed to in writing by the Board and the holders
of a majority of all outstanding shares of Common Stock held by the
Executive Management Holders (excluding the Capital Stock held by the
selling Management Holder); or
(iii) if the Board and the holders of a majority of all
outstanding shares of Common Stock held by the Executive Management
Holders cannot so agree, the per share fair market value as determined
by an independent appraisal firm selected and agreed to in writing by
the Board and the holders of a majority of the outstanding shares of
Common Stock held by the Executive Management Holders (excluding
shares of Common Stock held by the selling Executive Management
Holder); provided that if the Board and such holders cannot so
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agree, such independent appraisal firm shall be selected by the
American Arbitration Association;
provided, however, that in each case of clauses (i), (ii) and (iii), the
per share fair market value shall be based on the going concern value for a
private company (unless the Company's shares of Common Stock are publicly
traded or quoted at the time of determination (in which case, such fair
market value shall be determined pursuant to (d) below)) and shall in no
way be affected, or discounted, by the selling Executive Management
Holder's ownership of less than a majority of shares of Common Stock. In
the event that per share fair market value is determined pursuant to clause
(iii) above, all reasonable fees and expenses of the independent appraisal
firm shall be borne by the selling Executive Management Holder unless the
price determined by the independent appraisal firm exceeds 10% of the
amount originally determined by the Board (or the compensation committee
thereof), in good faith, in which case the reasonable fees and expenses
shall be paid by the Company.
(c) Notwithstanding anything to the contrary contained in (a) or (b)
above, (i) in the case of an Executive Management Holder who is terminated
other than for Cause or who resigns for Good Reason, the per share fair
market value of a share of Preferred Stock shall be deemed to be no less
than the Original Cost thereof plus the value of accrued but unpaid
dividends thereon and (ii) for purposes of determining the per share fair
market value of a share of Common Stock, the fair market value of a share
of Preferred Stock shall be deemed to be (x) if such fair market value is
being determined pursuant to the exercise of rights under the third
sentence of Section 5(a), the greater of fair market value and Original
Cost and (y) in all other cases, the Original Cost thereof plus the value
of accrued but unpaid dividends thereon.
(d) Notwithstanding anything to the contrary contained in (a), (b) or
(c) above, if any securities of the Company are publicly traded or quoted
at the time of determination, then the per share fair market value of such
securities shall be the average closing trading price of such securities
during the thirty day period preceding the date of determination as quoted
on the largest exchange on which such securities are traded or quoted.
(e) At any time in which the Board is permitted to determine the fair
market value of any security in accordance with this Agreement, neither the
Company nor any officer, director, employee or agent of the Company shall
have any liability with respect to the valuation of such securities that
are bought or sold at such fair market value even though the fair market
value, as so determined, may be more or less than actual fair market value.
Each of the Company and its officers, directors, employees and agents shall
be fully protected in relying in good faith upon the records of the Company
and upon information, opinions, reports or statements presented to the
Company by any Person as to matters which the Company or such director,
officer, employee or agent reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Company in determining such fair
market value. The per share fair market value of Common Stock or Preferred
Stock, as the case may be, as of the date hereof and until the first
determination
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of fair market value thereof by the Board shall be deemed to be Original
Cost, subject to appropriate adjustment by the Board for stock splits,
stock dividends, combinations and similar transactions.
"Good Reason" means, with respect to the termination of employment by
any Management Holder: (i) if such Management Holder is at the time of
termination a party to an employment or retention agreement with an Employer
thereof which defines such term, the meaning given therein, and (ii) in all
other cases, the taking of any action by the applicable Employer which (A)
materially decreases such Management Holder's total annual salary and target
bonus or (B) materially adversely affects such Management Holder's participation
in, or reduces such Management Holder's benefits originally provided to such
Management Holder under the applicable Employer's benefit plans, except, in each
of (A) and (B), to the extent that such action applies to (x) the employees of
such Employer that hold titles or responsibilities similar to such Management
Holder or (y) such Employer's employees generally.
"Group" shall have the meaning ascribed thereto in Section 13(d)(3) of
the Exchange Act.
"Holders" means the holders of securities of the Company who are
parties hereto.
"Initial Notice" shall have the meaning ascribed thereto in Section
4b(i).
"IRA" shall have the meaning ascribed to such term in Section 3.2(c).
"Management Holder" means Holders who are currently employed or serve
as consultants or directors to the Company or any of its Subsidiaries (and
includes the Executive Management Holders).
"Merger Agreement" means the Agreement and Plan of Merger, dated as of
March 10, 2004, by and among the Company, AC Safety Acquisition Corp. and Aearo
as it may be amended, supplemented or restated from time to time.
"NASD" means the National Association of Securities Dealers, Inc.
"Non-Bear Group Holders" means, collectively, the Holders other than
the Bear Group including their permitted transferees.
"Notice of Acceptance" shall have the meaning ascribed thereto in
Section 2(e)(iv).
"Offer to Resell" shall have the meaning ascribed thereto in Section
2(e)(ii).
"Offered Securities" shall have the meaning ascribed thereto in
Section 2(e)(i).
"Offerees" shall have the meaning ascribed thereto in Section 2(a)(i).
"Offeror" shall have the meaning ascribed thereto in Section 2(a)(i).
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"Option" means the options to purchase Common Stock issued to Holders
pursuant to the 2004 Stock Incentive Plan or any other similar plan approved by
the Company.
"Original Cost" means:
(a) With respect to a share of Common Stock, the price per share paid
by the holder of such share, subject to appropriate adjustment by the Board
for stock splits, stock dividends, combinations and similar transactions;
and
(b) With respect to a share of Preferred Stock, $1,000 per share,
subject to appropriate adjustment by the Board for stock splits, stock
dividends, combinations and similar transactions.
"Permitted Disposition" shall have the meaning given to such term in
Section 3.1.
"Person" shall be construed broadly and shall include, without
limitation, an individual, a partnership, a limited liability company, a
corporation, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department, agency
or political subdivision thereof.
"Piggyback Notice" shall have the meaning ascribed to such term in
Section 4(b).
"Piggyback Registration Rights" means the registration rights pursuant
to a Piggy Back Notice in Section 4(b).
"Preemptive Offer" shall have the meaning ascribed to such term in
Section 2(e)(i).
"Preemptive Offeree" shall have the meaning ascribed to such term in
Section 2(e)(i).
"Preferred Stock" means shares of the Company's Series A Preferred
Stock, par value, $.01 per share.
"Proportionate Percentage" means, with respect to any Holder, (i) in
respect of shares of Common Stock, a fraction (expressed as a percentage) the
numerator of which is the total number of shares of Common Stock held by such
Holder (including any Deemed Held Shares held by such Holder) and the
denominator of which is the total number of shares of Common Stock outstanding
at the time of determination (including any Deemed Held Shares held by all
Holders), and (ii) in respect of the Preferred Stock, a fraction (expressed as a
percentage) the numerator of which is the total number of shares of Preferred
Stock held by such Holder and the denominator of which is the total number of
shares of Preferred Stock outstanding at the time of determination.
"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the securities covered by such
Registration Statement and, in each case, by all other amendments and
supplements to such prospectus, including post-effective amendments and, in each
case, all material incorporated by reference in such prospectus.
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"Proxy" shall have the meaning ascribed to such term in Section 10(b).
"Public Sale" means any sale, occurring simultaneously with or after
an initial public offering, of Common Stock or Preferred Stock to the public
pursuant to an offering registered under the Securities Act or to the public in
the manner described by the provisions of Rule 144(f).
"Qualified Public Offering" means an underwritten public offering of
Common Stock by the Company pursuant to an effective registration statement
filed by the Company with the Securities and Exchange Commission (other than on
Forms S-4 or S-8 or successors to such forms) under the Securities Act, pursuant
to which (a) the per share price of the Common Stock sold in such offering is
equal to at least 150% of the Original Cost paid by the Bear Group for its
shares of Common Stock on the date of consummation of the transactions
contemplated by the Merger Agreement and (b) the aggregate offering price of the
Common Stock sold in such offering is at least $50,000,000.
"Realization Event" means (i) the consummation of a Sale of the
Company or (ii) the consummation of any transaction or series of related
transactions in which the Bear Group sells at least 50% of the shares of Common
Stock purchased by them on the date hereof and 50% of the shares of Preferred
Stock purchased by them on the date hereof (excluding any shares sold or
transferred in connection with the transactions contemplated by the
Co-Investment Rights Agreement).
"Registrable Securities" means shares of Common Stock and Preferred
Stock; provided that any Registrable Securities shall cease to be Registrable
Securities when (i) a registration statement with respect to the sale of such
Registrable Securities has been declared effective under the Securities Act and
such Registrable Securities have been disposed of in accordance with the plan of
distribution set forth in such registration statement, (ii) such Registrable
Securities are distributed pursuant to Rule 144 (or any similar provision then
in force) under the Securities Act or (iii) such Registrable Securities shall
have been otherwise transferred and new certificates for them not bearing a
legend restricting further Disposition under the Securities Act shall have been
delivered by the Company in accordance with applicable law; and provided further
that any securities that have ceased to be Registrable Securities shall not
thereafter become Registrable Securities. Notwithstanding any other provision of
this Agreement, with respect to any Registration Statement that only registers
shares of Common Stock, "Registrable Securities" shall only include shares of
Common Stock and with respect to any Registration Statement that only registers
shares of Preferred Stock, "Registrable Securities" shall only include shares of
Preferred Stock.
"Registration Expenses" shall have the meaning ascribed to such term
in Section 4(e).
"Registration Statement" means any Registration Statement of the
Company which covers Registrable Securities, including the Prospectus,
amendments and supplements to such Registration Statement, including
post-effective amendments, all exhibits thereto and all material incorporated by
reference in such Registration Statement.
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"Repurchase Event" means, with respect to a Management Holder, such
Management Holder shall cease to be employed by, to be a director of or to be a
consultant to the Company or any of its Subsidiaries for any reason.
"Resale Notice" shall have the meaning ascribed to such term in
Section 2(e)(ii).
"Resale Notice Period" shall have the meaning ascribed to such term in
Section 2(e)(ii).
"Resale Period" shall have the meaning ascribed to such term in
Section 2(e)(ii).
"Restated Certificate" means the Company's Restated Certificate of
Incorporation, as it may be amended, supplemented or restated from time to time,
including, without limitation, pursuant to the Certificate of Designations,
Preferences and Rights for the Preferred Stock.
"Restricted Group" shall have the meaning ascribed to such term in
Section 7(c).
"Restricted Stock" means the restricted Common Stock issued to Holders
pursuant to the 2004 Stock Incentive Plan or other similar plan approved by the
Company.
"Sale of the Company" means, with respect to the Company, (i) any
merger, consolidation or other business combination of the Company, Aearo or
Aearo Company with or into any other entity, recapitalization, spin-off,
distribution or any other similar transaction, whether in a single transaction
or series of related transactions, where the Bear Group and its permitted
transferees, collectively, cease to beneficially own at least 50% of the voting
power of the Voting Securities of the entity surviving or resulting from such
transaction (or the ultimate sole parent thereof) (such ownership being based
solely on the Voting Securities beneficially owned by such Persons immediately
prior to such event), (ii) any transaction or series of related transactions as
a result of which the Bear Group and its respective permitted transferees,
collectively, cease to beneficially own at least 50% of the voting power of the
Voting Securities of the Company (or the ultimate sole parent thereof) or (iii)
any sale of all or substantially all of the assets, property or business of the
Company and its Subsidiaries.
"Sale Notice" shall have the meaning ascribed to such term in Section
2(a).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Selling Holders' Counsel" shall have the meaning ascribed to such
term in Section 4(d)(ii).
"Subject Employee" shall have the meaning ascribed to such term in
Section 3.2(c).
"Subsidiary" means any corporation, company or entity with respect to
which a specified Person (or a Subsidiary thereof) has the power to vote or
direct the voting of sufficient securities to elect a majority of the board of
directors or comparable governing body.
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"Tag Along Notice" shall have the meaning ascribed to such term in
Section 2(a).
"Tag Along Transaction" shall have the meaning ascribed to such term
in Section 2(a).
"Term" shall have the meaning ascribed to such term in Section 10(a).
"2004 Deferred Compensation Plan" means the Company's 2004 Deferred
Compensation Plan, as it may be amended, supplemented or restated from time to
time.
"2004 Stock Incentive Plan" means the Company's 2004 Stock Incentive
Plan, as it may be amended, supplemented or restated from time to time.
"Underwritten Offering" means a sale of shares of Common Stock or
Preferred Stock to an underwriter for reoffering to the public.
"Vestar" means, collectively, Vestar Equity Partners, L.P. and its
Affiliates.
"Voting Securities" shall mean, at any time, shares of any class of
Capital Stock of the Company which are then entitled to vote generally in the
election of Directors or on any other matter.
Section 2. Certain Dispositions and Issuances by the Company.
(a) Tag Along Transaction.
(i) Subject to the provisions of Section 2(b), prior to the
consummation of a Qualified Public Offering, if any Bear Group Holder
(the "Offeror") desires to effect any Disposition of shares of Common
Stock or Preferred Stock to any third party following which such
Offeror shall have Disposed of at least 5% of the number of shares of
Common Stock or Preferred Stock, as applicable (when aggregated with
all prior such sales or Dispositions), that such Offeror originally
owned to a transferee or Group (each a "Tag Along Transaction"), such
Holder shall give written notice to the remaining Holders (the
"Offerees") at least fifteen (15) days prior to the anticipated sale
date offering such Holders the option to participate in such Tag Along
Transaction. The notice shall set forth the material terms of the
proposed Tag Along Transaction and identify the contemplated
transferee or Group (a "Sale Notice").
(ii) Each of the Offerees may, by written notice to the Offeror
(a "Tag Along Notice"), delivered within ten (10) days after the date
of the Sale Notice (each such Offeree delivering such timely notice
being an "Exercising Offeree"), elect to Dispose of a number of shares
of Common Stock or Preferred Stock, as applicable, in such Tag Along
Transaction, which will not exceed such Exercising Offerees's
Proportionate Percentage of the total number of shares of Common Stock
or Preferred Stock, as applicable, that the Offeror proposes to
Dispose of in the applicable Tag Along Transaction. This number of
shares may include shares of Common Stock and Preferred Stock to be
distributed to such
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Exercising Offeree in connection with such Tag Along Transaction from
the 2004 Deferred Compensation Plan or any similar plan or which such
Exercising Offeree may obtain by exercising any Options or shares of
Restricted Stock held by such Exercising Offeree that are vested as of
the date of such Tag Along Notice or which would vest in connection
with such Tag Along Transaction (collectively, the "Deemed Held
Shares").
(iii) If none of the Offerees delivers a timely Tag Along Notice,
then the Offeror may thereafter consummate the Tag Along Transaction,
on the same terms and conditions as are described in the Sale Notice
for a period of one hundred twenty (120) days thereafter. In the event
the Offeror has not consummated the Tag Along Transaction within such
one hundred twenty (120) day period, the Offeror shall not thereafter
consummate a Tag Along Transaction without first providing a Sale
Notice and an opportunity to the Exercising Offerees to sell in the
manner provided above. If one or more of Exercising Offeree gives the
Offeror a timely Tag Along Notice, then the Offeror shall use its
commercially reasonable best efforts to cause the prospective
transferee or Group to agree to acquire all shares identified in all
timely Tag Along Notices, upon the same terms and conditions as
applicable to the shares held by the Offeror. Each Exercising Offeree
shall take all reasonably necessary actions approved by the Bear Group
in connection with the consummation of the Tag Along Transaction,
including executing such agreements and such instruments and other
actions reasonably necessary to provide the representations,
warranties, covenants and indemnities, as well as escrow arrangements
relating to such Tag Along Transaction but only to the extent similar
agreements and instruments are executed and actions taken by the Bear
Group in connection with such Tag Along Transaction; provided,
however, that (i) any representations, warranties, covenants,
indemnities, escrow agreements and other provisions and agreements
made by the Exercising Offerees shall be several and not joint and
(ii) to the extent the Exercising Offerees are required to provide
indemnities in connection with the Disposition of their shares of
Common Stock or Preferred Stock, no Exercising Offeree shall be
required to provide indemnification that would result in an aggregate
liability to such Exercising Offeree in excess of such Exercising
Offeree's net proceeds from such Disposition pursuant to this Section
2(a)(iii), as applicable, and such indemnities shall be made by all
Exercising Offerees participating in the applicable transaction or
transactions, severally and not jointly. Each Holder hereby waives any
claims such Holder may have against the Board or the Bear Group in
connection with the Tag Along Transaction. If such prospective
transferee or Group is unable or unwilling to acquire all shares
proposed to be included in the Tag Along Transaction upon such terms,
then the Offeror may elect to cancel such Tag Along Transaction or to
allocate the maximum number of shares that each prospective transferee
or Group is willing to purchase among the Offeror and the Exercising
Offerees in the proportion that each such Exercising Offeree's and the
Offeror's Proportionate Percentage bears to the total Proportionate
Percentages of the Offeror and the Exercising Offerees (e.g., if the
Sale Notice contemplated a Tag Along Transaction of 10% Proportionate
Percentage by the Offeror, and if the Offeror at such time owns a
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30% Proportionate Percentage and one Exercising Offeree who owns a 20%
Proportionate Percentage elects to participate, then the Offeror would
be entitled to sell a 6% Proportionate Percentage (30%/50% multiplied
by the 10% Proportionate Percentage) and the Exercising Offeree would
be entitled to sell a 4% Proportionate Percentage (20%/50% multiplied
by the 10% Proportionate Percentage).
(iv) Notwithstanding the provisions of this Section 2(a), the
Bear Group may take any of the following actions without complying
with the provisions of this Section 2(a): (a) during the first twelve
(12) months of this Agreement, the Bear Group may Dispose of up to 10%
of the shares of Common Stock and 10% of the shares of Preferred Stock
then owned by it, (b) the Bear Group may Dispose of shares of Common
Stock and Preferred Stock to any Affiliate of the Bear Group (provided
that such Affiliate transferee agrees in writing to be bound by this
Agreement to the same extent as any other member of the Bear Group)
and (c) the Bear Group may Dispose of shares of Common Stock and
Preferred Stock to Vestar or one or more of its Affiliates in
connection with the transactions contemplated by the Co-Investment
Rights Agreement.
(b) Come Along Transaction.
(i) If, at any time, (A) the Bear Group holds at least fifty
percent (50%) of the outstanding shares of Common Stock and the Bear
Group approves the Disposition of at least fifty percent (50%) of the
shares of Common Stock and/or Preferred Stock held by the Bear Group
as of the date hereof or (B) the holders of at least fifty percent
(50%) of the outstanding shares of Common Stock (including the Bear
Group) approve a Disposition of at least fifty percent (50%) of the
outstanding shares of Common Stock and/or Preferred Stock (in either
of (A) or (B), a "Come Along Transaction"), then each Non-Bear Group
Holder shall raise no objections against, and, if a stockholder vote
is required by law in connection therewith, consent to, the Come Along
Transaction, and if the Come Along Transaction is structured as (1) a
merger or consolidation of the Company or an asset sale, each Non-Bear
Group Holder hereby waives any dissenters rights, appraisal rights or
similar rights in connection with such merger, consolidation or asset
sale or (2) a sale of Capital Stock of the Company, each Non-Bear
Group Holder shall agree to sell his or its pro rata portion of shares
of Common Stock and/or Preferred Stock which are the subject of the
Come Along Transaction (including his or its Deemed Held Shares). Each
Non-Bear Group Holder shall take all reasonably necessary actions
approved by the Bear Group in connection with the consummation of the
Come Along Transaction and executing such agreements and such
instruments and other actions reasonably necessary to provide the
representations, warranties, covenants and indemnities, as well as
escrow arrangements relating to such Come Along Transaction but only
to the extent similar agreements and instruments are executed and
actions taken by the Bear Group in connection with such Come Along
Transaction; provided, however, that (x) any representations,
warranties, covenants, indemnities, escrow agreements and other
provisions and agreements made by the Non-Bear Group
12
Holders shall be several and not joint and (y) to the extent the
Non-Bear Group Holders are required to provide indemnities in
connection with the Disposition of their shares of Common Stock or
Preferred Stock, no Non-Bear Group Holder shall be required to provide
indemnification that would result in an aggregate liability to such
Non-Bear Group Holder in excess of such Non-Bear Group Holder's net
proceeds from such Disposition pursuant to this Section 2(b)(i), as
applicable, and such indemnities shall be made by all Non-Bear Group
Holders participating in the applicable transaction or transactions,
severally and not jointly. Each Holder hereby waives any claims such
Holder may have against the Board or the Bear Group in connection with
the Come Along Transaction.
(c) The Company and the Non-Bear Group Holder shall cooperate in
causing any Deemed Held Shares that are ultimately included in a Tag Along
Transaction or a Come Along Transaction to be delivered to the Non-Bear
Group Holder immediately prior to the closing of such Tag Along Transaction
or Come Along Transaction in order that the Non-Bear Group Holder may
exercise his rights under Section 2(a) or that the Bear Group may exercise
its rights under Section 2(b), as the case may be.
(d) Upon the closing of the sale of any shares of Common Stock or
Preferred Stock (including any Deemed Held Shares) pursuant to this Section
2, the Holders shall deliver at such closing, against payment of the
purchase price therefor, certificates representing their shares of Common
Stock or Preferred Stock to be sold, duly endorsed for Disposition or
accompanied by duly endorsed stock powers, and evidence of good title to
the shares to be sold and the absence of liens, encumbrances and adverse
claims with respect thereto and such other matters as are reasonably deemed
necessary by the Company for the proper Disposition of such shares on the
books of the Company.
(e) Preemptive Rights.
(i) Except for Excluded Securities, prior to the consummation of
a Qualified Public Offering, the Company shall not issue or sell to,
or exchange with, the Bear Group (i) any Common Stock, (ii) any
Preferred Stock, (iii) any other equity security of the Company or
(iv) any option, call, warrant or other right to subscribe for,
purchase or otherwise acquire any security of the Company specified in
the foregoing clauses (i) through (iii), unless, in each case, the
Company shall have first offered to sell to each Non-Bear Group Holder
(each, a "Preemptive Offeree") the percentage of such securities equal
to the percentage of outstanding shares of Common Stock held by such
Preemptive Offeree as of such date (the "Offered Securities") at a
price and on such other terms and conditions as shall have been
specified by the Company in a writing delivered to such Preemptive
Offeree (the "Preemptive Offer"). A Preemptive Offer by its terms
shall remain open and irrevocable for a period of thirty (30) days
from the date of delivery to each Preemptive Offeree.
(ii) If the Company is unable to make the Preemptive Offer or
hold the Preemptive Offer open for the entire 30-day period referred
to in Section 2(e)(i), the Bear Group may purchase or cause to be
purchased from the Company all of the Offered Securities that are to
be offered to the Preemptive Offerees
13
pursuant to Section 2(e)(i), in which case the Company's obligations
under Section 2(e)(i) shall be deemed fully satisfied. Promptly after
such purchase, the Bear Group shall or shall cause the applicable
purchaser to offer (an "Offer to Resell") to each Preemptive Offeree
the number of such Offered Securities that such Preemptive Offerees
would otherwise be entitled to purchase pursuant to Section 2(e)(i),
at the same price paid by such purchaser and on the same terms and
conditions. Such Offer to Resell by its terms shall remain open for a
period of thirty (30) days from the date it is delivered (the "Resale
Period"). Notice of any Preemptive Offeree's intention to accept the
Offer to Resell shall be evidenced by a writing signed by such
Preemptive Offeree and delivered to the Bear Group and the Company
prior to the end of the Resale Period (the "Resale Notice"). Within
five (5) days after receipt of the Resale Notice, the Bear Group or
the applicable purchaser shall sell and each Preemptive Offeree
delivering a Resale Notice shall purchase the applicable Offered
Securities which were the subject of the Offer to Resell, upon the
terms and conditions of the Offer to Resell.
(iii) The Company may specify in the Preemptive Offer that all or
a minimum amount of the Offered Securities must be sold to the
Preemptive Offerees and the Bear Group pursuant to Section 2(e)(v)
below, in which case any Notice of Acceptance (as defined below) shall
be deemed conditioned upon the sale of all or such minimum amount, as
applicable, of the Offered Securities pursuant to Section 2(e)(v).
(iv) Notice of a Preemptive Offeree's intent to accept, in whole
or in part, a Preemptive Offer shall be irrevocable and evidenced by a
writing (the "Notice of Acceptance") signed by such Preemptive Offeree
and delivered to the Company prior to the end of the 30-day period of
such Preemptive Offer, setting forth the number of Offered Securities
to be purchased by such Preemptive Offeree (up to the number of
Offered Securities set forth in the Preemptive Offer received by such
Preemptive Offeree pursuant to Section 2(e)), on the above-described
terms and conditions.
(v) The Company shall have sixty (60) days from the expiration of
the foregoing 30-day period to sell all or any part of such Offered
Securities as to which Notices of Acceptance have not been given by
the Preemptive Offerees to the Bear Group, but only upon terms and
conditions (including, without limitation, purchase price,
representations, covenants, indemnification and interest rates),
which, when taken as a whole, are no more favorable to the Bear Group
and no less favorable to the Company than those set forth in the
Preemptive Offer. Upon the closing of such sale to the Bear Group
(which shall include full payment to the Company), each Preemptive
Offeree shall purchase from the Company, and the Company shall sell to
each Preemptive Offeree, the Offered Securities in respect of which a
timely Notice of Acceptance was delivered to the Company by such
Preemptive Offeree, on the terms specified in the Preemptive Offer.
14
(vi) Any Offered Securities not purchased by the Preemptive
Offerees or the Bear Group in accordance with Section 2(e)(v) may not
be sold or otherwise disposed of to the Bear Group until they are
again offered to the Preemptive Offerees under the procedures
specified in this Section 2(e).
Section 3. Transfers; Additional Parties.
3.1 Restrictions; Permitted Dispositions.
Without the written consent of the Board, except as otherwise provided
in this Agreement, no Non-Bear Group Holder shall make any Disposition, directly
or indirectly, through an Affiliate or otherwise. The preceding sentence shall
apply with respect to all shares of Common Stock and Preferred Stock held at any
time by a Non-Bear Group Holder (including, without limitation, all shares of
Common Stock acquired upon the exercise of any Option, any shares of Restricted
Stock and any shares of Common Stock and Preferred Stock distributed pursuant to
the 2004 Deferred Compensation Plan or any similar plan), regardless of the
manner in which such Non-Bear Group Holder initially acquired Common Stock or
Preferred Stock, as applicable. Notwithstanding the foregoing, the following
Dispositions shall be permitted (each, a "Permitted Disposition"):
(a) By any Non-Bear Group Holder (i) in the case of shares of Common
Stock or Preferred Stock, with respect to a Public Sale in connection with
the exercise of registration rights pursuant to Section 4, (ii) subject to
Section 4(f), a Public Sale of Common Stock, (iii) any sale of Common Stock
or Preferred Stock to any other Holder with the consent of the Board or
(iv) pursuant to Section 5 of this Agreement;
(b) By Vestar to any of its Affiliates or to its limited partners in a
pro rata distribution, in each case, in accordance with the other
provisions of this Agreement;
(c) By any individual Non-Bear Group Holder during such Non-Bear Group
Holder's lifetime to: (i) a guardian of the estate of such Non-Bear Group
Holder; (ii) an inter-vivos trust primarily for the benefit of such
Non-Bear Group Holder; or (iii) an inter-vivos trust whose primary
beneficiary is one or more of such Non-Bear Group Holder's lineal
descendants (including lineal descendants by adoption);
(d) With the consent of the Company (which consent shall not be
unreasonably withheld), by any Non-Bear Group Holder to a qualified
retirement plan sponsored by the Non-Bear Group Holder;
(e) By any qualified retirement plan of the Company to participants,
alternate payees and beneficiaries to the extent required by law and the
provisions of such plan;
(f) By any Non-Bear Group Holder which is a trust, to any successor
trust or successor trustee;
(g) By any Non-Bear Group Holder pursuant to Section 2; and
15
(h) With the consent of the Company (which consent shall not be
unreasonably withheld), by any Non-Bear Group Holder to other entities for
tax planning purposes.
No Holder shall permit a transaction involving a change of ownership interest or
voting power of such Holder which avoids the restrictions on Dispositions
provided in this Section 3.1 to be consummated; provided, however, that the
transfer of interests in a Holder that holds substantial assets in addition to
equity interests in the Company and is not a Management Holder will be deemed
not to be a Disposition which avoids the restrictions on Dispositions provided
in this Section 3.1.
3.2 Additional Parties.
(a) As a condition to the Company's obligation to effect a Disposition
of Common Stock or Preferred Stock permitted by this Agreement on the books
and records of the Company, any transferee (other than a Disposition to the
Company or in accordance with Section 3.1(a) above) shall be required to
become a party to this Agreement by executing (together with such Person's
spouse, if applicable) an Adoption Agreement in substantially the form of
Exhibit A or in such other form that is reasonably satisfactory to the
Company and upon execution of such Adoption Agreement such transferee shall
have all the rights and obligations of the Disposing Holder.
(b) In the event that any Person acquires shares of Common Stock or
Preferred Stock from (i) a Holder or any Affiliate or member of such
Holder's Group or (ii) any direct or indirect transferee of a Holder, such
Person shall be subject to any and all obligations and restrictions of the
Holder (for whom the shares of Common Stock or Preferred Stock were
purchased) hereunder, as if such Person was such Holder named herein.
Additionally, whenever a Management Holder makes a Disposition of shares of
Common Stock or Preferred Stock, such shares of Common Stock and/or
Preferred Stock shall contain a legend so as to inform any transferee that
such shares of Common Stock and/or Preferred Stock were held originally by
a Management Holder and are subject to repurchase based on the employment
of, or events relating to, such Management Holder. Such legend shall not be
placed on any shares of Common Stock or Preferred Stock acquired from a
Non-Bear Group Holder by the Company, the Bear Group or any of their
Affiliates. Notwithstanding the foregoing, the requirements of this Section
3.2(b) shall not apply in connection with any Disposition in accordance
with Section 3.1(a) above.
(c) The Company shall not, without the prior written consent of the
Bear Group, issue or sell any Capital Stock to any Person (other than
pursuant to a Public Sale) unless such Person is already a party to this
Agreement or first executes and delivers to the Company a counterpart to
this Agreement (and such Person's spouse, if applicable, executes a Spousal
Acknowledgement and Consent in substantially the form of Exhibit B or in
such other form as is reasonably satisfactory to the Company), pursuant to
which such Person will thereupon become a party to, and be bound by and
obligated to comply with the terms and provisions of, this Agreement.
(d) Any shares of Common Stock or Preferred Stock acquired by an
individual retirement account ("IRA") on behalf of an employee of the
Company or any
16
of its Subsidiaries (the "Subject Employee") shall be deemed to be a
Non-Bear Group Holder. Additionally, such Subject Employee shall be deemed
to be a Non-Bear Group Holder and his or her IRA shall be deemed to have
acquired all shares of Common Stock and/or Preferred Stock it holds from
such Subject Employee pursuant to a Disposition that is subject to Section
3.2(b) above.
3.3 Securities Restrictions; Legends.
(a) No shares of Common Stock or Preferred Stock shall be transferable
except upon the conditions specified in this Section 3.3, which conditions
are intended to insure compliance with the provisions of the Securities
Act.
(b) Each certificate representing shares of Common Stock and Preferred
Stock shall (unless otherwise permitted by the provisions of paragraph (d)
below) be stamped or otherwise imprinted with a legend in substantially the
following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES OR BLUE SKY LAWS. THESE
SECURITIES MAY NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, DISPOSED
OF OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT OR LAWS. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO A STOCKHOLDERS' AGREEMENT DATED AS OF
APRIL __, 2004 AMONG THE ISSUER OF SUCH SECURITIES (THE "COMPANY"),
AND THE OTHER PARTIES NAMED THEREIN. THE TERMS OF SUCH STOCKHOLDERS'
AGREEMENT INCLUDE, AMONG OTHER THINGS, RESTRICTIONS ON TRANSFER. A
COPY OF SUCH AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY
TO THE HOLDER HEREOF UPON WRITTEN REQUEST."
(c) The Holder of any shares of Common Stock and/or Preferred Stock by
acceptance thereof agrees, prior to any Disposition of any such shares, to
give written notice to the Company of such Holder's intention to effect
such Disposition and to comply in all other respects with the provisions of
this Section. Each such notice shall describe the manner and circumstances
of the proposed Disposition. Upon request by the Company, the Holder
delivering such notice shall deliver a written opinion, addressed to the
Company, of counsel for the Holder of such shares, stating that in the
opinion of such counsel (which opinion and counsel shall be reasonably
satisfactory to the Company) such proposed Disposition does not involve a
transaction requiring registration or qualification of such shares under
the Securities Act. Such Holder of such shares shall be
17
entitled to Dispose of such shares in accordance with the terms of the
notice delivered to the Company, if the Company does not reasonably object
to such Disposition and request such opinion within fifteen (15) days after
delivery of such notice, or, if it requests such opinion, does not
reasonably object to such Disposition within fifteen (15) days after
delivery of such opinion. Each certificate or other instrument evidencing
the securities issued upon the Disposition of any shares of Common Stock or
Preferred Stock shall bear the legend set forth in paragraph (b) above
unless (i) in such opinion of counsel to the Holder of such shares (each of
which opinion and counsel shall be reasonably acceptable to the Company)
registration of any future Disposition is not required by the applicable
provisions of the Securities Act or (ii) the Company shall have waived the
requirement of such legends.
(d) Notwithstanding the foregoing provisions of this Section 3, the
restrictions imposed by this Section upon the transferability of any shares
of Common Stock or Preferred Stock shall cease and terminate (i) when any
such shares are sold or otherwise disposed of (A) pursuant to an effective
registration statement under the Securities Act or (B) in a transaction
contemplated by paragraph (c) above which does not require that the shares
so transferred bear the legend set forth in paragraph (b) hereof, (ii) when
the Holder of such shares has met the requirements for Disposition of such
shares under Rule 144(k) under the Securities Act (subject to the delivery
of opinions as set forth above) or (iii) upon the expiration of the period
of time in which the Bear Group has agreed not to sell publicly, make any
short sale of, grant any option for the purchase of, or otherwise dispose
publicly of, any Capital Stock of the Company following the consummation of
a Qualified Public Offering; provided, however, that the period of time in
the preceding clause (iii) shall not exceed 180 days unless a longer period
of time has become market practice at the time of the registration of
securities related thereto. Whenever the restrictions imposed by this
Section shall terminate, the Holder of any shares as to which such
restrictions have terminated shall be entitled to receive from the Company,
without expense, a new certificate not bearing the restrictive legend set
forth in paragraph (b) above and not containing any other reference to the
restrictions imposed by this Section.
Section 4. Registration Rights.
(a) Demand Registration.
(i) Right to Demand; Demand Notices. Subject to the provisions of
this Section 4(a) at any time and from time to time after the date
hereof, the Bear Group may make up to six written requests to the
Company for registration under and in accordance with the provisions
of the Securities Act of all or part of their shares of Common Stock
or Preferred Stock. All requests made pursuant to this Section will
specify the aggregate amount of Registrable Securities to be
registered and will also specify the intended methods of disposition
thereof (a "Demand Notice"). Subject to Section 4(a)(ii), promptly
upon receipt of any such Demand Notice, the Company will notify each
Non-Bear Group Holder of its intent to register the Registrable
Securities and the Company shall use its commercially reasonable best
efforts to effect within 180 days such registration under the
Securities Act of the Registrable Securities which the Company has
been so requested to register. Subject to the provisions of this
18
Section 4(a), each Non-Bear Group Holder shall be permitted to
participate in any Demand Registration initiated by the Bear Group by
delivery of written notice to the Company within 30 days of receiving
notice from the Company of the Demand Notice specifying the aggregate
number of Registrable Securities such Non-Bear Group Holder desires to
have registered. Each Non-Bear Group Holder seeking registration of
any Registrable Securities shall be treated on a pari passu basis with
the Bear Group.
(ii) Company's Right to Defer Registration. If the Company is
requested to effect a Demand Registration and the Company furnishes to
the Bear Group a copy of a resolution of the Board certified by the
secretary of the Company stating that in the good faith judgment of
the Board it would be materially adverse to the Company for such
Registration Statement to be filed on or before the date such filing
would otherwise be required hereunder, the Company shall have the
right to defer such filing for a period of not more than ninety (90)
days after receipt of the request for such registration from the Bear
Group. If the Company shall so postpone the filing of a Registration
Statement and if the Bear Group within thirty (30) days after receipt
of the notice of postponement advises the Company in writing that it
has determined to withdraw such request for registration, then such
Demand Registration shall be deemed to be withdrawn, with respect to
any Registrable Securities of the Bear Group and any participating
Non-Bear Group Holders.
(iii) Registration Statement Form. Registrations under this
Section 4 shall be on such appropriate registration form of the
Commission (i) as shall be selected by the Company and as shall be
reasonably acceptable to the Bear Group and (ii) as shall permit the
disposition of such Registrable Securities in accordance with the
intended method or methods of disposition specified in the Bear
Group's Demand Notice. If, in connection with any registration under
this Section 4 which is proposed by the Company to be on Form S-3 or
any successor form, the managing underwriter, if any, shall advise the
Company in writing that in its opinion the use of another permitted
form is of material importance to the success of the offering, then
such registration shall be on such other permitted form.
(iv) Effective Registration Statement. The Company shall be
deemed to have effected a Demand Registration if (a) the Registration
Statement relating to such Demand Registration is declared effective
by the Commission; provided, however, that no Demand Registration
shall be deemed to have been effected if (i) such registration, after
it has become effective, is interfered with by any stop order,
injunction or other order or requirement of the Commission or other
governmental agency or court by reason of an act or omission by the
Company and such interference is not cured within twenty (20) business
days, or (ii) the conditions to closing specified in the purchase
agreement or underwriting agreement entered into in connection with
such registration are not satisfied because of an act or omission by
the Company (other than a failure of the Company or any of its
representatives to execute or deliver any closing certificate
19
by reason of facts or circumstances not within the control of the
Company or such representatives), or (b) at any time after the Bear
Group delivers a Demand Notice to the Company and prior to the
effectiveness of the Registration Statement, the preparation of such
Registration Statement is discontinued or such Registration Statement
is withdrawn or abandoned at the request of the Bear Group (other than
as contemplated by Section 4(a)(ii)) unless the Bear Group has elected
to pay and has paid to the Company in full the Registration Expenses
in connection with such Registration Statement.
(v) Underwriter's Cutback. If the managing underwriter informs
the Company in writing that the inclusion of all such Registrable
Securities proposed to be included in such Demand Registration would
adversely affect the successful marketing (including pricing, timing
and distribution) of the Registrable Securities to be offered thereby,
then the number of Registrable Securities proposed to be included in
such registration shall be allocated among the Company, the Bear Group
and all selling Non-Bear Group Holders of the Company proportionately,
such that the number of Registrable Securities that each such Person
shall be entitled to sell in the Public Offering shall be included in
the following order:
(A) first, the Registrable Securities held by the Persons
requesting their Registrable Securities be included in such
registration pursuant to the terms of this Section 4(a), pro rata
based upon the number of Registrable Securities owned by each such
Person at the time of such registration; and
(B) second, the Registrable Securities to be issued and sold
by the Company in such registration.
Notwithstanding anything to the contrary set forth in this Section 4(a)(v), if
the managing underwriter for an Underwritten Offering informs the Company in
writing that the inclusion of all Registrable Securities proposed to be included
in any registration by any particular Management Holder would adversely affect
the successful marketing (including pricing, timing and distribution) of the
Registrable Securities to be offered thereby, then the number of Registrable
Securities proposed to be included in such registration by such Management
Holder shall be reduced to the lower of the number of Registrable Securities
that the managing underwriter advises that such Management Holder may sell in
the Underwritten Offering and the number of Registrable Securities calculated
pursuant to the foregoing.
(vi) Selection of Underwriters. Notwithstanding any other
provision herein, the Bear Group shall have sole discretion to select
any and all underwriters that may participate in any Underwritten
Offering pursuant to this Section 4(a)(vi).
(b) Piggyback Registration.
(i) If the Company at any time proposes for any reason to
register shares of Common Stock or Preferred Stock under the
Securities Act (other than on Form S-4 or Form S-8 promulgated under
the Securities Act or any
20
successor forms thereto) on behalf of itself or any other Person
(other than on behalf of a Holder pursuant to Section 4(a) above), it
shall give written notice to each Holder of its intention to so
register such Registrable Securities (an "Initial Notice") as soon as
practicable and in any event at least 30 days before the filing of
such Registration Statement. Upon the written request of any Holder (a
"Piggyback Notice"), delivered within 30 days after receipt of any
such notice (or 15 days if the Company gives telephonic notice with
written confirmation to follow promptly thereafter, stating that (i)
such registration will be on Form S-3 and (ii) such shorter period of
time is required), to include in such registration Registrable
Securities designated by such Holder (which request shall specify the
number of Registrable Securities proposed to be included in such
registration), the Company shall use its commercially reasonable best
efforts to cause all such Registrable Securities to be included in
such registration on the same terms and conditions as the securities
otherwise being sold in such registration; subject to the limitations
set forth in Section 4(b)(ii).
(ii) Underwriter's Cutback. If the managing underwriter informs
the Company in writing that the inclusion of all such Registrable
Securities proposed to be included in such Piggyback Registration
would adversely affect the successful marketing (including pricing,
timing and distribution) of the Registrable Securities to be offered
thereby, then the number of Registrable Securities proposed to be
included in such registration shall be allocated among the Company and
all selling Holders of the Company proportionately, such that the
number of Registrable Securities that each such Person shall be
entitled to sell in the Public Offering shall be included in the
following order:
(A) first, the Registrable Securities to be issued and sold
by the Company for its own account in such registration; and
(B) second, the Registrable Securities requested to be
included in such registration pursuant to the terms of this Section
4(b), pro rata based upon the number of Registrable Securities owned
by each holder of such Registrable Securities at the time of such
registration; and
(C) third, all other Registrable Securities not covered by
the preceding clause (B) requested to be included in such
registration, pro rata based upon the number of Registrable Securities
owned by the holders thereof at the time of registration.
Notwithstanding anything to the contrary set forth in this Section 4(b)(ii), if
the managing underwriter for an Underwritten Offering informs the Company in
writing that the inclusion of all Registrable Securities proposed to be included
in any registration by any particular Management Holder would adversely affect
the successful marketing (including pricing, timing and distribution) of the
Common Stock or Preferred Stock to be offered thereby, then the number of
Registrable Securities proposed to be included in such registration by such
Management Holder shall be reduced to the lower of the number of Registrable
Securities that the managing
21
underwriter advises that such Management Holder may sell in the Underwritten
Offering and the number of Registrable Securities calculated pursuant to the
foregoing.
(iii) Company Control. The Company may decline to file a
Registration Statement after an Initial Notice has been given or after
receipt by the Company of a Piggyback Notice, and the Company may
withdraw a Registration Statement after filing and after such Initial
Notice or Piggyback Notice, but prior to the effectiveness of the
Registration Statement, provided that the Company shall promptly
notify the Holders in writing of any such action.
(iv) Selection of Underwriters. Notwithstanding any other
provision herein, the Company shall have sole discretion to select any
and all underwriters that may participate in any Underwritten Offering
pursuant to this Section 4(b)(iv).
(c) Registrations on Form S-3. Notwithstanding anything contained in
this Agreement to the contrary, at such time as the Company shall have
qualified for the use of Form S-3 promulgated under the Securities Act or
any successor form thereto, the Bear Group and the Holders shall have the
right to request in writing an unlimited number of registrations on Form
S-3, or such successor form, of Registrable Securities, which request or
requests shall (i) specify the number of Registrable Securities intended to
be sold or disposed of and (ii) state the intended method of disposition of
such Registrable Securities, and upon receipt of such request, the Company
shall use its best efforts promptly to effect the registration under the
Securities Act of the Registrable Securities so requested to be registered.
A requested registration on Form S-3, or any such successor form, in
compliance with this Section 4 shall not count as a registration statement
initiated pursuant to Section 4(a) but shall otherwise be treated as a
registration initiated pursuant to, and shall, except as otherwise
expressly provided herein, be subject to the other provisions of, this
Section 4.
(d) Preparation and Filing. If and whenever the Company is under an
obligation pursuant to the provisions of this Agreement to effect the
registration of any Registrable Securities, the Company shall, as
expeditiously as practicable:
(i) use its commercially reasonable best efforts to cause a
Registration Statement that registers such Registrable Securities to
become and remain effective for a period of 90 days or until all of
such Registrable Securities have been disposed of (if earlier);
(ii) furnish, at least five business days before filing a
Registration Statement that registers such Registrable Securities, a
Prospectus relating thereto or any amendments or supplements relating
to such Registration Statement or Prospectus, to one counsel selected
by the Holders of a majority of such Registrable Securities (the
"Selling Holders' Counsel"), copies of all such documents proposed to
be filed (it being understood that such five-business-day period need
not apply to successive drafts of the same document proposed to be
filed so long as such successive drafts are supplied to the Selling
Holders'
22
Counsel in advance of the proposed filing by a period of time that is
customary and reasonable under the circumstances);
(iii) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the Prospectus used in
connection therewith as may be necessary to keep such Registration
Statement effective for at least a period of 90 days or until all of
such Registrable Securities have been disposed of (if earlier) and to
comply with the provisions of the Securities Act with respect to the
sale or other disposition of such Registrable Securities;
(iv) notify in writing the Selling Holders' Counsel promptly of
the receipt by the Company of any notification with respect to (a) any
comments by the Commission with respect to such Registration Statement
or Prospectus or any amendment or supplement thereto or any request by
the Commission for the amending or supplementing thereof or for
additional information with respect thereto, (b) the issuance by the
Commission of any stop order suspending the effectiveness of such
Registration Statement or Prospectus or any amendment or supplement
thereto or the initiation or threatening of any proceeding for that
purpose and (c) the suspension of the qualification of such
Registrable Securities for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purposes;
(v) use its commercially reasonable best efforts to (i) register
or qualify such Registrable Securities under such other securities or
blue sky laws of such jurisdictions as the holders of Registrable
Securities reasonably request, (ii) keep such registration or
qualifications in effect for so long as such registration statement
remains in effect or until all Registrable Securities covered thereby
have been Disposed of pursuant thereto, and (iii) do any and all other
acts and things which may be reasonably necessary or advisable to
enable such Holders of Registrable Securities to consummate their
disposition in such jurisdictions; provided, however, that the Company
will not be required to qualify generally to do business, subject
itself to general taxation or consent to general service of process in
any jurisdiction where it would not otherwise be required to do so but
for this paragraph (v);
(vi) furnish to each Holder of Registrable Securities such number
of copies of a summary Prospectus or other Prospectus, including a
preliminary Prospectus, in conformity with the requirements of the
Securities Act, and such other documents as such Holders may
reasonably request in order to facilitate the public sale or other
disposition of such Registrable Securities;
(vii) without limiting subsection (v) above, use its commercially
reasonable best efforts to cause such Registrable Securities to be
registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the business and
operations of the Company to enable the Holders of such Registrable
Securities to consummate the disposition of such Registrable
Securities;
23
(viii) notify the Holders of such Registrable Securities promptly
and confirm such advice in writing (i) when a Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and,
with respect to a registration statement or any post-effective
amendment, when the same has become effective, (ii) of any request by
the Commission for amendments or supplements to a Registration
Statement or related Prospectus or for additional information, (iii)
of the issuance by the Commission of any stop order suspending the
effectiveness of a registration statement or the initiation of any
proceedings for that purpose, (iv) of the receipt by the Company of
any notification with respect to the suspension of the qualification
of any of the registered securities for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purpose, (v)
of the occurrence of any event or information becoming known which
requires the making of any changes in a Registration Statement or
related Prospectus so that such documents will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading and (vi) of the Company's reasonable
determination that a post-effective amendment to a registration
statement would be appropriate;
(ix) give the Selling Holders' Counsel the opportunity (but not
the obligation) to participate in the preparation of each Registration
Statement under the Securities Act pursuant to this Agreement, each
Prospectus included therein or filed with the Commission and, to the
extent practicable, each amendment thereof or supplement thereto, and
make available for inspection by the Holders of such Registrable
Securities, the Selling Holders' Counsel or any underwriter
participating in any disposition pursuant to such Registration
Statement and any attorney, accountant or other agent retained by any
such holder or underwriter (collectively, the "Inspectors"), all
pertinent financial and other records, pertinent corporate documents
and properties of the Company (collectively, the "Records"), as shall
be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and
employees to supply all information (together with the Records, the
"Information") reasonably requested by any such Inspector in
connection with such Registration Statement. Any of the Information
which the Company determines in good faith to be confidential, and of
which determination the Inspectors are so notified, shall not be
disclosed by the Inspectors unless (a) the disclosure of such
Information is necessary to avoid or correct a misstatement or
omission in the Registration Statement, (b) the release of such
Information is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction or (c) such Information has been made
generally available to the public. The Persons holding such
Registrable Securities agree that they will, upon learning that
disclosure of such Information is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company, at the
Company's expense, to undertake appropriate action to prevent
disclosure of the Information deemed confidential;
24
(x) in the case of an underwritten offering, use its reasonable
best efforts to obtain from its independent certified public
accountants "comfort" letters in customary form and at customary times
and covering matters of the type customarily covered by comfort
letters;
(xi) in the case of an underwritten offering, use its reasonable
best efforts to obtain from its counsel an opinion or opinions in
customary form;
(xii) provide a transfer agent and registrar (which may be the
same entity and which may be the Company) for such Registrable
Securities;
(xiii) issue to any underwriter to which any seller of
Registrable Securities may sell shares in such offering certificates
evidencing such Registrable Securities;
(xiv) upon the request of Holders of a majority of such
Registrable Securities, list such Registrable Securities on any
national securities exchange on which any shares of the Common Stock
or Preferred Stock are listed or, if the Common Stock or Preferred
Stock is not listed on a national securities exchange, use its best
efforts to qualify such Registrable Securities for inclusion on the
automated quotation system of the NASD or such national securities
exchange as the requesting Holders shall designate;
(xv) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission and make available to its
securityholders, as soon as reasonably practicable, earnings
statements (which need not be audited) covering a period of 12 months
beginning within three months after the effective date of the
Registration Statement, which earnings statements shall satisfy the
provisions of Section 11(a) of the Securities Act; and
(xvi) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter" that is required to be retained in accordance with the
rules and regulations of the NASD);
(xvii) subject to all the other provisions of this Agreement, use
its commercially reasonable best efforts to take all other steps
necessary to effect the registration of such Registrable Securities
contemplated hereby.
(e) Registration Expenses. All expenses incident to the Company's
performance of or compliance with this Section 4, including without
limitation (i) all registration and filing fees, and any other fees and
expenses associated with filings required to be made with any stock
exchange, the Commission and the NASD (including, if applicable, the fees
and expenses of any "qualified independent underwriter" and its counsel as
may be required by the rules and regulations of the NASD), (ii) all fees
and expenses of compliance with state securities or blue sky laws
(including fees and disbursements of counsel for the underwriters or
selling Holders in connection with blue sky qualifications of the
Registrable Securities and determination of their eligibility for
25
investment under the laws of such jurisdictions as the managing
underwriters or the selling Holders may designate), (iii) all printing and
related messenger and delivery expenses (including expenses of printing
certificates for the Registrable Securities in a form eligible for deposit
with The Depository Trust Company and of printing prospectuses, all fees
and disbursements of counsel for the Company and of all independent
certified public accountants of the issuer (including the expenses of any
special audit and "cold comfort" letters required by or incident to such
performance), (iv) Securities Act liability insurance if the Company so
desires or the underwriters so require, (v) all fees and expenses incurred
in connection with the listing of the Registrable Securities on any
securities exchange and all rating agency fees, (vi) all reasonable fees
and disbursements of Selling Holders' Counsel representing such Persons in
connection with such registration, (vii) all fees and disbursements of
underwriters customarily paid by the issuer or sellers of securities,
excluding underwriting discounts and commissions and transfer taxes, if
any, and fees and disbursements of counsel to underwriters (other than such
fees and disbursements incurred in connection with any registration or
qualification of Registrable Securities under the securities or blue sky
laws of any state), and (viii) fees and expenses of other Persons retained
by the Company in connection with the registrations or qualifications of
Registrable Securities (all such expenses being herein called "Registration
Expenses"), will be borne by the Company, regardless of whether the
Registration Statement becomes effective. In addition, the Company will, in
any event, pay its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any audit and the fees and expenses of
any Person, including special experts, retained by the Company.
(f) Lock-Up. If the Company at any time shall register shares of
Common Stock or Preferred Stock under the Securities Act for sale to the
public, no Non-Bear Group Holder shall sell publicly, make any short sale
of, grant any option for the purchase of, or otherwise dispose publicly of,
any capital stock of the Company without the prior written consent of the
Company, for the period of time in which the Bear Group has similarly
agreed not to sell publicly, make any short sale of, grant any option for
the purchase of, or otherwise dispose publicly of, any capital stock of the
Company; provided, however, that such period of time shall not exceed 180
days unless a longer period of time has become market practice at the time
of such registration.
(g) Participation in Underwritten Offerings. No Person may participate
in any Underwritten Offering hereunder unless such Person (i) agrees to
sell such Person's securities on the basis provided in any underwriting
arrangements approved by the Persons entitled to approve such arrangements
and (ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements, lock-ups and other documents required
under applicable federal and state securities laws and regulations for such
underwriting arrangements. Nothing in this Section 4(g) shall be construed
to create any additional rights regarding the registration of Registrable
Securities in any Person otherwise than as set forth herein.
26
(h) Indemnification.
(i) Indemnification by the Company. The Company agrees to
indemnify and hold harmless, to the full extent permitted by law, each
selling Holder and its Affiliates and their respective members,
partners, managers, agents, officers, directors and employees and each
Person who controls (within the meaning of the Securities Act) such
selling Holder against any losses, claims, damages, liabilities and
expenses caused by any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, Prospectus or
preliminary Prospectus or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as the same
may be caused by or contained in any information furnished in writing
to the Company by such selling Holder for use therein; provided,
however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or expense arises
out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any such preliminary
Prospectus if (a) such selling Holder failed to deliver or cause to be
delivered a copy of the Prospectus to the Person asserting such loss,
claim, damage, liability or expense after the Company has furnished
such selling Holder with a sufficient number of copies of the same and
(b) the Prospectus completely corrected in a timely manner such untrue
statement or omission; and provided, further, that the Company shall
not be liable in any such case to the extent that any such loss,
claim, damage, liability or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission in the Prospectus, if such untrue statement or alleged untrue
statement, omission or alleged omission is completely corrected in an
amendment or supplement to the Prospectus and the selling Holder
thereafter fails to deliver such Prospectus as so amended or
supplemented prior to or concurrently with the sale of the securities
to the Person asserting such loss, claim, damage, liability or expense
after the Company had furnished such selling Holder with a sufficient
number of copies of the same. The Company will also indemnify
underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in the distribution, their
officers and directors and each Person who controls such Persons
(within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the selling
Holder, if requested.
(ii) Indemnification by Selling Holders. Each selling Holder
agrees to, severally but not jointly, indemnify and hold harmless, to
the full extent permitted by law, the Company, each other selling
Holder and their Affiliates and their respective members, partners,
managers, agents, directors and officers and each Person who controls
the Company (within the meaning of the Securities Act) against any
losses, claims, damages or liabilities and expenses caused by any
untrue or alleged untrue statement of a material fact contained in any
Registration Statement or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, to the extent, but only to
the extent, that such untrue statement or
27
omission is contained in any information or affidavit so furnished by
such selling Holder to the Company in writing expressly for inclusion
in such Registration Statement, Prospectus or preliminary Prospectus
and has not been corrected in a subsequent writing prior to or
concurrently with the sale of the securities to the Person asserting
such loss, claim, damage, liability or expense. In no event shall the
liability of any selling Holder hereunder be greater in amount than
the dollar amount of the proceeds received by such selling Holder upon
the sale of the securities giving rise to such indemnification
obligation. The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in the distribution, to the same
extent as provided above with respect to information so furnished in
writing by such Persons specifically for inclusion in any Prospectus
or Registration Statement.
(iii) Conduct of Indemnification Proceedings. Any Person entitled
to indemnification hereunder will (a) give prompt (but in any event
within 30 days after such Person has actual knowledge of the facts
constituting the basis for indemnification) written notice to the
indemnifying party of any claim with respect to which it seeks
indemnification and (b) permit such indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to the
indemnified party; provided, however, that any delay or failure to so
notify the indemnifying party shall relieve the indemnifying party of
its obligations hereunder only to the extent, if at all, that it is
prejudiced by reason of such delay or failure; provided further,
however, that any Person entitled to indemnification hereunder shall
have the right to select and employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of
such counsel shall be at the expense of such Person unless (x) the
indemnifying party has agreed in writing to pay such fees or expenses,
or (y) the indemnifying party shall have failed to assume the defense
of such claim within a reasonable time after receipt of notice of such
claim from the Person entitled to indemnification hereunder and employ
counsel reasonably satisfactory to such Person or (z) in the
reasonable judgment of any such Person, based upon advice of counsel,
a conflict of interest may exist between such Person and the
indemnifying party with respect to such claims (in which case, if the
Person notifies the indemnifying party in writing that such Person
elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the
defense of such claim on behalf of such Person). If such defense is
not assumed by the indemnifying party, the indemnifying party will not
be subject to any liability for any settlement made without its
consent (but such consent will not be unreasonably withheld), provided
that an indemnified party shall not be required to consent to any
settlement involving the imposition of equitable remedies or involving
the imposition of any material obligations on such indemnified party
other than financial obligations for which such indemnified party will
be indemnified hereunder. No indemnifying party will be required to
consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or
28
litigation. Whenever the indemnified party or the indemnifying party
receives a firm offer to settle a claim for which indemnification is
sought hereunder, it shall promptly notify the other of such offer. If
the indemnifying party refuses to accept such offer within 20 business
days after receipt of such offer (or of notice thereof), such claim
shall continue to be contested and, if such claim is within the scope
of the indemnifying party's indemnity contained herein, the
indemnified party shall be indemnified pursuant to the terms hereof.
If the indemnifying party notifies the indemnified party in writing
that the indemnifying party desires to accept such offer, but the
indemnified party refuses to accept such offer within 20 business days
after receipt of such notice, the indemnified party may continue to
contest such claim and, in such event, the total maximum liability of
the indemnifying party to indemnify or otherwise reimburse the
indemnified party hereunder with respect to such claim shall be
limited to and shall not exceed the amount of such offer, plus
reasonable out-of-pocket costs and expenses (including reasonable
attorneys' fees and disbursements) to the date of notice that the
indemnifying party desires to accept such offer, provided that this
sentence shall not apply to any settlement of any claim involving the
imposition of equitable remedies or to any settlement imposing any
material obligations on such indemnified party other than financial
obligations for which such indemnified party will be indemnified
hereunder. An indemnifying party who is not entitled to, or elects not
to, assume the defense of a claim will not be obligated to pay the
fees and expenses of more than one counsel for all parties indemnified
by such indemnifying party with respect to such claim in any one
jurisdiction, unless in the written opinion of counsel to the
indemnified party, reasonably satisfactory to the indemnifying party,
use of one counsel would be expected to give rise to a conflict of
interest between such indemnified party and any other of such
indemnified parties with respect to such claim, in which the
indemnifying party shall be obligated to pay the fees and expenses of
one additional counsel.
(iv) Other Indemnification. Indemnification similar to that
specified in this Section 4(h) (with appropriate modifications) shall
be given by the Company and each selling Holder with respect to any
required registration or other qualification of securities under
Federal or state law or regulation of governmental authority other
than the Securities Act.
(v) Contribution. If for any reason the indemnification provided
for in the preceding clauses (i) and (ii) is unavailable to an
indemnified party or insufficient to hold it harmless as contemplated
by the preceding clauses (i) and (ii), then the indemnifying party
shall contribute to the amount paid or payable by the indemnified
party as a result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect not only the relative benefits
received by the indemnified party and the indemnifying party, but also
the relative fault of the indemnified party and the indemnifying
party, as well as any other relevant equitable considerations,
provided that no selling Holder shall be required to contribute in an
amount greater than the dollar amount of the proceeds received by such
selling Holder with respect to the sale of any securities. No Person
guilty of fraudulent misrepresentation (within the meaning of Section
29
11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
(vi) Rule 144. The Company hereby covenants that after it has
filed (and such registration statement has become effective) a
registration statement pursuant to the requirements of Section 12 of
the Exchange Act or a registration statement pursuant to the
requirements of the Securities Act in respect of Common Stock, the
Company will file in a timely manner all reports required to be filed
by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the Commission thereunder (or, if the Company
is not required to file such reports, it will, upon the request of any
Holder, make publicly available other information so long as necessary
to permit sales by such Holder under Rule 144 under the Securities
Act) and will take such further action as any Holder may reasonably
request to the extent required from time to time to enable such Holder
to sell shares of Common Stock under Rule 144 under the Securities
Act.
Section 5. Repurchase Rights.
(a) Company Repurchase Right. The Company (or a designee of the
Company) shall have the right to repurchase shares of Common Stock and
Preferred Stock held by any Management Holder upon the termination of
employment of such Management Holder as set forth herein. In the case of
(i) a termination of employment by any Management Holder without Good
Reason during the period commencing on the date hereof and ending on the
fifth anniversary of the date hereof or (ii) a termination of employment of
any Management Holder by the Company for Cause at any time, the Company (or
its designee) shall be permitted, in its sole discretion, to purchase all,
but not less than all, of the Management Holder's shares of Common Stock
and Preferred Stock at a per share purchase price equal to the lower of the
Original Cost and the Fair Market Value. In the case of a termination of
employment of a Management Holder other than as set forth on the preceding
sentence, the Company (or its designee) shall be permitted, in its sole
discretion, to purchase all, but not less than all, of the Management
Holder's shares of Common Stock and Preferred Stock at a per share purchase
price equal to the greater of the Original Cost and the Fair Market Value.
Notwithstanding the foregoing, in the event a Realization Event or a
dissolution, winding up or liquidation of the Company occurs within six (6)
months of the termination of employment of any Management Holder without
Cause or the resignation of any Management Holder for Good Reason, the
Company will pay or cause to be paid to such Management Holder the excess,
if any, of the net proceeds that would have been received by such
Management Holder in such sale transaction if the Company did not
repurchase such Management Holder's shares over the purchase price actually
paid to such Management Holder by the Company pursuant to the exercise of
the repurchase rights hereunder.
(b) Form of Payment.
(i) Subject to Section 5(e) below, in the case of a termination
of any Management Holder for Cause or a resignation by any Management
Holder without Good Reason, the Company (or its designee) shall be
permitted, in
30
its sole discretion, to pay for the shares of Common Stock and
Preferred Stock purchased pursuant to this Section 5 by issuance of a
note (a "Repurchase Note") in exchange for the delivery by the
Management Holder of the certificates representing such shares of
Common Stock and shares of Preferred Stock, duly endorsed for transfer
to the Company. The Company shall have the right to record such
transfer on its books and records without the consent of the
Management Holder. Any Repurchase Note issued hereunder shall accrue
interest at a fixed rate equal to the interest rate then in effect
with respect to Company's senior revolving credit facility and shall
be subordinated to all indebtedness of the Company and its
Subsidiaries. The term of the Repurchase Note shall be established by
the Board, but in no event shall the term exceed a period of five
years from the date of repurchase.
(ii) Subject to Section 5(c) and (d) below, in all cases other
than Section 5(b)(i), the Company (or its designee) shall pay for the
shares of Common Stock and shares of Preferred Stock purchased
pursuant to this Section 5 by delivery of a check or wire transfer of
funds, in exchange for the delivery by the Management Holder of the
certificates representing such shares of Common Stock and shares of
Preferred Stock, duly endorsed for transfer to the Company. The
Company shall have the right to record such transfer on its books and
records without the consent of the Management Holder.
(c) Time of Exercise.
(i) Subject to Section 5(e) below, in the case of a termination
of any Management Holder for Cause or a resignation by any Management
Holder without Good Reason, the Company shall be permitted to exercise
its right to purchase such shares of Common Stock and Preferred Stock
pursuant to this Section 5 at any time during the six month period
following the Repurchase Event. The determination date for purposes of
determining the Fair Market Value shall be the date of termination of
employment of such Management Holder.
(ii) Subject to Section 5(e) below, in all cases other than
Section 5(c)(i), the Company shall be permitted to exercise its right
to purchase such shares of Common Stock and Preferred Stock pursuant
to this Section 5 at any time during the 60 day period following the
Repurchase Event. The determination date for purposes of determining
the Fair Market Value shall be the date of termination of employment
of such Management Holder.
(iii) Notwithstanding the foregoing, the Company may defer paying
the purchase price for any shares repurchased hereunder in the event
that the Company is unable to pay such purchase price pursuant to this
Section 5 as a result of restrictions contained in the documents
governing the Company's indebtedness. The deferred purchase price for
any shares so repurchased will accrue interest at a rate equal to 10%
per annum on the amount to be paid in respect of such Management
Holder's shares of Preferred Stock and 7% per annum on the amount to
be paid in respect of such Management Holder's shares of Common Stock.
31
(d) Closing. The closing of the purchase or sale of the shares of
Common Stock and shares of Preferred Stock pursuant to this Section 5 shall
take place on a date designated by the Company.
(e) Restrictions on Repurchase. Notwithstanding anything to the
contrary contained in this Agreement, all purchases of shares of Common
Stock and shares of Preferred Stock by the Company (or its designee) shall
be subject to applicable restrictions contained in federal law and the DGCL
and in the Company's and its respective Subsidiaries' debt financing
agreements. Notwithstanding anything to the contrary contained in this
Agreement, if any such restrictions prohibit or otherwise delay the
purchase of the shares of Common Stock and shares of Preferred Stock
hereunder which the Company is otherwise entitled or required to make, then
the Company shall make such purchases within thirty (30) days of the date
that it is permitted to do so under such restrictions. Notwithstanding
anything to the contrary contained in this Agreement, the Company and its
Subsidiaries may not effectuate any transaction contemplated by this
Section 5 if such transaction would violate the terms of any restrictions
imposed by agreements evidencing the Company's indebtedness. If any
restrictions imposed by agreements evidencing the Company's indebtedness
prevent or restrict the purchase of the shares, the Company shall use its
commercially reasonable best efforts to obtain a waiver of such
restrictions (it being understood that the Company is not to required to
seek such waiver if it incurs, or is reasonably likely to incur, any
expenses other than de minimis expenses in attempting to obtain such
waiver). In the event that shares of Common Stock and shares of Preferred
Stock are purchased or sold pursuant to this Section 5, the Management
Holder, and such Management Holder's successors, assigns or
representatives, will take all steps necessary and desirable to obtain all
required third-party, governmental and regulatory consents and approvals
and take all other actions necessary and desirable to facilitate
consummation of such repurchase in a timely manner.
Section 6. Board of Directors.
(a) Number; Voting. The number of directors constituting the Board, as
fixed from time to time by the Board in accordance with this Agreement and
the Bylaws, shall initially be seven (7). Notwithstanding any provision in
the By-laws, the number of directors constituting the Board shall not be
changed without the consent of the Bear Group. At each annual meeting of
the Holders, and at each special meeting of the Holders called for the
purpose of electing directors of the Company, and at any time at which the
Holders shall have the right to, or shall, vote for, or consent in writing
to, the election of directors of the Company, then, and in each such event,
the Holders shall vote all of the shares of Common Stock owned by them or
their Affiliates for, or consent in writing with respect to such shares in
favor of, the election of the following Persons to the Board:
(i) one director who shall be the chief executive officer of the
Company (the "CEO Director"), who shall initially be Michael McLain;
and
(ii) all remaining directors that are to be elected by the
holders of Common Stock pursuant to the Bylaws and the Restated
Certificate shall be
32
designated and approved by the Bear Group (the "Bear Group Directors"
and individually, each a "Bear Group Director"), provided, however,
that (a) the seats to be occupied by the Bear Group Directors shall
initially be vacant until the Bear Group determines to fill such
vacancies pursuant to this Agreement and the Bylaws and (b) the Bear
Group shall consult with the chief executive officer of the Company
prior to designating any non-Affiliate of the Bear Group pursuant to
this Section 6(a)(ii).
Pursuant to this Agreement and the Bylaws, on the date hereof each undersigned
Holder hereby approves and votes all of his or its shares of Common Stock in
favor of the election to the Board of the initial designee named pursuant to
Section 6(a)(i). Each Holder acknowledges that up to four of the five
directorships to be filled by the holders of the Common Stock may remain vacant
following the date hereof until such time as such vacancies are filled pursuant
to the Bylaws and this Section 6.
(b) Removal and Vacancies. Subject to the next sentence, the Holders
shall vote their shares of Common Stock (i) to remove any director whose
removal is required by the party or parties with the power to designate
such director and (ii) to fill any vacancy created by the removal,
resignation or death of a director, in each case for the election of a new
director designated and approved, in accordance with the provisions of this
Section 6. Each of the Bear Group Directors may only be removed by the Bear
Group. The CEO Director may only be removed with the consent of the Bear
Group and a majority of the votes cast by the directors, excluding the CEO
Director. Vacancies on the Board shall be filled only by the party or
parties with the power to designate the applicable director pursuant to
this Section 6. In the event such party or parties fail to designate a
director to fill any such vacancy pursuant to this Section 6, such Board
seat shall remain vacant until the party or parties entitled to designate
such director fills such vacancy pursuant to this Section 6.
(c) Voting Rights. The special and exclusive voting rights contained
in Section 6(a) may be exercised either at a special meeting, at any annual
or special meeting of the Holders of the Company or by written consent in
lieu of a meeting. The directors to be elected pursuant to Section 6(a)
shall serve for terms extending from the date of their election and
qualification until their successors shall have been elected and qualified
in accordance with Section 6(a).
(d) Committees. From the date hereof until the earlier to occur of (i)
the termination of this Agreement and (ii) the termination of the
employment of Michael McLain, the Company shall appoint the chief executive
officer of the Company to serve on all Committees serving in the nature of
an executive committee or for the benefit of the whole Board. Each
committee established by the Board shall contain at least one Class A
Common Stock Director and one Bear Group Director, unless otherwise
approved by the Bear Group.
(e) Class A Common Stock Directors.
(i) Each of the Holders acknowledges and agrees that, pursuant to
the Restated Certificate and in addition to the directors elected by
the
33
holders of Common Stock and designated pursuant to Section 6(a), the
holders of the Class A Common Stock have the exclusive right to elect
two (2) directors to the Board (the "Class A Common Stock Directors").
Bear Stearns Merchant Banking Partners II, L.P., as the sole holder of
Class A Common Stock, hereby approves and votes all of its shares of
Class A Common Stock in favor of the election to the Board of John D.
Howard and Douglas R. Korn as the Class A Common Stock Directors.
(ii) The holders of the Class A Common Stock shall have the
exclusive right (i) to remove any Class A Common Stock Director and
(ii) to fill any vacancy created by the removal, resignation or death
of any Class A Common Stock Director immediately by delivering written
notice to the Company. The exclusive voting rights contained in this
Section 6(e) and the Restated Certificate may be exercised either at a
special meeting, at any annual or special meeting of the stockholders
of the Company or by written consent in lieu of a meeting. The Class A
Common Stock Directors shall serve for terms extending from the date
of their election and qualification until they have been removed or
until their successors shall have been elected and qualified, in each
case, in accordance with this Section 6(e).
Section 7. Financial Statements; Access; Confidentiality.
(a) If at any time the Company and its Subsidiaries cease to file
periodic reports under the Exchange Act, the Company shall deliver
quarterly and annual financial statements to each Holder promptly following
the preparation and finalization thereof.
(b) Until the consummation of a Qualified Public Offering, the Company
shall afford any Holder of at least five percent (5%) of the outstanding
shares of Common Stock and its counsel and other authorized representatives
(collectively, "Authorized Representatives") during normal business hours
the opportunity to (i) visit and inspect the assets and properties, (ii)
examine upon reasonable advance notice, the books of accounts and records
of the Company and (iii) make copies of such records and permit such
Persons to discuss all aspects of the Company with any officers, employees
or accountants of the Company; provided, however, that such investigation
shall not unreasonably interfere with the operations of the Company. The
Company will instruct its accountants to discuss such aspects of the
financial condition of the Company with any such Holder and its
representatives as such holder may reasonably request, and to permit such
holder and its representatives to inspect, copy and make extracts from such
financial statements, analyses, work papers and other documents and
information (including electronically stored documents and information)
prepared by the accountants with respect to the Company as such Holder may
reasonably request. All costs and expenses incurred by such Holder and its
representatives in connection with exercising such rights of access shall
be borne by such Persons, and all out-of-pocket costs and expenses incurred
by the Company in complying with any extraordinary requests by such Holder
and its representatives in connection with exercising such access rights
shall be borne by such Holder.
34
(c) Each Non-Bear Group Holder hereby covenants and agrees that such
Non-Bear Group Holder will not, without the prior written consent of the
Board, divulge, disclose or make accessible to any other Person, firm,
partnership, corporation or other entity for any reason whatsoever, any
Confidential Information pertaining to the business of the Company or the
Bear Group (or any of the Affiliates of the Bear Group that are engaged in
the same business or businesses as the Company or any of the Affiliates of
the Company) or any group, division, Subsidiary or Affiliate of the Company
(collectively, the "Company Group") except when required to do so by a
court of competent jurisdiction, by any governmental agency having
supervisory authority over the business of the Company Group, or by any
administrative body or legislative body with jurisdiction to order such
Holder to divulge, disclose or make accessible such information.
"Confidential Information" means non-public information concerning
financial data, strategic business plans, product development (or other
proprietary product data), customer lists, marketing plans, personnel
information pertaining to present and former employees of the Company Group
and any other non-public, proprietary and protected information of the
Company Group or their customers. Nothing herein will prevent a Non-Bear
Group Holder from using information generally known to him or it or
generally by Persons employed in the industry of the Company and its
Subsidiaries so long as it does not involve Confidential Information.
Section 8. Transactions with Affiliates.
(a) Except for transactions contemplated by this Agreement, the
Company will not, nor will it permit any of its Subsidiaries to, directly
or indirectly, enter into any material transaction or agreement, including
without limitation the purchase, sale or exchange of property or the
rendering of any services, with the Bear Group or any Affiliate thereof
(other than the Company and its Subsidiaries and Persons that are
Affiliates of the Bear Group solely as a result of being employees of the
Company or its Subsidiaries), except (i) pursuant to the Professional
Services Agreement, dated as of the date hereof, between Bear Stearns
Merchant Manager II, LLC, Aearo and the Company (the "Professional Services
Agreement"), (ii) any agreement evidencing investments to be made by the
Bear Group or an Affiliate thereof in respect of which the Management
Holders are given preemptive or other participation rights, (iii) the
issuance of pro-rata dividends, distributions and redemptions, (iv) certain
financial advisory, investment banking, underwriting, lending or other
services provided by Affiliates of the Bear Group that are in the ordinary
course of business and the financial terms of which have been approved by a
majority of disinterested directors of the Board, (v) transactions that are
on terms that would be obtainable in an arms-length transaction with a
third party, (vi) transactions with portfolio companies of the Bear Group
that are in the ordinary course of business and, if material, have been
approved by a majority of disinterested directors of the Board or (vii) any
definitive documentation relating to the Co-Investment Rights Agreement.
(b) The Bear Group and the Company hereby acknowledge and agree that
the Professional Services Agreement shall not be amended in a manner
materially adverse to the Non-Bear Group Holders without the consent of the
holders of a majority of the shares of Common Stock held by the Executive
Management Holders who are then
35
employed by the Company or a Subsidiary thereof and the holders of a
majority of the outstanding shares of Common Stock held by Holders other
than Management Holders and the Bear Group.
Section 9. Preferred Stock Certificate of Designations.
In the event the Company seeks to amend, eliminate, supplement or
restate any of the terms of the Preferred Stock (collectively, the "Amended
Terms") in connection with a sale of shares of Preferred Stock by the Bear Group
in which the Non-Bear Group Holders are offered full pro rata tag-along rights
(a "Series A Sale"), the Company shall not amend, eliminate, supplement or
restate such terms without (i) obtaining the consent of the holders of a
majority of the outstanding shares of Preferred Stock acting in good faith prior
to effectuating the Amended Terms and (ii) complying with the other requirements
of this Section 9. The Amended Terms may include, without limitation, (a)
modifications to the dividend rate or the ranking of the Preferred Stock
(provided, however, that the dividend rate of any Retained Shares (as defined
below) shall not be increased), (b) the implementation of optional and/or
mandatory redemption provisions on the Preferred Stock and (c) the elimination
or modification of the conversion rights of the Preferred Stock. The Amended
Terms, in the aggregate, may be favorable or adverse to the Company or to the
third party-buyer pursuant to a Series A Sale and may be implemented through an
amendment to the Restated Certificate, a reclassification or exchange of the
Capital Stock or in any other manner permitted by the DGCL; provided, however,
that the terms of any shares of Preferred Stock not sold in a Series A Sale (the
"Retained Shares") shall not be amended or supplemented except as necessary to
effectuate the Amended Terms in connection with a Series A Sale. Notwithstanding
anything to the contrary contained in this Section 9, the Amended Terms shall
not adversely affect the shares of Preferred Stock held by any Non-Bear Group
Holder without similarly affecting the shares of Preferred Stock held by all
other Holders, unless such Non-Bear Group Holder consents to the Amended Terms.
Section 10. Voting Agreement.
(a) Voting of the Shares. From the date hereof until the termination
of the this Agreement in accordance with Section 14 hereof (the "Term"), at
any meeting of the stockholders of the Company, however called, and in any
action by consent of the stockholders of the Company, each Management
Holder (other than the Executive Management Holders) hereby agrees to vote
his or her shares of Common Stock at the direction of the Company, and in
connection therewith, to execute any documents which are necessary in order
to effectuate the foregoing, including the ability for the Company or its
nominees to vote such shares of Common Stock directly.
(b) Proxy. Each Management Holder (other than the Executive Management
Holders) hereby revokes any and all prior proxies or powers of attorney in
respect of any of such Management Holder's shares of Common Stock and
constitutes and appoints the Company, or any nominee of the Company, with
full power of substitution and resubstitution, at any time during the Term,
as its true and lawful attorney and proxy (its "Proxy"), for and in its
name, place and stead, and to vote each of such shares of Common Stock as
its Proxy, at every annual, special, adjourned or postponed meeting of the
stockholders of the Company, including the right to sign its name (as
stockholder) to any consent, certificate or other document relating to the
Company that the laws of the
36
state of Delaware may permit or require with respect to any matter referred
to be voted on by the stockholders of the Company. THE FOREGOING PROXY AND
POWER OF ATTORNEY ARE IRREVOCABLE AND COUPLED WITH AN INTEREST THROUGHOUT
THE TERM.
(c) No Proxies for or Encumbrances on Management Holder Shares. Except
pursuant to the terms of this Agreement, during the Term, no Management
Holder shall, without the prior written consent of the Company, directly or
indirectly, (i) grant any proxies or enter into any voting trust or other
agreement or arrangement with respect to the voting of any such Management
Holder's shares of Common Stock other than this Agreement or (ii) sell,
assign, transfer, encumber or otherwise dispose of, or enter into any
contract, option or other arrangement or understanding with respect to the
direct or indirect sale, assignment, transfer, encumbrance or other
disposition of any such Management Holder's shares of Common Stock.
Section 11. Notices.
In the event a notice or other document is required to be sent
hereunder to the Company or to any Holder or the spouse or legal representative
of a Holder, such notice or other document, if sent by mail, shall be sent by
registered mail, return receipt requested (and by air mail in the event the
addressee is not in the continental United States), to the party entitled to
receive such notice or other document at the address set forth on Annex I
hereto. Any such notice shall be effective and deemed received three (3) days
after proper deposit in the mails, but actual notice shall be effective however
and whenever received. The Company or any Holder or spouse or their respective
legal representatives may effect a change of address for purposes of this
Agreement by giving notice of such change to the Company, and the Company shall,
upon the request of any party hereto, notify such party of such change in the
manner provided herein. Until such notice of change of address is properly
given, the addresses set forth herein shall be effective for all purposes.
Section 12. Representations and Warranties of the Company.
As a material inducement to each Holder to enter into and to perform
his obligations under this Agreement, the Company represents and warrants
to each Holder as of the date hereof as set forth below.
(a) The Company has all requisite power and authority to execute and
deliver this Agreement and any and all instruments necessary or appropriate
in order to effectuate fully the terms and conditions of this Agreement,
and the transactions contemplated hereby. This Agreement has been duly
authorized by all necessary action (corporate or otherwise) on the part of
the Company and this Agreement has been duly executed and delivered by the
Company and constitutes the valid and legally binding obligation of the
Company, enforceable in accordance with its terms and conditions, subject,
as to enforcement, to bankruptcy, insolvency, reorganization, moratorium
and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
37
(b) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby shall
not (a) violate any law applicable to the Company or any of its assets or
(b) conflict with, or result in any breach of, any of the terms, conditions
or provisions of, or constitute (with due notice or lapse of time, or both)
a default or give rise to any right of termination, cancellation or
acceleration, or result in the creation of any encumbrance (x) upon any of
the Company's assets or (y) under any provision of (i) the Company's
certificate of incorporation or bylaws, (ii) any permit or (iii) any other
material contract to which the Company is a party or by which its assets is
or may be bound. The Company has not been and is not required to give any
notice to, or make any filing with, any governmental authority or any other
Person, or obtain any permit, in each case, for the valid execution,
delivery and performance by the Company.
(c) The Company and the Holders agree to treat the receipt of shares
of the Company by (i) members of the Bear Group in exchange for cash and
(ii) Vestar and other Non-Bear Group Holders who receive shares in the
Company as provided under the Merger Agreement or in connection with the
Management Roll (as defined in the Merger Agreement), as a transaction to
which Section 351 of the Code and comparable provisions of applicable state
and local income tax law apply.
(d) As of the date of this Agreement, the Company intends to report
dividends on the Preferred Stock as income to the holders of such stock as
and when paid and intends not to treat the stock as giving rise to imputed
dividend income under Section 305 of the Code. The Company and the Holders
shall file all tax returns consistent with the Company's treatment.
Section 13. Representations and Warranties of the Holders.
As a material inducement to the Company to enter into and perform its
obligations under this Agreement, each Holder represents and warrants to the
Company as of the date hereof as set forth below.
(a) The Holder has all requisite power and authority to execute and deliver
this Agreement and any and all instruments necessary or appropriate in order to
effectuate fully the terms and conditions of this Agreement and to perform and
consummate such Holder's obligations hereunder. This Agreement and the
performance of the Holder's obligations hereunder, have been duly authorized by
all requisite action on the part of the Holder, and this Agreement has been duly
and validly executed and delivered by the Holder and constitutes a valid and
legally binding obligation of the Holder, enforceable against the Holder in
accordance with its terms and conditions, except as enforceability thereof may
be limited by any applicable bankruptcy, reorganization, insolvency or other
Laws affecting creditors' rights generally or by general principles of equity.
(b) The execution, delivery and performance by the Holder of this
Agreement, and the consummation of the transactions contemplated hereby, shall
not (i) violate any law applicable to the Holder or (ii) conflict with or result
in any violation or breach of, any of the terms, conditions or provisions of, or
constitute (with due notice or lapse of time, or both) a default under, or give
rise to any right of termination, cancellation or acceleration or result in the
38
creation of any encumbrance upon any of the assets of the Holder, any material
contracts to which the Holder is a party or by which the Holder or any of the
Holder's assets is or may be bound, in each case, which would prohibit the
Holder from consummating the transactions contemplated hereby. The Holder has
not been or is not required to give any notice to, or make any filing with, any
governmental authority or any other Person, or obtain any permit, in each case,
for the valid execution, delivery and performance by the Holder of this
Agreement.
(c) Upon the acquisition of any shares of Common Stock and Preferred Stock
(including on the date hereof), in addition to any other representations and
warranties set forth in any other document required by the Board with respect to
such acquisition, each Holder severally, as to itself (and not as to any other
Person) makes the representations and warranties set forth below to the Company
with respect to such shares of Common Stock and Preferred Stock, effective upon
the issuance thereof and upon such Holder's execution and delivery of a
counterpart hereof or an Adoption Agreement.
(i) The Holder is acquiring the shares of Common Stock and
Preferred Stock for investment for the Holder's own account and not
with a view to, or for resale in connection with, the distribution or
other disposition thereof except in compliance with this Agreement and
as permitted by law, including without limitation the Securities Act.
The Holder does not have any present intent to resell or distribute
any of its shares of Common Stock and Preferred Stock. If the Holder
is a corporation, trust, partnership or other organization, it was not
organized for the specific purpose of acquiring shares of Common Stock
and Preferred Stock.
(ii) The Holder has been advised that its shares of Common
Stock and Preferred Stock have not been registered under the
Securities Act, that such shares may not be sold or otherwise disposed
of unless they are registered thereunder or an exemption from
registration is available and that accordingly the Holder may be
required to bear the economic risk of the investment in such shares
for an indefinite period of time. The Holder also understands that the
Company does not have any intention of registering the shares of
Common Stock and Preferred Stock under the Securities Act or of
supplying the information which may be necessary to enable the Holder
to sell such shares pursuant to Rule 144 under the Securities Act.
(iii) The Holder has been given the opportunity to obtain
any information or documents, and to ask questions and receive answers
about such documents, the Company and its subsidiaries and the
business and prospects of the Company and its subsidiaries (including,
without limitation, the transactions to be consummated pursuant to the
terms of the Merger Agreement) as it deems necessary to evaluate the
merits and risks related to its investment in shares of Common Stock
and Preferred Stock and no representations concerning such matters or
any other matters related to such investment have been made to the
Holder except as set forth in this Agreement. The Holder has had an
opportunity to consult his or its own attorney, accountant or
investment advisor with respect to the investment contemplated hereby
and its suitability for the Holder, including the tax and other
economic considerations related to the investment.
39
(iv) The Holder (i) has knowledge and experience in
financial and business matters such that the Holder is capable of
evaluating the merits and risks of the purchase of the shares of
Common Stock and Preferred Stock as contemplated by this Agreement,
(ii) understands and has taken cognizance of all risk factors related
to the purchase of the shares of Common Stock and Preferred Stock and
(iii) is able to bear the economic risk of the investment in the
shares of Common Stock and Preferred Stock for an indefinite period of
time and can afford to suffer a complete loss of the investment in
such shares.
(v) The Holder has been informed that the offer of the
shares of Common Stock and Preferred Stock that the Holder is
acquiring is being made pursuant to an exemption from the registration
requirements of the Securities Act relating to transactions by an
issuer not involving a public offering, and that, consequently, the
materials relating to the offer have not been subject to review and
comment by the staff of the Securities and Exchange Commission or any
other governmental authority.
The Holder is not acquiring shares of Common Stock and Preferred Stock as a
result of or subsequent to any advertisement, article, notice or other
communication published in any newspapers, magazine or similar media or
broadcast over television or radio, or presented at any seminar or meeting, or
any solicitation of a subscription by a person not previously known to the
Holder in connection with investments in securities generally.
Section 14. Miscellaneous Provisions.
(a) On and as of the date hereof, each Holder hereby approves and
votes all of his or its shares of Common Stock in favor of, the form, terms
and provisions (including all exhibits, schedules and annexes, if any) of
the 2004 Stock Incentive Plan, in substantially the form previously
presented to the Holders.
(b) All questions concerning the construction, interpretation and
validity of this Agreement shall be governed by and construed in accordance
with the domestic laws of the State of Delaware without giving effect to
any choice or conflict of law provision or rule (whether in the State of
Delaware or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Delaware.
(c) Whenever the context requires, the gender of all words used herein
shall include the masculine, feminine and neuter, and the number of all
words shall include the singular and plural.
(d) This Agreement shall be binding upon the parties hereto, any
spouses of Management Holders, and their respective heirs, executors,
administrators and permitted successors and assigns.
(e) This Agreement may be amended, waived or terminated from time to
time by an instrument in writing signed by the Company and the Holders
party hereto holding a majority of the outstanding shares of Common Stock;
provided, however, that (i) this Agreement may be amended by the Company
without the consent of any Holder in
40
connection with the exercise (in whole or in part) by Vestar of its rights
pursuant to the Co-Investment Rights Agreement in order to give effect to
the arrangements between Bear and Vestar set forth therein, (ii) any
amendment or waiver that would adversely and affect the rights hereunder of
any Holder or any class of Holders without similarly affecting the rights
hereunder of all Holders or all Holders of such class shall not be
effective as to such Holder or class of Holders without the prior written
consent of such Holder or class of Holders and (iii) the parties to this
Agreement, as set forth on the signature pages hereto, shall be amended
from time to time by the Company without requiring the consent of any party
hereto to reflect issuances by the Company of Capital Stock or Dispositions
of Capital Stock made in compliance with the terms of this Agreement.
(f) This Agreement shall terminate automatically in its entirety upon
a Sale of the Company or a liquidation, dissolution or winding up of the
Company.
(g) Any Holder who disposes of all of his or its Common Stock and
Preferred Stock in conformity with the terms of this Agreement shall cease
to be a party to this Agreement and shall have no further rights hereunder.
(h) As a condition to the issuance of shares of Common Stock and
Preferred Stock to each Management Holder, such Management Holder's spouse,
to the extent applicable, shall execute the Spousal Acknowledgement and
Consent attached hereto as Exhibit B pursuant to which such spouse shall
agree to be bound by the terms and provisions of this Agreement. The
spouses of the Management Holders are fully aware of, understand and fully
consent and agree to the provisions of this Agreement and its binding
effect upon any community property interests or similar marital property
interests in the Common Stock and Preferred Stock they may now or hereafter
own, and agree that the termination of their marital relationship with any
Management Holder for any reason shall not have the effect of removing any
Common Stock and Preferred Stock of the Company otherwise subject to this
Agreement from the coverage of this Agreement and that their awareness,
understanding, consent and agreement are evidenced by their signing this
Agreement. Furthermore, each Management Holder agrees to cause his or her
spouse (and any subsequent spouse) to execute and deliver, upon the request
of the Company, a counterpart of this Agreement, or an Adoption Agreement
substantially in the form of Exhibit A or in a form satisfactory to the
Company.
(i) Any Disposition or attempted Disposition in breach of this
Agreement shall be void ab initio and of no effect. In connection with any
attempted Disposition in breach of this Agreement, the Company may hold and
refuse to Dispose of any Common Stock or Preferred Stock or any certificate
therefor tendered to it for Disposition, in addition to and without
prejudice to any and all other rights or remedies which may be available to
it or the Holders. Each party to this Agreement acknowledges that a remedy
at law for any breach or attempted breach of this Agreement will be
inadequate, agrees that each other party to this Agreement shall be
entitled to specific performance and injunctive and other equitable relief
in case of any such breach or attempted breach and further agrees to waive
(to the extent legally permissible) any legal conditions required to be met
for the obtaining of any such injunctive or other equitable relief
(including posting any bond in order to obtain equitable relief).
41
(j) This Agreement may be executed simultaneously in two or more
counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts taken together will constitute one and
the same agreement. It shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart. The
failure of any Holder to execute this Agreement does not make it invalid as
against any other Holder.
(k) Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal
or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not
affect any other provision or any other jurisdiction, and such invalid,
void or otherwise unenforceable provisions shall be null and void. It is
the intent of the parties, however, that any invalid, void or otherwise
unenforceable provisions be automatically replaced by other provisions
which are as similar as possible in terms to such invalid, void or
otherwise unenforceable provisions but are valid and enforceable to the
fullest extent permitted by law.
(l) Each party hereto shall do and perform or cause to be done and
performed all such further acts and things and shall execute and deliver
all such other agreements, certificates, instruments, and documents as any
other party hereto reasonably may request in order to carry out the
provisions of this Agreement and the consummation of the transactions
contemplated hereby.
(m) The parties to this Agreement agree that jurisdiction and venue in
any action brought by any party hereto pursuant to this Agreement shall
properly (but not exclusively) lie in any federal or state court located in
the State of Delaware. By execution and delivery of this Agreement, the
parties hereto irrevocably submit to the jurisdiction of such courts for
himself and in respect of his property with respect to such action. The
parties hereto irrevocably agree that venue would be proper in such court,
and hereby waive any objection that such court is an improper or
inconvenient forum for the resolution of such action. The parties further
agree that the mailing by certified or registered mail, return receipt
requested, of any process required by any such court shall constitute valid
and lawful service of process against them, without necessity for service
by any other means provided by statute or rule of court.
(n) No course of dealing between the Company, or its Subsidiaries, and
the Holders (or any of them) or any delay in exercising any rights
hereunder will operate as a waiver of any rights of any party to this
Agreement. The failure of any party to enforce any of the provisions of
this Agreement will in no way be construed as a waiver of such provisions
and will not affect the right of such party thereafter to enforce each and
every provision of this Agreement in accordance with its terms.
(o) BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED
AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO
APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE
42
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE
THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND/OR
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHT OR
REMEDIES UNDER THIS AGREEMENT OR ANY DOCUMENTS RELATED HERETO.
(p) This Agreement sets forth the entire agreement of the parties
hereto as to the subject matter hereof and supersedes all previous
agreements among all or some of the parties hereto, whether written, oral
or otherwise. Unless otherwise provided herein, any consent required by the
Company may be withheld by the Company in its sole discretion.
(q) No Person not a party to this Agreement, as a third party
beneficiary or otherwise, shall be entitled to enforce any rights or
remedies under this Agreement.
(r) If, and as often as, there are any changes in the Common Stock or
Preferred Stock by way of stock split, stock dividend, combination or
reclassification, or through merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustment shall be
made in the provisions of this Agreement, as may be required, so that the
rights, privileges, duties and obligations hereunder shall continue with
respect to the Common Stock or Preferred Stock as so changed. Without
limiting the foregoing and notwithstanding anything to the contrary
contained in this Agreement, the provisions of this Agreement will apply to
any shares of Capital Stock or securities received in consideration for
shares of Common Stock and/or Preferred Stock and to the issuer of such
shares of Capital Stock or securities.
(s) No director of the Company shall be personally liable to the
Company or any Holder as a result of any acts or omissions taken under this
Agreement in good faith.
(t) In the event additional shares of Common Stock or Preferred Stock
are issued by the Company to a Holder at any time during the term of this
Agreement, either directly or upon the exercise or exchange of securities
of the Company exercisable for or exchangeable into shares of Common Stock
or Preferred Stock, such additional shares of Common Stock or Preferred
Stock, as a condition to such issuance, become subject to the terms and
provisions of this Agreement, except if such issuance is made pursuant to a
Public Sale.
(u) Notwithstanding anything to the contrary contained herein, the
Bear Group may assign its rights or obligations, in whole or in part, under
this Agreement to one or more of its Affiliates.
* * * * *
43
This Stockholders' Agreement is executed by the Company and by each
Holder to be effective as of the date first above written.
COMPANY
AC SAFETY HOLDING CORP.
By: /s/ Douglas R. Korn
------------------------------------
Name: Douglas R. Korn
Title: President
This Stockholders' Agreement is executed by the Company and by each
Holder to be effective as of the date first above written.
BEAR GROUP
BEAR STEARNS MERCHANT BANKING
PARTNERS II, L.P.
By: Bear Stearns Merchant Capital II,
L.P., its General Partner
By: JDH Management LLC,
its Special Limited Partner
By: /s/ Douglas R. Korn
------------------------------------
Name: Douglas R. Korn
Title: Senior Managing Director
BEAR STEARNS MERCHANT BANKING
INVESTORS II, L.P.
By: Bear Stearns Merchant Capital II,
L.P., its General Partner
By: JDH Management LLC,
its Special Limited Partner
By: /s/ Douglas R. Korn
------------------------------------
Name: Douglas R. Korn
Title: Senior Managing Director
This Stockholders' Agreement is executed by the Company and by each
Holder to be effective as of the date first above written.
BEAR STEARNS MB-PSERS II, L.P.
By: Bear Stearns Merchant Capital II,
L.P., its General Partner
By: JDH Management LLC,
its Special Limited Partner
By: /s/ Douglas R. Korn
------------------------------------
Name: Douglas R. Korn
Title: Senior Managing Director
THE BSC EMPLOYEE FUND V, L.P.
By: Bear Stearns Merchant Capital II,
L.P., its General Partner
By: JDH Management LLC,
its Special Limited Partner
By: /s/ Douglas R. Korn
------------------------------------
Name: Douglas R. Korn
Title: Senior Managing Director
THE BSC EMPLOYEE FUND VI, L.P.
By: Bear Stearns Merchant Capital II,
L.P., its General Partner
By: JDH Management LLC,
its Special Limited Partner
By: /s/ Douglas R. Korn
------------------------------------
Name: Douglas R. Korn
Title: Senior Managing Director
This Stockholders' Agreement is executed by the Company and by each
Holder to be effective as of the date first above written.
NON-BEAR GROUP HOLDER
VESTAR EQUITY PARTNERS, L.P.
By: Vestar Associates, L.P.,
its general partner
By: Vestar Associates Corporation,
its general partner
By: /s/ Norman W. Alpert
------------------------------------
Name: Norman W. Alpert
Title:
---------------------------------
This Stockholders' Agreement is executed by the Company and by each
Holder to be effective as of the date first above written.
NON-BEAR GROUP HOLDER
/s/ James H. Floyd
----------------------------------------
Name: James H. Floyd
Address: 5850 Carrollton Avenue
Indianapolis, IN 46220
/s/ D. Garrad Warren III
----------------------------------------
Name: D. Garrad Warren III
Address: 8888 Pickwick Drive
Indianapolis, IN 46260
JAMES M. PHILLIPS TRUST
By: /s/ James M. Phillips, Trustee
------------------------------------
/s/ Carole E. Phillips, Trustee
------------------------------------
Name: James M. Phillips and Carole E.
Phillips
Address: 12121 Woods Bay Place
Carmel, IN 46033
A-1
This Stockholders' Agreement is executed by the Company and by each
Holder to be effective as of the date first above written.
NON-BEAR GROUP HOLDER
/s/ Michael A. McLain
----------------------------------------
Name: Michael A. McLain
Address: 325 Willow Springs Road
Indianapolis, IN 46240
/s/ M. Rand Mallitz
----------------------------------------
Name: M. Rand Mallitz
Address: 7519 Brackenwood Circle North
Indianapolis, IN 46260
/s/ Jeffrey S. Kulka
----------------------------------------
Name: Jeffrey S. Kulka
Address: 5291 Woodfield Drive South
Carmel, IN 46033
A-2
This Stockholders' Agreement is executed by the Company and by each
Holder to be effective as of the date first above written.
NON-BEAR GROUP HOLDER
/s/ Rahul Kapur
----------------------------------------
Name: Rahul Kapur
Address: 778 Edison Way
Carmel, IN 46032
/s/ Paul A. Berthiaume
----------------------------------------
Name: Paul A. Berthiaume
Address: P.O. Box 313
Sturbridge, MA 01566-0313
BRYAN J. CAREY TRUST
By: /s/ Bryan J. Carey
------------------------------------
Name: Bryan J. Carey, Trustee
Address: 215 East 68th Street, 6A
New York, NY 10021
A-3
This Stockholders' Agreement is executed by the Company and by each
Holder to be effective as of the date first above written.
NON-BEAR GROUP HOLDER
/s/ John D. Curtin, Jr.
----------------------------------------
Name: John D. Curtin, Jr.
Address: 60 Chestnut Street
Boston, MA 02108
/s/ Daryl Charton
----------------------------------------
Name: Daryl Charton
Address: 137 Hawkins Circle
Wheaton, IL 60187
/s/ Neil Cook
----------------------------------------
Name: Neil Cook
Address: 12 The Downs
Cheadle, 5K8 UK
A-4
This Stockholders' Agreement is executed by the Company and by each
Holder to be effective as of the date first above written.
NON-BEAR GROUP HOLDER
/s/ Maryan M. Dellomo
----------------------------------------
Name: Maryan M. Dellomo
Address: 218 West Main Street
Dudley, MA 01571
/s/ Vincent Donargo
----------------------------------------
Name: Vincent Donargo
Address: 8317 Courtney Drive
Fishers, IN 46038
/s/ Michael Douar
----------------------------------------
Name: Michael Douar
Address: 3468 Mesquite Court
Indianapolis, IN 46214
A-5
This Stockholders' Agreement is executed by the Company and by each
Holder to be effective as of the date first above written.
NON-BEAR GROUP HOLDER
/s/ Marc F. Farris
----------------------------------------
Name: Marc F. Farris
Address: 12348 Medalist Parkway
Carmel, IN 46033
/s/ Keith Fecteau
----------------------------------------
Name: Keith Fecteau
Address: 223 Three Rivers Road
Wilbraham, MA 01095
/s/ John E. Flanagan
----------------------------------------
Name: John E. Flanagan
Address: 259 Washington Street
Winchester, MA 01890
A-6
This Stockholders' Agreement is executed by the Company and by each
Holder to be effective as of the date first above written.
NON-BEAR GROUP HOLDER
/s/ George E. Gabuzda Jr.
----------------------------------------
Name: George E. Gabuzda, Jr.
Address: 10278 Hickory Ridge Drive
Zionsville, IN 46077
/s/ James F. Gray
----------------------------------------
Name: James F. Gray
Address: 5 Darby Lane
Brownsburg, IN 46112
/s/ Per Gustafsson
----------------------------------------
Name: Per Gustafsson
Address: Ugglegerton 12
33141 Vernamo, Sweden
A-7
This Stockholders' Agreement is executed by the Company and by each
Holder to be effective as of the date first above written.
NON-BEAR GROUP HOLDER
/s/ Greg R. Handy
----------------------------------------
Name: Greg R. Handy
Address: 3662 Crickwood Circle
Indianapolis, IN 46268
/s/ Richard W. Holub
----------------------------------------
Name: Richard W. Holub
Address: 1516 Brook Mill Court
Carmel, IN 46032
/s/ Gilbert R. Igo
----------------------------------------
Name: Gilbert R. Igo
Address: 100 Oak Hill Drive
Brownsburg, IN 46112
A-8
This Stockholders' Agreement is executed by the Company and by each
Holder to be effective as of the date first above written.
NON-BEAR GROUP HOLDER
/s/ Jay Kastan
----------------------------------------
Name: Jay Kastan
Address: 3421 Windsong Way
Maineville, OH 45039
/s/ Robert T. Klun
----------------------------------------
Name: Robert T. Klun
Address: 4423 Summer Drive
Zionsville, IN 46077
RICHARD E. KRAUER LIVING TRUST
By: /s/ Michael E. Krauer and
Patricia L Krauer, Trustees
------------------------------------
Name: Michael E. Krauer and
Patricia L Krauer
Address: 1362 Midway Court
Carmel, IN 46032
A-9
This Stockholders' Agreement is executed by the Company and by each
Holder to be effective as of the date first above written.
NON-BEAR GROUP HOLDER
ROSEMARY J. LABANOSKI LIVING TRUST
By: /s/ Rosemary Labanoski and
Ronald Labanoski, Trustees
------------------------------------
Name: Rosemary Labanoski and
Ronald Labanoski
Address: 10888 State Road 32E
Zionsville, IN 46077
/s/ Leonard Lieberman
----------------------------------------
Name: Leonard Lieberman
Address: One Gateway Center Newark,
NJ 07102
/s/ Michael A. Lombardi
----------------------------------------
Name: Michael A. Lombardi
Address: 1232 Mountain Brook Drive
Norman, OK 73072
A-10
This Stockholders' Agreement is executed by the Company and by each
Holder to be effective as of the date first above written.
NON-BEAR GROUP HOLDER
/s/ Timothy A. Millar
----------------------------------------
Name: Timothy A. Millar
Address: 1428 Gwynmere Run
Carmel, IN 46032
/s/ Peter Murphy
----------------------------------------
Name: Pete Murphy
Address: 1025 Pine Hill Way
Carmel, IN 46032
/s/ Ian C. Mullally
----------------------------------------
Name: Ian C. Mullaly
Address: 435 Dosebury Road, Heaton
Mersey, Stockport, England
A-11
This Stockholders' Agreement is executed by the Company and by each
Holder to be effective as of the date first above written.
NON-BEAR GROUP HOLDER
/s/ Brian C. Myers
----------------------------------------
Name: Brian C. Myers
Address: 6246 Winford Drive
Indianapolis, IN 46236
/s/ Sigvard Nilsson
----------------------------------------
Name: Sigvard Nilsson
Address: Citronwagen 82
3315Y Varnamo, Sweden
/s/ Larry D. Power
----------------------------------------
Name: Larry D. Power
Address: 1468 Queensborough Dr. Carmel,
IN 46033
A-12
This Stockholders' Agreement is executed by the Company and by each
Holder to be effective as of the date first above written.
NON-BEAR GROUP HOLDER
/s/ Roman Rozman
----------------------------------------
Name: Roman Rozman
Address: 88 Metropolitan Avenue
Ashland, MA 01721
/s/ John E. Salce
----------------------------------------
Name: John E. Salce
Address: 166 Central Street
Auburn, MA 01501
/s/ David Savage
----------------------------------------
Name: David Savage
Address: 39 Kilbride Drive
Whitby, Ontario Canada L1R 2B3
A-13
This Stockholders' Agreement is executed by the Company and by each Holder
to be effective as of the date first above written.
NON-BEAR GROUP HOLDER
/s/ Martin C. Salon
----------------------------------------
Name: Martin C. Salon
Address: 308 Broadbrook Road
Enfield, CT 06082
/s/ Jody Sneed
----------------------------------------
Name: Jody Sneed
Address: 445 Spring Mill Lane
Indianapolis, IN 46260
/s/ Garry Sutton
----------------------------------------
Name: Gary Sutton
Address: 4271 Field Master Drive
Zionsville, IN 46077
A-14
This Stockholders' Agreement is executed by the Company and by each Holder
to be effective as of the date first above written.
NON-BEAR GROUP HOLDER
/s/ Ron Throndsen
----------------------------------------
Name: Ron Throndsen
Address: 7618 Gardenshire Court
Indianapolis, IN 46278
/s/ Julie Tremblay
----------------------------------------
Name: Julie Tremblay
Address: 330 Sunderland Road #70
Worcester, MA 01604
/s/ Earle Vancelette
----------------------------------------
Name: Earle Vancelette
Address: 315 Rawsed Street
Leicester, MA 01524
A-15
This Stockholders' Agreement is executed by the Company and by each Holder
to be effective as of the date first above written.
NON-BEAR GROUP HOLDER
/s/ R. W. Vernazza
----------------------------------------
Name: R. W. Vernazza
Address: 11, Willow Field Grove
Ashton-in-Makerfield England
WN49NN
/s/ Hans Wickstrom
----------------------------------------
Name: Hans Wickstrom
Address: Duvgatau 17 33033 Hilleston
Sweden
/s/ John J. Wojnarowicz
----------------------------------------
Name: John J. Wojnarowicz
Address: 6 Fort Sumter Drive Holden,
MA 01520
A-16
This Stockholders' Agreement is executed by the Company and by each Holder
to be effective as of the date first above written.
NON-BEAR GROUP HOLDER
/s/ Guylaine Zmetra
----------------------------------------
Name: Guylaine Zmetra
Address: 380 Bungay Hill Road
Woodstock, CT 06281
----------------------------------------
Name:
----------------------------------
Address:
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----------------------------------------
Name:
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Address:
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A-17
EXHIBIT A
ADOPTION AGREEMENT
This Adoption Agreement (the "Adoption") is executed pursuant to the
terms of the Stockholders' Agreement of AC Safety Holding Corp., a Delaware
corporation (the "Company"), dated as of April 7, 2004, a copy of which is
attached hereto (as it may be amended, supplemented or restated from time to
time, the "Stockholders Agreement"), by the transferee ("Transferee") executing
this Adoption. By the execution of this Adoption, the Transferee agrees as
follows:
1. Acknowledgement. Transferee acknowledges that Transferee is
acquiring certain shares of Common Stock and/or Preferred Stock
of the Company, subject to the terms and conditions of the
Stockholders Agreement. Capitalized terms used herein without
definition are defined in the Stockholders Agreement and are used
herein with the same meanings set forth therein.
2. Agreement. Transferee (i) agrees that the shares of Common Stock
and/or Preferred Stock acquired by Transferee, and certain other
shares of Common Stock, Preferred Stock, and other securities
that may be acquired by Transferee in the future, shall be bound
by and subject to the terms of the Stockholders Agreement,
pursuant to the terms thereof, and (ii) hereby adopts the
Stockholders Agreement with the same force and effect as if he
were originally a party thereto.
3. Notice. Any notice required as permitted by the Stockholders
Agreement shall be given to Transferee at the address listed
beside Transferee's signature below.
4. Joinder. The spouse of the undersigned Transferee, if applicable,
executes this Adoption to acknowledge its fairness and that it is
in such spouse's best interest, and to bind such spouse's
community interest, if any, in the shares of Common Stock,
Preferred Stock, and other securities referred to above and in
the Stockholders Agreement, to the terms of the Stockholders
Agreement.
------------------------------
------------------------------
A-18
EXHIBIT B
SPOUSAL ACKNOWLEDGMENT AND CONSENT
The undersigned spouse of the Management Holder has read and hereby
approves the foregoing Stockholders' Agreement of AC Safety Holding Corp., a
Delaware corporation (the "Company"), dated as of April ___, 2004 (the
"Stockholders Agreement"). In consideration of the Company's granting the
Management Holder the right to acquire the Common Stock and Preferred Stock in
accordance with the terms of such Management Holder's Contribution Agreement or
Management Subscription and Contribution Agreement with the Company, as the case
may be, the undersigned hereby agrees to be irrevocably bound by all the terms
of the Stockholders Agreement, including, without limitation, the right of the
Company (or its designees) to purchase the Common Stock and Preferred Stock
otherwise owned or possessed by such Management Holder at the time of the
Management Holder's termination of employment. The undersigned spouse of the
Management Holder hereby acknowledges the fairness of the Stockholders Agreement
and that it shall bind such spouse's community interest, if any, in the shares
of Common Stock, Preferred Stock, and other securities referred to therein, to
the terms of the Stockholders Agreement. Capitalized terms used herein without
definition are defined in the Stockholders' Agreement and are used herein with
the same meanings set forth therein.
------------------------------------
NON-BEAR GROUP HOLDER'S SPOUSE
Address:
-------------------------------
-------------------------------
B-1
ANNEX I
(i) If to the Company:
AC Safety Holding Corp.
c/o Bear Stearns Merchant Banking
383 Madison Avenue, 40th Floor
New York, NY 10179
Facsimile: (212) 272-4154
Attention: Mr. Douglas R. Korn
with a copy to:
O'Melveny & Myers, LLP
7 Times Square Tower
New York, NY 10036
Facsimile: (212) 408-2420
Attention: Adam K. Weinstein, Esq.
(ii) If to the Bear Group:
Bear Stearns Merchant Banking
383 Madison Avenue, 40th Floor
New York, NY 10179
Facsimile: (212) 272-4154
Attention: Mr. Douglas R. Korn
with a copy to:
O'Melveny & Myers, LLP
7 Times Square Tower
New York, NY 10036
Facsimile: (212) 408-2420
Attention: Adam K. Weinstein, Esq.
(iii) If to any Non-Bear Group Holder, to the address set forth with
respect to such Non-Bear Group Holder in the Company's records.
* * * * *
I-1