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EXHIBIT 9.1
EQUITY HOLDERS AGREEMENT
This Equity Holders Agreement ("Agreement") is dated as of February 29,
1996 and is effective as of March 8, 1996 by and among FIRST NEW ENGLAND
CAPITAL LIMITED PARTNERSHIP, having its principal place of business at 100
Pearl Street, Hartford, Connecticut 06103 ("First New England"), MORAMERICA
CAPITAL CORP., having its principal place of business c/o InvestAmerica
Investment Advisors, Inc., 101 Second Street S.E., Suite 800, Cedar Rapids,
Iowa 52401 ("MorAmerica"), and NORTH DAKOTA SMALL BUSINESS INVESTMENT COMPANY A
NORTH DAKOTA LIMITED PARTNERSHIP, having its principal place of business c/o
InvestAmerica N.D. Management, Inc., 101 Second Street S.E., Suite 800, Cedar
Rapids, Iowa 52401 ("NDSBIC") (First New England, MorAmerica and NDSBIC are
hereinafter sometimes collectively referred to as the "Investors" and
individually as an "Investor"), CENTRUM INDUSTRIES, INC., a Delaware
corporation having its principal place of business at 6135 Trust Drive, Suite
104A, Holland, Ohio 43528 (the "Company"), and the individuals and entities
whose signatures appear at the end of this Agreement (the "Existing
Shareholders") (the Investors and the Existing Shareholders are hereinafter
sometimes collectively referred to as the "Equity Holders").
RECITALS
The following facts set forth the background to this Agreement:
A. Simultaneously with the execution of this Agreement, the Company is
entering into a Note and Warrant Purchase Agreement with the Investors (the
"Purchase Agreement") providing for the issuance by the Company to each
Investor of an 11% Convertible Subordinated Note due March 31, 2001 (each a
"Note", and collectively, the "Notes"), aggregating $2,500,000 in principal
amount and one or more warrants (each a "Warrant", and collectively, the
"Warrants") to purchase a certain number of the shares of common stock of the
Company.
B. As part of the transaction, the Company and the Investors are also
entering into a Put Agreement (the "Put Agreement") relating to the transfer of
the Warrants and the Securities (as such term is defined in the Put Agreement)
between the Company and the Investors.
C. The Company, the Investors and the Existing Shareholders desire to set
forth certain understandings regarding the management of the Company and the
transfers of Securities or other securities of the Company.
NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the Company and the Investors agree as follows:
1. Management of the Company
1.1 (a) Each of the Equity Holders agrees that from and after the date
hereof such Equity Holder will vote (or cause to be voted) all of the voting
stock of the
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Company owned or held of record by such Equity Holder in favor of the election
and continuation in office of a Board of Directors consisting of not less than
eight and not more than nine members, one (1) of which shall be designated by
First New England (or its successors or assigns) and one (1) of which shall be
designated jointly by MorAmerica and NDSBIC (or their respective successors and
assigns). Each such designee shall, in the reasonable judgment of the Investor
designating such designee, be qualified to serve on such Board of Directors.
(b) The Company and the Equity Holders each agrees that it will use its
best efforts to cause the election of any Board member designated by the
Investors pursuant to Section 1.1(a) hereof (an "Investor Candidate") at each
annual or special meeting of the Company's shareholders at which directors are
to be elected, including but not limited to the following: (i) the Company
shall cause the name of each Investor Candidate to be included in the slate of
directors submitted to the Company's shareholders for approval at such annual
or special meeting; and (ii) the Company shall, in its proxy solicitation
materials and other communications to its shareholders in connection with such
meeting, recommend that shareholders vote "for" each of the Investor
Candidates.
(c) The Company shall use its best efforts to cause its Board of
Directors to designate a Compensation Committee and an Audit Committee,
to the extent and only to the extent that such committees have not heretofore
been designated by the Board of Directors. and to appoint one (1) of the
Investor Candidates on each of the Compensation Committee and Audit Committee
of the Board of Directors.
1.2 The Company shall use its best efforts in accordance with Section 1.1
hereof to cause the election as a director of the Company of each director then
serving and previously designated pursuant to Section 1.1 if such director is
still eligible to serve as a director unless the Investor that designated such
person designates another person as its director designee. No Equity Holder
shall vote to remove any member of the Board of Directors designated in
accordance with Section 1.1 or this Section 1.2 unless the Investor that
designated such person so votes and then the other Equity Holders shall
likewise so vote.
1.3 Each Equity Holder hereby grants to and is deemed to have executed in
favor of First New England, MorAmerica or NDSBIC, as the case may be, a proxy
to vote all of the voting stock of the Company owned by the grantor of the
proxy for the election to the Board of Directors of the Company of the Investor
Candidates designated by First New England or MorAmerica and NDSBIC, as the
case may be, in accordance with Sections 1.1 and 1.2. This proxy is coupled
with an interest and is irrevocable by the Equity Holders during the term of
this Agreement.
1.4 The Board of Directors shall meet at least quarterly during the term
of the Notes, provided, however, that upon the occurrence and continuation of
an Event of Default under the Purchase Agreement, the Requisite Interest of
Investors may elect to require that the Board of Directors meet at least once
every month. The Investors shall be entitled to at least fourteen (14) days'
advance written notice of each regularly scheduled meeting of the Board of
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Directors or the shareholders of the Company. Emergency meetings of the Board
of Directors may be scheduled with reasonable advance notice of such meetings.
1.5 (a) The reasonable out-of-pocket costs and expenses incurred by
any Investor Candidate in performing his or her duties as a member of the Board
of Directors of the Company, including but not limited to reasonable travel and
lodging costs incurred in connection with attending meetings of the Board of
Directors and stockholders of the Company, shall be reimbursed by the Company
promptly upon submission of written invoices therefor documenting such costs
and expenses in reasonable detail. In addition, (i) if at any time one of the
positions on the Board of Directors reserved for the Investors pursuant to
Section 1.1 hereof are not occupied, the Company shall reimburse any and all
reasonable out-of-pocket costs and expenses, including but not limited to
reasonable travel and lodging costs, incurred by not more than one (1)
alternate director or other representative of the Investors in attending any
meeting of the Board of Directors and the stockholders of the Company, and (ii)
if at any time both of the positions on the Board of Directors reserved for the
Investors pursuant to Sections 1.1 and 1.2 hereof are not occupied, the Company
shall reimburse any and all reasonable out-of-pocket costs and expenses,
including but not limited to reasonable travel and lodging costs, incurred by
not more than two (2) alternate directors or other representatives of the
Investors in attending any meeting of the Board of Directors and the
stockholders of the Company.
(b) Each Investor who is not represented on the Board of Directors
by an Investor Candidate designated pursuant to Section 1.1 or Section
1.2 as a member of such Board shall have the right to designate an observer to
attend meetings of the Company's directors and stockholders. Each such observer
shall receive notice of all meetings and access to all information provided the
members of the Board of Directors or stockholders, as the case may be, and,
subject to Section 1.5(a), shall be permitted to attend such meetings at the
expense of the Company, provided that the Company shall not be required to bear
such expenses for more than two (2) observers in connection with each such
meeting.
1.6 The Company and the Equity Holders agree that members of the Board
of Directors shall not be compensated for their services, but each such member
and each designee under Section 1.5 hereof shall be reimbursed for all of
his/her reasonable expenses incurred in connection with his/her attendance at
meetings of the Board of Directors.
1.7 For purposes of this Agreement, a "Requisite Interest" at any time
means the Investors owning one hundred percent (100%) of the Total Shares (as
defined in the Put Agreement) at such time.
2. Director Indemnification. In the event that any director contemplated
by this Agreement shall be made or threatened to be made a party to any action,
suit or proceeding with respect to which he may be entitled to indemnification
by the Company pursuant to its Certificate of Incorporation or otherwise, he
shall be entitled to be represented in such action, suit or proceeding by
counsel of his choice and the reasonable expenses of such representation shall
be
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reimbursed by the Company to the extend provided in or authorized by said
Certificate of Incorporation or other provision and permitted by applicable
law.
3. Option to Participate in Change of Control.
3.1 If at any time after February 28, 1999, either (a) the Company
receives a bona fide offer to engage in a "Change in Control Event" (as defined
in the Put Agreement), or (b) any of the Equity Holders receives a bona fide
offer to engage in a "Change in Control Event" (as deemed in the Put
Agreement), then:
(i) the Company or such Equity Holder, as the case may be, shall deliver
prompt written notice of the same to the Investors and all other parties to
this Agreement, which notice shall set forth in reasonable detail the identity
of the offeror and the terms and conditions of such offer;
(ii) if within forty-five (45) days after receiving such notice, a
Requisite Interest of the Investors notifies the Company and the Equity Holders
in writing that the Investors desire to give effect to this Section 3.1, then
the Company shall, at its option, subject to the requirements of applicable
law, either (x) take all necessary and appropriate corporate action to accept
the bona fide offer or otherwise consummate the Change in Control Event, or (y)
purchase, within fourteen (14) days after receiving such written notice, all of
the Warrants and Securities then outstanding for a purchase price per share and
upon the same terms and conditions as such bona fide offer; and
(iii) in the event that a Change of Control Event to be consummated
pursuant to clause (x) of Section 3.1(ii) shall result in a sale, transfer or
exchange of less than all of the voting stock of the Company (whether through
sale, merger, consolidation or otherwise), each Investor shall participate in
the sale, transfer or exchange pursuant to the Change of Control Event on a pro
rata basis, based upon a fraction, (a) the numerator of which is the sum of (I)
the number of shares of Warrant Issuable Stock (as defined in the Put
Agreement) for all Warrants held by it, plus (II) the number of shares of all
Securities held by it, and (b) the denominator of which is the total number of
shares of voting stock to be sold pursuant to such Change of Control Event.
The failure of a Requisite Interest of the Investors to notify the Company in
writing of the Investors' desire to give effect to this Section 3.1 within such
forty-five (45) day period shall be deemed a waiver by the Investors of this
Section 3.1 solely with respect to such Change of Control Event.
4. Participation in Senior Management Compensation. (a) In any Change in
Control Event, whether or not Section 3.1 hereof is applicable and, if
applicable whether or not the Investors have elected to give effect to the
provisions of such Section 3.1, each Investor shall be entitled to receive from
the Company, in addition to any other consideration which the Investors may
receive in such Change in Control Event, an amount equal to the product of (i)
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the aggregate amount, discounted to present value using a discount rate equal
to the rate of interest on the Notes, of "Excess Compensation" (as defined
below) to be received by the Company's "Senior Management" (as defined below)
on and after the date such Change in Control Event is consummated (the "Closing
Date"), multiplied by (ii) a fraction, (A) the numerator of which is the sum of
(I) the number of shares of Warrant Issuable Stock for all Warrants held by
such Investor, plus (II) the number of shares of Securities held by such
Investor, in each case immediately prior to the Closing Date, and (B) the
denominator of which is the sum of (I) the number of shares of the Company's
common stock issued and outstanding (including, without limitation, all
Securities), plus (II) the number of shares of Warrant Issuable Stock, in each
case immediately prior to the Closing Date. Such amount shall be payable to
the Investors on the Closing Date.
(b) For purposes of this Agreement:
(i) "Excess Compensation" means the aggregate compensation and
remuneration (including but not limited to deferred compensation payable in any
calendar year after the calendar year in which the Closing Date occurs), other
than "Excluded Compensation" (as defined below), to be received by Senior
Management on and at any time after the Closing Date, discounted to present
value at a discount rate equal to the rate of interest on the Notes;
(ii) "Excluded Compensation" means an amount equal to the annual base
salaries and bonuses actually received by Remaining Senior Management during
the twelve (12) months immediately preceding the Closing Date;
(iii) "Remaining Senior Management" shall mean members of Senior
Management who, pursuant to written, non-contingent employment agreements
between each such member and the Company or its successor-in-interest will
remain employed by the Company or such successor-in-interest on a full-time
basis for a period of at least twelve months following the Closing Date; and
(iv) "Senior Management" means any of the Company's officers, any of the
Company's directors, and any of the Company's employees owning two (2%) percent
or more of the issued and outstanding common stock of the Company, in each case
during the twelve (12) months immediately prior to the Closing Date.
5. Legally Available Funds.
(a) If the Company is obligated to make any payment to any Investor
pursuant to Sections 3 or 4 hereof (each a "Participation Payment" and
collectively the "Participation Payments"), the failure of the Company to have
sufficient funds legally available to make any such Participation Payment shall
not excuse the Company's failure to make such Participation Payment in
accordance with the terms of this Agreement, and the Company shall be and
remain liable for the full amount of all sums payable in accordance with the
terms hereof until paid in full. However, the provisions of this Section 5
shall not be construed so as to require the
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Company to make any Participation Payment other than out of funds legally
available therefor under Delaware law; accordingly, if the Company does not at
the time such Participation Payment is payable have sufficient funds legally
available for such Participation Payment, then the Company shall use those
funds that are legally available to partially make such Participation Payment.
In the event that a Participation Payment is payable to more than one Investor,
all partial payments of Participation Payments shall be made pro rata among the
Investors, based upon the allocation formula given in subsection (b) of this
Section 5. At any time thereafter when additional funds of the Company become
available, the Company will immediately use such funds to pay all unpaid
portions of Participation Payments. Such payment of unpaid Participation
Payments shall be made pro rata among the Investors in accordance with the
formula given in subsection (b) hereof below to the extent that legally
available funds are not then available to fully satisfy all unpaid
Participation Payments.
(b) In the event of any required pro rata payment of Participation
Payments among the Investors in accordance with the provisions of subsection
(a) of this Section 5, the amount of such pro rata payment to be made to each
Investor entitled thereto shall be the product of (i) the amount of legally
available funds, multiplied by (ii) a fraction, (A) the numerator of which is
the amount of the unpaid Participation Payment owing to such Investor, and (B)
the denominator of which is the total unpaid Participation Payments owing to
all Investors.
(c) If the Company is obligated to make Participation Payments, and if
the Company does not have sufficient funds legally available therefore,
then the Company shall take any and all action necessary to increase its
legally available funds to an amount sufficient therefore, subject, however, to
the terms and conditions of the Finance Documents.
6. Notices. Whenever any party hereto desires or is required to give any
notices, demand, or request with respect to this Agreement, each such
communication shall be in writing and shall be effective only if it is
delivered by personal service or delivered by a nationally recognized overnight
courier, in each case addressed to the parties hereto at their respective
addresses set forth in the Purchase Agreement or set forth beneath such party's
signature at the end of this Agreement. Any party may change its address for
such communications by giving notice thereof to the other party in conformity
with this Section.
7. Assignment; Binding Effect; Definitions. Each Investor's rights
hereunder may be assigned to any person or entity to whom the Notes, Warrants
or Securities are legally transferred. This Agreement shall be binding on the
parties hereto and their respective legal representatives, successors and
assigns and on the transferees of any Securities now owned or hereafter
acquired by them, and shall inure to the benefit of the parties hereto and
their respective legal representatives, successors and permitted assigns.
Terms herein defined in the singular number shall include the plural, and terms
defined in the plural number shall include the singular number, as the context
may require. The neuter gender shall also denote the masculine and the feminine
where the context so permits. The headings in this Agreement are for purposes
of reference only and shall not be considered in construing this Agreement.
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8. Entire Agreement; Amendment and Waiver. This Agreement contains the
entire agreement and understanding of the parties with respect to the subject
matter hereof and supersedes all prior negotiations, commitments, agreements
and understandings heretofore had between them with respect thereto. This
Agreement may be amended, and compliance with any provisions of this Agreement
may be omitted or waived, by the written agreement of all parties. A waiver on
one occasion shall not constitute a waiver on any further occasion.
9. Counterparts; Signatories. This Agreement may be executed in more than
one counterpart, each of which shall be deemed to be an original and all of
which, together, shall constitute one and the same instrument. Each of the
parties hereto agrees that its respective obligations hereunder are not
contingent upon the execution of this Agreement by all intended parties hereto.
In the event that not all of the intended parties hereto execute this
Agreement, this Agreement shall nonetheless be legal and binding upon, and
enforceable in accordance with its terms against, each party hereto who has
executed a counterpart to this Agreement.
10. Applicable Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the internal laws of Delaware, including but
not limited to the General Corporation Law of the State of Delaware, without
regard to its conflict of law rules.
11. Legend. Each certificate for Securities shall bear a legend stating
in substance as follows:
The shares of stock represented by this certificate are subject to
the terms and provisions of an Equity Holders' Agreement dated as
of February 29, 1996 among the Company and certain holders of
capital stock of the Company, as amended. The Company will furnish
a copy of the Equity Holders' Agreement to the holder hereof upon
written request and without charge.
12. Specific Enforcement. The Company acknowledges and agrees that the
recovery of money damages will not constitute an adequate remedy for breach of
the provisions of this Agreement. Accordingly, the Company agrees that the
provisions of this Agreement may be specifically enforced against the Company
(in addition to any other remedies available for breach of this Agreement); and
the Company hereby waives the defense in any equitable proceeding that there is
an adequate remedy at law for any such breach.
13. Termination. The provisions of this Agreement shall terminate upon
(i) payment in full of all obligations due under the Notes and (ii) either (A)
the expiration of the Warrants (whether as a result of the full exercise
thereof or by the teens thereof) or (B) the date upon which the shares issuable
upon the full exercise of the Warrants is less than ten percent (10%) of the
total shares issuable upon the full exercise of the Warrants on the date of
this Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first above written.
CENTRUM INDUSTRIES, INC.
By: /s/ George H. Wells
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George Wells
Its President
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FIRST NEW ENGLAND CAPITAL
LIMITED PARTNERSHIP
By: FINEC Corp., its General Partner
By:
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Richard Klaffky
Its President (Duly Authorized)
MORAMERICA CAPITAL CORPORATION
By: InvestAmerica Investment Advisors, Inc.
its Investment Adviser
By: /s/ David Schroder
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David Schroder, its President
(Duly Authorized)
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NORTH DAKOTA SMALL BUSINESS
INVESTMENT COMPANY, A NORTH
DAKOTA LIMITED PARTNERSHIP
By: InvestAmerica ND Management, Inc.,
its Investment Adviser
By: /s/ David Schroder
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David Schroder, its President
(Duly Authorized)
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Name (Print):
Address:
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FIRST NEW ENGLAND CAPITAL
LIMITED PARTNERSHIP
By: FINEC Corp., its General Partner
By: /s/ Richard Klaffky
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Richard Klaffky
Its President (Duly Authorized)
MORAMERICA CAPITAL CORPORATION
By: InvestAmerica Investment Advisors,
Inc., its Investment Adviser
By:
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David Schroder, its President
(Duly Authorized)
NORTH DAKOTA SMALL BUSINESS
INVESTMENT COMPANY, A NORTH
DAKOTA LIMITED PARTNERSHIP
By: InvestAmerica ND Management, Inc., its
Investment Adviser
By: /s/ David Schroder
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David Schroder, its President
(Duly Authorized)
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Name (Print):
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/s/ George H. Wells
George H. Wells
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Name (Print):
Address: 10707 Obee Road
Whitehouse, OH 43571
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/s/ John R. Ayling
John R. Ayling
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Name (Print):
Address:
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1400 Rivercrest
Perrysburg, OH 43551
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/s/ David L. Hart
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Name (Print): David L. Hart
Address:
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2520 Middlesex Dr.
Toledo, OH 43606
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/s/Thomas E. Seiple
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Name (Print): Thomas E. Seiple
Address:
26570 Carrington Blvd.
Perrysburg, Ohio 43551
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/s/ William C. Davis
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Name (Print): William C. Davis
Address:
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/s/ Robert J. Fulton
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Name (Print): Robert J. Fulton
Address:
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